UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 12 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 1, 2002
Commission File Number 1-6227
LEE ENTERPRISES, INCORPORATED
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(Exact name of Registrant as specified in its charter)
Delaware 42-0823980
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(State of Incorporation) (I.R.S. Employer Identification No.)
215 N. Main Street, Davenport, Iowa 52801
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(Address of Principal Executive Offices)
(563) 383-2100
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Registrant's telephone number, including area code
ITEM 2. Acquisition or Disposition of Assets
On April 1, 2002 (the "Closing Date") the Registrant completed the
acquisition of all of the outstanding capital stock of Howard Publications,
Inc., a Delaware corporation ("Howard") (the "Purchase"). Howard publishes,
directly or through its fifty (50%) percent-owned subsidiary, Sioux City
Newspapers, Inc., sixteen (16) daily newspapers and several specialty
publications.
The Registrant paid the stockholders of Howard $749,000,000 (the
"Purchase Price") in cash pursuant to the terms of an Acquisition Agreement by
and among the Registrant, Howard, Howard Energy Co., Inc. and the stockholders
of Howard named therein dated February 11, 2002 and First Amendment thereto
dated March 29, 2002 (collectively, the "Agreement"). The transaction is valued
at approximately $694,000,000 after taking into account $50,000,000 of cash on
the Howard balance sheet to be retained by the Registrant, and other
adjustments.
The Purchase Price was determined as a result of arms-length
negotiations between unrelated parties.
The Agreement provides that the Purchase Price is subject to adjustment
by an amount equal to the difference between the Closing Working Capital of
Howard as of the day preceding the Closing Date and the Working Capital on
October 31, 2001. The Purchase Price is further subject to adjustment for
certain agreed-upon cash balances to be retained by Howard at the Closing Date,
the excess, if any, of which is to be paid to the stockholders of Howard within
ten (10) days following the Closing Date. The Closing Working Capital will be
determined by the Registrant within ninety (90) days after the Closing Date and,
subject to the concurrence of the stockholders of Howard, the adjustment to the
Purchase Price reflected thereby will be paid by the appropriate party within
one hundred and twenty (120) days after the Closing Date. Any objections to the
Registrant's determination of the Closing Working Capital and resultant
adjustments to the Purchase Price will be determined by an independent
accounting firm, whose determination will be conclusive and binding.
In the Agreement, certain Howard stockholders made various
representations and warranties as to the Acquired Companies and other matters
customarily found in transactions of such nature and magnitude. The
representations and warranties of such Howard stockholders are secured for
varying amounts pursuant to an Escrow Agreement between the Registrant and the
indemnifying Howard stockholders, which will be administered by Wells Fargo Bank
Iowa, N.A., as Escrow Agent.
The description of the Purchase and the terms of the Agreement and
Escrow Agreement contained herein are qualified in their entirety by reference
to the Agreement, which is filed as an exhibit hereto.
The Registrant paid the Purchase Price and expenses related to the
transaction from $435,000,000 of available funds, including proceeds from the
sale of its broadcast properties, which was substantially completed in October
2000, $50,000,000 of cash retained by Howard pursuant to the Agreement, and
Revolving Loans under the terms of a five year, $350,000,000 Credit Agreement
dated as of March 28, 2002 among the Registrant, Bank of America, N.A. ("BofA"),
as Administrative Agent, and the other lenders party thereto. The initial
interest rate of the Revolving Loans is, at the option of the Registrant, LIBOR
plus 1.25% or a Base Rate equal to the greater of the Federal Funds Rate plus
0.5% or the BofA Prime Rate. The Credit Agreement contains covenants, including
interest coverage and leverage ratios, which are not expected to be restrictive
to normal operations or historical amounts of stockholder dividends. The
foregoing description of the terms of the Credit Agreement contained herein is
qualified in its entirety by reference to the Credit Agreement, which is filed
as an exhibit hereto.
In connection with the announcement of the completion of the Purchase,
the Registrant issued the following news release.
NEWS RELEASE
Lee Enterprises completes acquisition of 17 newspapers
DAVENPORT, Iowa (April 1, 2002) -- Lee Enterprises, Incorporated (NYSE: LEE),
today completed the purchase of 16 daily newspapers from Howard Publications,
including one that is jointly owned. Also effective today, Lee gained a half
interest in another daily newspaper through its affiliate in Madison, Wis.
The acquisitions raise Lee's daily circulation by more than 75 percent, to more
than 1.1 million daily in 45 newspapers across 18 states.
"The strong, common thread among all these incoming newspapers is that they're
just like the rest of Lee," said Mary Junck, chairman and chief executive
officer. "They're all intensely local. They all serve solid markets that aren't
too big. And they all bring well-earned reputations for innovation and growth.
In other words, they fit our strategy exactly, and that strategy is to continue
building Lee as the pre-eminent newspaper group serving midsize markets."
Junck said Lee plans to transfer its successful advertising and circulation
sales programs to the incoming newspapers, as well as intensify initiatives for
online growth and niche publications. "The rest of Lee will benefit in turn,"
she added, "as the new papers have already begun sharing their own long lists of
best practices."
Lee's purchase of the Howard stock is valued at $694 million. Lee paid $435
million in cash with the remainder in bank borrowing. The purchase, announced in
February, is expected to be accretive to earnings per share by 15 cents in the
first full fiscal year, beginning Oct. 1, 2002.
The Howard newspapers have daily circulation of 479,000. They are: North County
Times, Oceanside and Escondido, Calif; The Times, Munster, Ind.; Sioux City
Journal, Sioux City, Iowa (jointly owned with The Hagadone Corporation);
Waterloo Courier, Waterloo, Iowa; The Post-Star, Glens Falls, N.Y.; Casper
Star-Tribune, Casper, Wyo.; The Times-News, Twin Falls, Idaho; The Daily News,
Longview, Wash.; The Times and Democrat, Orangeburg, S.C.; The Journal-Standard,
Freeport, Ill.; The Sentinel, Carlisle, Pa.; The Leader, Corning, N.Y.; The
Citizen, Auburn, N.Y.; the Journal Gazette, Mattoon, Ill.; the Times-Courier,
Charleston, Ill., and The Ledger-Independent, Maysville, Ky.
In another transaction that closed today, Central Wisconsin Newspapers, Inc., a
wholly owned subsidiary of Madison Newspapers, Inc., which is 50 percent owned
by Lee, acquired the Daily Citizen, a 10,250-circulation daily in Beaver Dam,
Wis. The purchase includes two weekly newspapers and five specialty
publications. The acquisition, announced in March, extends the reach of the
Madison Newspapers cluster to nearly one million readers across 17 counties in
central Wisconsin.
Lee Enterprises is based in Davenport, Iowa. In addition to the daily
newspapers, Lee also operates nearly 200 weekly newspapers, shoppers and
specialty publications, along with associated online services. Its stock is
traded on the New York Stock Exchange under the symbol LEE. More information is
available at www.lee.net.
The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor"
for forward-looking statements. This release contains information that may be
deemed forward-looking and that is based largely on the Company's current
expectations and is subject to certain risks, trends and uncertainties that
could cause actual results to differ materially from those anticipated. Among
such risks, trends and other uncertainties are changes in advertising demand,
newsprint prices, interest rates, labor costs, legislative and regulatory
rulings and other results of operations or financial conditions, difficulties in
integration of acquired business or maintaining employee and customer
relationships and increased capital and other costs. The words "may," "will,"
"would," "could," "believes," "expects," "anticipates," "intends," "plans,"
"projects," "considers" and similar expressions generally identify
forward-looking statements. Readers are cautioned not to place undue reliance on
such forward-looking statements, which are made as of the date of this release.
The Company does not publicly undertake to update or revise its forward-looking
statements.
Contact: dan.hayes@lee.net, (563) 383-2163
ITEM 5. Other Events and Regulation FD Disclosure
Under the terms of the Registrant's 1998 Note Purchase Agreement (the
"1998 Agreement") the Registrant was required to repay the outstanding balance
of $161,800,000 on October 1, 2002 unless the Registrant reinvested the net
proceeds of the sale of its broadcast operations or obtained a waiver or
amendment of that provision of the 1998 Agreement. The Purchase satisfies the
conditions of the Registrant's 1998 Agreement with regard to reinvestment of the
net proceeds of the sale of broadcast operations. If repayment had been
required, a substantial prepayment penalty would have also been required, based
upon interest rates in effect at that time.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired
To be filed by amendment not later than 60 days after the date that
the initial report on Form 8-K must be filed.
(b) Pro Forma Financial Information
To be filed by amendment not later than 60 days after the date that
the initial report on Form 8-K must be filed.
(c) Exhibits:
2.1 Acquisition Agreement by and among Lee Enterprises, Incorporated,
Howard Publications, Inc., Howard Energy Co., Inc. and the
stockholders of Howard Publications, Inc. named therein dated
February 11, 2002 and First Amendment thereto dated March 29,
2002.
2.2 Escrow Agreement by and among Lee Enterprises, Incorporated,
the HPI Indemnifying Stockholders listed on Schedule I
attached thereto, and Wells Fargo Bank Iowa, N.A. as Escrow
Agent dated as of April 1,2002.
99 Credit Agreement among Lee Enterprises, Incorporated, Bank of
America, N.A., as Administrative Agent, and the other lenders
party thereto dated as of March 28, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEE ENTERPRISES, INCORPORATED
Date: April 1, 2002 /s/ Carl G. Schmidt
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Carl G. Schmidt
Vice President, Chief Financial Officer
and Treasurer