Lee Reaffirms Pulitzer Plan, Despite Accounting Problem

By: (AP) Lee Enterprises Inc. still expects to complete its $1.46 billion acquisition of fellow newspaper publisher Pulitzer Inc. during the second quarter, despite accounting problems announced by Pulitzer this week.

Lee's reaffirmation of the closing date came Thursday, the same day Pulitzer restated with the Securities and Exchange Commission its Consolidated Statements of Cash Flows for fiscal years 2002 and 2003. At issue was the way the St. Louis-based company reported contributions to employee benefit plans in excess of required amounts.

The restatement resulted in Pulitzer reporting to the SEC a material weakness in internal control over financial reporting.

Lee chairman and chief executive officer Mary Junck said the restatement "is not a significant issue" and will not stop or delay Davenport, Iowa-based Lee's purchase of Pulitzer, publisher of the St. Louis Post-Dispatch, the Arizona Daily Star, and other newspapers.

"Pulitzer's restatement relates solely to a financial statement classification issue and has no effect whatsoever on Lee's desire to complete the transaction," Junck said. "It has no impact on past, current, or future operating results and no effect on the balance sheet. Also, it does not affect the funded status of Pulitzer benefit plans or overall cash balances."

Junck said Pulitzer's revenue so far in 2005 "reinforces Lee's enthusiasm for the transaction." Pulitzer revenue was up 3.7 percent for the first two months of 2005, compared to a year earlier, and was up 3.2 percent on a comparable basis, excluding acquisitions.

The sale was announced Jan. 30. Pulitzer shareholders must still vote, following approval from the SEC.

Lee Enterprises owns 38 daily newspapers and has a joint interest in six others. Lee also publishes nearly 200 weekly newspapers, shoppers and classified and specialty publications. Pulitzer operates 14 dailies, the Suburban Journals of Greater St. Louis, and other publications.

Shares of Lee fell 66 cents, or 1.5 percent, to $44.51 in morning trading Friday on the New York Stock Exchange. The stock has been trading in a 52-week range of $43.05 to $49.83. Pulitzer shares edged up 1 cent to $63.67, approaching their 52-week high of $65.89.