By: Mark Fitzgerald Lee Enterprises Inc. reported a loss for its fiscal third quarter Thursday as it took another impairment charge on top of advertising revenue that fell more than 24% from a year ago.
Lee's loss of $24.5 million, or 55 cents a share, compares with a profit of $2.8 million, or 6 cents a share. Without the $39.7 million non-cash impairment charge of the value of intangible assets including goodwill related to its joint operating agreement partnership in Tucson, Lee said it would have earned 12 cents a share. So far this year, Lee said, it has written down the value of goodwill by $264.5 million.
Total revenue for the parent of the St. Louis Post-Dispatch fell 20.5% to $203.8 million on advertising sales that tumbled 24.3%.
Retail ad revenue slid 18.4%, while classified dropped 35.2%.
Reporting the same sorts of deep declines in classified categories that its peer have for the past two weeks, Lee said combined print and online employment advertising revenue plunged 60.4%, automotive fell 30.9%, and real estate decreased 35.0%.
Online advertising revenue declined 29.3% in the quarter, driven by a plunge of 45.8% in classified.
Lee also had no good news in circulation, which has been a revenue bright spot for newspapers in these quarterly reports. The Davenport, Iowa-based publisher said circ revenue was down 6.3% for the quarter, partially, it said, because of the elimination of less profitable delivery areas.
Lee's operating expenses, however, reflect the deep cost-cutting going on throughout newspapers.
Operating expenses, excluding unusual items, depreciation and amortization, decreased 22% to $157.6 million. Compensation costs, excluding unusual items, dropped 22.4%. The number of full-time equivalent employees fell 16.8% form a year ago, Lee said.
Lee also hacked away at newsprint and ink expense, which ended 41.4% below last year's level, chiefly on a reduction in newsprint use by 36.4% and lower newsprint prices.
Operating cash flow fell in the quarter by 16.9% to $44.7 million.
In a statement, Lee Chairman and CEO Mary Junck said the rate of decline in operating cash flow "has slowed dramatically since last quarter, and more individual enterprises have begun exceeding prior year." She said the operating cash flow margin improved to 21.9% from 21.0% a year ago.
"We are continuing to position Lee so it will emerge strong when the recession ends," Junck said. "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."
Lee CFO and Treasurer Carl Schmidt said the company "remains well within all of its financial covenants." Liquidity at the end of the quarter totaled $112 million, he said, against $96.9 million of debt repayments due in the next four quarters. "Substantially all" of the repayments are expected to be met from ongoing cash flow, he said.
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