Lee suspends 401(k) contributions
The letter from Mary Junck:
October 31, 2008
Dear Lee Employee:
Like many other businesses and media companies, Lee has been battered by the unprecedented economic turmoil and credit crisis. Consumers are suffering and spending less, which means our advertisers are suffering and spending less. As a result, our revenue and earnings have fallen.
While we believe that the economy will improve and that Lee will emerge strong, no one can predict when the upturn will begin. Until it does, we must protect our financial health by reducing spending even more while continuing to drive revenue as aggressively as we can.
Until economic conditions improve, the company’s profit-sharing contribution to most employee 401(k) retirement accounts is being suspended beginning in December. Also, the company’s match to employee contributions is being reduced. For most employees, the reduction is half of the current levels.
We regret having to take these steps and look forward to the time when these benefits can be reinstated....
As you probably know, Lee Enterprises is the parent company of the St. Louis Post-Dispatch, having bought out the Pulitzer company in 2005 for nearly $1.5 billion. You can read the full memo at Lee Watch.
Earlier today, the Post-Dispatch reported this news:
Lee Enterprises Inc., the parent of the St. Louis Post-Dispatch, suspended its dividend and renegotiated a key credit agreement to ease borrowing terms.
Suspending the dividend will save Davenport, Iowa-based Lee $34 million a year, the company said Thursday in a statement. The savings will be used to repay bank debt, and the dividend won't be reinstated until the company achieves improvement in an important debt ratio.
Lee's stock, which was trading in the mid-$40 range at the time of the 2005 Post acquisition, closed today at $2.50 -- down 24 percent for the day.