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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 1-6227
LEE ENTERPRISES, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 42-0823980
(State of Incorporation) (I.R.S. Employer Identification No.)
215 N. Main Street, Davenport, Iowa 52801
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (319) 383-2100
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange On
Title of Each Class Which Registered
Common Stock $2.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Class B Common Stock $2.00 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of voting stock held by nonaffiliates
of the registrant as of December 9, 1994. Common Stock and Class B Common
Stock, $2.00 par value: $723,000,000.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of December 9, 1994. Common Stock, $2.00 par
value, 15,754,767 shares; and Class B Common Stock, $2.00 par value,
6,666,872 shares.
PART I
Item 1. Business
Item 1(a) Recent business developments. During the Company's fiscal
year ended September 30, 1994 there were no material developments in the
Company's business.
Item 1(b) Financial information about industry segments. See Note 9
to the Notes to Financial Statements under Item 8, herein.
Item 1(c) Narrative description of business.
NEWSPAPERS
The Company and its subsidiaries publish the following daily
newspapers:
Quad-City Times - Davenport, Iowa
The Wisconsin State Journal - Madison, Wisconsin
The Lincoln Star - Lincoln, Nebraska
The Journal Times - Racine, Wisconsin
LaCrosse Tribune - LaCrosse, Wisconsin
Gazette Times - Corvallis, Oregon
Globe-Gazette - Mason City, Iowa
Ottumwa Courier - Ottumwa, Iowa
Star Courier - Kewanee, Illinois
Muscatine Journal - Muscatine, Iowa
Billings Gazette - Billings, Montana
The Montana Standard - Butte, Montana
Missoulian - Missoula, Montana
Independent Record - Helena, Montana
Bismarck Tribune - Bismarck, North Dakota
Herald and Review - Decatur, Illinois
Southern Illinoisan - Carbondale, Illinois
Winona Daily News - Winona, Minnesota
Rapid City Journal - Rapid City, South Dakota
One daily and Sunday newspaper, The Wisconsin State Journal, and one
daily newspaper, The Capital Times, are published in Madison, Wisconsin,
both of which are owned by Madison Newspapers, Inc. The Company owns 50%
of the outstanding capital stock of Madison Newspapers, Inc. The Company
has a contract to furnish the editorial and news content for The Wisconsin
State Journal, which is a morning newspaper published seven days each
week. The Capital Times Company, of which the Company owns 17% of the
nonvoting common stock, owns the other 50% of the outstanding capital
stock of Madison Newspapers, Inc., and has a similar contract to furnish
the editorial and news content for The Capital Times, which is an
afternoon newspaper published daily, except Sunday. Both newspapers are
produced in the printing plant of Madison Newspapers, Inc., which
maintains common advertising, circulation, delivery and business
departments for the two newspapers. The Company is compensated for
supplying the editorial and news content. In the newspaper field and
rating services The Wisconsin State Journal is classified as one of the
Lee Group of newspapers.
The Company owns 49.75% of the outstanding capital stock of Journal-
Star Printing Co., Lincoln, Nebraska, which publishes two weekday
newspapers, The Lincoln Star and The Lincoln Journal, as well as the
Saturday Journal Star and the Sunday Journal and Star. The Company has a
contract to furnish the editorial and news content for The Lincoln Star,
which is a morning newspaper published daily, except Saturday and Sunday,
and certain holidays, the editions of the Journal Star published on
Saturday and certain holidays, and not less than 15% of the editorial and
news content for the Sunday newspaper, the Sunday Journal and Star.
Journal Limited Partnership, a partnership not affiliated with the
Company, which owns 50.25% of the outstanding capital stock of Journal-
Star Printing Co., has a similar contract to furnish the editorial and
news content for The Lincoln Journal, which is an afternoon newspaper
published daily, except Saturday, Sunday and certain holidays and not more
than 85% of the news and editorial content for the Sunday Journal and
Star. These newspapers are produced in the printing plant of Journal-Star
Printing Co., which maintains common advertising, circulation, delivery
and business departments for the two daily and Sunday newspapers. The
Company is compensated for supplying the editorial and news content and
certain administrative services. In the newspaper field and rating
services The Lincoln Star is classified as one of the Lee Group of
newspapers.
The Company also publishes 36 weekly newspapers, shoppers and special
industry publications.
The basic raw material of newspapers is newsprint. The Company and
its subsidiaries purchase newsprint from U.S. and Canadian producers. The
Company believes it will continue to receive a supply of newsprint
adequate to its needs. Price increases for newsprint are probable in the
future.
Newspaper revenue has traditionally been highest in the quarter
ended December 31 and, likewise, has been lowest in the quarter ended
March 31.
The Company's newspapers compete with newspapers having national
or regional circulation, as well as magazines, radio, television and other
advertising media such as billboards, shoppers and direct mail. In
addition, many of the Company's daily and Sunday newspapers compete with
other newspapers in nearby cities and towns.
BROADCASTING
The Company and its subsidiaries own and operate the following
television stations:
Nielsen DMA
Station Affiliation Market Ranking
KOIN-TV - Portland, Oregon CBS 25
KGMB-TV - Honolulu, Hawaii CBS 69
WSAZ-TV - Huntington-Charleston, West Virginia NBC 56
KMTV - Omaha, Nebraska CBS 74
KGUN-TV - Tucson, Arizona ABC 81
KRQE-TV - Albuquerque, New Mexico CBS 49
KBIM-TV - Roswell, New Mexico CBS 49
KZIA-TV - Las Cruces, New Mexico Paramount 100
[FN]
KGMB-TV also operates satellite stations KGMD-TV, Hilo, Hawaii and
KGMV-TV, Maui, Hawaii.
Combined DMA rank.
El Paso, Texas DMA Rank
Broadcasting revenue has traditionally been highest in the quarter
ended December 31 and, likewise, has been lowest in the quarter ended
March 31.
The Company's television stations are in competition with other over-
the-air broadcast, direct broadcast satellite ("DBS") and cable
television, and radio companies, as well as other advertising media such
as newspapers, magazines and billboards. Competition in the television
broadcasting industry occurs primarily in individual market areas.
Generally, a television station in one market does not compete with other
stations in other market areas, nor does a group of stations, such as
those owned by the Company, compete with any other group of stations as
such. DBS and cable television systems in the Company's broadcasting
markets operate on a subscriber payment basis and compete by importing
out-of-market television signals or by originating programming to the
extent permitted or required by present or future rules of the Federal
Communications Commission ("FCC").
The Company's television broadcasting operations are subject to the
jurisdiction of the FCC under the Communications Act of 1934, as amended
(the "Act"). The Act empowers the FCC, among other things, to issue,
revoke or modify broadcasting licenses, to assign frequency bands, to
determine the location of stations, to regulate the apparatus used by
stations, to establish areas to be served, to adopt regulations necessary
to carry out the provisions of the Act and to impose penalties for
violation of such regulations. Television licenses are granted for a
maximum period of five years and, upon application, may be renewed for
additional five-year terms. The FCC is required to hold a hearing on a
renewal application if a conflicting application is filed, if a
substantial and material question of fact is raised with respect to the
renewal application, or if for any reason the FCC is unable to find that
the grant of the renewal application would serve the public interest,
convenience and necessity. Renewal of the Company's television licenses
has never been denied and all such licenses are now in full force and
effect.
MEDIA PRODUCTS AND SERVICES
NAPP Systems Inc. ("NAPP") has been wholly-owned by the Company since
September 14, 1990 and is engaged in the business of manufacturing and
selling photosensitive letterpress (NAPPlate) and flexographic (NAPPflex)
polymer printing plates and selling related plate processing equipment
manufactured under contracts by others to newspaper publishers, preprint,
or telephone directory printing businesses located throughout the world.
NAPP is subject to competition in the photopolymer plate business.
Present supplies and/or contracts with suppliers of aluminum, steel and
chemicals used in manufacturing of NAPP plates are deemed adequate. Price
increases for these raw materials are probable in the future, but these
increases will affect competition as well as NAPP.
Under an Assignment and License Agreement with Nippon Paint Co., Ltd.
("Nippon"), former owner of 50% of the outstanding capital stock of NAPP,
NAPP was granted the exclusive worldwide, nonassignable and nonsublicensable
right to use Nippon's NAPPlate and NAPPflex patent rights in development,
design, manufacture, marketing, sale, and distribution of photopolymer
printing plates for use by newsprint, preprint, and telephone directory
printing businesses throughout the world. In return for rights
under the Assignment and License Agreement with Nippon, which are of
substantial importance to NAPP, NAPP agreed to pay a fixed payment with
respect to NAPPlate patent rights, which amount has been fully paid at the
date of this report. With respect to NAPPflex patent rights, NAPP pays
the greater of a minimum royalty or an annual royalty fee equal to 2% of
the yearly defined net sales of NAPP.
OTHER MATTERS
Compliance with present statutory and regulatory requirements
respecting environmental quality will not necessitate significant capital
outlays, or materially affect the earning power of the business of the
Company, or cause material changes in the Company's business, whether
present or intended.
In September 1994, the Company, its subsidiaries and associated
companies had approximately 4,700 employees, including approximately 1,600
part-time employees.
Item 2. Properties
The Company's executive offices are located in facilities leased under
a short-term arrangement at 215 North Main Street, Davenport, Iowa.
All of the newspaper printing plants (except Madison and Lincoln) are
owned by the Company. All newspaper printing plants (including Madison
and Lincoln) are well maintained, are in good condition, and are suitable
for the present office and publishing operations of the newspapers. All
newspaper plants are adequately equipped with typesetting, printing and
other equipment required in the publication of newspapers.
All offices, studios, and transmitter buildings of the broadcasting
divisions are owned or subject to long-term lease by the Company. All of
the television properties are adequately equipped for present operations,
and are in good condition and repair. Network television programs are
received via satellite.
The office, production and primary warehouse facilities of NAPP are
located in buildings in San Marcos, California which are owned by NAPP,
are in good condition and repair, and are suitable for its operations.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
COMMON STOCK PRICES AND DIVIDENDS
Lee Common Stock is listed on the New York Stock Exchange. The table
below shows the high and low prices of Lee Common Stock for each quarter
during the past three years, the closing price at the end of each quarter
and the dividends paid per share.
Quarter
4th 3rd 2nd 1st
STOCK PRICES
1994:
High $ 35-1/2 $ 35-1/2 $ 38-1/8 $ 35
Low 32 31-3/4 33-3/4 31
Closing 34-1/2 32 35-1/8 35
1993:
High $ 31-5/8 $ 30-1/4 $ 31-1/2 $ 34-1/2
Low 27-1/2 27-1/4 28-1/2 30-1/4
Closing 31-3/8 27-1/4 29-5/8 30-1/2
1992:
High $ 32 $ 30 $ 27-7/8 $ 23-1/4
Low 27-1/2 26 23-1/8 20-1/4
Closing 32 27-1/4 26-7/8 23-1/4
DIVIDENDS PAID
1994 $ .21 $ .21 $ .21 $ .21
1993 .20 .20 .20 .20
1992 .20 .19 .19 .19
For a description of the relative rights of Common Stock and Class B
Common Stock, see Note 6 of the Notes to Financial Statements under Item 8
herein.
At September 30, 1994, the Company had 5,118 holders of Common Stock
and 3,026 holders of Class B Common Stock.
Item 6. Selected Financial Data
FIVE YEAR FINANCIAL PERFORMANCE
Year Ended September 30: 1994 1993 1992 1991 1990
(In Thousands Except Per Share Data)
OPERATIONS
Operating revenue $402,551 $372,907 $363,918 $346,260 $287,477
Net income $ 50,854 $ 41,236 $ 38,492 $ 31,501 $ 43,494
PER SHARE AMOUNTS
Weighted average shares 23,425 23,460 23,341 23,292 23,928
Earnings $ 2.17 $ 1.76 $ 1.65 $ 1.35 $ 1.82
Dividends .84 .80 .77 .76 .72
OTHER DATA
Total assets $474,701 $482,317 $504,985 $490,264 $496,395
Debt, including current
maturities 130,532 160,214 173,537 191,096 205,007
Stockholders' equity 241,930 223,482 203,812 183,035 173,343
Item 7. Management Discussion and Analysis of Financial Condition
and Results of Operations
Management Review and Discussions
Operating results are summarized below:
1994 1993 1992
(In Thousands)
Operating revenue $402,551 $372,907 $363,918
Percent change 7.9% 2.5% 5.1%
Operating income 95,477 81,139 80,169
Percent change 17.7% 1.2% 15.6%
Net income 50,854 41,236 38,492
Percent change 23.3% 7.1% 22.2%
Earnings per share 2.17 1.76 1.65
Percent change 23.3% 6.7% 22.2%
Fiscal 1994 and 1993 comparisons were not affected by significant
acquisitions. The 1992 operating revenue growth rate was 2.1% excluding
the effect of the purchase of New Mexico Broadcasting Company, Inc.
NEWSPAPERS
1994 1993 1992
(In Thousands)
Operating revenue $241,032 $223,423 $213,666
Percent change 7.9% 4.6% 2.9%
Operating income:
Wholly-owned properties 65,881 58,434 59,144
Percent change 12.7% (1.2%) 18.7%
Equity in net income 10,031 9,502 8,667
Percent change 5.6% 9.6% 8.4%
Operating margin, wholly-owned properties 27.3% 26.2% 27.7%
The newspaper segment includes daily and weekly newspapers, shoppers, and
specialty publications. Operating revenue consists of the following:
1994 1993 1992
(In Thousands)
Daily newspaper:
Advertising $134,322 $126,920 $122,762
Percent change 5.8% 3.4% 2.5%
Circulation 66,302 63,285 59,882
Percent change 4.8% 5.7% 5.6%
Other 40,408 33,218 31,022
Percent change 21.6% 7.1% (.4%)
Changes in advertising units for classified and local advertising, which
account for more than 70% of newspaper advertising revenue, are as
follows:
ADVERTISING INCHES 1994 1993 1992
(In Thousands)
Classified 3,508 3,227 3,130
Percent change 8.7% 3.1% (.1%)
Local 4,950 5,002 5,144
Percent change (1.0%) (2.8%) (1.6%)
Classified advertising revenue increased approximately 13.3% in 1994, 4.4%
in 1993 and 2.2% in 1992. The average rate realized increased 4.2% in
1994, 1.3% in 1993 and 2.5% in 1992. In 1994 growth was led by increases
in employment, automotive and private party advertising.
Local "run-of-press" advertising represents advertising by merchants in
the local community which is printed in the newspaper rather than
"preprints" which are printed separately by the Company or others and
inserted into the newspaper. Revenue in 1994 increased 2.8% on higher
average rates despite a 1.0% decrease in advertising inches. In 1993
revenue was flat due to the 2.8% decrease in volume. In 1992 revenue
increased .4% while volume decreased by 1.6% as advertisers reduced the
average ad size.
Total revenue realized from local and national merchants is increasing
despite the shift from run-of-press advertising to preprints which have
lower-priced, higher-volume distribution rates. Preprint revenue
increased $1,275,000 (4.4%) in 1994, $1,500,000 (5.7%) in 1993 and
$2,000,000 (7.9%) in 1992 primarily as a result of increases in volume.
In 1994 circulation revenue increased 4.8% as a result of higher rates
which offset a .7% decrease in volume. The 1993 and 1992 increases in
circulation revenue were a result of increases in price of 5.4% and 5.1%
and in the number of subscribers of .3% and .5%, respectively.
The primary components of the 1994 increase in other revenue resulted
from: 1) a $2,000,000 increase in products delivered outside the
newspaper (which include activities such as target marketing and special
event production), 2) a $3,900,000 increase in weekly and specialty
publications, including $2,150,000 related to acquisitions, and 3) a
$900,000 increase in commercial printing. The 1993 increase was primarily
the result of a $1,000,000 increase in products delivered outside the
newspaper and a $1,000,000 increase in commercial printing. Revenues from
acquisitions and start-ups of weekly newspapers were not significant in
1993, net of the effect of discontinued publications.
Exclusive of the effects of the specialty publication acquisitions, in
1994 costs other than depreciation and amortization (which we refer to as
"cash costs") increased 5.7%. Compensation costs increased 6.9% primarily
due to a 1.8% increase in hours worked and salary increases. Total hours
worked increased primarily due to the non-traditional revenue activities.
Newsprint and ink costs in 1994 decreased 1.1%. Increased newsprint
rebates offset a 4% increase in newsprint usage by newspapers and a 11%
increase in commercial printing volume. Exclusive of the acquisitions,
other cash costs increased 7.1% primarily due to non-traditional services
and normal inflationary increases.
After many years of flat or declining newsprint prices, suppliers have
announced sharply higher newsprint prices for 1995. The increases reflect
a growing economy and worldwide newsprint demand. If newsprint prices
actually increase as indicated our costs could increase by 15-20% in 1995.
In 1993 cash costs increased 7.5%. Compensation costs increased 3.7%
primarily as a result of salary increases. Newsprint and ink costs
increased 10.0% primarily as a result of reduced newsprint rebates and an
increase in commercial printing. Other cash costs increased 12.2%
primarily due to costs related to non-traditional services and normal
inflationary increases.
In 1992 cash costs decreased 1.6%. Increases in total compensation of
3.7% as a result of salary increases and termination payments were
partially offset by a decrease in total hours worked of 2.5%. Lower
newsprint prices reduced expense by approximately $5,300,000, and reduced
commercial printing activity resulted in approximately $500,000 of
newsprint cost reduction. All other cash costs increased only 1.4% as a
result of the cost control programs.
BROADCASTING
1994 1993 1992
(In Thousands)
Operating revenue $ 90,000 $ 81,284 $ 79,118
Percent change 10.7% 2.7% 13.5%
Operating income 21,494 16,712 13,966
Percent change 28.6% 19.7% 28.7%
Operating margin 23.9% 20.6% 17.7%
The full year of operations from the acquisition of KZIA-TV, Las Cruces,
New Mexico, increased operating revenue in 1994 by $400,000. Exclusive of
the effects of this acquisition, local/regional revenue increased
$4,700,000 and national advertising increased $4,300,000. Included in
these increases are the effects of the Winter Olympics on our five CBS
affiliates. Recent changes in network affiliation agreements are expected
to increase 1995 network compensation revenue by approximately $2,000,000.
Political advertising in 1993 increased $1,100,000 over the prior year.
Local/regional advertising increased by $2,500,000 which was offset, in
part, by a $1,200,000 decrease in national advertising. The national
advertising decrease was primarily related to the economically depressed
west coast markets where national media buyers reduced their orders. This
reaction impacted Portland even though that area remained solid
economically. Network compensation decreased $300,000 for the year,
primarily at the Company's CBS-affiliated stations.
The acquisition of New Mexico Broadcasting Company increased operating
revenue in 1992 by $9,100,000. Exclusive of the effects of this
acquisition broadcasting revenue increased .4% in 1992. A $3,000,000
decrease in political advertising in the first quarter of 1992 was offset
by increased revenue primarily at the Company's CBS-affiliated television
stations during the remainder of the fiscal year. Network compensation
decreased $500,000 for the year, primarily at the Company's NBC affiliate.
Operating income increased in 1994 by $4,800,000. Compensation costs
increased $3,200,000 or 10.1%, due to an increase in incentive
compensation related to increases in advertising revenue and an increase
of 5.1% in the number of hours worked (including the effects of the
acquisition of Las Cruces). Portland, Omaha and Huntington all expanded
news programming which required additional staffing and other related
costs. Film amortization declined $1,000,000 primarily due to lower
programming costs. Other cash costs increased $1,800,000 or 10.4%, due to
costs related to the higher business activity levels. In 1995 programming
costs are not expected to change significantly.
Operating income increased $2,600,000 in 1993. Programming costs
decreased by $3,300,000 reflecting trends from 1992. Compensation costs
increased 5.0% primarily as a result of salary increases. Other cash
costs increased by 5.1% reflecting increased sales promotion costs and
inflationary cost increases.
The operating income increase in 1992 reflects a $2,900,000 net
improvement resulting primarily from a reduction in programming costs and
a reduction of .3% in other operating costs.
MEDIA PRODUCTS AND SERVICES
In 1994 NAPP's revenue increased 5.2% due primarily to higher flexographic
printing plate sales. The contribution from letterpress printing plates
for the year was flat as higher average prices offset increased
manufacturing costs and a 10% reduction in plate volume.
NAPP presently expects conversion to offset or flexographic printing by
its existing newspaper letterpress customer base within the next fifteen
to twenty years. The timing of conversion to offset or flexographic
printing by present newspaper customers of NAPP in future periods is
difficult to predict since printing equipment may be retired based on
considerations other than physical condition. The decision will also be
impacted by a number of factors beyond NAPP's control, including economic
conditions in NAPP's worldwide market.
NAPP may be able to offset a portion of the loss in newspaper letterpress
revenues by increasing the newspaper and commercial market for its
flexographic product, increasing product offerings in the commercial
letterpress printing market, development of additional products for use in
other printing technologies and marketing of the cost-effective
letterpress printing technology in Eastern Europe and other countries
where newspaper markets are developing. There is no assurance that NAPP
will be successful in replacing its newspaper letterpress revenues.
During 1993 NAPP restructured its European operations and appointed a
distributor for the European market. The distribution agreement provides
for payment in U.S. dollars, which substantially reduces NAPP's exposure
to fluctuation in foreign currency exchange rates. Costs of approximately
$2,000,000 related to closing NAPP's United Kingdom sales office were
offset in part by a one-time sale of letterpress printing plate
inventories to the new distributor. In 1992 NAPP was able to offset the
loss of letterpress volume due to conversions to offset printing by
increasing market share and levels of customer inventories.
INTEREST EXPENSE
Interest expense decreased by approximately $1,700,000 in 1994, $1,600,000
in 1993 and $1,800,000 in 1992. The most significant elements of the
decrease were a lower debt level which reduced interest by approximately
$1,700,000, $800,000, and $1,000,000, respectively, and in 1992, a
$600,000 reduction in interest on amended income tax returns. The
continuing phase-out of the Company's Deferred Compensation Unit Plan
reduced interest by $400,000 and $500,000 in 1993 and 1992, respectively.
The 1992 reductions were offset, in part, by interest expense related to
the acquisition of New Mexico Broadcasting Company which totaled
approximately $300,000.
INCOME TAXES
Income taxes were 40.1% of pretax income in 1994, 39.3% in 1993 and 40.7%
in 1992. The effect of the federal income tax rate increase was
approximately $200,000 in 1994 and $1,000,000 including a $500,000
increase in deferred income tax credits in 1993. The 1993 increase was
offset by the reduction in the income tax interest contingency related to
the income tax basis of acquired intangibles due to favorable court
rulings for taxpayers with similar circumstances and changes in the income
tax law. The effective tax rate for 1995 is expected to be approximately
39%.
LIQUIDITY, CAPITAL RESOURCES AND COMMITMENTS
Cash provided by operations is the Company's primary source of liquidity,
generating $77,775,000 in 1994, $58,275,000 in 1993 and $68,137,000 in
1992. The reduction in cash provided by operations in 1993 is
attributable to the $7,749,000 distribution to participants in connection
with the phase-out of a long-term deferred compensation plan. The Company
has not traditionally made use of short-term debt to finance seasonal or
other working capital requirements.
The Company has financed significant acquisitions by long-term borrowings.
The long-term borrowings may not be prepaid without a substantial
prepayment penalty.
Capital expenditures for new and improved facilities and equipment were
$17,611,000, $9,988,000 and $3,954,000 in 1994, 1993 and 1992,
respectively, and are expected to be about $17,000,000 in 1995. The
Company anticipates that funds necessary for capital expenditures and
other requirements will be available from internally generated funds.
DIVIDENDS AND COMMON STOCK PRICES
The current quarterly cash dividend is 22 cents per share, an annual rate
of $.88.
During the fiscal year ended September 30, 1994, the Company paid
$19,367,000 or 38.1% of the current year's earnings in dividends. The
Company will continue to review its dividend policy to assure that it
remains consistent with its capital demands. Covenants under long-term
obligations are not considered restrictive to payment of dividends. Lee
common stock is listed on the New York Stock Exchange. The table under
Item 5 herein shows the high and low prices of Lee common stock for each
quarter during the past three years. It also shows the closing price at
the end of each quarter and the dividends paid in the quarter.
INFLATION
The net effect of inflation on operations has not been material in the
last few years because of efforts by the Company to lessen the effect of
rising costs through a strategy of improving productivity, controlling
costs and, where competitive conditions permit, increasing selling prices.
QUARTERLY RESULTS
The Company's largest source of newspaper revenue, local run-of-press
advertising, is seasonal and tends to fluctuate with retail sales in
markets served. Historically, local run-of-press advertising is higher in
the first and third quarters. Newspaper classified advertising revenue
(which includes real estate and automobile ads) and broadcasting revenue
are lowest in January and February which are included in our second fiscal
quarter.
Quarterly results of operations are summarized under Item 8 herein.
Item 8. Financial Statements and Supplementary Data
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
September 30,
1994 1993 1992
(Dollars In Thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 18,784 $ 17,072 $ 23,271
Temporary investments 38,859 45,500 24,800
Trade receivables, less allowance for
doubtful accounts 1994 $4,100; 1993
$3,400 and 1992 $3,500 46,170 43,284 43,786
Receivables from associated companies 2,169 2,137 1,852
Inventories 13,147 11,177 12,489
Film rights and other 16,578 15,952 19,727
Total current assets $135,707 $135,122 $125,925
INVESTMENTS, associated companies $ 21,969 $ 20,305 $ 18,977
PROPERTY AND EQUIPMENT
Land and improvements $ 11,392 $ 11,319 $ 11,856
Buildings and improvements 56,675 55,177 55,855
Equipment 152,547 137,917 129,941
$220,614 $204,413 $197,652
Less accumulated depreciation 138,450 129,057 120,854
$ 82,164 $ 75,356 $ 76,798
INTANGIBLES AND OTHER ASSETS
Intangibles $225,633 $242,267 $276,470
Other 9,228 9,267 6,815
$234,861 $251,534 $283,285
$474,701 $482,317 $504,985
September 30,
1994 1993 1992
(Dollars In Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 31,891 $ 32,748 $ 20,363
Accounts payable 17,336 13,215 15,116
Compensation and other accruals 26,523 25,078 34,094
Income taxes payable 12,971 10,808 21,494
Unearned income 11,009 9,859 9,096
Total current liabilities $ 99,730 $ 91,708 $100,163
LONG-TERM DEBT, net of current maturities $ 98,641 $127,466 $153,174
DEFERRED ITEMS
Retirement and compensation $ 13,021 $ 13,747 $ 11,442
Income taxes 21,379 25,914 36,394
$ 34,400 $ 39,661 $ 47,836
STOCKHOLDERS' EQUITY
Capital stock:
Serial convertible preferred, no par
value; authorized 500,000 shares;
issued none
Common, $2 par value; authorized
60,000,000 shares; issued and
outstanding 1994 16,065,000 shares $ 32,130 $ 31,826 $ 41,842
Class B, common, $2 par value;
authorized 30,000,000 shares;
issued and outstanding 1994 6,695,000
shares 13,390 14,374 18,606
Additional paid-in capital 6,497 3,469 - -
Unearned compensation (665) (901) (760)
Retained earnings 190,578 174,714 256,519
$241,930 $223,482 $316,207
Less cost of shares reacquired for
the treasury - - - - 112,395
$241,930 $223,482 $203,812
$474,701 $482,317 $504,985
CONSOLIDATED STATEMENTS OF INCOME
Years Ended September 30,
1994 1993 1992
(In Thousands
Except Per Share Data)
OPERATING REVENUE
Newspaper:
Advertising $134,322 $126,920 $122,762
Circulation 66,302 63,285 59,882
Other 40,408 33,218 31,022
Broadcasting 90,000 81,284 79,118
Media products and services 61,357 58,651 62,846
Equity in net income of associated
companies 10,162 9,549 8,288
$402,551 $372,907 $363,918
Operating expenses:
Compensation costs $138,486 $128,734 $125,475
Newsprint and ink 21,744 21,936 19,939
Depreciation 10,916 11,131 11,246
Amortization of intangibles 12,580 13,645 13,614
Other 123,348 116,322 113,475
$307,074 $291,768 $283,749
Operating income $ 95,477 $ 81,139 $ 80,169
Financial (income) expense:
Interest expense $ 13,576 $ 15,312 $ 16,897
Financial (income) (2,984) (2,103) (1,600)
$ 10,592 $ 13,209 $ 15,297
Income before taxes on income $ 84,885 $ 67,930 $ 64,872
Income taxes 34,031 26,694 26,380
Net income $ 50,854 $ 41,236 $ 38,492
Weighted average number of shares 23,425 23,460 23,341
Earnings per share $ 2.17 $ 1.76 $ 1.65
CONSOLIDATED STATEMENTS OF CASH FLOWS
September 30,
1994 1993 1992
(In Thousands)
CASH PROVIDED BY OPERATING ACTIVITIES
Net income $ 50,854 $ 41,236 $ 38,492
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 23,496 24,776 24,860
Undistributed earnings of
associated companies (1,696) (1,563) (751)
Change in assets and liabilities, net
of effects from business
acquisitions:
(Increase) decrease in receivables (2,631) 529 (3,870)
(Increase) decrease in inventories,
film rights and other (4,013) 1,447 (910)
Increase (decrease) in accounts
payable, accrued expenses and
unearned income 5,038 (10,154) 10,830
Increase in income taxes payable 2,163 884 5,670
Other, primarily deferred items 4,564 1,120 (6,184)
Net cash provided by operating
activities $ 77,775 $ 58,275 $ 68,137
CASH (REQUIRED FOR) INVESTING ACTIVITIES
Acquisitions $ (4,132) $ (444) $ (1,500)
Additional investment in associated
companies - - (50) (1,365)
Purchase of property and equipment (17,611) (9,988) (3,954)
Purchase of temporary investments (117,732) (87,500) (25,600)
Proceeds from maturities of temporary
investments 124,373 66,800 1,900
Net cash (required for) investing
activities $(15,102) $(31,182) $(30,519)
CASH (REQUIRED FOR) FINANCING ACTIVITIES
Purchase of common stock $(16,498) $ (8,702) $ (2,958)
Cash dividends paid (19,367) (18,495) (17,771)
Principal payments on long-term
borrowings (26,667) (11,070) (13,549)
Other, primarily stock options exercised 1,571 4,975 2,707
Net cash (required for) financing
activities $(60,961) $(33,292) $(31,571)
Net increase (decrease) in cash and cash
equivalents $ 1,712 $ (6,199) $ 6,047
Cash and cash equivalents:
Beginning 17,072 23,271 17,224
Ending $ 18,784 $ 17,072 $ 23,271
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended September 30,
Amount Shares
1994 1993 1992 1994 1993 1992
(In Thousands Except Per Share Data)
COMMON STOCK
Balance, beginning $ 31,826 $ 41,842 $ 40,604 15,913 20,921 20,302
Conversion from Class B
Common Stock 988 432 1,238 494 216 619
Cancellation of treasury
stock - - (10,480) - - - - (5,240) - -
Shares issued 462 560 - - 231 280 - -
Shares reacquired (1,146) (528) - - (573) (264) - -
Balance, ending $ 32,130 $ 31,826 $ 41,842 16,065 15,913 20,921
CLASS B COMMON STOCK
Balance, beginning $ 14,374 $ 18,606 $ 19,844 7,187 9,303 9,922
Conversion to Common Stock (988) (432) (1,238) (494) (216) (619)
Cancellation of treasury
stock - - (3,712) - - - - (1,856) - -
Shares issued 14 90 - - 7 45 - -
Shares reacquired (10) (178) - - (5) (89) - -
Balance, ending $ 13,390 $ 14,374 $ 18,606 6,695 7,187 9,303
ADDITIONAL PAID-IN CAPITAL
Balance, beginning $ 3,469 $ - - $ - -
Shares issued and
reacquired, net 3,028 3,469 - -
Balance, ending $ 6,497 $ 3,469 $ - -
UNEARNED COMPENSATION
Balance, beginning $ (901) $ (760) $ - -
Restricted shares issued (474) (787) (1,067)
Restricted shares cancelled 22 118 - -
Amortization 688 528 307
Balance, ending $ (665) $ (901) $ (760)
Years Ended September 30,
Amount Shares
1994 1993 1992 1994 1993 1992
(In Thousands Except Per Share Data)
RETAINED EARNINGS
Balance, beginning $174,714 $256,519 $236,701
Net income 50,854 41,236 38,492
Cash dividends per share
1994 $.84; 1993 $.80;
1992 $.77 (19,367) (18,495) (17,771)
Treasury stock issued for
less than cost or
cancelled - - (98,203) (273)
Shares reacquired (15,623) (6,343) - -
Balance, ending $190,578 $174,714 $256,519
TREASURY STOCK
Balance, beginning $ - - $112,395 $113,484 - - 7,096 7,154
Shares reacquired - - - - 2,958 - - - - 109
Shares issued - - - - (4,047) - - - - (167)
Cancellation of treasury
stock - - (112,395) - - - - (7,096) - -
Balance, ending $ - - $ - - $112,395 - - - - 7,096
STOCKHOLDERS' EQUITY $241,930 $223,482 $203,812 22,760 23,100 23,128
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant
intercompany items have been eliminated.
TEMPORARY INVESTMENTS:
Temporary investments are carried at cost which approximates
fair value because of the short maturity of those instruments.
INVENTORIES:
Newsprint inventories are priced at the lower of cost or market
with cost being determined primarily by the last-in, first-out
method. Newsprint inventories as of September 30, 1994, 1993
and 1992 were less than replacement cost by $2,985,000,
$3,148,000 and $3,132,000, respectively.
Media product inventories are valued at the lower of standard
cost (which approximates cost on a first-in, first-out method)
or market.
FILM RIGHTS:
Cost of film rights is stated at the lower of cost or estimated
realizable value. The total cost of the rights is recorded as
an asset and a liability when the program becomes available for
broadcast. Cost of film rights is charged to operations
primarily on accelerated bases related to the usage of the
program. The current portion of film rights represents those
rights that will be amortized in the succeeding year.
INVESTMENTS IN ASSOCIATED COMPANIES:
Investments in the common stock or joint venture capital of
associated companies are reported at cost plus the Company's
share of undistributed earnings since acquisition, less
amortization of intangibles.
Long-term loans to associated companies are included in
investments in associated companies.
FOREIGN CURRENCY TRANSLATION:
The Company through its subsidiary, NAPP Systems Inc., has
approximately 3%, 5% and 8% of its 1994, 1993 and 1992 revenue
in foreign currencies, respectively. Assets and liabilities
denominated in foreign currencies are translated at the exchange
rate on the balance sheet date. Revenues, costs and expenses
are translated at average rates of exchange prevailing during
the year. Translation adjustments resulting from this process
are charged or credited to operations. Realized and unrealized
gains and losses on foreign currency transactions and forward
contracts are included in operations. For the years ended
September 30, 1994 and 1993, the Company had no foreign exchange
forward contracts outstanding. Gains and losses on foreign
exchange forward contracts were not material in 1992.
FINANCIAL INSTRUMENTS AND RISK CONCENTRATION:
Financial instruments which potentially subject the Company to
concentrations of credit risk are cash investments. The Company
places its cash investments with high-credit-quality financial
institutions and currently invests primarily in commercial paper
and corporate bonds that have maturities of 6 months or less.
The Company believes no significant concentration of credit risk
exists with respect to these cash investments.
PROPERTY AND EQUIPMENT:
Property and equipment is carried at cost. Equipment, except
for newspaper presses and broadcast towers, is depreciated
primarily by declining-balance methods. The straight-line
method is used for all other assets. The estimated useful lives
in years are as follows:
Years
Buildings and improvements 5-25
Newspaper:
Presses 15-20
Other major equipment 3-11
Broadcasting:
Towers 15-20
Other major equipment 3-10
Manufacturing equipment 5-8
The Company capitalizes interest as part of the cost of
constructing major facilities.
INTANGIBLES:
Intangibles include covenants not-to-compete, consulting
agreements, customer lists and the excess costs over fair value
of tangible net assets of businesses acquired.
The excess costs over fair value of net tangible assets include
$21,510,000 related to the newspaper and broadcast segments
incurred prior to October 31, 1970, which is not being
amortized. Excess costs related to shoppers are being amortized
over a 10 to 15 year period. The remaining newspaper and
broadcast segment costs are being amortized over a period of 40
years. Intangibles related to the media products and services
segment are being amortized over a period of 20 years.
Intangibles, representing non-compete covenants and consulting
agreements, are being amortized over a period of 3 to 10 years.
The Company reviews its intangibles annually to determine
potential impairment by comparing the carrying value of the
intangibles with the anticipated future cash flows of the
related property.
ADVERTISING COSTS:
Advertising costs, which are not material, are expensed as
incurred.
INCOME TAXES:
Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary
differences and operating loss carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred
tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment.
EARNINGS PER SHARE:
Earnings per share are calculated using the weighted average
number of common stock, Class B Common Stock and common stock
equivalent shares outstanding resulting from employee stock
option and purchase plans.
CASH AND CASH EQUIVALENTS:
For the purpose of reporting cash flows, the Company considers
all highly liquid debt instruments purchased with an original
maturity of three months or less at date of acquisition to be
cash equivalents.
RESTRICTED STOCK:
The Company amortizes as compensation cost the value of
restricted stock, issued under a long-term incentive plan, by
the straight-line method over the three year restriction period.
NOTE 2. ACQUISITIONS
The Company acquired two specialty publications in 1994, an
independent television station in 1993 and two shoppers in 1992.
The purchase price of business acquisitions was allocated as
follows:
Year Ended September 30,
1994 1993 1992
(In Thousands)
Noncash working capital
acquired $ 161 $ 27 $ - -
Property and equipment 436 505 165
Intangibles 3,535 67 2,829
Deferred items - - (155) (1,494)
Total cash purchase
price $ 4,132 $ 444 $ 1,500
NOTE 3. INVESTMENTS IN ASSOCIATED COMPANIES
The Company has an effective 50% ownership interest in two
newspaper publishing companies operating at Lincoln, Nebraska
(Journal-Star Printing Co.) and Madison, Wisconsin (Madison
Newspapers, Inc.) and a direct marketing venture, Quality
Information Systems.
Summarized financial information of the associated companies is as
follows:
Combined Associates 1994 1993 1992
(In Thousands)
Assets
Current assets $ 35,895 $ 36,420 $ 37,076
Investments and other assets 13,757 14,486 7,261
Property and equipment, net 13,835 8,608 9,007
$ 63,487 $ 59,514 $ 53,344
Liabilities and
Stockholders' Equity
Current liabilities $ 17,839 $ 17,684 $ 14,705
Long-term debt 615 615 1,119
Deferred items 2,414 1,915 1,689
Stockholders' equity 42,619 39,300 35,831
$ 63,487 $ 59,514 $ 53,344
Revenue $ 98,011 $ 92,097 $ 85,568
Income before depreciation,
interest and income taxes 33,454 31,333 27,251
Operating income 31,629 29,600 25,499
Net income 20,353 19,124 16,599
Receivables from associated companies consist of dividends.
Certain information relating to Company investments in these
associated companies is as follows:
1994 1993 1992
(In Thousands)
Share of:
Stockholders' equity $ 21,265 $ 19,601 $ 17,872
Undistributed earnings 19,508 17,844 16,543
NOTE 4. DEBT
The Company has long-term obligations, net of current maturities,
as follows:
September 30,
1994 1993 1992
(In Thousands)
Insurance companies notes
payable:
Senior notes, effective rate
of 8.27%, due January 1997 $ 20,000 $ 20,000 $ 35,000
Senior notes, effective rate
of 9.79%, due in varying
amounts from 1995 through
1999 75,000 100,000 110,000
Film contracts, noninterest
bearing, due through 1997 2,040 4,366 6,447
Other 5.0%, due through 2010 1,601 3,100 1,727
$ 98,641 $127,466 $153,174
Aggregate maturities during the next five years are $31,891,000,
$26,911,000, $20,277,000, $25,079,000, and $26,374,000. Covenants
under these agreements are not considered restrictive to normal
operations or anticipated stockholder dividends.
The fair value of the Company's long-term debt is estimated based
on the quoted market prices for the same or similar issues or on
the current rates offered to the Company for debt of the same
remaining maturities. The fair value of the long-term debt at
September 30, 1994 and 1993 is approximately $102,239,000 and
$141,451,000, respectively.
NOTE 5. RETIREMENT AND COMPENSATION PLANS
Substantially all the Company's employees are covered by a
qualified defined contribution retirement plan. The Company has
other retirement and compensation plans for executives and others.
Retirement and compensation plan costs, including interest on
deferred compensation costs, charged to operations were $10,200,000
in 1994, $7,800,000 in 1993 and $9,056,000 in 1992.
NOTE 6. COMMON STOCK AND CLASS B COMMON STOCK
Class B Common Stock has ten votes per share on all matters and
generally votes as a class with Common Stock (which has one vote
per share). The transfer of Class B Common Stock is restricted;
however, Class B Common Stock is at all times convertible into
shares of Common Stock on a share-for-share basis. Common Stock
and Class B Common Stock have identical rights with respect to cash
dividends and upon liquidation.
During 1993, the Board of Directors retired 7,096,000 shares of
treasury stock and adopted the policy of retiring all shares of the
Company's common stock as it is repurchased.
NOTE 7. STOCK OPTION AND RESTRICTED STOCK
AND STOCK PURCHASE PLANS
Stock option and restricted stock plans:
The Company has reserved 3,768,000 common shares for issuance to
key employees under incentive and nonstatutory stock option plans
and a restricted stock plan approved by stockholders. Options
have been granted at a price equal to the fair market value on
the date of grant, and are exercisable in cumulative installments
over a ten-year period. Other pertinent information related to
the stock option plans is as follows:
Number of Shares
1994 1993 1992
(In Thousands)
Under option, beginning of
year 1,278 1,341 1,195
Granted 99 186 225
Terminated and cancelled (17) (11) - -
Exercised (157) (238) (79)
Under option, end of year 1,203 1,278 1,341
Options exercisable, end of
year 928 869 809
As of September 30, 1994, 39,000 options granted in 1986 and in
prior years are for Class B Common Stock. All other options
granted in 1987 and all subsequent option grants are for common
stock.
Average Price
1994 1993 1992
Granted during the year $32.05 $31.08 $22.00
Exercised during the year 24.73 19.88 13.90
Under option, end of year 26.40 25.81 24.04
Restricted stock is subject to an agreement requiring forfeiture
by the employee in the event of termination of employment within
three years of the grant date for reasons other than normal
retirement, death or disability. As of September 30, 1994,
82,000 shares of restricted stock were outstanding.
At September 30, 1994, 2,565,000 shares were available for
granting of stock options or issuance of restricted stock.
Stock purchase plan:
The Company has 163,000 additional shares of common stock
available for issuance pursuant to a non-officer employee stock
purchase plan. April 30, 1995 is the exercise date for the
current offering. The purchase price is the lower of 85% of the
fair market value at the date of the grant or the exercise date
which is one year from the date of the grant.
In 1994, 1993 and 1992 employees purchased 60,000, 54,000 and
54,000 shares, respectively, at a per share price of $24.97 in
1994, $24.76 in 1993 and $24.76 in 1992.
NOTE 8. INCOME TAX MATTERS
Components of income tax expense consist of the following:
Year Ended September 30,
1994 1993 1992
(In Thousands)
Paid or payable on currently
taxable income:
Federal $27,846 $21,554 $22,349
State 5,535 4,311 4,467
Net increase (decrease) due
to deferred income taxes 650 829 (436)
$34,031 $26,694 $26,380
Income tax expense for the years ended September 30, 1994, 1993 and
1992 is different than the amount computed by applying the U.S.
federal income tax rate to income before income taxes. The reasons
for these differences are as follows:
% Of Pre-Tax Income
1994 1993 1992
Computed "expected" income tax
expense 35.0% 34.8% 34.0%
State income taxes, net of
federal tax benefit 4.2 4.2 4.4
Net income of associated companies
taxed at dividend rates (3.7) (4.4) (4.1)
Effect of change in tax rates on
deferred taxes - - .7 - -
Goodwill amortization 3.3 4.7 4.9
Other 1.3 (.7) 1.5
40.1% 39.3% 40.7%
Foreign taxes are not material.
Net deferred tax liabilities consist of the following components as
of September 30, 1994, 1993 and 1992:
1994 1993 1992
(In Thousands)
Deferred tax liabilities:
Property and equipment $ 3,429 $ 3,728 $ 2,642
Equity in undistributed
earnings of affiliates 1,676 1,529 1,350
Deferred gain on sale of
broadcast properties 3,308 3,308 3,231
Identifiable intangible
assets 19,686 23,120 34,032
$ 28,099 $ 31,685 $ 41,255
Deferred tax assets:
Accrued compensation $ 7,525 $ 6,670 $ 8,672
Receivable allowance 1,746 1,493 1,429
Loss carryforwards acquired 784 1,703 1,660
Other 3,084 3,411 2,812
$ 13,139 $ 13,277 $ 14,573
Less, valuation allowance - - 1,703 1,660
$ 13,139 $ 11,574 $ 12,913
$ 14,960 $ 20,111 $ 28,342
The components giving rise to the net deferred tax liabilities
described above have been included in the accompanying balance
sheets as of September 30, 1994, 1993 and 1992 as follows:
1994 1993 1992
(In Thousands)
Current assets $ 6,419 $ 5,803 $ 8,052
Noncurrent liabilities (21,379) (25,914) (36,394)
$(14,960) $(20,111) $(28,342)
The Company provided a valuation allowance of $1,660,000 during
1991 at the time New Mexico Broadcasting Company, Inc. was acquired
because of limitations imposed by the tax laws on the Company's
ability to realize the benefit of the acquired operating loss
carryforwards. The net change in the valuation allowance for
deferred tax assets was an increase of $43,000 during 1993, due to
the effect of the tax rate change on the net operating loss
carryforward. During 1994, as a result of changes in the
operations of New Mexico Broadcasting Company, Inc. management has
determined that it is more likely than not that the remaining net
operating losses will be utilized and, accordingly, reduced the
valuation allowance by $1,703,000 with a corresponding reduction in
goodwill.
Based upon recent favorable court rulings for taxpayers with
similar circumstances and changes in the income tax law and recent
Internal Revenue examination, the Company changed its estimate of
the tax basis of acquired intangibles and reduced goodwill by
$5,877,000 and $20,632,000 during the years ended September 30,
1994 and 1993 respectively.
NOTE 9. LINE OF BUSINESS INFORMATION
The Company has three principal businesses: newspaper publishing,
broadcasting and sale of media products and services. As of
September 30, 1994, operating divisions and associated companies
publish 19 daily newspapers and operate eight television stations.
Media products and services consist primarily of the operations of
NAPP Systems Inc., a manufacturer of graphic systems products.
Year Ended September 30,
1994 1993 1992
(In Thousands)
Revenues:
Newspapers:
Wholly-owned properties $241,032 $223,423 $213,666
Equity in net income of
associated companies 10,031 9,502 8,667
Broadcasting 90,000 81,284 79,118
Media products and
services:
Wholly-owned properties 61,357 58,651 62,846
Equity in net income
(loss) of associated
companies 131 47 (379)
Total revenue $402,551 $372,907 $363,918
Operating income:
Newspapers $ 75,912 $ 67,936 $ 67,811
Broadcasting 21,494 16,712 13,966
Media products and services 11,321 8,187 10,384
Corporate and other (13,250) (11,696) (11,992)
Total operating
income $ 95,477 $ 81,139 $ 80,169
Identifiable assets:
Newspapers $174,695 $168,432 $182,418
Broadcasting 139,401 147,270 165,158
Media products and services 88,225 95,641 100,542
Corporate 72,380 70,974 56,867
Total identifiable
assets $474,701 $482,317 $504,985
Depreciation:
Newspapers $ 5,645 $ 6,087 $ 6,385
Broadcasting 3,917 3,635 3,868
Media products and services 850 804 880
Corporate 504 605 113
Total depreciation $ 10,916 $ 11,131 $ 11,246
Amortization of intangibles:
Newspapers $ 4,927 $ 5,584 $ 5,553
Broadcasting 3,661 4,069 4,069
Media products and services 3,992 3,992 3,992
Total amortization
of intangibles $ 12,580 $ 13,645 $ 13,614
Capital expenditures:
Newspapers $ 12,993 $ 2,113 $ 1,833
Broadcasting 4,298 3,715 1,417
Media products and services 170 398 315
Corporate 150 3,762 389
Total capital
expenditures $ 17,611 $ 9,988 $ 3,954
NOTE 10. OTHER INFORMATION
Balance sheet information:
Inventories consist of the following:
September 30,
1994 1993 1992
(In Thousands)
Newsprint $ 2,343 $ 2,904 $ 3,087
Media products and
services:
Raw material 5,684 4,737 4,571
Finished goods 5,120 3,536 4,831
$ 13,147 $ 11,177 $ 12,489
Film rights and other consist of the following:
September 30,
1994 1993 1992
(In Thousands)
Film rights $ 6,278 $ 7,507 $ 9,007
Deferred income taxes 6,419 5,803 8,052
Other 3,881 2,642 2,668
$ 16,578 $ 15,952 $ 19,727
Intangibles consist of the following:
September 30,
1994 1993 1992
(In Thousands)
Goodwill $206,525 $209,356 $232,595
Less, accumulated
amortization 56,631 46,834 41,519
$149,894 $162,522 $191,076
Covenants and consulting
agreements $ 25,315 $ 23,955 $ 23,955
Less, accumulated
amortization 13,543 10,302 7,085
$ 11,772 $ 13,653 $ 16,870
Customer lists, broadcasting
licenses and agreements and
newspaper subscriber lists $ 79,432 $ 79,332 $ 79,332
Less, accumulated
amortization 15,465 13,240 10,808
$ 63,967 $ 66,092 $ 68,524
$225,633 $242,267 $276,470
Compensation and other accruals consist of the following:
September 30,
1994 1993 1992
(In Thousands)
Compensation $ 9,684 $ 10,777 $ 11,484
Deferred compensation,
current portion 1,567 173 7,749
Vacation pay 3,892 3,811 3,572
Retirement and stock
purchase plans 2,769 2,192 2,302
Interest 2,365 2,831 3,034
Other 6,246 5,294 5,953
$ 26,523 $ 25,078 $ 34,094
Cash flows information:
Year Ended September 30,
1994 1993 1992
(In Thousands)
Cash payments for:
Interest $ 14,042 $ 15,515 $ 17,137
Income taxes $ 31,218 $ 24,743 $ 21,146
Film rights were acquired
by issuing long-term
contracts as follows $ 3,600 $ 4,900 $ 6,900
Issuance of restricted
common stock, net $ 452 $ 669 $ 1,067
Change in tax contingency
estimates:
Reduction in goodwill $ 7,580 $ 20,632 $ - -
Reduction in:
Deferred income taxes $ 5,801 $ 9,060 $ - -
Income taxes payable 1,779 11,572 - -
$ 7,580 $ 20,632 $ - -
SUPPLEMENTARY DATA
QUARTERLY RESULTS (UNAUDITED)
4th 3rd 2nd 1st
(In Thousands Except Per Share Data)
1994 Quarter
Operating revenue $102,519 $103,022 $ 94,923 $102,087
Net income 13,606 14,367 9,564 13,317
Earnings per common and common
equivalent share $ .58 $ .61 $ .41 $ .57
1993 Quarter
Operating revenue $ 94,608 $ 97,043 $ 84,909 $ 96,347
Net income 11,383 11,849 6,501 11,503
Earnings per common and common
equivalent share $ .49 $ .51 $ .28 $ .49
1992 Quarter
Operating revenue $ 91,766 $ 93,173 $ 84,776 $ 94,203
Net income 10,764 11,761 6,342 9,625
Earnings per common and common
equivalent share $ .46 $ .50 $ .27 $ .42
Item 9. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
NOMINEES FOR ELECTION AS DIRECTORS
Principal Proposed Director
Nominee Occupation Age Term Since
Andrew E. Newman Chairman of the 50 3 years 1991
Board, Edison Brothers (1998)
Stores, Inc.
Ronald L. Vice President- 56 3 years 1986
Rickman Newspapers (1998)
Lloyd G. Chairman of the 68 3 years 1959
Schermer Board (1998)
Richard W. Consultant and Retired 71 1 year 1982
Sonnenfeldt Chief Executive Officer (1996)
of NAPP Systems Inc.
DIRECTORS CONTINUING IN OFFICE
Principal Remaining Director
Director Occupation Age Term Since
J. P. Guerin Investor 65 2 years 1985
(1997)
Charles E. Chairman of the Board, 66 2 years 1990
Rickershauser, Jr. PS Group, Inc. (1997)
Mark Vittert Private Investor 46 2 years 1986
(1997)
Rance E. President, Crain 56 1 year 1990
Crain Communications (1996)
Richard D. President and Chief 52 1 year 1986
Gottlieb Executive Officer (1996)
Phyllis Retired 64 1 year 1977
Sewell (1996)
[FN]
Member of Executive Committee
Member of Executive Compensation Committee
Member of Audit Committee
Member of Nominating Committee
Mr. Newman is Chairman of the Board of Edison Brothers Stores, Inc., a
position he has held since 1987. Edison Brothers is a diversified retail
apparel, footwear and entertainment concern with its principal corporate
offices in St. Louis, MO. He is also a director of Boatmen's Bancshares
and Sigma-Aldrich Corporation, St. Louis, MO.
For more than the past 5 years, Mr. Rickman has been Vice President-
Newspapers of the Company.
Mr. Schermer was Chairman and Chief Executive Officer of the Company
until May 11, 1991 when, upon his recommendation, the Board of Directors
elected Mr. Gottlieb as Chief Executive Officer.
From September 1, 1987 to September 28, 1990, Mr. Sonnenfeldt held the
position of Chairman of the Board and Chief Executive Officer of NAPP
Systems Inc., a subsidiary of the Company. He is a director of SKYSAT
Communications Network Corp., New York, NY; Solar Outdoor Lighting Co.,
Stuart, FL; and TRIDEX Corporation, Westport, CT. He is also a member of
the Council on Foreign Relations, the American Council on Germany, and is a
Fellow of the IEEE.
Mr. Guerin is Vice-Chairman of Daily Journal Company, Los Angeles, CA
and a director of PS Group, Inc., San Diego, CA and Chairman of Tapestry
Films and Mitchum Securities Corp., Los Angeles, CA.
Mr. Rickershauser is Chairman of the Board of PS Group, Inc., San
Diego, CA. From 1986 until October 31, 1990, he was a partner of the firm
of Fried, Frank, Harris, Shriver & Jacobson, Los Angeles, California. He
is also a director of City National Corporation and of The Vons Companies,
Inc., Los Angeles, CA.
Mr. Vittert organized the Business Journal Publications Corporation in
St. Louis 12 years ago. This corporation published business newspapers in
St. Louis, Indianapolis, Cincinnati, Philadelphia, Baltimore and
Pittsburgh. He sold his interest in this business in 1986. Mr. Vittert is
currently a private investor and a director of Munsingwear, Inc.
Mr. Crain is the President and Editorial Director of Crain
Communications, a diversified publishing company with its principal offices
in Chicago, IL.
Mr. Gottlieb was elected Chief Executive Officer of the Company on
May 11, 1991, and prior thereto served as President and Chief Operating
Officer since November 11, 1986.
Until July, 1988, Mrs. Sewell was a Senior Vice President of Federated
Department Stores. Mrs. Sewell is also a director of Pitney Bowes Inc.,
Stamford, CT, The United States Shoe Corporation, Cincinnati, OH, and SYSCO
Corporation, Houston, TX.
Executive Officers of the Company
The following table shows the names and ages of all executive officers
of the Company, the period of service for each with the Company, the period
during which each has held his present office and the office held by each.
Period Of
Service Period In
With Present
Name Age Company Office Present Office
Richard D. Gottlieb 52 31 years 3 years President and
Chief
Executive
Officer
Larry L. Bloom 47 1 1/2 Years 1 1/2 Years Vice-President
& Treasurer
Ronald L. Rickman 56 35 years 11 years Vice-President
Gary N. Schmedding 56 22 years 6 years Vice-President
Floyd Whellan 57 8 years 8 years Vice-President
Mark S. Roby 39 1 1/2 Years 1 1/2 Years Vice-President
Charles D. Waterman, III 48 5 years 5 years Secretary
George C. Wahlig 47 5 years 2 years Principal
Accounting
Officer
John VanStrydonck 41 13 years 3 years Chairman and
CEO, NAPP
Systems Inc.
Richard D. Gottlieb was elected Chief Executive Officer of the Company
in May 1991, and was elected President and Chief Operating Officer of the
Company in November 1986.
Larry L. Bloom was elected Vice-President of Finance, Treasurer and
Chief Financial Officer in June 1993 and for more than five years prior
thereto he was in financial management positions with the New York Daily
News, most recently serving as senior vice-president and chief financial
officer.
Gary N. Schmedding was elected a Vice-President of the Company in
January 1989; from February 1987 to February 1989 he was general manager of
WSAZ-TV.
Mark S. Roby was elected Vice-President of Marketing and Chief
Information Officer in June 1993. For more than five years prior thereto
Mr. Ruby held various marketing management positions with IBM Corporation.
Charles D. Waterman, III was elected Secretary of the Company in
November 1989. He is presently, and for more than the past five years has
been, a partner in the law firm of Lane & Waterman, Davenport, Iowa, general
counsel of the Company.
George C. Wahlig was elected Principal Accounting Officer of the Company
in November 1992; from May 1990 to November 1992 he was Director of Finance
and for more than two years prior to May 1990 he was a partner in the public
accounting firm of McGladrey & Pullen.
John VanStrydonck was elected President and Chief Executive Officer of
NAPP Systems Inc. in July of 1991 and Chairman and CEO in September 1994.
For more than three years prior thereto he was publisher of the Globe-
Gazette in Mason City, Iowa.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Act")
requires the Company's directors and executive officers and persons who own
more than ten percent of the Company's Common Stock or Class B Common Stock
to file initial reports of ownership and reports of changes in that
ownership with the Securities and Exchange Commission (the "SEC") and the
New York Stock Exchange. Specific due dates for these reports have been
established, and the Company is required to disclose in its proxy statement
any failure to file by these dates during the Company's 1994 fiscal year.
Based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all filing requirements applicable to its executive
officers and directors were satisfied, except that a benefit trust of which
Mr. Rickershauser is trustee reported late the acquisition of certain shares
as to which Mr. Rickershauser has beneficial ownership.
Item 11. Executive Compensation
The following tables and discussion summarize the compensation which the Company paid for services rendered in
all capacities for the fiscal year ended September 30, 1994 to the chief executive officer of the Company and to
each of the four other most highly compensated executive officers of the Company.
Summary Compensation Table
Annual Compensation Long Term Compensation
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Annual Re- Other
Name and Comp- stricted Stock Comp-
Principal ensa- Stock Options LTIP ensa-
Position Year Salary($) Bonus($) tion($) Awards($) (#) Payouts($) tion($)
Richard D. Gottlieb 1994 $421,000 $315,750 $ 0 $ 96,600 20,000 $478,827 $165,302
President and 1993 390,000 240,000 0 83,200 17,800 98,410 211,681
Chief Executive Officer 1992 378,750 386,100 0 183,329 30,000 754,816 130,765
Ronald L. Rickman 1994 289,920 176,851 0 51,750 10,000 341,750 100,994
Vice-President-Newspapers 1993 270,400 170,352 0 56,800 15,600 64,077 154,962
1992 262,600 262,288 0 97,202 15,000 627,469 88,823
Gary N. Schmedding 1994 220,240 165,180 0 51,750 10,000 242,098 107,623
Vice-President-Broadcast 1993 206,000 119,975 0 36,000 10,400 43,509 78,539
1992 200,000 197,760 0 74,394 12,000 172,975 66,107
Floyd Whellan 1994 166,200 66,480 0 17,250 3,000 170,308 51,010
Vice-President - Human 1993 160,200 52,800 0 16,000 3,400 37,972 77,005
Resources and Corporate 1992 154,517 158,598 0 58,383 9,500 327,024 51,734
Planning
Larry L. Bloom 1994 206,000 136,240 $72,087 34,500 7,500 0 31,728
Vice President - Finance 1993 73,790 65,256 0 11,200 3,200 0 0
and Chief Financial Officer
[FN]
The Executive Compensation Committee of the Company meets each
November following the conclusion of the Company's fiscal year to
determine among other things, the amount of the annual bonus to be
awarded and the long term compensation grants to be made, if any,
for the fiscal year just concluded.
The Summary Compensation Table includes the value of shares of
restricted stock and the number of stock option shares granted by
the Executive Compensation Committee under the Company's 1990 Long
Term Incentive Plan in each of the years indicated for the
corresponding fiscal year.
Mr. Bloom joined the Company in May, 1993. Mr. Bloom was paid
additional compensation in 1994 in accordance with the Company's
Relocation Policy to compensate him for certain costs and expenses
incurred in connection with his relocation to the Company's
corporate office.
The amounts shown represent shares of restricted stock in the
following amounts granted to the named individuals in 1992, 1993 and
1994, respectively: Mr. Gottlieb, 5,803, 2,600, and 2,800
shares; Mr. Rickman, 3,062, 1,775 and 1,500 shares; Mr. Schmedding,
2,352, 1,125 and 1,500 shares; Mr. Whellan, 1,839, 500 and 500
shares; and Mr. Bloom, 350 and 1,000 shares. The restricted stock
awarded in 1992, 1993 and 1994 will vest on the third anniversary of
the grant date. Holders of restricted stock are entitled to receive
all cash dividends paid in respect thereof during the restricted
period. At September 30, 1994, the number and market value of
shares of restricted stock (including those awarded in November,
1994) held by each of the named executive officers were as follows:
Mr. Gottlieb, 11,203 shares ($386,504); Mr. Rickman, 6,337
shares ($218,627); Mr. Schmedding, 4,977 shares ($171,707); Mr.
Whellan, 2,839 shares ($97,946); and Mr. Bloom, 1,350 shares
($46,575).
Includes replacement (reload) options awarded at exercise of non-
qualified options with payment made with restricted stock; the 1993
replacement options were awarded to the following executive
officers: Mr. Rickman, 3,500 shares; and Mr. Schmedding, 2,700
shares.
The amounts shown represent the aggregate of (a) cash distributions
to the named individuals under the Company's 1990 Long Term
Incentive Plan in 1992, 1993, and 1994 for the three year
performance cycles ending in those years; (b) the value at
September 30, 1994 of restricted stock awarded in November, 1991 and
vesting in November, 1994 for Mr. Gottlieb ($201,750), Mr. Rickman
($164,494), Mr. Schmedding ($126,901), and Mr. Whellan ($70,613);
and (c) payments in 1992 and 1994 to distribute accrued deferred
compensation account balances at September 30, 1992 and 1994 payable
under the phaseout of the 1962 Deferred Compensation Unit Plan
(discontinued in 1989). The 1992 and 1994 deferred compensation
distributions, respectively, to the named executive officers and
included in column (h) were as follows: Mr. Gottlieb, $727,190 and
$15,270; Mr. Rickman, $608,059 and $25,991; Mr. Schmedding, $160,848
and none; and Mr. Whellan, $315,303 and $10,100.
The amounts shown include (a) contributions by the Company on behalf
of the named individuals to the Company's Retirement Account Plan
and Supplemental Retirement Account, which as to the named executive
officers in 1994 were as follows: Mr. Gottlieb, $165,302; Mr.
Rickman, $100,994; Mr. Schmedding, $81,150; Mr. Whellan, $51,010;
and Mr. Bloom, $27,503; and (b) accrued compensation in 1994 of
$26,473 to the account of Mr. Schmedding in connection with the
phaseout of the 1962 Deferred Compensation Unit Plan.
Option Grants In Last Fiscal Year
Individual Grants
(a) (b) (c) (d) (e) (f)
% of Total
Options Grant
Granted to Exercise Date
Options Employees In Price Expiration Present
Name Granted Fiscal Year ($/Sh) Date Value($)
Richard D. Gottlieb 20,000 21.1% $ 33.25 31-Oct-04 $234,000
Ronald L. Rickman 10,000 10.6% 33.25 31-Oct-04 117,000
Gary N. Schmedding 10,000 10.6% 33.25 31-Oct-04 117,000
Floyd Whellan 3,000 3.2% 33.25 31-Oct-04 35,100
Larry L. Bloom 7,500 7.9% 33.25 31-Oct-04 87,750
[FN]
The options granted to the named individuals were determined by the
Executive Compensation Committee in November, 1994 following review
of each individual's performance in fiscal year 1994, and become
exercisable in installments of 30% of the original grant on each of
the first and second anniversaries of the grant date and 40% on the
third anniversary. All options are for Common Stock and have an
exercise price equal to the closing market price of the stock on the
grant date. The lesser of 25% or the maximum number of shares
permitted by law are designated as incentive stock options, and the
balance are non-qualified options. All options were granted under
the Company's 1990 Long Term Incentive Plan, the provisions of
which, among other things, allow an optionee exercising an option to
satisfy the exercise price and withholding tax obligations by
electing to have the Company withhold shares of stock otherwise
issuable under the option with a fair market value equal to such
obligations. The Plan also permits an optionee exercising an option
to satisfy the exercise price by delivering previously awarded
restricted stock or previously owned Common Stock. The limitations
accompanying the restricted stock remain in effect and apply to the
corresponding number of shares issued upon the stock option exercise
until they lapse according to their original terms.
The "grant date present value" is a hypothetical value determined
under the Black-Scholes Option Pricing Model. It is one of the
methods permitted by the Securities and Exchange Commission for
estimating the present value of options. The Company's stock
options are not transferrable, and the actual value of the stock
options that an executive officer may realize, if any, will depend
on the excess of the market price on the date of exercise over the
exercise price. The Black-Scholes Option Pricing Model is based on
assumptions as to certain variables such as the volatility of the
Company's stock price and prevailing interest rates, so there is no
assurance that an individual will actually realize the option values
presented in this table.
Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year End Option Values
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares Value FY End (#) FY End ($)
Acquired On Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
Richard D. Gottlieb 0 $ 0 213,340 $1,924,725
44,460 96,650
Ronald L. Rickman 0 0 127,238 1,176,800
24,470 53,925
Gary N. Schmedding 0 0 68,436 573,775
20,190 42,175
Floyd Whellan 16,381 253,906 59,819 464,025
9,180 22,525
Larry L. Bloom 0 0 960 3,600
9,740 17,775
[FN]
All options are for Common Stock or Class B Common Stock and were
granted under the Company's 1982 Incentive Stock Option Plan or the
1990 Long Term Incentive Plan.
Market value of underlying securities at exercise date minus the
exercise price.
Options granted under the Company's 1990 Long Term Incentive Plan
become exercisable in three installments over a period of three years
from the date of grant. The number of unexercisable options shown
includes those granted by the Executive Compensation Committee in
November, 1994 for the fiscal year just concluded.
Market value of underlying securities at September 30, 1994 ($34.50),
minus the exercise price.
Long Term Incentive Plans - Awards in Last Fiscal Year
The Executive Compensation Committee decided in January, 1993 to
cancel, as to executive officers of the Company, outstanding performance
units awarded for three year performance cycles ending in 1993 and 1994.
The Committee recognized that such termination would have an adverse
financial impact for the Company's executive officers, and determined in
November, 1993 and 1994 to pay each executive officer, in cash, a
discretionary amount equal to one-half of the value of performance units
earned at the end of the 1993 and 1994 cycles. Each executive officer
named in the Summary Compensation Table (except Mr. Bloom, who was not
affected by the Committee's decision) received payment in cash, the amount
of which is shown in column (h) of the Table.
The Committee further determined in November, 1992 not to make any
performance unit awards in future fiscal years under the Company's Long
Term Incentive Plan. The Committee made its decisions after careful
examination of the Plan, the award of performance units thereunder, and
the relationship between award performance and the compensation objectives
of the Committee for executive officers of the Company. The Committee
does not intend to make performance unit awards during fiscal year 1995.
Pension Plans
Under the Company's Retirement Account and Supplementary Benefit
Plans, the Company matches employee contributions up to 5% of employee
compensation and, in addition, contributes 6.2% of a participant's total
compensation plus an additional 5.7% of such compensation in excess of
$60,600. These retirement plans are defined contribution plans and were
adopted in 1980 to replace the Company's Pension Plan, a defined benefit
plan. The Company and employee contributions are invested and the total
amount standing to each employee's credit is paid following his or her
retirement. The amounts credited in fiscal 1994 under the Retirement
Account and Supplementary Benefit Plans to the accounts of the persons
listed in the Summary Compensation Table were as follows: Mr. Gottlieb,
$165,302; Mr. Rickman, $100,994; Mr. Schmedding, $107,623; Mr. Whellan,
$51,010; and Mr. Bloom, $27,503.
The Company's Pension Plan was superseded in 1980 by the Retirement
Account Plan. Annual benefits under the Pension Plan payable upon
retirement at age 65 to the individuals listed in the Summary Compensation
Table are as follows: Mr. Gottlieb, none; Mr. Rickman, $11,574; Mr.
Schmedding, $1,376; Mr. Whellan, none; and Mr. Bloom, none.
Executive Agreements
The Company is obliged under written agreements to pay to Messrs.
Gottlieb, Rickman, Schmedding and Whellan a multiple of three times the
executive officer's base salary in the event of termination of his
employment without cause. The Company determined in 1991 not to enter
into such agreements in the future with its executive officers.
PERFORMANCE PRESENTATION
The graphical presentation omitted herein compares the yearly
percentage change in the cumulative total shareholder return of the
Company, the Standard & Poor's (S & P) 500 Stock Index, and the S & P
Publishing/Newspapers Index, in each case for the five years ending
September 30, 1994. Total shareholder return is measured by dividing (a)
the sum of (i) the cumulative amount of dividends declared for the
measurement period, assuming dividend reinvestment and (ii) the difference
between the issuer's share price at the end and the beginning of the
measurement period, by (b) the share price at the beginning of the
measurement period.
The following data points were utilized in preparation of the omitted
graph.
1989 1990 1991 1992 1993 1994
Lee $100.00 $ 64.83 $ 75.08 $108.65 $109.43 $123.32
S&P Publishing/
Newspapers-
Index 100.00 66.50 83.85 99.66 101.86 102.48
S&P 500 100.00 90.76 119.20 132.20 149.39 154.89
The (S & P) 500 Stock Index includes 500 U.S. companies in the industrial,
transportation, utilities and financial sectors and is weighted by market
capitalization. The S & P Publishing/Newspapers Index, which is also
weighted by market capitalization, includes the following six publishing
companies: Gannett Co., Inc., Knight-Ridder, Inc., The New York Times
Company, The Times Mirror Company, Dow Jones & Company, Inc. and Tribune
Company.
Report of the Executive Compensation Committee of the
Board of Directors on Executive Compensation
The Committee
The Executive Compensation Committee of the Board of Directors (the
"Committee") is composed of four independent outside directors. No
executive officer of the Company is a member of the Board of Directors of
any company with which a member of the Committee is affiliated. The Board
of Directors has delegated to the Committee the authority to review,
consider and determine the compensation of the Company's executive
officers and other key executive employees and, in accordance with Rule
16b-3 of the Exchange Act, make the final determination regarding awards
of stock options, restricted stock, and other stock-based awards to such
persons.
Compensation Policies
The Committee operates on the principle that the compensation of the
Company's executive management, including its Chief Executive Officer and
the other executive officers named in the Summary Compensation Table,
should be competitive with compensation of executive management at
comparable companies but should not be at the top of any range derived
from such comparisons. The Committee also follows a policy of basing a
significant portion of the cash compensation of senior executive officers
on the operating performance of the Company, and of other members of the
executive management team on the performance of the enterprises units or
functions over which they exercise significant management responsibility.
The Committee's policies are designed to assist the Company in attracting
and retaining qualified executive management by providing competitive
levels of compensation that integrate the Company's annual and long term
performance goals, reward strong corporate performance, and recognize
individual initiative and achievements. The Committee also believes that
stock ownership by management and stock-based performance compensation
arrangements are beneficial in the linking management's and stockholders'
interests in the enhancement of stockholder value.
The Company's executive compensation program is comprised of three
elements: (1) base salary; (2) annual incentive bonus; and (3) long term
incentive compensation.
Base Salary
Salary levels for executive management are set so as to reflect the
duties and level of responsibilities inherent in the position, and to
reflect competitive conditions in the lines of business in which the
Company is engaged in the geographic areas where services are being
performed. Comparative salaries paid by other companies in the industries
and locations where the Company does business are considered in
establishing the salary for a given position. The Company participates
annually in the Towers Perrin Media Industry Compensation Survey, which is
widely used in its industry and gives relevant compensation information on
executive positions. The Company strives to place fully competent and
highly performing executives at or above the median level of compensation,
as reported annually in the Towers Survey.
The Towers Survey provides annual compensation analyses for executives
in the media industry based on revenues, industry segments including
publishing and broadcasting, and market type and size. The statistical
information, including revenues and compensation levels, provided by
Survey participants is utilized by the Towers Survey to develop
statistical equations based on revenues, industry segments and markets.
These equations, along with other data, are used by the Company to
determine the median and other levels of compensation of the executive
management of media companies with profiles comparable to that of the
Company. Base salaries for executives named in the Summary Compensation
Table are reviewed annually by the Committee taking into account the
competitive level of pay as reflected in the Towers Survey. In setting
base salaries, the Committee also considers a number of factors relating
to the particular executive, including individual performance, level of
experience, ability and knowledge of the job. Base salaries were
increased in 1994 for executive management by 5.29% on a composite basis.
The Committee believes the base salary levels are reasonable and necessary
to retain these key employees.
Annual Incentive Bonus Plan
The purpose of the annual incentive bonus plan is to motivate and
reward executive management so that they consistently achieve specific
financial targets, and are compensated for the accomplishment of certain
non-financial objectives. These targets and objectives are reviewed and
approved by the Committee annually in conjunction with its review of the
Company's strategic and operating plans. A target bonus level, stated as
a percent of year end salary, is established for each member of the
executive management team, other than executive officers, by the executive
officer exercising responsibility over an enterprise unit or function.
For executive officers other than the Chief Executive Officer, the bonus
level and achievement targets are determined by the Chief Executive
Officer and approved by the Committee. Similarly, the Committee
determines the annual bonus opportunity and performance objectives of the
Chief Executive Officer. While the annual incentive bonus awards for
executives other than the Chief Executive Officer are generally approved
upon the recommendation of the Chief Executive Officer, the Committee
retains the right to adjust the recommended bonus awards to reflect its
evaluation of the Company's overall performance.
Long Term Incentive Plan
Under the Company's Long Term Incentive Plan, the Committee is
authorized, in its discretion, to grant stock options, restricted stock
awards, and performance units payable in cash or restricted stock of the
Company, in such proportions and upon such terms and conditions as the
Committee may determine. The Committee meets in November of each year to
evaluate the performance of the Company for the preceding fiscal year and
determine the annual incentive bonus and long term incentive awards of
executive management of the Company, for the fiscal year just ended. In
November, 1994 the Committee made the following determinations with
respect to long term compensation for the Company's executive management.
Performance Unit Awards
As noted above, performance unit awards made in 1990 and 1991 for the
three year cycles ending in 1993 and 1994 were cancelled, as to executive
officers, by the Committee in January, 1993. The Committee agreed to
permit completion of the three year cycles and related performance unit
awards previously made for persons other than executive officers, but made
no performance unit awards for the three year cycles commencing in fiscal
years 1993 and 1994. The Committee has considered and will continue to
consider, in addition to objective performance criteria, certain non-
quantitative factors including the accomplishment of specific goals
established by the Board of Directors and the Committee in connection with
long term compensation to executive officers for 1994 and succeeding
years, and for other executive management employees of the Company
following the conclusion of the performance unit cycles presently
outstanding. The Summary Compensation Table includes payments to
executive officers for performance unit awards made in 1989 based upon
cumulative earnings per share and revenue growth targets established for
the three year cycle ending in 1992. The cumulative targets were only
partially achieved, and therefore, consistent with the Company's
philosophy of relating compensation to performance, performance unit
awards paid to participants in the Long Term Incentive Plan, including
executive officers, reflected less than targeted achievement. The
performance unit awards were paid equally in restricted stock and cash at
the completion of the performance cycle. As noted previously, the
Committee determined to make discretionary payments to executive officers
in lieu of performance unit awards made in 1990 and 1991 for the three
year cycles ending in 1993 and 1994 of one-half of the amount that would
have been earned.
Stock Option Grants
The number of stock options granted to each executive officer in 1994
was determined by dividing a specified dollar amount for the grant by a
hypothetical fair market value of the stock option as of the grant date,
based upon the Black-Scholes Option Pricing Model. The more responsible
the executive officer's position, the greater the dollar amount of the
grant. All stock options granted have an exercise price equal to the fair
market value of the Common Stock at time of grant. In order to assure the
retention of high level executives and to tie the compensation of those
executives to the creation of long-term value for shareholders, the
Committee provided that these stock options generally vest in specified
portions over a three year period.
Restricted Stock Awards
In November, 1994, the Committee granted to executive officers and
other key employees awards of restricted stock, which represent shares of
the Common Stock of the Company and which the recipient cannot sell or
otherwise transfer until the applicable restriction period lapses. The
number of shares of restricted stock awarded is generally determined by
dividing a specified dollar amount for the target award by the fair market
value of the Company's Common Stock on the date such awards are approved.
The number of shares then determined is reviewed by the Committee and may
be increased or decreased to reflect a number of criteria including, but
not limited to, the Company's past operating performance, the individual
executive's role in accomplishment of the Company's operating objectives,
and that individual's potential for long term growth and contribution to
the Company's strategic objectives. Restricted stock awards are also
intended to increase the ownership of executives in the Company, through
which the value of long term stockholder ownership and growth can be
enhanced.
Compensation of Chief Executive Officer
The Committee determined the 1994 base salary for the Company's Chief
Executive Officer, Richard D. Gottlieb, in a manner consistent with the
base salary guidelines applied to executive officers of the Company as
described above. The annual bonus paid to Mr. Gottlieb for 1994 was based
upon a subjective evaluation of the performance of the Company in relation
to past years and the performance of comparable media companies, and to a
lesser extent, his accomplishment of certain non-financial perforamnce
objectives. In making that evaluation, the Committee gave particular
weight to the consistently high performance of the Company in relation to
its peers in revenue growth, operating income growth, and operating cash
flow growth, which contributed in 1994 to record levels of revenue,
operating income and operating cash flow. When examining the performance
of peer group companies for the past three years, the Committee found the
Company's performance, overall and in its primary business segments of
newspaper publishing and broadcasting, to be well above the median
performance of its peer group in all categories.
The Committee made long term compensation awards of stock options and
restricted stock to Mr. Gottlieb in 1994 by applying the same criteria
described for the determination of such awards to other executive officers
of the Company. The Committee did not consider past stock options and
restricted stock grants to Mr. Gottlieb in determining the amount of his
1994 grants. The Committee did consider the consistently exceptional
performance of the Company, as more particularly described above, in the
final determination of such grants.
Executive Compensation Committee Participation
The current members of the Executive Compensation Committee are
Phyllis Sewell, Chairman, Mark Vittert, Rance E. Crain and Andrew E.
Newman.
COMPENSATION OF DIRECTORS
No Company employee receives any remuneration for acting as a
director. In fiscal 1994 Messrs. Fischer, Newman, Vittert, Crain,
Rickershauser, Guerin, Schermer and Sonnenfeldt and Mrs. Sewell were paid
a $24,400 annual retainer, $1,000 for each Board meeting attended and
$700 for each Committee meeting attended. Committee chairmen were also
paid $3,000 extra as an annual retainer for acting as such. Mr. Schermer
received an additional stipend of $60,000 for his services as Chairman of
the Board. Directors engaged to provide consultative services are
compensated at the rate of $1,500 per diem. The Company in fiscal 1994
also paid to or accrued deferred compensation for Mr. Sonnenfeldt in the
amount of $40,000 for consultative services rendered to the Company and
its subsidiary, NAPP Systems Inc.
In 1984 the Board of Directors authorized "outside" directors prior to
the beginning of any Company fiscal year to elect to defer receipt of all
or any part of compensation such director might earn during such year.
Amounts so deferred will be paid to the director upon his or her ceasing
to be a director or upon attaining any specified age between 60 and 70,
together with interest thereon at the average rate of interest earned by
the Company on its invested funds during each year. Alternatively,
directors may elect to have deferred compensation credited to a "rabbi
trust" established by the Company with an independent trustee, which
administers the investment of amounts so credited for the benefit and at
the direction of the trust beneficiaries until their accounts are
distributed under the deferred compensation plan.
In 1991 the Company adopted a plan whereby it would match, on a
dollar-for-dollar basis up to $5,000 annually, charitable contributions
made by outside directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of December 9, 1994 as
to each person known by the Company to own beneficially more than five
(5%) percent of the Common Stock or Class B Common Stock of the Company.
Common Percent Class B Percent
Beneficial Owner Stock of Class Common Stock of Class
New England 991,000 6.29% --- ---
Investment Co.
c/o Reich & Tang
Asset Management, L.P.
600 Fifth Avenue
8th Floor
New York, NY 10020
Lloyd G. Schermer 333,381 2.12% 596,293 8.94%
c/o Lee Enterprises,
Incorporated
215 N. Main Street
Davenport, IA 52801
Betty A. Schermer 257,803 1.64% 534,677 8.02%
c/o Lee Enterprises,
Incorporated
215 N. Main Street
Davenport, IA 52801
[FN]
Includes (i) 46,828 Common and 232,514 Class B Common shares owned
by a trust as to which Lloyd G. Schermer retains sole voting and
investment powers; (ii) 138,627 Common shares subject to
acquisition within 60 days by the exercise of outstanding stock
options; (iii) 4,962 Common and 15,105 Class B Common shares held
by a charitable foundation as to which Lloyd G. Schermer has
shared voting and investment power; (iv) 174,419 Class B Common
shares held by a charitable trust as to which Lloyd G. Schermer
has sole voting and shared investment power; and (v) 55,010 Common
and 55,010 Class B Common shares held by a trust and 87,954 Common
and 119,245 Class B Common shares held by a charitable trust as to
which Lloyd G. Schermer shares voting and investment powers.
Lloyd G. Schermer disclaims beneficial ownership of 147,926 Common
and 363,779 Class B Common shares listed above, and of the Common
and Class B Common shares beneficially owned by Betty A. Schermer
listed above and described in footnote (2) below.
Includes (i) 164,887 Common and 375,669 Class B Common shares
owned by trusts under which Betty A. Schermer has sole voting and
investment powers; (ii) 87,954 Common and 119,245 Class B Common
shares owned by a charitable trust as to which Betty A. Schermer
shares voting and investment powers, but disclaims all beneficial
ownership; and (iii) 4,962 Common and 15,105 Class B Common shares
held by a charitable foundation as to which Betty A. Schermer has
shared voting and investment power, but disclaims all beneficial
ownership. Betty A. Schermer also disclaims beneficial ownership
of all Common and Class B Common shares beneficially owned by
Lloyd G. Schermer listed and described in footnote (1) above.
The following table sets forth information as to the Common Stock
and Class B Common Stock of the Company beneficially owned as of
December 9, 1994 by each director, each of the named executive officers
listed in the Summary Compensation Table below, and by all directors and
executive officers as a group:
Name and
Address of Percent Class B Common Percent
Beneficial Owner Common Stock of class Stock of class
Larry L. Bloom 2,310 * --- ---
1021 Carriage Place Drive
Bettendorf, IA 52722
Rance E. Crain 1,000 * --- ---
220 E. 42nd Street
Room 930
New York, NY 10017
Harry A. --- * 100 *
Fischer, Jr.
One Westbrook Corp. Cntr.
Suite 100
Westchester, IL 60153
Richard D. 243,612 1.55% 66,818 1.00%
Gottlieb
11 Deer Hill Road
Pleasant Valley, IA 52767
J. P. Guerin --- --- 53,407 *
355 S. Grand Ave.
34th Floor
Los Angeles, CA 90024
Andrew E. Newman 1,000 * --- ---
501 N. Broadway
St. Louis, MO 63102
Charles E. 1,000 * --- ---
Rickershauser, Jr.
355 S. Grand Ave.
34th Floor
Los Angeles, CA 90071
Ronald L. Rickman 142,109 * 43,678 *
3265 Woodcrest Drive
Bettendorf, IA 52722
Lloyd G. Schermer 498,268 3.16% 996,620 14.95%
c/o Lee Enterprises,
Incorporated
400 Putnam Building
215 N. Main Street
Davenport, IA 52801
Gary N. Schmedding 80,626 * 4,532 ---
5743 Lewis Court
Bettendorf, IA 52722
Phyllis Sewell 950 * 1,450 *
7716 Pinemeadow
Cincinnati, OH 45224
Richard W. Sonnenfeldt 100 * 100 *
4 Secor Drive
Port Washington, NY 11050
Mark Vittert 1,000 * --- ---
750 S. Price Road
Ladue, MO 63124
Floyd Whellan 64,758 * --- ---
6401 Utica Ridge Road
Bettendorf, IA 52722
All present executive
officers and directors
as a group (18). 1,061,697 6.67% 1,166,907 17.50%
* Less than one (1%) percent of the class.
[FN]
The following directors and officers disclaim beneficial ownership
of the following shares, included above, not owned personally by
them or held for their benefit: Schermer, 312,813 Common Stock,
764,106 Class B Common Stock; Gottlieb, 10,502 Common Stock, 16,292
Class B Common Stock; Guerin, 1,425 Class B Common Stock; and
Schmedding, 20 Common Stock.
This table includes the following shares subject to acquisition
within 60 days by the exercise of outstanding stock options:
Schermer, 138,627 Common Stock; Gottlieb, 203,340 Common Stock,
10,000 Class B Common Stock; Rickman, 117,238 Common Stock, 10,000
Class B Common Stock; Schmedding, 68,436 Common Stock; Whellan,
59,819 Common Stock; and Bloom, 960 Common Stock.
Item 13. Certain Relationships and Related Transactions
For more than 10 years, the Company has been engaged, through its
wholly owned subsidiary, Voice Response, Inc. ("VRI"), in various research
and development activities and commercial ventures in the emerging
telephone services industry. In January, 1992, the Company limited VRI's
external business activities to licensing of certain patent rights and
servicing existing customers, because of the absence of immediate business
opportunities and the need for substantial additional investment to
develop VRI's patent rights for commercial use.
In April, 1993, the Company decided to discontinue the operations as
of September 30, 1993, and to discontinue patent licensing efforts after
that date. VRI had no significant tangible assets, but retained certain
intangible patents, patent rights and associated "know-how" (the "VRI
Technology"). VRI's fiscal 1993 revenues were insignificant, while the
venture continued to have significant costs, which included the costs of
developing voice response applications for the Company's use.
The Board of Directors' decision to cease operations was reached after
careful review of VRI's business operations and was based on the following
factors: the immediate prospects for successful consummation of a license
agreement with a significant potential licensing customer were highly
speculative; continued efforts to secure such a license would require
considerable additional expense to the Company, the recovery of which is
not assured in any such licensing arrangement; and there was no other
prospect for such a licensing arrangement known to the Company's
management which could be secured without significant further commitment
of the Company's management efforts and financial resources, which could
be more profitably directed toward the Company's continuing business
operations.
Subsequently, Lloyd G. Schermer, Chairman of the Company's Board of
Directors, expressed a desire to acquire the VRI Technology from the
Company. In July, 1993 a special committee of independent directors was
appointed by the Board of Directors to review the Company's proposed
agreement with Voice Capture, Inc., a company to be formed by Mr. Schermer
to acquire the VRI Technology, and after consultation with persons with
experience in matters pertaining to telephone technology and patent
licensing, concluded that the proposed Agreement was fair to the Company.
The Company's Board of Directors (excluding Mr. Schermer), after full
consideration of the proposed Agreement and the advice of the special
committee, determined that the proposed Agreement with Voice Capture, Inc.
was fair to the Company, and approved the transactions described therein.
On October 1, 1993, Voice Capture, Inc. and the Company entered into
the Agreement, which provided, among other things, that Voice Capture,
Inc. acquire from the Company the exclusive title to the VRI Technology,
assume certain contracts, liabilities and obligations which are not
significant in the aggregate, with respect to the VRI Technology (except
monetary obligations associated with the VRI Technology incurred before
October 1, 1993), and assume the associated patent licensing activities
previously conducted by the Company.
As consideration for the transfer of the VRI Technology to Voice
Capture, Inc., the Company will receive an annual royalty from Voice
Capture, Inc. equal to fifty (50%) percent of the gross revenues from
licensing of the VRI Technology to third parties and has retained, at no
cost, a non-exclusive world-wide license to use the VRI Technology in its
continuing business or future operations. In the event the Company does
not receive from Voice Capture, Inc. aggregate royalties of $100,000 prior
to September 30, 1996, the Company has the right to reacquire the VRI
Technology and dispose of such rights as its management determines. Mr.
Schermer has personally guaranteed the payment of all royalties and the
performance of certain obligations by Voice Capture, Inc. During fiscal
1994 Voice Capture, Inc. derived no revenues from licensing activities
and, accordingly, no royalties were due or paid to the Company.
PART IV
Page Number
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
(a) 1. Financial Statements
Independent Auditor's Report
and Consent
Financial Statements
Consolidated balance sheets as of September 30,
1994, 1993 and 1992
Consolidated statements of income years ended
September 30, 1994, 1993 and 1992
Consolidated statements of cash flows years
ended September 30, 1994, 1993 and 1992
Consolidated statements of stockholders' equity
years ended September 30, 1994, 1993 and 1992
Notes to consolidated financial statements
(a) 2. Financial statements schedule
Schedule
VIII - Valuation and qualifying accounts years
ended September 30, 1994, 1993 and 1992
All other schedules have been omitted as not
required, not applicable, not deemed material
or because the information is included in the
Notes to Financial Statements.
(a) 3. Exhibits (listed by numbers corresponding to the
Exhibit Table of Item 601 in Regulation S-K).
3(ii) By-laws
11 Computation of earnings per share years ended
September 30, 1994, 1993 and 1992
21 Subsidiaries
24 Power of Attorney
(b) No reports on Form 8-K were filed for the three months ended
September 30, 1994.
* * * * *
For the purposes of complying with the amendments to
the rules governing Form S-8 (effective July 13, 1991)
under the Securities Act of 1933, the undersigned
registrant hereby undertakes as follows, which undertaking
shall be incorporated by reference into registrant's
Registration Statements on Form S-8 Nos. 2-56652 (filed
June 17, 1976), 2-58393 (filed March 11, 1977), 2-77121
(filed April 22, 1982), 33-19725 (filed January 20, 1988),
and 33-46708 (filed March 31, 1992).
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
INDEPENDENT AUDITOR'S REPORT
AND CONSENT
To the Stockholders
Lee Enterprises, Incorporated
and Subsidiaries
Davenport, Iowa
We have audited the accompanying consolidated balance sheets of Lee
Enterprises, Incorporated and subsidiaries as of September 30, 1994, 1993
and 1992 and the related consolidated statements of income, stockholders'
equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Lee Enterprises, Incorporated and subsidiaries as of September 30, 1994,
1993 and 1992 and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles.
In our opinion, schedules included in this Annual Report on Form 10-K
for the year ended September 30, 1994, present fairly the information set
forth therein, in conformity with generally accepted accounting
principles.
We consent to the incorporation by reference in the Registration
Statements on Form S-8 No. 2-56652, No. 2-77121, No. 2-58393, No. 33-
19725, and No. 33-46708 (filed March 31, 1992) and in the related
Prospectuses of our report dated October 26, 1994 with respect to the
financial statements of Lee Enterprises, Incorporated, incorporated by
reference and the schedule included in this Annual Report on Form 10-K for
the year ended September 30, 1994 and to the reference to us under the
heading "Experts" in such Prospectuses.
/s/ McGladrey & Pullen
Davenport, Iowa
October 26, 1994
LEE ENTERPRISES, INCORPORATED
AND WHOLLY-OWNED SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
Column A Column B Column C Column D Column E
Balance At Additions Charged Deduction Balance
Beginning Charged To Other From At Close
Description Of Period To Income Accounts Reserves Of Period
Allowance for doubtful
accounts:
For the year ended
September 30, 1994 $ 3,400 $ 2,200 $ - - $ 1,500 $ 4,100
For the year ended
September 30, 1993 $ 3,500 $ 1,500 $ - - $ 1,600 $ 3,400
For the year ended
September 30, 1992 $ 3,200 $ 2,500 $ - - $ 2,200 $ 3,500
Represents accounts written off as uncollectible, net of recoveries which are
immaterial.
2
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this annual report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date December 27, 1994 LEE ENTERPRISES, INCORPORATED
/s/ Richard D. Gottlieb /s/ Larry L. Bloom
Richard D. Gottlieb, President Larry L. Bloom,
Chief Executive Officer, and Vice-President of Finance,
Director Treasurer and Chief Financial
Officer
/s/ G. C. Wahlig
G. C. Wahlig,
Principal Accounting Officer
We, the undersigned directors of Lee Enterprises, Incorporated, hereby
severally constitute Richard D. Gottlieb and Larry L. Bloom, and each of
them, our true and lawful attorneys with full power to them, and each of
them, to sign for us and in our names, in the capacities indicated below,
the Annual Report on Form 10-K of Lee Enterprises, Incorporated for the
fiscal year ended September 30, 1994 to be filed herewith and any
amendments to said Annual Report, and generally do all such things in our
name and behalf in our capacities as directors to enable Lee Enterprises,
Incorporated to comply with the provisions of the Securities Exchange Act
of 1934 as amended, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be
signed by our said attorneys, or either of them, to said Annual Report on
Form 10-K and any and all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated:
Signature Title Date
/s/ Lloyd G. Schermer Chairman of the
Lloyd G. Schermer Board of Directors November 17, 1994
/s/ J. P. Guerin
J. P. Guerin Director November 17, 1994
/s/ Phyllis Sewell
Phyllis Sewell Director November 17, 1994
/s/ Mark Vittert
Mark Vittert Director November 17, 1994
/s/ Harry A. Fischer, Jr.
Harry A. Fischer, Jr. Director November 17, 1994
/s/ Ronald L. Rickman
Ronald L. Rickman Director November 17, 1994
/s/ Richard W. Sonnenfeldt
Richard W. Sonnenfeldt Director November 17, 1994
/s/ Rance E. Crain
Rance E. Crain Director November 17, 1994
/s/ Charles E. Rickershauser, Jr.
Charles E. Rickershauser, Jr. Director November 17, 1994
/s/ Andrew E. Newman
Andrew E. Newman Director November 17, 1994