Lee Enterprises Announces Debt Reduction Initiative Two Years Ahead of Plan
Lee Enterprises, Incorporated (NYSE: LEE) reduced debt by $98.5 million in its fiscal year ended September 29, 2013, reducing the balance to $847.5 million, two years ahead of its reorganization plan.
In remarks prepared for a presentation Wednesday at the Deutsche Bank 21st Annual Leveraged Finance Conference in Scottsdale, AZ, Mary Junck, Lee chairman and chief executive officer, and Carl Schmidt, vice president, chief financial officer and treasurer, said Lee expects to continue reducing leverage over the next several years.
They also said:
* Lee's consolidated leverage has been reduced to approximately 4.9x Adjusted EBITDA^(1) for the 53 weeks ended June 30, 2013 (LTM June 2013).
* Business transformation initiatives are expected to reduce cash costs approximately $10 million in 2014. Those decreases will help to mitigate cost increases from new revenue initiatives and other sources.
* Lee continues on track to achieve published guidance of 4.5-5.5% operating expense reduction in 2013, excluding depreciation, amortization and unusual matters. Since 2007, cash costs of continuing operations have been reduced $271 million, or 34%, through LTM June 2013.
* "We are particularly proud of our track record of maintaining our cash flow, in spite of revenue losses caused by macroeconomic and business conditions. We have achieved nearly five straight years of stable EBITDA^(1) and Adjusted EBITDA," which totaled $163 million and $175 million, respectively, through LTM June 2013, with EBITDA margin improving to 23.6%.
* Lee's EBITDA results have resulted in strong unlevered free cash flow^(1), which totaled $156 million through LTM June 2013. Substantially all of that cash flow is dedicated to debt service. Details are included in the appendix to the presentation, which is available at lee.net.
* Lee was able to carry back 2012 tax losses, resulting in a tax refund of $9.5 million in August 2013. Approximately $7 million of additional carryback is available from taxes paid in 2011. "At current levels of profitability, we don't expect to pay significant taxes for at least several years, due to higher interest expense from refinancing and the tax impact of the Chapter 11 process."
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