UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  December 13, 2019

 

LEE ENTERPRISES, INCORPORATED

(Exact name of Registrant as specified in its charter)

 

 

 

Commission File Number 1-6227

 

Delaware

(State of Incorporation)

42-0823980

(I.R.S. Employer Identification No.)

 

4600 E. 53rd Street, Davenport, Iowa 52807

(Address of Principal Executive Offices)

 

(563) 383-2100

Registrant’s telephone number, including area code

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01 per share

LEE

New York Stock Exchange

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 
 

 

Item 7.01.

Regulation FD Disclosure.

 

The supplemental financial information is furnished as Exhibit 99.1 to this Form 8-K and is hereby incorporated by reference. The information in this report shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.

 

Lee Legacy only and Pulitzer Inc. ("Pulitzer") only supplemental financial information is being provided because it is a required reporting covenant in the debt agreements of the Company. Lee Legacy constitutes the business of the Company, including its 50% interest in Madison Newspapers, Inc. ("MNI"), but excluding Pulitzer and the Company’s 50% interest in TNI Partners ("TNI").

 

The Lee Legacy and Pulitzer separate income statement presentations are not prepared in accordance with Generally Accepted Accounting Principles ("GAAP") as non-operating income (expense) and income tax expense are allocations of the consolidated balances and have not been prepared in accordance with Accounting Standards Codification 280: Segment Reporting. This presentation is only intended to be used for purposes of complying with covenants under the Company's debt agreements and should not be used as a substitute for the Company's consolidated financial statements prepared in accordance with GAAP. Refer to the Company's consolidated financial statements prepared in accordance with GAAP as periodically filed on Form 10-Q and Form 10-K with the Securities and Exchange Commission.

 

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits

 

 

99.1

Supplemental Financial Information – Fourth fiscal quarter ended September 29, 2019

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

LEE ENTERPRISES, INCORPORATED

 

 

 

 

 

 

 

 

 

 

 

Date:

December 13, 2019

By:

/s/ Timothy R. Millage

 

 

 

 

Timothy R. Millage

 

 

 

 

Vice President, Chief Financial Officer and Treasurer

 

 

Exhibit 99.1

 

Exhibit 99.1 - Supplemental Financial Information – Fourth fiscal quarter ended September 29, 2019.

 

 

4600 E 53rd Street.

Davenport, IA 52807

www.lee.net

 

 
 

 

Quarter Ended (unaudited)

   

September 29, 2019

   

September 30, 2018

 

(in thousands)

 

Consolidated

   

Lee Legacy

   

Pulitzer Inc.

   

Consolidated

   

Lee Legacy

   

Pulitzer Inc.

 

Operating revenue:

                                               

Advertising and marketing services

    61,282       42,846       18,436       73,695       51,702       21,993  

Subscription

    48,726       34,012       14,714       52,703       36,904       15,799  

Other

    13,657       12,109       1,548       13,348       11,792       1,556  

Total operating revenue

    123,665       88,967       34,698       139,746       100,398       39,348  

Operating expenses:

                                               

Compensation

    42,672       31,699       10,973       49,614       37,334       12,280  

Newsprint and ink

    4,843       3,245       1,598       7,028       4,836       2,192  

Other operating expenses

    47,793       29,188       18,605       50,824       30,148       20,676  

Depreciation and amortization

    7,069       4,619       2,450       7,794       5,082       2,712  

Assets loss (gain) on sales, impairments, and other

    2,676       2,361       315       7,626       695       6,931  

Restructuring costs and other

    6,022       3,294       2,728       1,400       1,021       379  

Total operating expenses

    111,075       74,406       36,669       124,286       79,116       45,170  

Equity in earnings of associated companies

    1,823       1,183       640       3,679       2,605       1,074  

Operating income

    14,413       15,744       (1,331 )     19,139       23,887       (4,748 )

Non-operating income (expense), net

    (11,310 )     (14,433 )     3,123       (14,140 )     (17,558 )     3,418  

Income tax expense (benefit)

    1,758       1,310       448       561       1,044       (483 )

Net income

    1,345       1       1,344       4,438       5,285       (847 )

 

Adjusted EBITDA is a non-GAAP financial measure. Below is a reconciliation of adjusted EBITDA to net income, the most directly comparable measure under GAAP:

 

Net Income

    1,345       1       1,344       4,438       5,285       (847 )

Adjusted to exclude

                                               

Non-operating expenses (income), net

    11,310       14,433       (3,123 )     14,140       17,558       (3,418 )

Income tax expense (benefit)

    1,758       1,310       448       561       1,044       (483 )

Equity in earnings of TNI and MNI

    (1,823 )     (1,183 )     (640 )     (3,679 )     (2,605 )     (1,074 )

Depreciation and amortization

    7,069       4,619       2,450       7,794       5,082       2,712  

Assets loss (gain) on sales, impairments, and other

    2,676       2,361       315       7,626       695       6,931  

Restructuring costs and other

    6,022       3,294       2,728       1,400       1,021       379  

Stock compensation

    428       428       —       417       417       —  

Add:

                                               

Ownership share of TNI and MNI EBITDA (50%)

    2,325       1,580       745       2,449       1,270       1,179  

Adjusted EBITDA

    31,110       26,843       4,267       35,146       29,767       5,379  
                                                 

Supplemental cash flow information

                                               

Distributions from MNI and TNI

    2,007       1,000       1,007       2,339       900       1,439  

Capital expenditures

    (2,148 )     (1,606 )     (542 )     (1,744 )     (1,529 )     (215 )

Cash income tax payments

    (2,097 )     (2,097 )     —       (35 )     (30 )     (5 )

Interest income

    165       (2,245 )     2,410       154       (2,556 )     2,710  

Interest to be settled in cash

    (11,232 )     (8,305 )     (2,927 )     (13,004 )     (10,046 )     (2,958 )

Debt financing and administrative costs

    159       159       —       (4 )     (4 )     —  

 

 
 

 

Year Ended (unaudited)

                                               
   

September 29, 2019

   

September 30, 2018

 

(in thousands)

 

Consolidated

   

Lee Legacy

   

Pulitzer Inc.

   

Consolidated

   

Lee Legacy

   

Pulitzer Inc.

 

Operating revenue:

                                               

Advertising and marketing services

    265,933       184,648       81,285       303,446       212,265       91,181  

Subscription

    186,691       129,053       57,638       195,108       135,309       59,799  

Other

    57,230       51,077       6,153       45,401       38,543       6,858  

Total operating revenue

    509,854       364,778       145,076       543,955       386,117       157,838  

Operating expenses:

                                               

Compensation

    182,869       137,172       45,697       199,164       149,924       49,240  

Newsprint and ink

    22,237       15,172       7,065       24,949       17,591       7,358  

Other operating expenses

    193,709       118,738       74,971       199,653       119,673       79,980  

Depreciation and amortization

    29,332       19,135       10,197       31,766       20,676       11,090  

Assets loss (gain) on sales, impairments, and other

    2,464       2,247       217       6,429       (475 )     6,904  

Restructuring costs and other

    11,635       7,118       4,517       5,550       4,587       963  

Total operating expenses

    442,246       299,582       142,664       467,511       311,976       155,535  

Equity in earnings of associated companies

    7,121       2,885       4,236       9,249       4,629       4,620  

Operating income

    74,729       68,081       6,648       85,693       78,770       6,923  

Non-operating income (expense), net

    (50,889 )     (64,596 )     13,707       (54,873 )     (67,071 )     12,198  

Income tax expense (benefit)

    7,931       2,842       5,089       (16,228 )     (23,173 )     6,945  

Net income

    15,909       643       15,266       47,048       34,872       12,176  

 

Adjusted EBITDA is a non-GAAP financial measure. Below is a reconciliation of adjusted EBITDA to net income, the most directly comparable measure under GAAP:

 

Net Income

    15,909       643       15,266       47,048       34,872       12,176  

Adjusted to exclude

                                               

Non-operating expenses (income), net

    50,889       64,596       (13,707 )     54,873       67,071       (12,198 )

Income tax expense (benefit)

    7,931       2,842       5,089       (16,228 )     (23,173 )     6,945  

Equity in earnings of TNI and MNI

    (7,121 )     (2,885 )     (4,236 )     (9,249 )     (4,629 )     (4,620 )

Depreciation and amortization

    29,332       19,135       10,197       31,766       20,676       11,090  

Assets loss (gain) on sales, impairments, and other

    2,464       2,247       217       6,429       (475 )     6,904  

Restructuring costs and other

    11,635       7,118       4,517       5,550       4,587       963  

Stock compensation

    1,638       1,638       —       1,857       1,857       —  

Add:

                                               

Ownership share of TNI and MNI EBITDA (50%)

    8,811       4,157       4,654       9,883       4,845       5,038  

Adjusted EBITDA

    121,488       99,491       21,997       131,929       105,631       26,298  
                                                 

Supplemental cash flow information:

                                               

Distributions from MNI and TNI

    7,595       3,350       4,245       9,214       3,400       5,814  

Capital expenditures

    (5,901 )     (4,794 )     (1,107 )     (6,025 )     (4,660 )     (1,365 )

Cash income tax payments

    (8,439 )     (8,440 )     1       (464 )     (396 )     (68 )

Interest income

    655       (10,204 )     10,859       489       (8,879 )     9,368  

Interest to be settled in cash

    (47,488 )     (36,821 )     (10,667 )     (52,842 )     (39,988 )     (12,854 )

Debt financing and administrative costs

    (1,773 )     (1,773 )     —       (437 )     (437 )     —