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Delaware | 42-0823980 | ||||
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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, par value $.01 per share | LEE | The Nasdaq Global Select Market | ||||||
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| Large accelerated filer | Accelerated filer |
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Emerging growth company |
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References to “we”, “our”, “us” and the like throughout this document refer to Lee Enterprises, Incorporated (the “Company”). References to “2022”“2023”, “2021"“2022" and the like refer to the fiscal years ended the last Sunday in September.
(Thousands of Dollars) 2022 2021 ASSETS Current assets: Cash and cash equivalents Accounts receivable and contract assets, net Inventories Prepaid and other current assets Total current assets Investments: Associated companies Other Total investments Property and equipment: Land and improvements Buildings and improvements Equipment Construction in process Less accumulated depreciation Property and equipment, net Operating lease right-of-use assets Goodwill Other intangible assets, net Pension plan assets, net Medical plan assets, net Other Total assets (Thousands of Dollars and Shares, Except Per Share Data) 2022 2021 LIABILITIES AND EQUITY Current liabilities: Current portion of lease liabilities Current maturities of long-term debt Accounts payable Compensation and other accrued liabilities Unearned revenue Total current liabilities Long-term debt, net of current maturities Operating lease liabilities Pension obligations Postretirement and postemployment benefit obligations Deferred income taxes Income taxes payable Other Total liabilities Equity: Stockholders' equity: Serial convertible preferred stock, no par value; authorized 500 shares; none issued Common Stock, $0.01 par value; authorized 12,000 shares; issued and outstanding: June 26, 2022; 5,977 shares; $0.01 par value September 26, 2021; 5,889 shares; $0.01 par value Class B Common Stock, $2 par value; authorized 3,000 shares; none issued Additional paid-in capital Accumulated deficit Accumulated other comprehensive income Total stockholders' equity Non-controlling interests Total equity Total liabilities and equity The accompanying Notes are an integral part of the Consolidated Financial Statements. June 26, June 27, June 26, June 27, (Thousands of Dollars, Except Per Common Share Data) 2022 2021 2022 2021 Operating revenue: Advertising and marketing services Subscription Other Total operating revenue Operating expenses: Compensation Newsprint and ink Other operating expenses Depreciation and amortization Assets loss (gain) on sales, impairments and other, net Restructuring costs and other Total operating expenses Equity in earnings of associated companies Operating income Non-operating (expense) income: Interest expense Curtailment gain Pension withdrawal cost Other, net Total non-operating (expense) income, net Income before income taxes Income tax expense Net income Net income attributable to non-controlling interests (Loss) Income attributable to Lee Enterprises, Incorporated Other comprehensive (loss) income, net of income taxes Comprehensive (loss) income attributable to Lee Enterprises, Incorporated Earnings per common share: Basic: Diluted: CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Thousands of Dollars) Accumulated Deficit Common Stock Additional paid-in capital Accumulated Other Comprehensive Income Total September 27, 2021 Shares issued (redeemed) Income attributable to Lee Enterprises, Incorporated Stock compensation Other comprehensive loss Deferred income taxes, net December 26, 2021 Shares issued (redeemed) Loss attributable to Lee Enterprises, Incorporated Stock compensation Other comprehensive loss Deferred income taxes, net March 27, 2022 Shares issued (redeemed) Loss attributable to Lee Enterprises, Incorporated Stock compensation Other comprehensive loss Deferred income taxes, net June 26, 2022 (Thousands of Dollars) Accumulated Deficit Common Stock Additional paid-in capital Accumulated Other Comprehensive Loss Total September 28, 2020 Shares issued (redeemed) Income attributable to Lee Enterprises, Incorporated Stock compensation Other comprehensive income Deferred income taxes, net December 27, 2020 Shares issued (redeemed) Loss attributable to Lee Enterprises, Incorporated Stock compensation Other comprehensive income Deferred income taxes, net March 28, 2021 Shares issued (redeemed) Income attributable to Lee Enterprises, Incorporated Stock compensation Other comprehensive income Deferred income taxes, net June 27, 2021 June 26, June 27, (Thousands of Dollars) 2022 2021 Cash provided by operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Curtailment gain Pension withdrawal cost Stock compensation expense Assets (gain) loss on sales, impairments and other, net Deferred income taxes Pension contributions Return of (Payments to collateralize) letters of credit Other, net Changes in operating assets and liabilities: (Increase) decrease in receivables and contract assets (Increase) decrease in inventories and other Increase (decrease) in accounts payable and other accrued liabilities Decrease in pension and other postretirement and postemployment benefit obligations Change in income taxes payable Other Net cash provided by operating activities Cash provided by investing activities: Purchases of property and equipment Proceeds from sales of assets Distributions (less) greater than earnings of TNI and MNI Other, net Net cash provided by (required for) investing activities Cash required for financing activities: Payments on long-term debt Common stock transactions, net Net cash required for financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents: Beginning of period End of period 10-K. June 26, June 27, June 26, June 27, (Thousands of Dollars) 2022 2021 2022 2021 Operating revenue: Print Digital Advertising and marketing services revenue Print Digital Subscription revenue Print Digital Other revenue Total operating revenue Accounts receivable, excluding allowance for credit losses was June 26, June 27, June 26, June 27, (Thousands of Dollars) 2022 2021 2022 2021 Operating revenue Operating expenses Operating income Company's 50% share of operating income Equity in earnings of TNI June 26, June 27, June 26, June 27, (Thousands of Dollars) 2022 2021 2022 2021 Operating revenue Operating expenses, excluding restructuring costs, depreciation and amortization Restructuring costs Depreciation and amortization Operating income Net income Equity in earnings of MNI Goodwill and identified intangible assets consist of the following: June 26, September 26, (Thousands of Dollars) 2022 2021 Goodwill, beginning of period Non-amortized intangible assets: Mastheads Amortizable intangible assets: Customer and newspaper subscriber lists Less accumulated amortization Total intangibles, net We have The net periodic pension and postretirement cost (benefit) components for our plans are as follows: PENSION PLANS June 26, June 27, June 26, June 27, (Thousands of Dollars) 2022 2021 2022 2021 Service cost for benefits earned during the period Interest cost on projected benefit obligation Expected return on plan assets Amortization of net loss Amortization of prior service benefit Curtailment gain Pension benefit POSTRETIREMENT MEDICAL PLANS June 26, June 27, June 26, June 27, (Thousands of Dollars) 2022 2021 2022 2021 Service cost for benefits earned during the period Interest cost on projected benefit obligation Expected return on plan assets Amortization of net gain Amortization of prior service benefit Curtailment gain Postretirement medical benefit 2023. was 28.8%. June 26, June 27, June 26, June 27, (Thousands of Dollars and Shares, Except Per Share Data) 2022 2021 2022 2021 (Loss) income attributable to Lee Enterprises, Incorporated: Weighted average common shares Less weighted average restricted Common Stock Basic average common shares Dilutive stock options and restricted Common Stock Diluted average common shares Earnings per common share: Basic Diluted Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Our products include daily newspapers, websites and mobile applications, mobile news and advertising, video products, a digital marketing agency, digital services including web hosting and content management, niche publications and community newspapers. Our local media operations range from large daily newspapers and their associated digital products, such as the St. Louis Post-Dispatch and the Buffalo News, to non-daily newspapers with news websites and digital platforms serving smaller communities. (Thousands of Dollars, Except Per Share Data) Operating revenue: Print Digital Advertising and marketing services revenue Print Digital Subscription revenue Print Digital Other revenue Total operating revenue Operating expenses: Compensation Newsprint and ink Other operating expenses Depreciation and amortization Assets loss on sales, impairments and other, net Restructuring costs and other Operating expenses Equity in earnings of associated companies Operating income Non-operating income (expense): Interest expense Other, net Non-operating expenses, net Income before income taxes Income tax expense Net income Earnings per common share: Basic Diluted 564,000, and revenue from digital-only subscribers totaled $12.3 million, up 56% compared to the 2022 Quarter. Operating Expenses transformation, while restructuring costs In the 2022 quarter also include costs associated with the unsolicited offer in November 2021. income. June 26, June 27, Percent (Thousands of Dollars, Except Per Share Data) 2022 2021 Change Operating revenue: Print Digital Advertising and marketing services revenue Print Digital Subscription revenue Print Digital Other revenue Total operating revenue Operating expenses: Compensation Newsprint and ink Other operating expenses Depreciation and amortization Assets (gain) loss on sales, impairments and other, net Restructuring costs and other Operating expenses Equity in earnings of associated companies Operating income Non-operating income (expense): Interest expense Curtailment gain Pension withdrawal cost Other, net Non-operating expenses, net Income before income taxes Income tax expense Net income Earnings per common share: Basic Diluted NON-GAAP FINANCIAL MEASURES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES June 26, June 27, June 26, June 27, (Thousands of Dollars) 2022 2021 2022 2021 Net income Adjusted to exclude Income tax expense Non-operating expenses, net Equity in earnings of TNI and MNI Loss (gain) on sale of assets and other, net Depreciation and amortization Restructuring costs and other Stock compensation Add: Ownership share of TNI and MNI EBITDA (50%) Adjusted EBITDA LIQUIDITY AND CAPITAL RESOURCES 2022. SENSITIVITY TO CHANGES IN VALUE The Company's recently expanded Corporate Compliance function will lead management's efforts related to effective control design, documentation, and implementation, as well as remediate ineffective controls. •The overall impact the COVID-19 pandemic has on the Company's revenues and costs;•The long-term or permanent changes the COVID-19 pandemic may have on the publishing industry, which may result in permanent revenue reductions and other risks and uncertainties;•We may be required to indemnify the previous owners of the BH Media or Buffalo News for unknown legal and other matters that may arise;•Our ability to manage declining print revenue and circulation subscribers;•The impact and duration of adverse conditions in certain aspects of the economy affecting our business;•Changes in advertising and subscription demand;•Changes in technology that impact our ability to deliver digital advertising;•Potential changes in newsprint, other commodities and energy costs;•Interest rates;•Labor costs;•Significant cyber security breaches or failure of our information technology systems;•Our ability to achieve planned expense reductions and realize the expected benefit of our acquisitions;•Our ability to maintain employee and customer relationships;•Our ability to manage increased capital costs;•Our ability to maintain our listing status on NASDAQ;•Competition; and•Other risks detailed from time to time in our publicly filed documents. (Unaudited) June 26, September 26, (Unaudited) (Thousands of Dollars) December 25,
2022September 25,
2022 ASSETS Current assets: 15,661 26,112 Cash and cash equivalents 18,346 16,185 74,911 65,070 Accounts receivable and contract assets, net 75,405 69,522 8,661 6,297 Inventories 8,991 8,265 13,482 11,320 Prepaid and other current assets 18,352 15,151 112,715 108,799 Total current assets 121,094 109,123 Investments: 27,052 26,682 Associated companies 28,064 27,378 6,075 6,065 Other 5,765 5,971 33,127 32,747 Total investments 33,829 33,349 Property and equipment: 14,505 16,576 Land and improvements 14,130 14,505 93,888 106,890 Buildings and improvements 93,328 95,111 212,908 228,817 Equipment 216,065 215,731 3,998 2,813 Construction in process 2,137 1,449 325,299 355,096 325,660 326,796 249,519 271,830 Less accumulated depreciation 255,224 253,083 75,780 83,266 Property and equipment, net 70,436 73,713 58,193 65,682 Operating lease right-of-use assets 47,097 47,490 329,504 330,204 Goodwill 329,504 329,504 140,231 156,671 Other intangible assets, net 116,534 121,373 16,571 35,855 Pension plan assets, net 486 528 18,200 16,695 Medical plan assets, net 19,597 19,066 10,515 13,632 Other 9,119 9,896 794,836 843,551 Total assets 747,696 744,042 (Unaudited) (Thousands of Dollars and Shares, Except Per Share Data) December 25,
2022September 25,
2022LIABILITIES AND EQUITY Current liabilities: Current portion of lease liabilities 7,848 7,859 Accounts payable 39,383 28,608 Compensation and other accrued liabilities 39,945 44,740 Unearned revenue 48,750 49,929 Total current liabilities 135,926 131,136 Long-term debt, net of current maturities 462,554 462,554 Operating lease liabilities 44,062 46,003 Pension obligations 984 966 Postretirement and postemployment benefit obligations 9,291 9,221 Deferred income taxes 42,503 42,719 Income taxes payable 8,446 8,292 Withdrawal liabilities and other 25,512 25,914 Total liabilities 729,278 726,805 Equity: Stockholders' equity: Serial convertible preferred stock, no par value; authorized 500 shares; none issued — — Common Stock, $0.01 par value; authorized 12,000 shares; issued and outstanding: 60 60 December 25, 2022; 6,043 shares; $0.01 par value September 25, 2022; 5,979 shares; $0.01 par value Class B Common Stock, $2 par value; authorized 3,000 shares; none issued — — Additional paid-in capital 259,487 259,521 Accumulated deficit (260,130) (261,229) Accumulated other comprehensive income 16,513 16,653 Total stockholders' equity 15,930 15,005 Non-controlling interests 2,488 2,232 Total equity 18,418 17,237 Total liabilities and equity 747,696 744,042 (Unaudited) June 26, September 26, 7,811 8,612 0 6,112 34,656 20,420 43,316 45,076 56,749 61,404 142,532 141,624 462,554 476,504 49,918 57,683 928 22,444 11,404 11,008 37,295 40,295 9,543 9,174 26,047 28,121 740,221 786,853 0 0 60 59 0 0 259,221 258,063 (240,631 ) (245,744 ) 33,741 42,187 52,391 54,565 2,224 2,133 54,615 56,698 794,836 843,551 Three months ended Nine months ended Three months ended (Thousands of Dollars, Except Per Common Share Data) December 25,
2022December 26,
2021 Operating revenue: 91,001 91,122 277,388 279,326 Advertising and marketing services 89,585 98,754 89,048 88,792 263,915 269,905 Subscription 79,699 87,519 14,988 16,576 46,030 51,505 Other 15,847 16,009 195,037 196,490 587,333 600,736 Total operating revenue 185,131 202,282 Operating expenses: 78,126 82,731 246,333 250,048 Compensation 75,446 84,694 7,542 7,051 22,254 22,222 Newsprint and ink 7,432 7,644 88,004 82,117 258,665 243,749 Other operating expenses 86,774 85,982 8,818 10,836 27,445 33,794 Depreciation and amortization 7,886 9,676 1,086 242 (11,340 ) 6,938 Assets gain on sales, impairments and other, net Assets gain on sales, impairments and other, net (2,563) (12,274) 6,072 1,419 19,862 5,880 Restructuring costs and other 646 3,200 189,648 184,396 563,219 562,631 Total operating expenses 175,621 178,922 1,050 1,689 4,211 4,902 Equity in earnings of associated companies 1,668 1,754 6,439 13,783 28,325 43,007 Operating income 11,178 25,114 Non-operating (expense) income: (10,292 ) (11,010 ) (31,478 ) (34,129 ) Interest expense (10,408) (10,663) 0 0 1,027 23,830 Curtailment gain — 1,027 0 0 (2,335 ) (12,310 ) 4,205 2,330 13,525 6,240 Other, net 1,494 3,072 (6,087 ) (8,680 ) (19,261 ) (16,369 ) Total non-operating expense, net Total non-operating expense, net (8,914) (6,564) 352 5,103 9,064 26,638 Income before income taxes 2,264 18,550 156 1,366 2,363 7,106 Income tax expense 440 5,351 196 3,737 6,701 19,532 Net income 1,824 13,199 (465 ) (510 ) (1,588 ) (1,537 ) Net income attributable to non-controlling interests (725) (541) (269 ) 3,227 5,113 17,995 (1,167 ) 477 (8,446 ) 2,097 (1,436 ) 3,704 (3,333 ) 20,092 Income attributable to Lee Enterprises, Incorporated Income attributable to Lee Enterprises, Incorporated 1,099 12,658 Other comprehensive loss, net of income taxes Other comprehensive loss, net of income taxes (140) (6,112) Comprehensive income attributable to Lee Enterprises, Incorporated Comprehensive income attributable to Lee Enterprises, Incorporated 959 6,546 Earnings per common share: (0.05 ) 0.56 0.89 3.15 Basic: 0.19 2.21 (0.05 ) 0.55 0.87 3.10 Diluted: 0.19 2.17 (Thousands of Dollars) Accumulated
DeficitCommon Stock Additional
paid-in capitalAccumulated
Other
Comprehensive
IncomeTotal (245,744 ) 59 258,063 42,187 54,565 September 26, 2022 September 26, 2022 (261,229) 60 259,521 16,653 15,005 0 1 (386 ) 0 (385 ) Shares issued (redeemed) — — (383) — (383) 12,658 0 0 0 12,658 Income attributable to Lee Enterprises, Incorporated 1,099 — — — 1,099 0 0 186 — 186 Stock compensation — — 349 — 349 0 0 0 (8,174 ) (8,174 ) Other comprehensive loss — — — (200) (200) 0 0 0 2,062 2,062 Deferred income taxes, net — — — 60 60 (233,086 ) 60 257,863 36,075 60,912 0 0 (3 ) 0 (3 ) (7,276 ) 0 0 0 (7,276 ) 0 0 663 0 663 0 0 0 (1,667 ) (1,667 ) 0 0 0 500 500 (240,362 ) 60 258,523 34,908 53,129 0 0 371 0 371 (269 ) 0 0 0 (269 ) 0 0 327 0 327 0 0 0 (1,667 ) (1,667 ) 0 0 0 500 500 (240,631 ) 60 259,221 33,741 52,391 December 25, 2022 December 25, 2022 (260,130) 60 259,487 16,513 15,930 (Thousands of Dollars) Accumulated
DeficitCommon Stock Additional
paid-in capitalAccumulated
Other
Comprehensive
LossTotal (268,529 ) 58 256,957 (20,050 ) (31,564 ) September 27, 2021 September 27, 2021 (259,212) 59 258,063 42,187 41,097 0 1 (55 ) 0 (54 ) Shares issued (redeemed) — 1 (386) — (385) 15,902 0 0 0 15,902 Income attributable to Lee Enterprises, Incorporated 12,658 — — — 12,658 0 0 220 0 220 Stock compensation — — 186 — 186 0 0 0 1,347 1,347 Other comprehensive loss Other comprehensive loss — — — (8,174) (8,174) 0 0 0 (205 ) (205 ) Deferred income taxes, net — — — 2,062 2,062 (252,627 ) 59 257,122 (18,908 ) (14,354 ) 0 0 (8 ) 0 (8 ) (1,134 ) 0 0 0 (1,134 ) 0 0 214 0 214 0 0 0 682 682 0 0 0 (204 ) (204 ) (253,761 ) 59 257,328 (18,430 ) (14,804 ) 0 0 318 0 318 3,227 0 0 0 3,227 0 0 205 0 205 0 0 0 682 682 0 0 0 (205 ) (205 ) (250,534 ) 59 257,851 (17,953 ) (10,577 ) December 26, 2021 December 26, 2021 (246,554) 60 257,863 36,075 47,444 Nine months ended Three months ended (Thousands of Dollars) December 25,
2022December 26,
2021 Cash (required for) provided by operating activities: Cash (required for) provided by operating activities: 6,701 19,532 Net income 1,824 13,199 Adjustments to reconcile net income to net cash provided by operating activities: 27,445 33,794 Depreciation and amortization 7,886 9,676 (1,027 ) (23,830 ) Curtailment gain — (1,027) 2,335 12,310 Pension withdrawal cost — — 1,026 639 Stock compensation expense 349 186 (11,340 ) 6,938 Assets gain loss on sales, impairments and other, net Assets gain loss on sales, impairments and other, net (2,563) (12,274) Gain on sale of investment Gain on sale of investment (1,408) — 62 (398 ) Deferred income taxes (216) — 0 (965 ) 2,451 1,686 Return of letters of credit collateral Return of letters of credit collateral 778 — (1,492 ) (147 ) Other, net (459) 383 Changes in operating assets and liabilities: (8,004 ) (8,720 ) (2,369 ) 1,080 Increase in receivables and contract assets Increase in receivables and contract assets (6,098) (8,519) Decrease in inventories and other Decrease in inventories and other 153 1,085 1,775 2,494 Increase (decrease) in accounts payable and other accrued liabilities (1,738) 3,369 (13,910 ) (4,807 ) Decrease in pension and other postretirement and postemployment benefit obligations (192) (4,826) (2,986 ) 2,459 Change in income taxes payable 570 2,427 49 706 Other (578) (3,109) 716 42,771 Net cash (required for) provided by operating activities Net cash (required for) provided by operating activities (1,692) 570 Cash provided by investing activities: (5,738 ) (5,350 ) Purchases of property and equipment (1,187) (1,777) 14,824 3,095 Proceeds from sales of assets 4,052 14,406 (276 ) 159 Distributions less than earnings of TNI and MNI Distributions less than earnings of TNI and MNI (522) (595) (295 ) (369 ) Other, net 1,678 (80) 8,515 (2,465 ) Net cash provided by investing activities Net cash provided by investing activities 4,021 11,954 Cash required for financing activities: (20,062 ) (53,128 ) Payments on long-term debt — (20,062) 380 159 Common stock transactions, net (168) 11 (19,682 ) (52,969 ) Net cash required for financing activities (168) (20,051) (10,451 ) (12,663 ) Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents 2,161 (7,527) Cash and cash equivalents: 26,112 33,733 Beginning of period 16,185 26,112 15,661 21,070 End of period 18,346 18,585 1BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of PresentationJune 26,December 25, 2022,, and our results of operations and cash flows for the periods presented. The Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's 20212022 Annual Report on Form 10-K.20222023 ends on September 25, 2022, 24, 2023, and fiscal year 20212022 ended September 26, 2021. 25, 2022. Fiscal year 20222023 and 20212022 are 52-week52-week years with 13 weeks in each quarter. Because of seasonal and other factors, the results of operations for the three and nine months ended June 26,December 25, 2022, are not necessarily indicative of the results to be expected for the full year.TownNews”BLOX Digital" formerly "TownNews”).On March 16, 2020, the Company completed the acquisition of BH Media Group, Inc. and The Buffalo News, Inc. for a combined purchase price of $140,000,000 (collectively, the "Transactions").2REVENUE Three months Ended Nine months Ended 44,814 54,632 145,032 174,933 46,187 36,490 132,356 104,393 91,001 91,122 277,388 279,326 78,079 81,483 234,962 249,332 10,969 7,309 28,953 20,573 89,048 88,792 263,915 269,905 10,671 11,880 32,430 37,177 4,317 4,696 13,600 14,328 14,988 16,576 46,030 51,505 195,037 196,490 587,333 600,736 Three months Ended (Thousands of Dollars) December 25,
2022December 26,
2021Operating revenue: Print advertising revenue 41,836 55,970 Digital advertising revenue 47,749 42,784 Advertising and marketing services revenue 89,585 98,754 Print subscription revenue 67,370 79,628 Digital subscription revenue 12,329 7,891 Subscription revenue 79,699 87,519 Print other revenue 11,120 11,385 Digital other revenue 4,727 4,624 Other revenue 15,847 16,009 Total operating revenue 185,131 202,282 Total Digital Revenue in the prior year was reclassified to conform to the current year presentation. Total Digital Revenue is defined as digital advertising and marketing services revenue including revenue from our wholly owned digital marketing agency Amplified Digital TM("Amplified"), digital-only subscription revenue and digital services revenue.ninethree months ended June 26,December 25, 2022, that was included in the contract liability as of September 26, 2021, 25, 2022, was $52,718,000.$32.2 million.7$82,369,000$80.8 million and $71,644,000$74.8 million as ofJune 26,December 25, 2022, andSeptember 25, 2022, and September 26, 2021, respectively. Allowance for credit losses was $7,458,000$5.4 million and $6,574,000$5.2 million as ofJune 26,December 25, 2022, and September 25, 2022, and September 26, 2021, respectively.3INVESTMENTS IN ASSOCIATED COMPANIES Three months ended Nine months ended 8,229 8,389 25,805 26,548 6,492 6,077 19,365 19,506 1,737 2,312 6,440 7,042 869 1,156 3,220 3,521 869 1,156 3,220 3,521 Three months ended (Thousands of Dollars) December 25,
2022December 26,
2021Operating revenue 8,814 8,981 Operating expenses 6,285 6,465 Operating income 2,529 2,516 Company's 50% share of operating income 1,265 1,258 Equity in earnings of TNI 1,265 1,258 June 26,December 25, 2022, and June 27,December 26, 2021, and in both periods we received $676,000 and $544,000$0.9 million in distributions, respectively. In the nine months ended June 26,2022, and June 27,2021, we received $2,935,000 and $3,161,000 in distributions, respectively. Three months ended Nine months ended 11,921 11,479 35,677 34,425 9,682 8,657 28,402 29,324 122 0 122 106 167 188 507 480 1,950 2,634 6,646 4,515 362 1,066 1,982 2,762 181 533 991 1,381 Three months ended (Thousands of Dollars) December 25,
2022December 26,
2021Operating revenue 11,904 12,195 Operating expenses, excluding restructuring costs, depreciation and amortization 9,346 9,546 Restructuring costs 26 — Depreciation and amortization 137 170 Operating income 2,395 2,479 Net income 807 991 Equity in earnings of MNI 404 496 June 26,December 25, 2022 and June 27,December 26, 2021, in both periods we received $200,000 and $750,000, respectively. In the nine months ended June 26, 2022, and June 27,2021, we received dividends of $1,000,000 and $1,900,000, respectively.$0.3 million in distributions.84GOODWILL AND OTHER INTANGIBLE ASSETS 330,204 330,204 Impairment (700 ) 0 Goodwill, end of period 329,504 330,204 39,849 39,672 574,558 774,242 (474,176 ) (657,243 ) 100,382 116,999 469,735 486,875 (Thousands of Dollars) December 25,
2022September 25,
2022Goodwill, beginning of period 329,504 330,204 Impairment — (700) Goodwill, end of period 329,504 329,504 Non-amortized intangible assets: Mastheads 26,346 26,346 Amortizable intangible assets: Customer and newspaper subscriber lists 323,568 323,568 Less accumulated amortization (233,380) (228,541) 90,188 95,027 Total intangibles, net 446,038 450,877 12.712.2 years.5DEBT$462,554,000$462.6 million at a 9% annual fixed rate and maturing on March 16, 2045 (referred(referred to herein as “Credit Agreement” and “Term Loan”). OnJune 26, December 25, 2022, based on market quotations, the fair value approximates carrying value.is $480.8 million. This represents a level 2 fair value measurement.June 26,December 25, 2022, we made 0no principal debt payments. During the nine months ended June 26, 2022, we made principal debt payments of $20,062,000.For the nine months ended, payments consisted of $10,450,000 from the sale of non-core assets, $6,112,000 from September 26, 2021 excess cash flow, and $3,500,000 in voluntary prepayments. Future payments are contingent on the Company's ability to generate future excess cash flow, as defined in the Credit Agreement. As of June 26,December 25, 2022, there was no excess cash flow payment due.WarrantsWe entered into a Warrant Agreement dated March 31, 2014 (the “Warrant Agreement”). Under the Warrant Agreement, certain warrant holders received warrants to purchase, in cash, an initial aggregate of 600,000 shares of Common Stock, subject to adjustment pursuant to anti-dilution provisions and at an exercise price of $41.90 per share (the “Warrants”). The Warrants expired on March 31, 2022.The Warrant Agreement required the Warrants to be measured at fair value and included in warrants and other liabilities in our Consolidated Balance Sheets. The initial fair value of the Warrants was $16,930,000. We re-measure the fair value of the liability each reporting period using the Black-Scholes option pricing model. The change in fair value of $71,000 for the nine months ended June 26, 2022 is reported as income in other, net non-operating income (expense). The Warrants expired on March 31, 2022. As of September 26, 2021, the fair value of the warrants was $71,000.In connection with the issuance of the Warrants, we entered into a Registration Rights Agreement dated March 31,2014 (the “Registration Rights Agreement”). The Registration Rights Agreement required, among other matters, that we use our commercially reasonable efforts to maintain the effectiveness for certain specified periods of a shelf registration statement related to the shares of Common Stock to be issued upon exercise of the Warrants.6PENSION, POSTRETIREMENT AND POSTEMPLOYMENT DEFINED BENEFIT PLANSseveraltwo defined benefit pension plans that together cover certain employees, including plans established under collective bargaining agreements. As of September 26, 2021 two of seven plans had benefits under the plan frozen and no new participants are permitted. Additionally, we provide retiree medical and life insurance benefits under postretirement plans at several of our operating locations. ThroughJune 26,During the quarter ended December 26, 2021, we notified participants in four of our defined benefit plans of changes to be made to the plans. The Company froze future benefits for an additional four of the defined benefit plans. The freeze of future benefits resulted in a non-cash curtailment gain of $1,027,000 related to the four plans. In connection with the freeze the Company provided certain plan enhancements that resulted in an increase to our net pension liability and a decrease to Accumulated Other Comprehensive income of $6,507,000. Additionally, the Company merged the six frozen plans into one defined benefit plan effective in the second quarter of fiscal 2022.During the quarter ended December 27, 2020, we notified certain participants in one of our post-employment benefit plans of changes to be made to the plans, including elimination of coverage for certain participants. The changes resulted in a non-cash curtailment gain of $23,830,000 and a reduction in our benefit obligation by $23,830,000. This is recorded within Curtailment gain and Postretirement and postemployment benefit obligations. 9 Three months ended Nine months ended 287 633 1,030 1,899 2,001 1,787 5,939 5,361 (4,535 ) (4,672 ) (13,606 ) (14,016 ) (687 ) 1,004 (2,633 ) 3,013 212 0 424 (1 ) 0 0 (1,027 ) 0 (2,722 ) (1,248 ) (9,873 ) (3,744 ) Three months ended Nine months ended 27 240 81 690 85 239 255 601 (263 ) (252 ) (789 ) (756 ) (249 ) (172 ) (747 ) (516 ) (162 ) (162 ) (486 ) (485 ) 0 0 0 (23,830 ) (562 ) (107 ) (1,686 ) (24,296 ) PENSION PLANS Three months ended (Thousands of Dollars) December 25,
2022December 26,
2021Service cost for benefits earned during the period 5 456 Interest cost on projected benefit obligation 2,592 1,936 Expected return on plan assets (2,548) (4,536) Amortization of net (gain) loss 2 (1,259) Amortization of prior service benefit 213 — Curtailment gain — (1,027) Pension benefit 264 (4,430) POSTRETIREMENT MEDICAL PLANS Three months ended (Thousands of Dollars) December 25,
2022December 26,
2021Service cost for benefits earned during the period 17 27 Interest cost on projected benefit obligation 149 85 Expected return on plan assets (295) (263) Amortization of net gain (254) (249) Amortization of prior service benefit (162) (162) Postretirement medical benefit (545) (562) ninethree months ended June December 25, 2022 and December 26,2022, 2021, we had 0 requiredmade no contributions to our pension plans. In the nine months ended June 27,2021, we contributed $965,000 to our pension plans. We have no required contributions to our pension plans for 2022 and therefore do not expect to make contributions to our pension trust during the remainder of fiscal 2022.We recorded estimates of withdrawal liabilities as of the time the contracts agreeing to withdraw from those plans are ratified. As of June 26,December 25, 2022, and September 26, 2021, 25, 2022,we had $24,337,020$23.7 million and $23,471,000$25.0 million of accrued withdrawal liabilities recorded in Other Liabilities in our Consolidated Balance Sheets.liabilities. The liabilities reflect the estimated value of payments to the fund, payable over 20-years.7INCOME TAXES$156,000$0.4 million related to income before taxes of $352,000$2.3 million for the three months ended June 26,2022, and income tax expense of $2,363,000 related to income before taxes of $9,064,000 for the nine months ended June 26,December 25, 2022. We recorded an income tax expense of $1,366,000$5.4 million related to income before taxes of $5,103,000$18.6 million for the three months ended June 27,2021, and income tax expense of $7,106,000 related to income before taxes of $26,638,000 for the nine months ended June 27,December 26, 2021. The effective income tax rates for the three and nine months ended June 26,2022, were 44.3% and 26.1%, respectively. The effective income tax rate for the three and nine months ended June 27,December 25, 2022, was 19.4%. The effective income tax rate for the three months ended December 26, 2021, were 26.8% and 26.7%, respectively.2014.2015.8EARNINGS PER COMMON SHARE Three months ended Nine months ended (269 ) 3,227 5,113 17,995 5,965 5,881 5,935 5,867 (170 ) (156 ) (168 ) (155 ) 5,795 5,725 5,767 5,712 0 123 93 102 5,795 5,848 5,860 5,814 (0.05 ) 0.56 0.89 3.15 (0.05 ) 0.55 0.87 3.10 Three months ended (Thousands of Dollars and Shares, Except Per Share Data) December 25,
2022December 26,
2021Income attributable to Lee Enterprises, Incorporated: 1,099 12,658 Weighted average common shares 5,996 5,885 Less weighted average restricted Common Stock (171) (159) Basic average common shares 5,825 5,726 Dilutive stock options and restricted Common Stock 71 118 Diluted average common shares 5,896 5,844 Earnings per common share: Basic 0.19 2.21 Diluted 0.19 2.17 JuneDecember 25, 2022 and December 26, 2022 no2021, 74,304 and 600,000 shares, respectively, were considered in the computation of diluted earnings per common share because the Company recorded net losses. For the nine months endedJune 26,2022, 74,804 shares were not considered in the computation of diluted earnings per common share because their inclusion would result in an anti-dilutive effect on per share amounts. For the three and nine months ended June 27, 2021, 600,000 anti-dilutive shares were excluded.Rights AgreementOn November 24, 2021, our Board of Directors adopted a stockholder rights plan (the “Rights Agreement”). Pursuant to the Rights Agreement, on November 24, 2021, our Board of Directors declared a dividend of 1 preferred share purchase right (a “Right”), payable on December 6, 2021, for each share of our Common Stock outstanding to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company one-thousandth of a share of Series B Participating Convertible Preferred Stock, without par value (the “Preferred Shares”), of the Company at a price of $120.00 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment.The Rights will initially trade with our Common Stock and will generally become exercisable only if any person or group, other than certain exempt persons, acquires beneficial ownership of 10% (or 20% in the case of certain passive investors) or more of our Common Stock outstanding. In the event the Rights become exercisable, each holder of a Right, other than the triggering person(s), will be entitled to purchase additional shares of our Common Stock at a 50% discount or the Company may exchange each Right held by such holders for one share of our Common Stock. The Rights Agreement will continue in effect until November 23, 2022, or unless earlier redeemed or terminated by the Company, as provided in the Rights Agreement. The Rights have no voting or dividend privileges, and, unless and until they become exercisable, have 0 dilutive effect on the earnings of the Company.The Rights Agreement applies equally to all current and future stockholders and is not intended to deter offers or preclude our Board of Directors from considering acquisition proposals that are fair and otherwise in the best interest of our stockholders. However, the overall effect of the Rights Agreement may render it more difficult or discourage a merger, tender offer, or other business combination involving us that is not supported by our Board of Directors.9COMMITMENTS AND CONTINGENT LIABILITIESand nine months ended June 26,December 25, 2022. This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes thereto, included herein, and our 20212022 Annual Report on Form 10-K.•Our web and mobile sites are the number one digital source of local news in most of our markets, reaching almost 43 million monthly unique visitors in 2022 with 349 million page views and 80 million visits.•We have approximately one million paid subscribers to our print and digital products. Digital-only subscribers totaled approximately 501,000, a 48.6% increase over the prior year.TownNewsBLOX Digital which provides state-of-the-art web hosting, content management services and video management services to nearly 2,200 other media organizations including broadcast.•Grow digital audiences by transforming the way we present local news and information•Expand our digital subscription base and revenue through audience growth and continued conversion of our massive digital audiences.•Diversify and expand offerings for advertisers by launching a portfolio of video advertising initiatives and e-commerce sales strategies through Amplified Digital that will enable advertisers to leverage our vast data-rich digital audiences and reach consumers in new ways.THREE MONTHS ENDEDJune 26, 2022 June 26, June 27, Percent 2022 2021 Change 44,814 54,632 (18.0 ) 46,187 36,490 26.6 91,001 91,122 (0.1 ) 78,079 81,483 (4.2 ) 10,969 7,309 50.1 89,048 88,792 0.3 10,671 11,880 (10.2 ) 4,317 4,696 (8.1 ) 14,988 16,576 (9.6 ) 195,037 196,490 (0.7 ) 78,126 82,731 (5.6 ) 7,542 7,051 7.0 88,004 82,117 7.2 8,818 10,836 (18.6 ) 1,086 242 NM 6,072 1,419 NM 189,648 184,396 2.8 1,050 1,689 (37.8 ) 6,439 13,783 (53.3 ) (10,292 ) (11,010 ) (6.5 ) 4,205 2,330 80.5 (6,087 ) (8,680 ) (29.9 ) 352 5,103 (93.1 ) 156 1,366 (88.6 ) 196 3,737 (94.8 ) (0.05 ) 0.56 NM (0.05 ) 0.55 NM (Thousands of Dollars, Except Per Common Share Data) 2022 2021 Percent Change Operating revenue: Print advertising revenue 41,836 55,970 (25.3) % Digital advertising revenue 47,749 42,784 11.6 % Advertising and marketing services revenue 89,585 98,754 (9.3) % Print subscription revenue 67,370 79,628 (15.4) % Digital subscription revenue 12,329 7,891 56.2 % Subscription revenue 79,699 87,519 (8.9) % Print other revenue 11,120 11,385 (2.3) % Digital other revenue 4,727 4,624 2.2 % Other revenue 15,847 16,009 (1.0) % Total operating revenue 185,131 202,282 (8.5) % Operating expenses: Compensation 75,446 84,694 (10.9) % Newsprint and ink 7,432 7,644 (2.8) % Other operating expenses 86,774 85,982 0.9 % Depreciation and amortization 7,886 9,676 (18.5) % Assets gain on sales, impairments and other (2,563) (12,274) (79.1) % Restructuring costs and other 646 3,200 (79.8) % Total operating expenses 175,621 178,922 (1.8) % Equity in earnings of associated companies 1,668 1,754 (4.9) % Operating income 11,178 25,114 (55.5) % Non-operating income (expense): Interest expense (10,408) (10,663) (2.4) % Curtailment gain — 1,027 (100.0) % Pension and OPEB related benefit (cost) and other, net 1,494 3,072 (51.4) % Total non-operating expense, net (8,914) (6,564) 35.8 % Income before income taxes 2,264 18,550 (87.8) % Income tax expense 440 5,351 (91.8) % Net Income 1,824 13,199 (86.2) % Earnings (loss) per common share: Basic 0.19 2.21 (91.4) % Diluted 0.19 2.17 (91.2) % JuneDecember 26, 2022. Similarly, references to the “2021 Quarter” refer to the three months ended June 27, 2021.$195,037,000$185.1 million in the 20222023 Quarter, down $1,453,000,$17.2 million, or 0.7%8.5%, compared to the prior year.$91,001,000$89.6 million in the 20222023 Quarter, down 0.1%9.3% compared to the 20212022 Quarter. Print advertising revenues were $44,814,000$41.8 million in the 20222023 Quarter, down 18%25.3% compared to the 20212022 Quarter due to continued secular declines in demand for print advertising. Digital advertising and marketing services totaled $46,187,000$47.7 million in the 20222023 Quarter, up 26.6%11.6% compared to the 20212022 Quarter. These gains resulted from an increase in Amplified Digital revenue and an increase in digital advertising on our owned and operated sites.revenue. Digital advertising and marketing services represented 50.8%53.3% of the 20222023 Quarter total advertising and marketing services revenue, compared to 40.1%43.3% in the same period last year.$89,048,000$79.7 million in the 20222023 Quarter, up 0.3%down 8.9% compared to the 20212022 Quarter. SelectiveDecline in full access volume, consistent with historical and industry trends were partially offset by selective increases on our full access subscriptions, growth in digital-only subscribers and price increases on digital subscriptions, were partially offset by a decline in full access volume, consistent with historical and industry trends.subscriptions. Digital-only subscribers grew 48.6%25.3% since the 20212022 Quarter and now total 501,000.TownNews,BLOX Digital, decreased $1,588,000,$0.2 million, or 9.6%1.0%, in the 20222023 Quarter compared to the 20212022 Quarter. Digital services revenue totaled $4,317,000$4.7 million in the 20222023 Quarter, an 8.1% decreasea 2.2% increase compared to the 20212022 Quarter. Commercial printing revenue totaled $5,341,000$5.5 million in the 20222023 Quarter, a 15.7%4.6% decrease compared to the 20212022 Quarter, primarily driven by reduction in print volumes from our partners.$61,473,000$64.8 million in the 20222023 Quarter, an increase of 26.8%17.2% over the 20212022 Quarter, and represented 31.5%35.0% of our total operating revenue in the 20222023 Quarter.$639,0000.1 in the 20222023 Quarter.$189,648,000$175.6 million in the 20222023 Quarter, a 2.8% increase1.8% decrease compared to the 20212022 Quarter. Cash Costs, a non-GAAP financial measure used to summarize certain operating expense (see reconciliation of Non-GAAP financial measures below), were up 1.0%down 4.9% in the 20222023 Quarter.$4,605,000$9.2 million in the 20222023 Quarter, or 5.6%10.9%, compared to the 20212022 Quarter from reductions in full time employees ("FTEs") due to continued business transformation efforts, partially offset by investments in digital talent.increased $491,000decreased $0.2 in the 20222023 Quarter, or 7.0%2.8%, compared to the 20212022 Quarter. The increasedecrease is attributable to higher newsprint prices offset by declines in newsprint volumes.volumes offset by higher newsprint prices. See Item 3, “Commodities”, included herein, for further discussion and analysis of the impact of newsprint on our business.$5,887,000$0.8 in the 20222023 Quarter, or 7.2%0.9%, compared to the 20212022 Quarter. Other operating expenses include all operating costs not considered to be compensation, newsprint, depreciation and amortization, or restructuring costs and assets loss on sales, impairments, and other, net. The largest components are costs associated with printing and distribution of our printed products, digital cost of goods sold and facility expenses. The increase is attributable to increases in investments to fund our digital growth strategy partially offset by lower delivery and other print-related costs due to lower volumes of our print editions.$6,072,000$0.6 million and $1,419,000$3.2 million in the 20222023 Quarter and 20212022 Quarter, respectively. Restructuring costs and other include severance costs, litigation expenses, restructuring expenses, and advisor expenses in the 2022 quarter associated with the unsolicited offer in November 2021.expenses. Restructuring costs in the 20212023 Quarter are predominately severance related to our ongoing business transformation.$2,018,000,$1.8 million, or 18.6%18.5%, in the 20222023 Quarter. The decrease in both is attributable to assets becoming fully depreciated or amortized.lossgain on sales, impairments and other, was a net lossgain of $1,086,000$2.6 million in the 20222023 Quarter compared to a net lossgain of $242,000$12.3 million in the 20212022 Quarter. The gainsAssets gain on sales, impairments and losses and impairmentsother in the 20222023 Quarter and in the 20212022 Quarter were the result of the disposition of non-core assets, including real estate.$6,439,000$11.2 million in the 20222023 Quarter compared to operating income of $13,783,000$25.1 million in the 20212022 Quarter.$718,000,$0.3 million, or 6.5%2.4%, to $10,292,000$10.4 million in the 20222023 Quarter, compared to the same period last year. The decrease was due to a lower outstanding balance on our Term Loan. Our weighted average cost of debt was 9.0% at the end of the 20222023 Quarter and 20212022 Quarter.$3,598,000$0.3 million periodic pension and other postretirement benefits in the 20222023 Quarter compared to $2,228,000$4.4 million in the 20212022 Quarter. We recorded non-operating income of $0 in the 20222023 Quarter and non-operating expense of $237,000$1.9 million in the 20212022 Quarter, related to the changes in the value of the Warrants.$156,000,$0.4 million, or 44.3%19.4% of pretax income in the 20222023 Quarter. In the 20212022 Quarter, we recognized an income tax expense of $1,366,000,$5.4 million, or 26.8%28.8% of pretax loss.$196,000$1.8 million and diluted lossesearnings per share were $0.05$0.19 for the 20222023 Quarter compared to net income of $3,737,000$13.2 million and diluted earnings per share of $0.55$2.17 for the 20212022 Quarter. The change reflects the various items discussed above.14NINE MONTHS ENDEDJune 26, 2022Operating results, as reported in the Consolidated Financial Statements, are summarized below. 145,032 174,933 (17.1 ) 132,356 104,393 26.8 277,388 279,326 (0.7 ) 234,962 249,332 (5.8 ) 28,953 20,573 40.7 263,915 269,905 (2.2 ) 32,430 37,177 (12.8 ) 13,600 14,328 (5.1 ) 46,030 51,505 (10.6 ) 587,333 600,736 (2.2 ) 246,333 250,048 (1.5 ) 22,254 22,222 0.1 258,665 243,749 6.1 27,445 33,794 (18.8 ) (11,340 ) 6,938 NM 19,862 5,880 NM 563,219 562,631 0.1 4,211 4,902 (14.1 ) 28,325 43,007 (34.1 ) (31,478 ) (34,129 ) (7.8 ) 1,027 23,830 (95.7 ) (2,335 ) (12,310 ) (81.0 ) 13,525 6,240 NM (19,261 ) (16,369 ) 17.6 9,064 26,638 (66.0 ) 2,363 7,106 (66.7 ) 6,701 19,532 (65.7 ) 0.89 3.15 (71.8 ) 0.87 3.10 (71.8 ) References to the “2022 Period” refer to the nine months ended June 26, 2022. Similarly, references to the “2021 Period” refer to the nine months ended June 27, 2021. Operating RevenueTotal operating revenue was $587,333,000 in the 2022 Period, down $13,403,000, or 2.2%, compared to the 2021 Period.Advertising and marketing services revenue totaled $277,388,000 in the 2022 Period, down 0.7% compared to the prior year. Print advertising revenues were $145,032,000 in the 2022 Period, down 17.1% compared to the prior year due to continued secular declines in demand for print advertising. Digital advertising and marketing services totaled $132,356,000 in the 2022 Period, up 26.8% compared to the prior year. These gains resulted from an 83.1% increase in Amplified Digital revenue and an increase in advertising on our owned and operated sites. Digital advertising and marketing services represented 47.7% of the 2022 Period total advertising and marketing services revenue, compared to 37.4% in the same period last year.Subscription revenue totaled $263,915,000 in the 2022 Period, down 2.2% compared to the 2021 Period. The decline in full access volume, consistent with historical and industry trends were partially offset by growth in digital only subscribers and selective price increases on our full access subscriptions. Digital only subscribers grew 48.6% since the 2021 Period and now total 501,000.Other revenue, which primarily consists of commercial printing revenue and digital services from TownNews, decreased $5,475,000, or 10.6%, in the 2022 Period compared to the 2021 Period. Digital services revenue totaled $13,600,000 in the 2022 Period, a 5.3% decrease compared to the 2021 Period. Commercial printing revenue totaled $16,195,000 in the 2022 Period, a 9.3% decrease compared to the 2021 Period primarily driven by reduction in print volumes from our partners.Total digital revenue including digital advertising revenue, digital subscription revenue and digital services revenue totaled $174,909,000 in the 2022 Period, an increase of 25.5% over the 2021 Period, and represented 29.8% of our total operating revenue in the 2022 Period.Equity in earnings of TNI and MNI decreased $691,000 in the 2022 Period.Operating ExpensesTotal operating expenses were $563,219,000 in the 2022 Period, a 0.1% increase compared to the 2021 Period. Cash Costs, a Non-GAAP financial measure (see reconciliation of Non-GAAP financial measures below), were $527,252,000, a 2.2% increase compared to the 2021 Period.Compensation expense decreased $3,715,000 in the 2022 Period, or 1.5%, compared to the 2021 Period due to reductions in FTE's due to continued business transformation efforts partially offset by investments in digital talent and increasing average compensation levels due to investments in digital talent.Newsprint and ink costs increased $32,000 in the 2022 Period, or 0.1%, compared to the 2021 Period. The increase is attributable to higher newsprint prices offset by declines in newsprint volumes. See Item 3, “Commodities”, included herein, for further discussion and analysis of the impact of newsprint on our business.Other operating expenses increased $14,916,000 in the 2022 Period, or 6.1%, compared to the 2021 Period. Other operating expenses include all operating costs not considered to be compensation, newsprint, depreciation and amortization, or restructuring costs and asset loss on sales, impairments and other, net. The largest components are costs associated with printing and distribution of our printed products, digital cost of goods sold and facility expenses. The increase is attributable to increases in digital costs of goods sold from Amplified Digital growth, higher input costs due to inflation and investments to fund our digital growth strategy partially offset by lower delivery and other print-related costs due to lower volumes of our print editions.Restructuring costs and other totaled $19,862,000 and $5,880,000 in the 2022 Period and 2021 Period, respectively. Restructuring costs and other include severance costs, litigation costs, restructuring expenses, and advisor expenses in the 2022 Period associated with an unsolicited takeover offer received in November 2021. Restructuring costs in the 2021 Period are predominately severance related to our ongoing business transformation.Depreciation and amortization expense decreased $6,349,000, or 18.8%, in the 2022 Period. The decrease in both is attributable to assets becoming fully depreciated or amortized.Assets (gain) loss on sales, impairments and other, was a net gain of $11,340,000 in the 2022 Period compared to a net loss of $6,938,000 in the 2021 Period. The gains and losses in the 2022 Period and 2021 Period were the result of the disposition of non-core assets, including real estate.The factors noted above resulted in operating income of $28,325,000 in the 2022 Period compared to $43,007,000 in the 2021 Period.Non-operating Income and ExpenseInterest expense decreased $2,651,000, or 7.8%, to $31,478,000 in the 2022 Period, compared to the same period last year. The decrease was due to a lower outstanding balance on our Term Loan. Our weighted average cost of debt was 9.0% at the end of the 2022 Period and 2021 Period.Other non-operating income and expense consists of benefits associated with our pension and other postretirement plans and the fair value adjustment of our Warrants. We recorded $11,643,000 periodic pension and other postretirement benefits in the 2022 Period compared to $6,799,000 in the 2021 Period. We recorded non-operating income of $71,000 in the 2022 Period and non-operating expense of $954,000 in the 2021 Period, related to changes in the value of the Warrants.We recognized a non-cash curtailment gain of $1,027,000 in the 2022 Period as a result of freezing certain pension plans. We recognized a non-cash curtailment gain of $23,830,000 and a reduction in our benefit obligation in the 2021 Period by eliminating post-retirement medical coverage for certain employees.We recognized pension withdrawal costs in the 2022 and 2021 Period of $2,335,000 and $12,310,000, respectively in connection with the withdrawal from a pension plan that covered certain employees. These withdrawal liabilities will be paid in equal quarterly installments over the next 20 years.Income Tax ExpenseWe recorded an income tax expense of $2,363,000, or 26.1% of pretax income, in the 2022 Period. In the 2021 Period, we recognized an income tax expense of $7,106,000 or 26.7% of pretax income.Net Income and Earnings Per ShareNet income was $6,701,000 and diluted earnings per share were $0.87 for the 2022 Period, compared to net income of $19,532,000 and diluted earnings per share of $3.10 for the 2021 Period. The change reflects the various items discussed above. Three months ended Nine months ended 196 3,737 6,701 19,532 156 1,366 2,363 7,106 6,087 8,680 19,261 16,369 (1,050 ) (1,689 ) (4,211 ) (4,902 ) 1,086 �� 242 (11,340 ) 6,938 8,818 10,836 27,445 33,794 6,072 1,419 19,862 5,880 327 205 1,026 639 1,268 1,923 4,864 5,421 22,960 26,719 65,971 90,777 Three months ended (Thousands of Dollars) December 25, 2022 December 26, 2021 Net income 1,824 13,199 Adjusted to exclude Income tax expense 440 5,351 Non-operating expenses, net 8,914 6,564 Equity in earnings of TNI and MNI (1,668) (1,754) Depreciation and amortization 7,886 9,676 Restructuring costs and other 646 3,200 Assets gain on sales, impairments and other, net (2,563) (12,274) Stock compensation 349 186 Add: Ownership share of TNI and MNI EBITDA (50%) 1,791 1,939 Adjusted EBITDA 17,619 26,087 Three months ended Nine Months ended June 26, June 27, June 26, June 27, (Thousands of Dollars) 2022 2021 2022 2021 Operating expenses 189,648 184,396 563,219 562,631 Adjustments Depreciation and amortization 8,818 10,836 27,445 33,794 Assets loss (gain) on sales, impairments and other, net 1,086 242 (11,340 ) 6,938 Restructuring costs and other 6,072 1,419 19,862 5,880 Cash Costs 173,672 171,899 527,252 516,019 Three months ended (Thousands of Dollars) December 25, 2022 December 26, 2021 Operating expenses 175,621 178,922 Adjustments Depreciation and amortization 7,886 9,676 Assets gain on sales, impairments and other, net (2,563) (12,274) Restructuring costs and other 646 3,200 Cash Costs 169,652 178,320 provided byrequired for operating activities totaled $716,000$1.7 million in 20222023 compared to cash provided by operating activities of $42,771,000$0.6 million in 2021,2022, a decrease of $42,055,000.$2.3 million. The decrease was driven by a decrease in operating results of $23,400,000$4.0 million (defined as net income (loss) adjusted for non-working capital items) and an increase in working capital of $18,654,000,$1.7 million, primarily related to unfavorable changes in inventory, postretirement liabilities, income taxes payable, and warrants, and accounts receivable.$8,515,000$4.0 million in the 20222023 Period compared to cash required forprovided by investing activities of $2,465,000$12.0 million in the 20212022 Period. 2023 and 2022 included $14,824,000$4.1 million and $14.4 million, respectively, in proceeds from the sale of assets as the Company divested non-core real estate.$10,000,000$10.0 million in 2022,2023, and other requirements, will be available from internally generated funds.$19,682,000$0.2 million in the 20222023 Period compared to $52,969,000$20.1 million in the 20212022 Period. Debt reduction accounted for nearly all the usage of funds in the 2022 and 2021 Periods.$15,661,000$18.3 million on June 26,December 25, 2022. This liquidity amount excludes any future cash flows from operations. We expect all interest and principal payments due in the next twelve months will be satisfied by existing cash and our cash flows, which will allow us to maintain an adequate level of liquidity.In February 2020, our filing of a replacement Form S-3 registration statement ("Shelf") with the SEC was declared effective and expires February 2023. The Shelf registration gives us the flexibility to issue and publicly distribute various types of securities, including preferred stock, common stock, warrants, secured or unsecured debt securities, purchase contracts and units consisting of any combination of such securities, from time to time, in one or more offerings, up to an aggregate amount of $750,000,000. SEC issuer eligibility rules require us to have a public float of at least $75,000,000 to use the Shelf. Among other provisions, the CARES Act allows the Company to defer payments of the employer’s share of social security taxes which shall be paid between December 31, 2021, and December 31, 2022. The CARES Act also provides for an Employee Retention Credit which can be applied to the employer’s share of payroll taxes. The Company has elected to defer the employer’s share of social security tax payments and is currently determining the applicability of the Employee Retention Credit.All North American newsprint producersa January 2022 price increases of $25 per tonne, $25 per tonne in Marchthroughout 2022 and another price increase in May of $50 per tonne. Theexpect to remain there for the foreseeable future. Despite reduced consumption, the newsprint supply chain is challenged due to significant capacity reductions taken in the last two years including paper machine permanent Like other industries, the supply chain is further challenged by shipping delays due to restrictions of personnel crossing the US/Canada border.$340,000$0.3 million based on current and anticipated consumption trends in 2022,2023, excluding consumption of TNI and MNI and the impact of LIFO accounting.$462,554,000$462.6 million principal amount of the Term Loan recorded at carrying value.UnderAct,Act. Based on that evaluation the Company has concluded that, because the material weaknesses in the Company's internal control that existed as of September 25, 2022 and have not been remediated by the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the Evaluation Date,report, our disclosure controls and procedures were effective.CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTINGThere have been no changesnot effective..ourthe areas of user access for certain of its information systems that are relevant to the preparation of the Company’s consolidated financial statements and system of internal control over financial reporting that occurred duringreporting.threevalidation of the completeness and nine months ended June 26, 2022,accuracy of information received from these service organizations and correspondingly relied upon by the Company in the preparation of the Company’s consolidated financial statements.materially affected, orbeen identified and maintaining an effective system of disclosure controls and procedures. These remediation efforts, summarized below, are reasonably likelyintended to materially affect,both address the identified material weaknesses and to enhance our overall financial control environment. In this regard, our initiatives include:controlcontrols over financial reporting.20212022 Form 10-K.NumberDescriptionNumber Description 31.131.1 Attached 31.2 Attached 32.1 Attached 32.2 Attached 101.INS Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) Attached 101.SCH Inline XBRL Taxonomy Extension Schema Document Attached 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Attached 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Attached 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Attached 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Attached 104 Cover Page Interactive Data File (formatted as Inline XBRL and embedded within the Inline XBRL document) Attached 1920LEE ENTERPRISES, INCORPORATED /s/ Timothy R. Millage August 4, 2022Timothy R. Millage Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) 2021