Today, Lee came back to earth, with the release of the company's 3rd Quarter financial results. Although the company reported having cut costs by 22 percent, revenue dropped by 20.5 percent, leading to a quarterly loss of $24.5 million. Minutes after the NYSE opened, the stock was down 33 cents per share.
Here is the lede from the company's financial statement:
Lee Enterprises, Incorporated (NYSE:LEE), reduced cash operating expenses, excluding unusual items, 22.0 percent in its third fiscal quarter ended June 28, 2009, as operating revenue declined 20.5 percent. Excluding non-cash impairment charges and other unusual items, diluted earnings per common share were 12 cents, compared with 30 cents a year ago. Free cash flow(2) totaled $22.1 million, compared with $34.2 million in 2008.
Including non-cash impairment charges, Lee recorded a loss per diluted common share of 55 cents for the quarter, compared with earnings of 6 cents per share a year ago.
“We are continuing to position Lee so it will emerge strong when the recession ends,” said Mary Junck, chairman and chief executive officer. “We reduced debt by $18 million during the quarter and again performed well within projections we provided to lenders in February. While overall business remains sluggish, it has stabilized, and many of our publishers are reporting cautious optimism from an increasing number of local advertisers. We are also encouraged by our efforts to expand our local advertising market share and the response we have received to new sales programs that reach non-traditional advertisers. Beginning this next quarter, we also expect an enthusiastic response to our rollout of online behavioral targeting advertising through the new Yahoo platform.”
She added: “Our streamlining of costs also remains on track, and, thanks in part to 22 percent reductions in the June quarter, we expect to reduce full-year 2009 cash costs, about 17 percent below 2008, a decrease of nearly $140 million. We have completed page width reduction across the company, realigned staffing and consolidated or outsourced printing and distribution in several more locations. As a result of those actions and many more, the overall rate of decline in our operating cash flow(3) has slowed dramatically since last quarter, and more individual enterprises have begun exceeding prior year. Our operating cash flow margin(3), which includes corporate costs, has improved to 21.9 percent from 21.0 percent a year ago.”
THIRD QUARTER OPERATING RESULTS
Total operating revenue from continuing operations for the quarter decreased 20.5 percent from a year ago to $203.8 million. Combined print and online advertising revenue decreased 24.3 percent to $148.0 million, with retail advertising down 18.4 percent, and classified down 35.2 percent. Combined print and online employment advertising revenue decreased 60.4 percent, automotive decreased 30.9 percent and real estate decreased 35.0 percent. Online advertising revenue declined 29.3 percent, with online retail advertising down 1.7 percent and online classified advertising down 45.8 percent. National advertising revenue decreased 11.4 percent. Circulation revenue declined 6.3 percent, partially a result of elimination of less profitable delivery areas.
Operating expenses, excluding unusual items, depreciation and amortization, decreased 22.0 percent to $157.6 million and decreased 21.5 percent in total. Compensation, excluding unusual items, declined 22.4 percent, with the average number of full-time equivalent employees down 16.8 percent. Newsprint and ink expense decreased 41.4 percent, a result of a reduction in newsprint volume of 36.4 percent and more favorable newsprint prices.
Operating cash flow decreased 16.9 percent compared with a year ago to $44.7 million. Including equity in earnings (loss) of associated companies, depreciation and amortization, as well as adjustments for impairment and other non-cash charges, the operating loss was $13.8 million.