LEE ENTERPRISES, Inc (Form: 10-K, Received: 12/13/2019 16:31:08)

The accompanying Notes are an integral part of the Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

References to "we", "our", "us" and the like throughout the Consolidated Financial Statements refer to Lee Enterprises, Incorporated and subsidiaries (the "Company"). References to "2019", "2018", "2017" and the like refer to the fiscal years ended the last Sunday in September. Fiscal years 2019 and 2017 include 52 weeks and 2018 includes 53 weeks of operations.

Lee Enterprises, Incorporated is a leading provider of high quality, trusted, local news and information, and a major platform for advertising in the markets we serve. We operate 50 principally mid-sized local media operations (including TNI Partners ("TNI") and Madison Newspapers, Inc. ("MNI")) across 20 states.

1. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Consolidated Financial Statements include our accounts and those of our subsidiaries, all of which are wholly-owned, except for our 50% interest in TNI, 50% interest in MNI and 82.5% interest in TownNews, TNI and MNI are accounted for under the equity method. Results of TownNews are consolidated.

In February 2018, the Financial Accounting Standards Board (“FASB”) issued new guidance to allow a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects resulting from what is commonly referred to as the Tax Cuts and Jobs Act (the "2017 Tax Act"). In the first quarter of fiscal year 2018, we re-measured our deferred taxes related to unrealized gains on our investment balances using the reduced tax rate. As required by GAAP, we recognized the net tax benefit in the provision for income taxes in our consolidated income statements, and we reclassified a $3,067,000 net tax benefit from AOCI to retained earnings in our consolidated balance sheets. Adoption of the standard had no impact to our consolidated income statements or cash flows statements.

In March 2016, the FASB issued a new standard that makes improvements to the accounting for employee share-based payments. The new standard simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes and statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted this standard in 2018 and the impact from the adoption of this standard did not have a material impact on the Consolidated Financial Statements.

Fiscal Year

All of our enterprises use period accounting with the fiscal year ending on the last Sunday in September.

Subsequent Events

We have evaluated subsequent events through December 13, 2019. No events have occurred subsequent to September 29, 2019 that require disclosure or recognition in these financial statements.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Principles of Consolidation

All significant intercompany transactions and balances have been eliminated.

Investments in TNI and MNI are accounted for using the equity method and are reported at cost, plus our share of undistributed earnings since acquisition less, for TNI, amortization of, and reductions in the value of, intangible assets.

Cash and Cash Equivalents

We consider all highly liquid debt instruments purchased with an original maturity of three months or less at date of acquisition to be cash equivalents.

Accounts Receivable

We evaluate our allowance for doubtful accounts receivable based on historical credit experience, payment trends and other economic factors. Delinquency is determined based on timing of payments in relation to billing dates. Accounts considered to be uncollectible are written off.

Inventories

Newsprint inventories and other inventories are priced at the lower of cost or net realizable value. LIFO newsprint inventories at September 29, 2019 and September 30, 2018 are less than replacement cost by $1,661,000 and $2,333,000, respectively.

The components of inventory by cost method are as follows:

(Thousands of Dollars)	September 29, 2019		September 30, 2018

Newsprint - FIFO method		1,498		2,079
Newsprint - LIFO method		1,296		2,071
Other inventory - FIFO method		975		1,534
		3,769		5,684

Other Investments

Other investments primarily consist of marketable securities held in trust under a deferred compensation arrangement and investments for which no established market exists. Marketable securities are classified as trading securities and carried at fair value with gains and losses reported in earnings. Non-marketable securities are carried at cost.

Property and Equipment

Property and equipment are carried at cost. Equipment, except for printing presses and preprint insertion equipment, is depreciated primarily by declining-balance methods. The straight-line method is used for all other assets. The estimated useful lives are as follows:

	Years

Buildings and improvements		4 - 54
Printing presses and insertion equipment		5 - 28
Other		3 - 17

We recognize the fair value of a liability for a legal obligation to perform an asset retirement activity when such activity is a condition of a future event and the fair value of the liability can be estimated. The cost of asset retirements and related accruals was not material in 2019, 2018 or 2017.

Goodwill and Other Intangible Assets

Intangible assets include covenants not to compete, consulting agreements, customer lists, newspaper subscriber lists and mastheads. Intangible assets subject to amortization are being amortized using the straight-line method as follows:

	Years

Customer lists		15 - 23
Newspaper subscriber lists		10 - 33

We review goodwill for impairment on an annual basis by performing a qualitative and quantitative assessment. Companies with reporting units with zero or negative carrying value are required to disclose the amount of goodwill for those reporting units.

The Company's goodwill is all attributable to single reporting unit entity with negative carrying value. In 2019 and 2018, the Company had $250,309,000 and $246,176,000 of goodwill in the Consolidated Balance Sheets, respectively. The annual assessment is made on the first day of our fourth fiscal quarter, or more frequently if impairment triggers are noted.

We review non-amortizing intangibles for impairment on an annual basis. Should we determine that a non-amortized intangible asset impairment is more likely than not, we make a determination of the individual asset's fair value. Fair value is determined using the relief from royalty method, which estimates fair value based upon appropriate royalties of future revenue discounted to their present value. The impairment amount, if any, is calculated based on the excess of the carrying amount over the fair value of such asset.

We analyze goodwill and other non-amortized intangible assets for impairment more frequently if impairment indicators are present. Such indicators of impairment include, but are not limited to, changes in business climate and operating or cash flow losses related to such assets.

We review our amortizable intangible assets for impairment when indicators of impairment are present. We assess recoverability of these assets by comparing the estimated undiscounted cash flows associated with the asset group with their carrying amount. The impairment amount, if any, is calculated based on the excess of the carrying amount over the fair value of those asset groups.

The required valuation methodology and underlying financial information that are used to determine fair value require significant judgments to be made by us and represent a Level 3 fair value measurement. These judgments include, but are not limited to, long term projections of future financial performance and the selection of appropriate discount rates used to determine the present value of future cash flows. Changes in such estimates or the application of alternative assumptions could produce significantly different results.

We also periodically evaluate the useful lives of amortizable intangible assets. Any resulting changes in the useful lives of such intangible assets will not impact our cash flows. However, a decrease in the useful lives of such intangible assets would increase future amortization expense and decrease future reported operating results and earnings per common share.

Future decreases in our market value, or significant differences in revenue, expenses or cash flows from estimates used to determine fair value, could result in impairment charges in the future. See Note 4.

Non-controlling Interest

Non-controlling interest in earnings of TownNews is recognized in the Consolidated Financial Statements.

Revenue Recognition

On October 1, 2018, we adopted the New Revenue Standard, using the modified retrospective method applied to those contracts which were not completed as of that date. Results for reporting periods beginning after October 1, 2018 are presented under the new guidance while prior period amounts are not adjusted and continue to be reported in accordance with legacy accounting under the old guidance. We did not record any adjustments to beginning retained earnings at October 1, 2018 as a result of adopting the new guidance.

Recognition principles: Revenue is recognized when a performance obligation is satisfied by the transfer of control of the contracted goods or services to our customers, in an amount that reflects the consideration we expect to receive in exchange for those goods or services.

Advertising and marketing services revenue: Advertising and marketing services revenue includes amounts charged to customers for retail, national, or classified advertising space purchased in our newspapers, advertisements placed on our digital platforms, and other print advertising products such as preprint inserts and direct mail. Advertising and marketing services revenue also include amounts charged to customers for digital marketing services which include: audience extension, Search Engine Optimization ("SEO"), Search Engine Marketing ("SEM"), web and mobile production, social media services and reputation monitoring and management. The following define the timing of revenue recognition for each general revenue category:

•

Print advertising revenue is recognized at the point in time the associated publication has been delivered.

•

Digital advertising revenue is recognized at the point in time that impressions are delivered.

•

Digital marketing services revenue is recognized over the period of time which the service is performed.

Advertising and marketing services contract transaction prices consist of fixed consideration. We recognize revenue when control of the related performance obligation transfers to the customer.

Payments for advertising revenue is due upon completion of our performance obligations at previously agreed upon rates. In instances where the timing of revenue recognition differs from the timing of invoicing, such timing differences are not large. As a result, we have determined that our contracts do not include a significant financing component.

Subscription revenue: Subscription revenue includes revenue for content delivered to consumers via print and digital products purchased by readers or distributors. Single copy revenue is also included in subscription revenue. Subscription revenue from single-copy and home delivery subscriptions is recognized at the point in time the publications are delivered. Digital subscription revenue is recognized over time as performance obligations are met via on-demand availability of online content made available to customers throughout the contract term. Payments for subscription revenue is typically collected in advance, are for contract periods of one year or less and result in an unearned revenue liability that is reduced when revenue is recognized.

Other revenue: Other revenue primarily consists of digital services, Management Agreement revenue, commercial printing and delivery of third party products. Management Agreement revenue consists of fixed and variable fees collected from our Management Agreement. Fixed fee revenue from the Management Agreement is recognized over time and paid quarterly and variable fees are paid annually. Variable fees are recognized when the fees are deemed earned and it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Commercial printing and delivery revenue is recognized when the product is delivered to the customer.

Digital services revenues, which are primarily delivered through TownNews, are primarily comprised of contractual agreements to provide webhosting and content management services. As such, digital services revenue is recognized over the contract period. Prices for digital services are agreed upon in advance of the contract beginning and are typically billed in arrears on a monthly basis, with the exception of implementation fees which are recognized as deferred revenue and amortized over the contract period.

Arrangements with multiple performance obligations: We have various advertising and subscription agreements which include both print and digital performance obligations. Revenue from sales agreements that contain multiple performance obligations are allocated to each obligation based on the relative standalone selling price. We determine standalone selling prices based on observable prices charged to customers. See footnote 2.

Advertising Costs

A substantial amount of our advertising and promotion consists of advertising placed in our own publications and digital platforms, using available space. The incremental cost of such advertising is not significant and is not measured separately by us. External advertising costs are not significant and are expensed as incurred.

Restructuring Costs and Other

We incur severance related costs on an ongoing basis in response to overall industry trends. We accrue for severance related items generally as part of planned business transformation efforts when the impacted employees can be identified and the amounts are estimable. We did not have a significant severance liability as of September 29, 2019 or September 30, 2019.

Other costs included in Restructuring Costs and Other include estimated impacts of withdrawals from our multiemployer plans. Multiemployer plans are discussed in Note 8.

Pension, Postretirement and Postemployment Benefit Plans

We evaluate our liabilities for pension, postretirement and postemployment benefit plans based upon computations made by consulting actuaries, incorporating estimates and actuarial assumptions of future plan service costs, future interest costs on projected benefit obligations, rates of compensation increases, when applicable, employee turnover rates, anticipated mortality rates, expected investment returns on plan assets, asset allocation assumptions of plan assets and other factors.

We use a fiscal year end measurement date for all our pension and postretirement obligations in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 715, Retirement Plans. We use the alternative spot rate approach which utilizes a full yield curve to estimate the interest cost component of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

Income Taxes

Deferred income tax assets are recognized for deductible temporary differences and loss carryforwards and deferred income tax liabilities are recognized for taxable temporary differences which are the difference between the reported amounts of assets and liabilities and their tax basis. Deferred income tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Fair Value of Financial Instruments

We utilize FASB ASC Topic 820, Fair Value Measurements and Disclosures, to measure and report fair value. FASB ASC Topic 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FASB ASC Topic 820 establishes a three-level hierarchy of fair value measurements based on whether the inputs to those measurements are observable or unobservable, which consists of the following levels:

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

Investments measured at net asset value, as a practical expedient for fair value, are excluded from the fair value hierarchy.

Valuation methodologies used for pension and postretirement assets measured at fair value are as follows:

Cash and cash equivalents consist of short term deposits valued based on quoted prices in active markets. Such investments are classified as Level 1.

Treasury Inflation-Protected Securities ("TIPS") consist of low yield mutual funds and are valued by quoted market prices. Such investments are classified as Level 1.

Equity securities are valued based on the closing market price in an active market and are classified as Level 1. Certain investments in commingled funds are valued at the end of the period based upon the value of the underlying investments as determined by quoted market prices. Such investments are classified as Level 2.

Debt securities consist of government securities that are valued based upon quoted market prices in an active market. Such investments are classified as Level 1. Corporate bonds that are valued based on quoted market prices in an inactive market are classified as Level 2. Certain investments in commingled funds are valued at the net asset value of units held at the end of the period based upon the value of the underlying investments as determined by quoted market prices. Such investments are excluded from the fair value hierarchy.

Hedge funds consist of a long/short equity funds and a diversified fund of funds. These funds are valued at the net asset value of units held at the end of the period based upon the value of the underlying investments, which is determined using multiple approaches including by quoted market prices and by private market quotations. Such investments are excluded from the fair value hierarchy.

Stock Compensation and Warrants

We have several active stock-based compensation plans. We account for grants under those plans under the fair value expense recognition provisions of FASB ASC Topic 718, Compensation-Stock Compensation. We determine the fair value of stock options using the Black-Scholes option pricing formula. Key inputs to this formula include expected term, expected volatility and the risk-free interest rate.

The expected term represents the period that our stock-based awards are expected to be outstanding, and is determined based on historical experience of similar awards, giving consideration to contractual terms of the awards, vesting schedules and expectations of future employee behavior. The volatility factor is calculated using historical market data for our Common Stock. The time frame used is equal to the expected term. We base the risk-free interest rate on the yield to maturity at the time of the stock option grant on zero-coupon U.S. government bonds having a remaining term equal to the option's expected term. When estimating forfeitures, we consider voluntary termination behavior as well as actual option forfeitures.

We amortize as compensation expense the value of stock options and restricted Common Stock using the straight-line method over the vesting or restriction period, which is generally one to four years.

We also have 6,000,000 warrants outstanding to purchase shares of our Common Stock. Warrants are recorded at fair value determined using the Black-Scholes option pricing formula. See Notes 5, 9 and 12.

Uninsured Risks

We are self-insured for health care, workers compensation and certain long-term disability costs of our employees, subject to stop loss insurance, which limits our losses in the event of large claims. We accrue our estimated health care costs in the period in which such costs are incurred, including an estimate of incurred but not reported claims. Other risks are insured and carry deductible losses of varying amounts. Letters of credit and performance bonds totaling $3,901,000 at September 29, 2019 are outstanding in support of our insurance program.

Our accrued reserves for health care and workers compensation claims are based upon estimates of the remaining liability for retained losses made by consulting actuaries. The amount of workers compensation reserve has been determined based upon historical patterns of incurred and paid loss development factors from the insurance industry.

Recently Issued Accounting Standards - Standards Adopted in 2019

In March 2017, the Financial Accounting Standards Board ("FASB") issued a new standard to improve the presentation of pension and postretirement benefit expense. The new standard requires that the service cost component of pension and postretirement benefits expense is recognized as compensation expense, while the remaining components of the expense are presented outside of operating income. The prior presentation included all components of the expense as Compensation in our Consolidated Statements of Income and Comprehensive Income. As a result of the adoption of this standard, we recorded other non-operating income of $2,847,000, $2,830,000 and $3,417,000 in 2019, 2018 and 2017, respectively. These amounts were previously recognized as compensation.

In August 2016, the FASB issued a new standard to conform the presentation in the statement of cash flows for certain transactions, including cash distributions from equity method investments, among others. The new standard was adopted in 2019 and did not result in a change to our statement of cash flows.

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers” and in 2015, 2016, and 2017 the FASB issued several clarifying updates to this new standard (ASU No. 2015-14, 2016-08, 2016-10, 2016-11, 2016-12, 2016-20 and 2017-05), which collectively comprises ASC Topic 606 “Revenue from Contracts with Customers”. Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” and is effective fiscal years beginning after December 15, 2017. Topic 606 provides a five-step model in determining when and how revenue is recognized and requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The new standard was adopted in 2019 using the modified retrospective method and did not result in a material change to our Consolidated Financial Statements. See to Note 2 for disclosures as a result of this adoption.

Recently Issued Accounting Standards - Standards Not Yet Adopted

In February 2016, the FASB issued a new standard for the accounting treatment of leases. The new standard is based on the principle that entities should recognize assets and liabilities arising from leases. The new standard's primary change is the requirement for entities to recognize a lease liability for payments and a right of use asset representing the right to use the leased asset during the term on most operating lease arrangements. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of twelve months or less. In addition, the new standard expands the disclosure requirements of lease arrangements. Lessees have the option to use a modified retrospective transition approach, which includes a number of practical expedients. As a result of utilizing the modified retrospective transition approach, we will not restate prior year financial statements to conform to the new guidance. We expect to elect the package of practical expedients, which permits the Company to not reassess under the new standard the prior conclusions about lease identification, lease classification, or initial direct costs. In addition, we will not reassess whether existing land easements which were previously not accounted for as leases are or contain leases under the new guidance.

To date, we reviewed all existing leases and contracts, completed data entry for in-scope leases into our selected software solution which is compatible with our current financial reporting and control environment and quantified a range of expected financial impacts. We will adopt the new standard effective September 30, 2019, the first day of fiscal year 2020. We expect to recognize upon adoption, lease liabilities and right of use assets ranging from $9,600,000 to $12,600,000. Right-of-use assets have been adjusted for lease incentives and initial direct costs. We are still evaluating for potential embedded leases relating to our outsourced printing contracts, which could result in material additional lease obligations and right-of-use assets. We do not expect the adoption of the new standard will have a material impact on our Consolidated Statements of Income or Consolidated Statement of Cash Flows.

In June 2016, the FASB issued a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a wider array of reasonable and supportable information to inform and develop credit loss estimates. We will be required to use a forward-looking expected credit loss model for both accounts receivables and other financial instruments. The new standard will be adopted beginning September 29, 2020 using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align our credit loss methodology with the new standard. We are currently evaluating the impact of this standard on our consolidated financial statements.

3 INVESTMENTS IN ASSOCIATED COMPANIES

TNI Partners

In Tucson, Arizona, TNI, acting as agent for our subsidiary, Star Publishing Company (“Star Publishing”) and Citizen Publishing Company (“Citizen”), a subsidiary of Gannett Co. Inc., is responsible for printing, delivery, advertising and subscription activities of the Arizona Daily Star, as well as the related digital platforms and specialty publications. TNI collects all receipts and income and pays substantially all operating expenses incident to the partnership's operations and publication of the newspaper and other media. Income or loss of TNI is allocated equally to Star Publishing and Citizen.

Summarized financial information of TNI is as follows:

	September 29			September 30
(Thousands of Dollars)	2019			2018

ASSETS
Current assets		3,484			3,615
Investments and other assets		1,350			—
Total assets		4,834			3,615

LIABILITIES AND MEMBERS' EQUITY
Current liabilities		5,924			5,213
Members' equity		(1,090	)		(1,598	)
Total liabilities and members' equity		4,834			3,615

Summarized results of TNI are as follows:

(Thousands of Dollars)	2019		2018		2017

Operating revenue		43,532		47,165		48,297
Operating expenses		34,224		37,090		38,150
Net income		9,308		10,075		10,147

Company's 50% share		4,654		5,038		5,073
Less amortization of intangible assets		418		418		418
Equity in earnings of TNI		4,236		4,620		4,655

TNI makes weekly distributions of its earnings. We received $4,245,000, $5,814,000 and $4,644,000 in distributions in 2019, 2018 and 2017, respectively.

At September 29, 2019, the carrying value of the Company's 50% investment in TNI is $14,741,000. The difference between our carrying value and our 50% share of the members' equity of TNI relates principally to goodwill of $12,366,000 and other identified intangible assets of $3,299,000, certain of which are being amortized over their estimated useful lives through 2020. See Note 4.

Madison Newspapers, Inc.

We have a 50% ownership interest in MNI, which publishes daily and Sunday newspapers, and other publications in Madison, Wisconsin, and other Wisconsin locations, and related digital sites. Net income or loss of MNI (after income taxes) is allocated equally to us and The Capital Times Company (“TCT”). MNI conducts its business under the trade name Capital Newspapers.

Summarized financial information of MNI is as follows:

	September 29		September 30
(Thousands of Dollars)	2019		2018

ASSETS
Current assets		8,796		10,173
Investments and other assets		31,134		33,295
Total assets		39,930		43,468

LIABILITIES AND MEMBERS' EQUITY
Current liabilities		5,912		7,274
Other liabilities		6,064		7,261
Stockholders' equity		27,954		28,933
Total liabilities and stockholders' equity		39,930		43,468

Summarized results of MNI are as follows:

(Thousands of Dollars)	2019		2018		2017

Operating revenue		56,790		59,670		61,396
Operating expenses, excluding restructuring costs, depreciation and amortization		48,121		49,598		51,392
Restructuring costs		355		383		296
Depreciation and amortization		1,018		1,149		1,295
Operating income		7,296		8,540		8,413
Net income		5,770		9,257		5,908
Equity in earnings of MNI		2,885		4,629		2,954

MNI makes quarterly distributions of its earnings. We received $3,350,000, $3,400,000 and $3,500,000 in distributions in 2019, 2018 and 2017, respectively.

We provide editorial services to MNI. Editorial service fees are included in other revenue in the Consolidated Statements of Income and Comprehensive Income and totaled $6,636,000, $6,718,000 and $7,021,000, in 2019, 2018 and 2017, respectively.

At September 29, 2019, the carrying value of the Company's 50% investment in MNI is $14,001,000.

5 DEBT

On March 31, 2014, we completed a comprehensive refinancing of our debt (the "2014 Refinancing"), which included the following:

•

$400,000,000 aggregate principal amount of 9.5% Senior Secured Notes (the “Notes”), pursuant to an Indenture dated as of March 31, 2014 (the “Indenture”).

•

$250,000,000 first lien term loan (the "1^st Lien Term Loan") and $40,000,000 revolving facility (the "Revolving Facility") under a First Lien Credit Agreement dated as of March 31, 2014 (together the “1^st Lien Credit Facility”).

•

$150,000,000 second lien term loan under a Second Lien Loan Agreement dated as of March 31, 2014 (the “2^nd Lien Term Loan”).

In November 2018, we repaid, in full, the remaining balance of the 1^st Lien Term Loan.

In November 2019, we amended our 1^st Lien Credit Facility to amend and extend our $23,120,000 Revolving Facility (the "Amendment") through December 28, 2020. Our Revolving Facility was undrawn at the time of the amendment.

Debt is summarized as follows:

							Interest Rates (%)
	September 29			September 30			September 29
(Thousands of Dollars)	2019			2018			2019

Revolving Facility		—			—			6.13
1st Lien Term Loan		—			6,303			8.54
Notes		363,420			385,000			9.50
2nd Lien Term Loan		80,207			93,556			12.00
		443,627			484,859
Unamortized debt issue costs		(11,282	)		(17,055	)
Less current maturities of long-term debt		2,954			7,027
Total long-term debt		429,391			460,777

Our weighted average cost of debt, excluding amortization of debt financing costs at September 29, 2019, is 10.0%.

At September 29, 2019, aggregate minimum required maturities of debt excluding amounts required to be paid from future excess cash flow computations total $2,954,000 in 2020, zero in 2021, $363,420,000 in 2022 and $77,253,000 in 2023.

Notes

The Notes are senior secured obligations of the Company and mature on March 15, 2022. At September 29, 2019, the principal balance of the Notes totaled $363,420,000.

Interest

The Notes require payment of interest semiannually on March 15 and September 15 of each year, at a fixed annual rate of 9.5%.

Redemption

We may redeem some, or all, of the principal amount of the Notes at any time.

Period Beginning	Percentage of Principal Amount

March 15, 2019		102.38
March 15, 2020		100.00

If we sell certain of our assets or experience specific kinds of changes of control, we must, subject to certain exceptions, offer to purchase the Notes at 101% of the principal amount. Any redemption of the Notes must also satisfy any accrued and unpaid interest thereon.

We may repurchase Notes in the open market at any time. In the 52 weeks ended September 29, 2019 we purchased $21,580,000 principal amount of Notes in privately negotiated transactions. The transactions resulted in a loss on extinguishment of debt totaling $333,000 in the 52 weeks ended September 29, 2019 which is recorded in Other, net in the Consolidated Statements of Income and Comprehensive Income.

Covenants and Other Matters

The Indenture and the 1^st Lien Credit Facility contain restrictive covenants as discussed more fully below. However, certain of these covenants will cease to apply if the Notes are rated investment grade by either Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Group and there is no default or event of default under the Indenture.

1^st Lien Credit Facility

The 1^st Lien Term Loan was paid in full in November 2018 and has no outstanding balance as of September 29, 2019.

The 1^st Lien Credit Facility documents the primary terms of the 1^st Lien Term Loan and the Revolving Facility. The $23,120,000 Revolving Facility matures on December 28, 2020 and may be used for working capital and general corporate purposes (including letters of credit). At September 29, 2019, after consideration of letters of credit, we have approximately $17,644,000 available for future use under the Revolving Facility.

Interest

Interest on the Revolving Facility, which is undrawn at September 29, 2019, accrues, at our option, at either (A) LIBOR plus 5.5%, or (B) 4.5% plus the higher of (i) the prime rate at the time, (ii) the federal funds rate plus 0.5%, or (iii) one month LIBOR plus 1.0%.

Covenants and Other Matters

The 1^st Lien Credit Facility requires that we comply with certain affirmative and negative covenants customary for financing of this nature, including a maximum total leverage ratio, which is only applicable to the Revolving Facility.

The 1^st Lien Credit Facility restricts us from paying dividends on our Common Stock. This restriction no longer applies if Lee Legacy Leverage is below 3.25x before and after such payments. Lee Legacy Leverage as defined is 4.19x at September 29, 2019. Further, the 1^st Lien Credit Facility restricts or limits, among other things, subject to certain exceptions, the ability of the Company and its subsidiaries to: (i) incur indebtedness, (ii) enter into mergers, acquisitions and asset sales, (iii) incur or create liens and (iv) enter into transactions with certain affiliates. The 1^st Lien Credit Facility contains various representations and warranties and may be terminated upon occurrence of certain events of default. The 1^st Lien Credit Facility also contains cross-default provisions tied to the terms of each of the Indenture and 2^nd Lien Term Loan.

2^nd Lien Term Loan

The 2^nd Lien Term Loan, which has a balance of $80,207,000 at September 29, 2019, bears interest at a fixed annual rate of 12.0%, payable quarterly, and matures in December 2022.

Principal Payments

Excluding excess cash flow payments, there are no scheduled mandatory amortization payments required under the 2^nd Lien Term Loan.

Quarterly, we are required to prepare a calculation of excess cash flow of the Pulitzer Subsidiaries ("Pulitzer Excess Cash Flow"). Pulitzer Excess Cash Flow is generally determined as the cash earnings of the Pulitzer Subsidiaries including adjustments for changes in working capital, capital spending, pension contributions, debt principal payments and income tax payments. Pulitzer Excess Cash Flow also includes a deduction for interest costs incurred under the 2^nd Lien Term Loan.

Pulitzer Excess Cash Flow is used to prepay the 2^ndLien Term Loan, at par, and is required to be paid 45 days after the end of the quarter.

Payments will also be made on the 2^nd Lien Term Loan, at par, with proceeds from asset sales by the Pulitzer Subsidiaries that are not reinvested subject to certain other conditions. For September 29, 2019 there were no principal payments, and for the year ended, September 30, 2018 we repaid $4,000,000, on the 2^nd Lien Term Loan, at par, with net proceeds from the sale of Pulitzer assets.

During the 13 and 52 weeks ended September 29, 2019, payments on the 2^nd Lien Term Loan totaled $3,931,000 and $13,349,000 respectively. For the 13 weeks ended September 29, 2019, Pulitzer Excess Cash Flow totaled $2,954,000, which was used to make a payment on the 2^nd Lien Term Loan in November 2019, at par.

Voluntary payments under the 2^nd Lien Term Loan are no longer subject to call premiums and are payable at par. The Indenture includes certain restrictions on voluntary payments on the 2^nd Lien Term Loan.

Prior to March 31, 2017, we were required to offer the Pulitzer Excess Cash Flow to the 2^nd Lien Lenders to prepay the 2^nd Lien Term Loan at par, which payment the 2^nd Lien Lenders could accept or reject. After March 31, 2017, the 2^nd Lien Lenders can not reject, and Pulitzer Excess Cash Flow is used to prepay the 2^nd Lien Term Loan, at par. Pulitzer Excess Cash Flow payments are required to be paid 45 days after the end of the quarter.

Pulitzer Excess Cash Flow and the related payments on the 2^nd Lien Term Loan for the previous four quarters are as follows:

For the Period Ending
(Thousands of Dollars)	Pulitzer Excess Cash Flow Payment		Payment Date

September 30, 2018		724	Q1 2019
December 30, 2018		1,377	Q2 2019
March 31, 2019		7,317	Q3 2019
June 30, 2019		3,931	Q4 2019

Covenants and Other Matters

The 2^nd Lien Term Loan requires that we comply with certain affirmative and negative covenants customary for financing of this nature, including the negative covenants under the 1^st Lien Credit Facility discussed above. The 2^nd Lien Term Loan contains various representations and warranties and may be terminated upon occurrence of certain events of default. The 2^nd Lien Term Loan also contains cross-default provisions tied to the terms of the Indenture and 1^st Lien Credit Facility.

In connection with the 2^nd Lien Term Loan, we entered into a Warrant Agreement dated as of March 31, 2014 (the “Warrant Agreement”). Under the Warrant Agreement, certain affiliates or designees of the 2^nd Lien Lenders received on March 31, 2014 their pro rata share of warrants to purchase, in cash, an initial aggregate of 6,000,000 shares of Common Stock, subject to adjustment pursuant to anti-dilution provisions (the “Warrants”). The Warrants represent, when fully exercised, approximately 10.1% of shares of Common Stock outstanding at March 30, 2014 on a fully diluted basis. The exercise price of the Warrants is $4.19 per share.

The Warrant Agreement contains provisions requiring the Warrants to be measured at fair value and included in warrants and other liabilities in our Consolidated Balance Sheets. We re-measure the fair value of the liability each reporting period, with changes reported in other, net non-operating income (expense). The initial fair value of the Warrants was $16,930,000. See Note 9 and Note 12.

In connection with the issuance of the Warrants, we entered into a Registration Rights Agreement dated as of March 31, 2014 (the “Registration Rights Agreement”). The Registration Rights Agreement requires, 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.

Security

The Notes and the 1^st Lien Credit Facility are fully and unconditionally guaranteed on a joint and several first-priority basis by each of the Company's material domestic subsidiaries, excluding MNI, the Pulitzer Subsidiaries and TNI (the "Lee Legacy Assignors"), pursuant to a first lien guarantee and collateral agreement dated as of March 31, 2014 (the "1^st Lien Guarantee and Collateral Agreement").

The Notes, the 1^st Lien Credit Facility and the subsidiary guarantees are secured, subject to certain exceptions, priorities and limitations, by perfected security interests in all property and assets, including certain real estate, of the Lee Legacy Assignors, other than the capital stock of MNI and any property and assets of MNI (the “Lee Legacy Collateral”), on a first-priority basis, equally and ratably with all of the Lee Legacy Assignors' existing and future obligations. The Lee Legacy Collateral includes, among other things, equipment, inventory, accounts receivables, depository accounts, intellectual property and certain of their other tangible and intangible assets.

Also, the Notes and the 1^st Lien Credit Facility are secured, subject to certain exceptions, priorities and limitations in the various agreements, by first-priority security interests in the capital stock of, and other equity interests owned by the Lee Legacy Assignors (excluding the capital stock of MNI). The Notes and 1^st Lien Credit Facility are subject to a Pari Passu Intercreditor Agreement dated March 31, 2014.

The Notes, the 1^st Lien Credit Facility and the subsidiary guarantees are also secured, subject to permitted liens, by a second-priority security interest in the property and assets of the Pulitzer Subsidiaries that become subsidiary guarantors (the "Pulitzer Assignors") other than assets of or used in the operations or business of TNI (collectively, the “Pulitzer Collateral”). In June 2015 the Pulitzer Assignors became a party to the 1^st Lien Guarantee and Collateral Agreement on a second lien basis.

Also, the Notes and the 1^st Lien Credit Facility are secured, subject to certain exceptions, priorities, and limitations in the various agreements, by second-priority security interests in the capital stock of, and other equity interests in, the Pulitzer Assignors and Star Publishing’s interest in TNI.

The 2^nd Lien Term Loan is fully and unconditionally guaranteed on a joint and several first-priority basis by the Pulitzer Assignors, pursuant to a Second Lien Guarantee and Collateral Agreement dated as of March 31, 2014 (the “2^nd Lien Guarantee and Collateral Agreement”) among the Pulitzer Assignors and the 2^nd Lien collateral agent.

Under the 2^nd Lien Guarantee and Collateral Agreement, the Pulitzer Assignors have granted (i) first-priority security interests, subject to certain priorities and limitations in the various agreements, in the Pulitzer Collateral and (ii) have granted first-priority lien mortgages or deeds of trust covering certain real estate, as collateral for the payment and performance of their obligations under the 2^nd Lien Term Loan.

Also, under the 2^nd Lien Guarantee and Collateral Agreement, the Lee Legacy Assignors have granted (i) second-priority security interests, subject to certain priorities and limitations in the various agreements, in the Lee Legacy Collateral, and (ii) have granted second-priority lien mortgages or deeds of trust covering certain real estate, as collateral for the payment and performance of their obligations under the 2^nd Lien Term Loan. Assets of, or used in the operations or business of, MNI are excluded.

The rights of each of the collateral agents with respect to the Lee Legacy Collateral and the Pulitzer Collateral are subject to customary intercreditor and intercompany agreements.

Other

In connection with the 2014 Refinancing, we capitalized $37,819,000 of debt financing costs. Amortization of debt financing costs totaled $5,773,103, $4,769,000 and $4,447,000 in 2019, 2018 and 2017, respectively. Amortization of such costs is estimated to total $4,105,000 in 2020, $4,275,000 in 2021, $2,675,000 in 2022 and $227,000 in 2023. At September 29, 2019, we have $11,282,000 of unamortized debt financing costs recorded as a reduction of Long-term debt in our Consolidated Balance Sheets.

During the 52 weeks ended September 29, 2019, we identified an adjustment of $1,309,000 related to debt financing costs that should have been recorded in prior periods. The impact of recording this out of period adjustment was an increase to Debt financing and administrative costs of $1,309,000 in the Consolidated Statements of Operations and Comprehensive Income for the 52 weeks ended September 29, 2019 and an increase to debt of $1,309,000 on the Consolidated Balance Sheet. We do not believe the impact of the adjustment is material to our consolidated financial statements for any previously issued financial statements taken as a whole, or to our net income for the 52 weeks ended September 29, 2019. Further, the impact of the corrections was not material to any of our Consolidated Balance Sheets nor our Consolidated Statements of Cash Flows.

Liquidity

At September 29, 2019, after consideration of letters of credit, we have approximately $17,644,000 available for future use under our Revolving Facility. Including cash, our liquidity at September 29, 2019 totals $26,289,000. This liquidity amount excludes any future cash flows. 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. The Warrants, if and when exercised, would provide additional liquidity in an amount up to $25,140,000 subject to a reduction for any amounts the Company may elect to use to repay our 1^st Lien Term Loan and/or the Notes.

There are numerous potential consequences under the Notes, 1^stLien Credit Facility and 2^nd Lien Term Loan, if an event of default, as defined, occurs and is not remedied. Many of those consequences are beyond our control. The occurrence of one or more events of default would give rise to the right of the applicable lender(s) to exercise their remedies under the Notes, 1^st Lien Credit Facility and 2^nd Lien Term Loan, respectively, including, without limitation, the right to accelerate all outstanding debt and take actions authorized in such circumstances under applicable collateral security documents.

Our ability to operate as a going concern is dependent on our ability to remain in compliance with debt covenants and to repay, refinance or amend our debt agreements as they become due. The Notes, 1^st Lien Credit Facility and 2^nd Lien Term Loan have only limited affirmative covenants with which we are required to maintain compliance. We are in compliance with our debt covenants at September 29, 2019.

6 PENSION PLANS

We have several non-contributory defined benefit pension plans that together cover selected employees. Benefits under the plans were generally based on salary and years of service. Effective in 2012, substantially all benefits are frozen and only a small amount of additional benefits are being accrued. Our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annual actuarial calculations. Plan funding strategies are influenced by government regulations. Plan assets consist primarily of domestic and foreign corporate equity securities, government and corporate bonds, hedge fund investments and cash.

The net periodic cost (benefit) components of our pension plans are as follows:

(Thousands of Dollars)	2019			2018			2017

Service cost for benefits earned during the year		36			48			84
Interest cost on projected benefit obligation		6,563			5,754			5,394
Expected return on plan assets		(8,073	)		(7,933	)		(7,878	)
Amortization of net loss		1,135			2,025			2,947
Amortization of prior service benefit		(100	)		(136	)		(136	)
Net periodic pension cost (benefit)		(439	)		(242	)		411

Changes in benefit obligations and plan assets are as follows:

(Thousands of Dollars)	2019			2018

Benefit obligation, beginning of year		176,531			191,645
Service cost		36			48
Interest cost		6,563			5,754
Actuarial loss (gain)		20,687			(9,464	)
Benefits paid		(11,448	)		(11,452	)
Benefit obligation, end of year		192,369			176,531
Fair value of plan assets, beginning of year:		151,255			149,762
Actual return on plan assets		8,705			10,576
Benefits paid		(11,448	)		(11,452	)
Administrative expenses paid		(2,163	)		(2,571	)
Employer contributions		650			4,940
Fair value of plan assets, end of year		146,999			151,255
Funded status		(45,370	)		(25,276	)

Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:

	September 29			September 30
(Thousands of Dollars)	2019			2018

Pension obligations		(45,370	)		(25,276	)
Accumulated other comprehensive loss (before income taxes)		(53,066	)		(31,882	)

Amounts recognized in accumulated other comprehensive income (loss) are as follows:

	September 29			September 30
(Thousands of Dollars)	2019			2018

Unrecognized net actuarial loss		(53,072	)		(31,988	)
Unrecognized prior service benefit		6			106
		(53,066	)		(31,882	)

We expect to recognize $3,166,000 and $6,000 of unrecognized net actuarial loss and unrecognized prior service benefit, respectively, in net periodic pension cost in 2020.

The accumulated benefit obligation for the plans total $192,369,000 at September 29, 2019 and $176,531,000 at September 30, 2018. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets are $192,369,000, $192,369,000 and $146,999,000, respectively, at September 29, 2019.

Assumptions

Weighted-average assumptions used to determine benefit obligations are as follows:

	September 29		September 30
(Percent)	2019		2018

Discount rate		3.1		4.2

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

(Percent)	2019		2018		2017

Discount rate - service cost		4.2		3.7		3.5
Discount rate - interest cost		3.9		3.1		2.8
Expected long-term return on plan assets		5.5		5.5		5.5

For 2020, the expected long-term return on plan assets is 5.5%. The assumptions related to the expected long-term return on plan assets are developed through an analysis of historical market returns, current market conditions and composition of plan assets.

Plan Assets

The primary objective of our investment strategy is to satisfy our pension obligations at a reasonable cost. Assets are actively invested to balance real growth of capital through appreciation and reinvestment of dividend and interest income and safety of invested funds.

Our investment policy outlines the governance structure for decision making, sets investment objectives and restrictions and establishes criteria for selecting and evaluating investment managers. The use of derivatives is prohibited, except on a case-by-case basis where the manager has a proven capability, and only to hedge quantifiable risks such as exposure to foreign currencies. An investment committee, consisting of certain of our executives and supported by independent consultants, is responsible for monitoring compliance with the investment policy. Assets are periodically redistributed to maintain the appropriate policy allocation.

The weighted-average asset allocation of our pension assets is as follows:

(Percent)	Policy Allocation			Actual Allocation
	September 29		September 29		September 30
Asset Class	2019		2019		2018

Equity securities		50		49		50
Debt securities		35		34		32
TIPS		5		5		4
Hedge fund investments		10		10		10
Cash and cash equivalents		—		2		4

Plan assets include no Company securities. Assets include cash and cash equivalents and receivables from time to time due to the need to reallocate assets within policy guidelines.

Fair Value Measurements

The fair value hierarchy of pension assets at September 29, 2019 is as follows:

(Thousands of Dollars)	NAV		Level 1		Level 2		Level 3

Cash and cash equivalents		—		2,970		—		—
Domestic equity securities		9,524		8,971		40,593		—
International equity securities		—		6,525		7,283		—
TIPS		—		6,918		—		—
Debt securities		—		26,392		24,190		—
Hedge fund investments		15,733		—		—		—

The fair value hierarchy of pension assets at September 30, 2018 is as follows:

(Thousands of Dollars)	NAV		Level 1		Level 2		Level 3

Cash and cash equivalents		—		5,537		—		—
Domestic equity securities		10,045		12,573		40,083		—
International equity securities		—		7,070		7,560		—
TIPS		—		6,535		—		—
Debt securities		—		25,673		22,523		—
Hedge fund investments		15,767		—		—		—

There were no purchases, sales or transfers of assets classified as Level 3 in 2019 or 2018. Pension assets included in the fair value hierarchy at net asset value, or "NAV", include three investments:

•

U.S. small cap value equity common/collective fund for which fund prices are not publicly available. The balance of this investment is $9,524,000 and $10,045,000 as of 9/29/2019 and 9/30/2018, respectively. We can redeem this fund on a monthly basis.

•

Global equity long/short common/collective hedge fund-of-funds for which fund prices are established on a monthly basis. The balance of this investment is $7,923,000 and $8,116,000 as of 9/29/2019 and 9/30/2019, respectively. We can redeem up to 90% of our investment in this fund within 90-120 days of notice with the remaining distributed following completion of the audit of the Fund's financial statements for the year.

•

Global equity long/short common/collective hedge fund-of-funds for which fund prices are established on a monthly basis. The balance of this investment is $7,810,000 and $7,651,000 as of 9/29/2019 and 9/30/2018, respectively. We can redeem up to 50% of our investment in this fund twice per year.

Cash Flows

Based on our forecast at September 29, 2019, we expect to make contributions of $6,718,000 to our pension trust in 2020.

We anticipate future benefit payments to be paid from the pension trust as follows:

(Thousands of Dollars)

2020		12,452
2021		11,770
2022		11,711
2023		11,725
2024		11,679
2025-2029		56,172

Other Plans

We are obligated under an unfunded plan to provide fixed retirement payments to certain former employees. The plan is frozen and no additional benefits are being accrued. The accrued liability under the plan is $1,667,000 and $1,469,000 at September 29, 2019 and September 30, 2018, respectively.

7 POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS

We provide retiree medical and life insurance benefits under postretirement plans at several of our operating locations. The level and adjustment of participant contributions vary depending on the specific plan. In addition, St. Louis Post Dispatch LLC provides postemployment disability benefits to certain employee groups prior to retirement. Our liability and related expense for benefits under the postretirement plans are recorded over the service period of active employees based upon annual actuarial calculations. We accrue postemployment disability benefits when it becomes probable that such benefits will be paid and when sufficient information exists to make reasonable estimates of the amounts to be paid.

The net periodic postretirement benefit cost (benefit) components for our postretirement plans are as follows:

(Thousands of Dollars)	2019			2018			2017

Service cost for benefits earned during the year		—			—			13
Interest cost on projected benefit obligation		412			365			412
Expected return on plan assets		(1,082	)		(1,080	)		(1,056	)
Amortization of net actuarial gain		(976	)		(984	)		(987	)
Amortization of prior service benefit		(723	)		(785	)		(1,459	)
Curtailment gains		0			(2,031	)		(3,741	)
Net periodic postretirement benefit		(2,369	)		(4,515	)		(6,818	)

In March 2017, we notified certain participants in one of our postemployment medical plans of changes to their plan, which included notice that the plan will terminate on December 31, 2017. These changes resulted in a non-cash curtailment gain of $2,031,000 and $3,741,000 in 2018 and 2017, respectively. The curtailment gain is recorded in assets loss (gain) on sales, impairments and other in the Consolidated Statements of Income and Comprehensive Income. These charges also reduced the postemployment benefit obligation by $7,036,000 and reduced accumulated other comprehensive loss by $106,000 and $1,417,000 in 2018 and 2017, respectively.

Changes in benefit obligations and plan assets are as follows:

(Thousands of Dollars)	2019			2018

Benefit obligation, beginning of year		11,756			15,667
Service cost		—			—
Interest cost		412			365
Actuarial loss (gain)		1,033			(1,054	)
Benefits paid, net of premiums received		(1,507	)		(1,399	)
Curtailment		—			(1,924	)
Medicare Part D subsidies		58			101
Benefit obligation, end of year		11,752			11,756
Fair value of plan assets, beginning of year		24,647			24,626
Actual return on plan assets		2,097			2,106
Employer contributions		222			422
Benefits paid, net of premiums and Medicare Part D subsidies received		(1,449	)		(1,298	)
Benefits paid for active employees		(1,382	)		(1,209	)
Fair value of plan assets at measurement date		24,135			24,647
Funded status		12,383			12,891

Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:

	September 29		September 30
(Thousands of Dollars)	2019		2018

Non-current assets		12,383		12,891
Postretirement benefit obligations		—		—
Accumulated other comprehensive income (before income tax benefit)		14,818		17,917

Amounts recognized in accumulated other comprehensive income are as follows:

	September 29		September 30
(Thousands of Dollars)	2019		2018

Unrecognized net actuarial gain		4,970		12,224
Unrecognized prior service benefit		9,848		5,693
		14,818		17,917

We expect to recognize $743,000 and $647,000 of unrecognized net actuarial gain and unrecognized prior service benefit, respectively, in net periodic postretirement benefit in 2020.

Assumptions

Weighted-average assumptions used to determine postretirement benefit obligations are as follows:

	September 29		September 30
(Percent)	2019		2018

Discount rate		2.8		4.0
Expected long-term return on plan assets		4.5		4.5

The assumptions related to the expected long-term return on plan assets are developed through an analysis of historical market returns, current market conditions and composition of plan assets.

Weighted-average assumptions used to determine net periodic benefit cost are as follows:

(Percent)	2019		2018		2017

Discount rate - service cost		4.0		3.4		3.1
Discount rate - interest cost		3.7		2.8		2.4
Expected long-term return on plan assets		4.5		4.5		4.5

For 2019, the expected long-term return on plan assets is 4.5%. The assumptions related to the expected long-term return on plan assets are developed through an analysis of historical market returns, current market conditions and composition of plan assets.

Assumed health care cost trend rates are as follows:

	September 29		September 30
(Percent)	2019		2018

Health care cost trend rates		8.5		9.0
Rate to which the cost trend rate is assumed to decline (the “Ultimate Trend Rate”)		4.5		4.5
Year in which the rate reaches the Ultimate Trend Rate	2027		2026

Administrative costs related to indemnity plans are assumed to increase at the health care cost trend rates noted above.

Assumed health care cost trend rates have an effect on the amounts reported for the postretirement plans. A one percentage point change in assumed health care cost trend rates would have the following annualized effects on reported amounts for 2019:

	One Percentage Point
(Thousands of Dollars)	Increase		Decrease

Effect on net periodic postretirement benefit		11		(10	)
Effect on postretirement benefit obligation		425		(389	)

Plan Assets

Assets of the retiree medical plan are invested in a master trust. The master trust also pays benefits of active employee medical plans for the same union employees. The fair value of master trust assets allocated to the active employee medical plans at September 29, 2019 and September 30, 2018 is $1,955,000 and $3,266,000, respectively, which are included within the tables below.

The primary objective of our investment strategy is to satisfy our postretirement obligations at a reasonable cost. Assets are actively invested to balance real growth of capital through appreciation and reinvestment of dividend and interest income and safety of invested funds.

Our investment policy outlines the governance structure for decision making, sets investment objectives and restrictions, and establishes criteria for selecting and evaluating investment managers. The use of derivatives is strictly prohibited, except on a case-by-case basis where the manager has a proven capability, and only to hedge quantifiable risks such as exposure to foreign currencies. An investment committee, consisting of certain of our executives and supported by independent consultants, is responsible for monitoring compliance with the investment policy. Assets are periodically redistributed to maintain the appropriate policy allocation.

The weighted-average asset allocation of our postretirement assets is as follows:

(Percent)	Policy Allocation		Actual Allocation
			September 29		September 30
Asset Class	September 29 2019		2019		2018

Equity securities		20		18		18
Debt securities		70		68		69
Hedge fund investment		10		14		13
Cash and cash equivalents		—		—		—

Plan assets include no Company securities. Assets include cash and cash equivalents and receivables from time to time due to the need to reallocate assets within policy guidelines.

Fair Value Measurements

The fair value hierarchy of postretirement assets at September 29, 2019 is as follows:

(Thousands of Dollars)	NAV		Level 1		Level 2		Level 3

Cash and cash equivalents		—		—		—		—
Domestic equity securities		778		2,640		—		—
International equity securities		—		628		750		—
Debt securities		—		17,707		—		—
Hedge fund investment		3,587		—		—		—

The fair value hierarchy of postretirement assets at September 30, 2018 is as follows:

(Thousands of Dollars)	NAV		Level 1		Level 2		Level 3

Cash and cash equivalents		—		242		—		—
Domestic equity securities		820		2,589		—		—
International equity securities		—		681		780		—
Debt securities		—		19,185		—		—
Hedge fund investment		3,616		—		—		—

There were no purchases, sales or transfers of assets classified as Level 3 in 2019 or 2018. Postretirement assets included in the fair value hierarchy at net asset value, or "NAV", include two investments:

•

U.S. small cap value equity common/collective fund for which fund prices are not publicly available. The balance of this investment is $778,000 and $820,000 as of 9/29/2019 and 9/30/2018, respectively. We can redeem this fund on a monthly basis.

•

Global equity long/short common/collective hedge fund-of-funds for which fund prices are established on a monthly basis. The balance of this investment is $3,587,000 and $3,616,000 as of 9/29/2019 and 9/30/20018, respectively. We can redeem up to 90% of our investment in this fund within 90-120 days of notice with the remaining distributed following completion of the audit of the Fund's financial statements for the year.

Cash Flows

Based on our forecast at September 29, 2019, we do not expect to contribute to our postretirement plans in 2019.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Modernization Act”) introduced a prescription drug benefit under Medicare (“Medicare Part D”) and a federal subsidy to sponsors of retiree health care benefit plans (“Subsidy”) that provide a benefit at least actuarially equivalent (as that term is defined in the Modernization Act) to Medicare Part D. We concluded we qualify for the Subsidy under the Modernization Act since the prescription drug benefits provided under our postretirement health care plans generally require lower premiums from covered retirees and have lower deductibles than the benefits provided in Medicare Part D and, accordingly, are actuarially equivalent to or better than, the benefits provided under the Modernization Act.

We anticipate future benefit payments to be paid either with future contributions to the plan or directly from plan assets, as follows:

			Less
			Medicare
	Gross		Part D			Net
(Thousands of Dollars)	Payments		Subsidy			Payments

2020		1,241		(66	)		1,175
2021		1,201		(65	)		1,136
2022		1,154		(63	)		1,091
2023		1,099		(60	)		1,039
2024		1,039		(57	)		982
2025-2029		4,185		(221	)		3964

Postemployment Plan

Our postemployment benefit obligation, which represents certain disability benefits, is $2,550,000 at September 29, 2019 and $2,580,000 at September 30, 2018.

11 INCOME TAXES

On December 22, 2017, the 2017 Tax Act was signed into law. Among other provisions, the 2017 Tax Act reduces the federal statutory corporate income tax rate from 35% to 21%. The reduction of the corporate tax rate caused us to re-measure our deferred tax assets and liabilities to the lower federal base rate of 21%. We reported a discrete adjustment from revaluing our deferred tax assets and liabilities which resulted in a provisional net decrease in income tax expense of $24,872,000 for the 13 weeks ended December 24, 2017.

The Securities Exchange Commission issued rules that allow for a measurement period of up to one year after the enactment date of the 2017 Tax Act to finalize the recording of the related transitional impact. Apart from any future changes in interpretations, legislative action or changes in accounting standards, we have finalized and recorded the resulting adjustments as of September 29, 2019. The impact of the re-measurement did not change materially for the 52 weeks ended September 29, 2019.

Income tax expense (benefit) consists of the following:

(Thousands of Dollars)	2019			2018			2017

Current:
Federal		8,763			275			394
State		1,171			875			819
Deferred		(2,003	)		(17,378	)		10,398
		7,931			(16,228	)		11,611

Income tax expense (benefit) related to continuing operations differs from the amounts computed by applying the U.S. federal income tax rate to income (loss) before income taxes. The reasons for these differences are as follows:

(Percent of Income (Loss) Before Income Taxes)	2019			2018			2017

Computed “expected” income tax expense (benefit)		21.0			24.7			35.0
State income tax expense (benefit), net of federal tax impact		1.3			2.6			2.3
Net income of associated companies taxed at dividend rates		(3.9	)		(5.1	)		(3.7	)
Resolution of tax matters		1.7			(8.4	)		2.2
Non-deductible expenses		3.4			2.9			1.5
Valuation allowance		10.8			9.9			2.6
Warrant valuation		(0.6	)		0.2			(10.2	)
Revaluation of deferred income taxes due to law charges		—			(79.1	)		—
Other		(0.4	)		(0.4	)		(0.8	)
		33.3			(52.7	)		28.9

Net deferred income tax liabilities consist of the following components:

	September 29			September 30
(Thousands of Dollars)	2019			2018

Deferred income tax liabilities:
Property and equipment		(14,424	)		(16,506	)
Identified intangible assets		(15,358	)		(18,486	)
Long-term debt		(6,647	)		(11,074	)
Accrued compensation		(189	)		2,402
Investments		(3,164	)		(6,472	)
		(39,782	)		(50,136	)
Deferred income tax assets:
Allowance for doubtful accounts and losses on loans		1,279			910
Pension and postretirement benefits		4,048			2,305
Operating loss carryforwards		41,610			41,663
Accrued expenses		426			424
Other		2,526			3,075
		49,889			48,377
Valuation allowance		(39,913	)		(37,349	)
Net deferred income tax liabilities		(29,806	)		(39,108	)

All deferred taxes are categorized as non-current.

A reconciliation of 2019 and 2018 changes in gross unrecognized tax benefits is as follows:

(Thousands of Dollars)	2019			2018

Balance, beginning of year		16,104			13,915
Increases (decreases) in tax positions for prior years		33			132
Increases in tax positions for the current year		2,472			2,567
Lapse in statute of limitations		(357	)		(510	)
Balance, end of year		18,252			16,104

Approximately $10,665,000 and $10,312,000 of the gross unrecognized tax benefit balances for 2019 and 2018, respectively, relate to state net operating losses which are netted against deferred taxes on our balance sheet. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $14,019,000 at September 29, 2019. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest related to unrecognized tax benefits was, net of tax, $848,000 at September 29, 2019 and $563,000 at September 30, 2018. There were no amounts provided for penalties at September 29, 2019 or September 30, 2018.

At September 29, 2019, we had a deferred tax asset of $4,255,000 related to disallowed interest expense.

No significant income tax audits are currently in progress and the Company has not received any notices of intent to audit. Certain of the Company's state income tax returns for the year ended September 29, 2013 are open for examination. The Federal and remaining state returns are open beginning with the September 29, 2014 year.

At September 29, 2019, we have state tax benefits of approximately $63,338,000 in net operating loss ("NOL") carryforwards that expire between 2020 and 2039. These NOL carryforwards result in a deferred income tax asset of $50,037,000 at September 29, 2019, a portion of which is offset by a valuation allowance.

As expected, we reported a taxable income in 2018 in excess of our remaining NOL, so that no Federal NOL is available in fiscal year 2019.

Delaware	42-0823980
(State of incorporation)	(I.R.S. Employer Identification No.)


Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Common Stock - $0.01 par value	LEE	New York Stock Exchange

TABLE OF CONTENTS			PAGE


Part I

	Item 1	Business	1

	Item 1A	Risk Factors	10

	Item 1B	Unresolved Staff Comments	16

	Item 2	Properties	16

	Item 3	Legal Proceedings	16

	Item 4	Mine Safety Disclosures	16

Part II

	Item 5	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17

	Item 6	Selected Financial Data	19

	Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	20

	Item 7A	Quantitative and Qualitative Disclosures about Market Risk	31

	Item 8	Financial Statements and Supplementary Data	32

	Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	32

	Item 9A	Controls and Procedures	32

	Item 9B	Other Information	34

Part III

	Item 10	Directors, Executive Officers and Corporate Governance	34

	Item 11	Executive Compensation	34

	Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	34

	Item 13	Certain Relationships and Related Transactions, and Director Independence	34

	Item 14	Principal Accounting Fees and Services	34

Part IV

	Item 15	Exhibits and Financial Statement Schedules	35

Consolidated Financial Statements			36

Signatures			74

Exhibit Index			75

			Average Units ⁽¹⁾				2019 Monthly Average ('000s) ⁽⁷⁾
Newspaper	Primary Website	Location	Daily ⁽²⁾		Sunday		Unique Visitors		Page Views

St. Louis Post-Dispatch ⁽³⁾	stltoday.com	St. Louis, MO		84,657		336,636		6,234		66,170
Arizona Daily Star ^{(5) (3)}	azstarnet.com	Tucson, AZ		40,593		83,454		1,603		13,310
Capital Newspapers ⁽⁴⁾
Wisconsin State Journal	madison.com	Madison, WI		51,401		60,789		2,147		13,127
Daily Citizen	wiscnews.com/bdc	Beaver Dam, WI		3,968		—		93		731
Portage Daily Register	wiscnews.com/pdr	Portage, WI		2,211		—		246		1,307
Baraboo News Republic	wiscnews.com/bnr	Baraboo, WI		2,203		—		128		681
The Times	nwitimes.com	Munster, Valparaiso, and Crown Point, IN		40,328		52,276		1,772		30,054
Quad Cities Group
Quad-City Times	qctimes.com	Davenport, IA		26,836		28,372		782		6,837
Dispatch-Argus	qconline.com	Moline, IL		50,145		17,939		357		3,353
Muscatine Journal	muscatinejournal.com	Muscatine, IA		3,659		—		80		636
Lincoln Group
Lincoln Journal Star	journalstar.com	Lincoln, NE		34,462		40,930		1,872		21,995
Columbus Telegram⁽⁶⁾	columbustelegram.com	Columbus, NE		3,869		—		164		1,198
Fremont Tribune ⁽⁶⁾	fremonttribune.com	Fremont, NE		3,334		—		148		1,129
Beatrice Daily Sun ⁽⁶⁾	beatricedailysun.com	Beatrice, NE		2,479		—		84		577
Central Illinois Newspaper Group
The Pantagraph⁽³⁾	pantagraph.com	Bloomington, IL		17,848		21,336		624		8,270
Herald & Review	herald-review.com	Decatur, IL		11,787		18,033		518		4,751
Journal Gazette & Times-Courier	jg-tc.com	Mattoon/Charleston, IL		6,236		—		165		1,534
Racine/Kenosha Group
The Journal Times	journaltimes.com	Racine, WI		14,163		15,482		512		6,594
Kenosha News	kenoshanews.com	Kenosha, WI		14,165		16,486		204		1,984
Billings Gazette	billingsgazette.com	Billings, MT		21,847		23,123		1,232		11,257
The Courier	wcfcourier.com	Waterloo and Cedar Falls, IA		29,016		22,443		595		5,799
River Valley Newspaper Group
La Crosse Tribune	lacrossetribune.com	La Crosse, WI		13,737		16,144		569		6,874
Winona Daily News	winonadailynews.com	Winona, MN		3,796		3,935		169		1,905
The Chippewa Herald ⁽⁶⁾	chippewa.com	Chippewa Falls, WI		1,617		—		160		1,445
The Bismarck Tribune	bismarcktribune.com	Bismarck, ND		17,177		18,627		552		6,271
Helena/Butte Group
Independent Record ⁽⁶)	helenair.com	Helena, MT		8,800		10,192		392		3,927
Montana Standard ⁽⁶⁾	mtstandard.com	Butte, MT		7,424		8,310		287		2,879
Missoula Group
Missoulian ⁽⁶⁾	missoulian.com	Missoula, MT		13,979		16,195		650		4,765
Ravalli Republic ⁽⁶⁾	ravallinews.com	Hamilton, MT		1,796		1,343		94		455
Sioux City Journal	siouxcityjournal.com	Sioux City, IA		16,871		17,427		550		4,010

			Average Units ⁽¹⁾				2019 Monthly Average ('000s) ⁽⁷⁾
Newspaper	Primary Website	Location	Daily ⁽²⁾		Sunday		Unique Visitors		Page Views

Casper Star-Tribune	trib.com	Casper, WY		16,575		17,011		519		3,562
Rapid City Journal	rapidcityjournal.com	Rapid City, SD		13,817		16,853		533		4,757
The Post-Star	poststar.com	Glens Falls, NY		13,721		15,733		663		7,703
Mid-Valley News Group
Albany Democrat-Herald	democratherald.com	Albany, OR		7,743		8,020		224		2,079
Corvallis Gazette-Times	gazettetimes.com	Corvallis, OR		7,170		7,174		244		1,993
The Southern Illinoisan	thesouthern.com	Carbondale, IL		8,654		13,719		400		2,404
Magic Valley Group
The Times-News	magicvalley.com	Twin Falls, ID		17,492		10,978		364		2,820
Elko Daily Free Press ⁽⁶⁾	elkodaily.com	Elko, NV		2,933		—		185		1,651
The Daily News	tdn.com	Longview, WA		13,587		10,608		257		1,944
Globe Gazette	globegazette.com	Mason City, IA		7,267		8,521		317		4,531
Napa Valley Register⁽³⁾	napavalleyregister.com	Napa, CA		7,965		7,903		428		3,634
Arizona Daily Sun ^{(3) (6)}	azdailysun.com	Flagstaff, AZ		7,011		7,072		329		1,868
The Times and Democrat ⁽⁶⁾	thetandd.com	Orangeburg, SC		6,084		6,218		328		2,751
The Citizen ⁽⁶⁾	auburnpub.com	Auburn, NY		5,210		5,867		298		2,925
Santa Maria Times ^{(3) (6)}	santamariatimes.com	Santa Maria, CA		5,206		4,460		388		2,569
The Sentinel ⁽⁶⁾	cumberlink.com	Carlisle, PA		6,086		—		264		1,968
The World⁽³⁾	theworldlink.com	Coos Bay, OR		3,705		—		120		705
Daily Journal ^{(3) (6)}	dailyjournalonline.com	Park Hills, MO		2,803		—		226		1,901
The Sentinel ⁽³⁾	hanfordsentinel.com	Hanford, CA		2,651		—		169		970
				706,084		969,609		29,239		286,560

	(1)	Source: AAM: September 2019 Quarterly Executive Summary Data Report, unless otherwise noted.
	(2)	Not all newspapers are published Monday through Saturday.
	(3)	Owned by Pulitzer Inc.
	(4)	Owned by MNI.
	(5)	Owned by Star Publishing and published through TNI.
	(6)	Source: Company statistics.
	(7)	Excludes Agri-Media sites

			Service	Named
			With The	To Current
Name	Age		Company	Position	Current Position

Kevin D. Mowbray		57	September 1986	February 2016	President and Chief Executive Officer
Joseph J. Battistoni		36	March 2014	November 2019	Vice President - Local Advertising
Nathan E. Bekke		50	January 1992	February 2015	Vice President - Consumer Sales and Marketing
Ray G. Farris		63	October 2006	December 2018	Vice President - Group Publisher
Suzanna M. Frank		49	December 2003	March 2008	Vice President - Audience
Astrid J. Garcia		69	December 2006	December 2013	Vice President - Human Resources and Legal
James A. Green		53	March 2013	March 2013	Vice President - Digital
John M. Humenik		56	December 1998	February 2015	Vice President - News
Timothy R. Millage		38	March 2010	August 2018	Vice President - Chief Financial Officer and Treasurer
Douglas L. Ranes		69	February 2005	November 2019	Vice President - Production Operations
Michele Fennelly White		57	June 1994	June 2011	Vice President - Information Technology and Chief Information Officer

	•	Adopting a majority voting standard for the election of directors in uncontested elections;
	•	Allowing proxy access, providing shareholders who satisfy the requirements specified in the amended bylaws the ability to include their own nominees in the Company’s proxy statement;
	•	Allowing substantially more time for shareholders to submit proposals and director nominations for consideration at annual meetings; and
	•	Demonstrating a commitment to board refreshment through the nomination of three new independent board members.

	•	Taking down our websites, as media companies have been a target of their websites being disabled;
	•	Improper disclosures of personal data or confidential information;

							Quarter Ended
(Dollars)	December		March		June		September

2019
High		3.05		3.68		3.49		2.33
Low		1.84		2.02		2.12		1.77
Closing		2.13		3.30		2.24		2.01

2018
High		2.50		2.70		3.30		3.30
Low		2.15		1.95		2.00		2.60
Closing		2.35		1.95		2.85		2.65

2017
High		3.76		3.30		3.10		2.40
Low		2.40		2.40		1.75		1.80
Closing		2.90		2.60		1.90		2.20

									September 29
(Dollars)	2015		2016		2017		2018		2019

Lee Enterprises, Incorporated		61.54		110.95		65.09		78.40		60.36
Peer Group Index		94.68		98.78		116.93		137.73		148.49
S&P 500 Stock Index		99.39		114.72		136.07		160.44		167.27

(Thousands of Dollars and Shares, Except Per Share Data)	2019			2018			2017			2016			2015

OPERATING RESULTS
Operating revenue		509,854			543,955			566,943			614,364			648,543
Cash Costs (1) (3)		398,815			423,766			437,767			477,857			501,629
Depreciation and amortization		29,332			31,766			41,282			43,441			45,563
Assets loss (gain) on sales, impairments and other		2,464			6,429			(1,150	)		(954	)		106
Restructuring costs and other		11,635			5,550			7,523			1,825			3,304
Equity in earnings of associated companies		7,121			9,249			7,609			8,533			8,254
Operating income (3)		74,729			85,693			89,130			100,728			106,195
Interest expense		(47,488	)		(52,842	)		(57,573	)		(64,233	)		(72,409	)
Debt financing and administration costs		(7,214	)		(5,311	)		(4,818	)		(5,947	)		(5,433	)
Gain on insurance settlement		—			—			—			30,646			—
Other, net (3)		3,813			3,280			13,477			(9,537	)		3,213

Net income		15,909			47,048			28,605			36,019			24,318

Income attributable to Lee Enterprises, Incorporated		14,268			45,766			27,481			34,961			23,316

Earnings per common share:
Basic		0.26			0.84			0.51			0.66			0.44
Diluted		0.25			0.82			0.50			0.64			0.43

Weighted average common shares:
Basic		55,565			54,702			53,990			53,198			52,640
Diluted		56,884			55,948			55,392			54,224			53,931

Total assets		555,202			575,411			620,850			662,855			747,825
Debt, including current maturities (2)		443,627			484,859			548,385			617,167			725,872
Debt, net of cash and restricted cash (2)		434,982			479,479			537,764			600,183			714,738
Stockholders' deficit		(38,484	)		(37,354	)		(92,235	)		(128,485	)		(159,393	)

	Effect on 2019 Pension		Effect on September 29, 2019
	Expense		Liability
Pension discount rate(1)	$	—	$	11,200,000
Postretirement and postemployment benefits discount rate(1)	$	—	$	500,000
Pension expected rate of return on assets	$	710,000	$	—
Postretirement and postemployment benefits expected rate of return on assets	$	118,000	$	—

(Thousands of Dollars)	Payments (or Commitments) Due (Years)
			Less				More
Nature of Obligation	Total		Than 1		1-3	3-5	Than 5

Debt (Principal Amount)⁽¹⁾		443,627		2,954	440,673	—		—
Interest expense ⁽²⁾⁽³⁾		111,093		43,840	67,253	—		—
Operating lease obligations		15,925		3,402	4,528	3,003		4,992
Capital expenditure commitments		1,642		1,642	—	—		—
		572,287		51,838	512,454	3,003		4,992

	(1)	Maturities of long-term debt are limited to mandatory payments and, accordingly, exclude excess cash flow, asset sale and other payments under the Notes and the 2nd Lien Term Loan. While excess cash flow payments are based on actual performance, we expect to make voluntary and excess cash flow payments on the 2nd lien term loan currently outstanding, in the next four years. See Note 5 of the Notes to the Consolidated Financial Statements, included herein.
	(2)	Interest expense includes an estimate of interest expense for the Notes, 1st Lien Credit Facility, and 2nd Lien Term Loan until their maturities in March 2022, March 2019, and December 2022, respectively. Interest expense under the Notes is estimated using the 9.5% contractual rate applied to the outstanding balance as reduced by future contractual maturities of such debt. Interest expense under the Revolving Facility is estimated based on the one month LIBOR at September 29, 2019 of 1.82% as increased by our applicable margin of 5.5% applied to the outstanding balance, as reduced by future contractual maturities of such debt. Interest expense under the 2nd Lien Term Loan is estimated using the 12.0% contractual rate applied to the outstanding balance during each period. Changes in interest rates in excess of current LIBOR levels, use of borrowing rates not based on LIBOR, use of interest rate hedging instruments, and/or principal payments in excess of contractual maturities or based on other requirements of the Notes, 1st Lien Credit Facility or 2nd Lien Term Loan could significantly change this estimate. See Note 5 of the Notes to Consolidated Financial Statements, included herein.
	(3)	Interest expense excludes non-cash present value adjustments and amortization of debt financing costs previously paid. See Note 5 of the Notes to Consolidated Financial Statements, included herein.

CONSOLIDATED FINANCIAL STATEMENTS	PAGE


Consolidated Statements of Income and Comprehensive Income (Loss)	37

Consolidated Balance Sheets	38

Consolidated Statements of Stockholders' Equity (Deficit)	40

Consolidated Statements of Cash Flows	41

Notes to Consolidated Financial Statements	42

Report of Independent Registered Public Accounting Firm	73

(Thousands of Dollars, Except Per Common Share Data)	2019			2018			2017

Operating revenue:
Advertising and marketing services		265,933			303,446			331,360
Subscription		186,691			195,108			191,922
Other		57,230			45,401			43,661
Total operating revenue		509,854			543,955			566,943
Operating expenses:
Compensation		182,869			199,164			213,109
Newsprint and ink		22,237			24,949			24,904
Other operating expenses		193,709			199,653			199,754
Depreciation and amortization		29,332			31,766			41,282
Assets loss (gain) on sales, impairments and other		2,464			6,429			(1,150	)
Restructuring costs and other		11,635			5,550			7,523
Total operating expenses		442,246			467,511			485,422
Equity in earnings of associated companies		7,121			9,249			7,609
Operating income		74,729			85,693			89,130
Non-operating income (expense):
Interest expense		(47,488	)		(52,842	)		(57,573	)
Debt financing and administrative costs		(7,214	)		(5,311	)		(4,818	)
Other, net		3,813			3,280			13,477
Total non-operating expense, net		(50,889	)		(54,873	)		(48,914	)
Income before income taxes		23,840			30,820			40,216
Income tax expense (benefit)		7,931			(16,228	)		11,611
Net income		15,909			47,048			28,605
Net income attributable to non-controlling interests		(1,641	)		(1,282	)		(1,124	)
Income attributable to Lee Enterprises, Incorporated		14,268			45,766			27,481
Other comprehensive income (loss), net of income taxes		(17,368	)		4,322			6,710
Comprehensive (loss) income attributable to Lee Enterprises, Incorporated		(3,100	)		50,088			34,191

Earnings per common share:
Basic:		0.26			0.84			0.51
Diluted:		0.25			0.82			0.50

	Amount									Shares
(Thousands of Dollars and Shares)	2019			2018			2017			2019		2018		2017

Common Stock:
Balance, beginning of year		572			567			558			57,141		56,712		55,771
Shares issued		5			5			9			505		429		941
Balance, end of year		577			572			567			57,646		57,141		56,712
Additional paid-in capital:
Balance, beginning of year		253,511			251,790			249,740
Stock compensation		2,040			2,039			2,088
Shares issued (redeemed)		(75	)		(318	)		(38	)
Balance, end of year		255,476			253,511			251,790
Accumulated deficit:
Balance, beginning of year		(279,691	)		(328,524	)		(356,005	)
Net income		15,909			47,048			28,605
Net income attributable to non-controlling interests		(1,641	)		(1,282	)		(1,124	)
Cumulative effect of accounting change		—			3,067			—
Balance, end of year		(265,423	)		(279,691	)		(328,524	)
Accumulated other comprehensive income (loss):
Balance, beginning of year		(11,746	)		(16,068	)		(22,778	)
Change in pension and postretirement benefits		(24,667	)		10,477			11,439
Deferred income taxes, net		7,299			(3,088	)		(4,729	)
Cumulative effect of accounting change		—			(3,067	)		—
Balance, end of year		(29,114	)		(11,746	)		(16,068	)
Total stockholders' deficit		(38,484	)		(37,354	)		(92,235	)		57,646		57,141		56,712

(Thousands of Shares)	2019			2018			2017

Under option, beginning of year		1,100			1,271			1,698
Exercised		(93	)		(131	)		(339	)
Canceled		(198	)		(40	)		(88	)
Under option, end of year		809			1,100			1,271
Exercisable, end of year		809			1,100			1,271

(Dollars)	Options Outstanding			Options Exercisable
Range of	Number Outstanding (Thousands)	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price	Number Exercisable (Thousands)	Weighted Average Exercise Price

1 - 2	425	2.7	1.14	425	1.14
2 - 3	384	1.0	2.57	384	2.57
	809	1.9	1.82	809	1.82

/s/ Kevin D. Mowbray		/s/ Timothy R. Millage
Kevin D. Mowbray		Timothy R. Millage
President and Chief Executive Officer		Vice President, Chief Financial Officer and Treasurer
(Principal Executive Officer)		(Principal Financial and Accounting Officer)

Signature

/s/ Richard R. Cole		Director
Richard R. Cole

/s/ Nancy S. Donovan		Director
Nancy S. Donovan

/s/ Leonard J. Elmore		Director
Leonard J. Elmore

/s/ Margaret R. Liberman		Director
Margaret R. Liberman

/s/ Mary E. Junck		Director
Mary E. Junck

/s/ Brent M. Magid		Director
Brent Magid

/s/ William E. Mayer		Director
William E. Mayer

/s/ Herbert W. Moloney III		Director
Herbert W. Moloney III

/s/ Kevin D. Mowbray		President and Chief Executive Officer, and Director
Kevin D. Mowbray

/s/ Gregory P. Schermer		Director
Gregory P. Schermer

/s/ Timothy R. Millage		Vice President, Chief Financial Officer and Treasurer
Timothy R. Millage

Number	Description

3.1 *	Amended and Restated Certificate of Incorporation of Lee Enterprises, Incorporated effective as of January 30, 2012 (Exhibit 3.1 to Form 8-K filed on February 3, 2012)

3.2 *	Second Amended and Restated By-Laws of Lee Enterprises, Incorporated effective as of June 26, 2019 (Exhibit 3.1 to Form 8-K filed June 27, 2019)

4.1 *	Indenture dated as of March 31, 2014 among Lee Enterprises, Incorporated, certain subsidiaries from time to time parties thereto, U.S. Bank National Association, as Trustee, and Deutsche Bank Trust Company Americas, as Collateral Agent (Exhibit 4.1 to Form 8-K filed on April 4, 2014)

4.2 *	Warrant Agreement dated as of March 31, 2014 between Lee Enterprises, Incorporated and Wells Fargo Bank, National Association (Exhibit 4.2 to Form 8-K filed on April 4, 2014)

4.3 *	Registration Rights Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, Mudrick Capital Management, LP, Hawkeye Capital Management, LLC, Cohanzick Management, LLC, Aristeia Capital, L.L.C., CVC Credit Partners, LLC, Franklin Mutual Advisors, LLC and Wingspan Master Fund, LP (Exhibit 4.3 to Form 8-K filed on April 4, 2014)

10.1 *	Purchase Agreement dated March 21, 2014 among Lee Enterprises, Incorporated, certain subsidiaries party thereto from time to time, U.S. Bank National Association, as Trustee, and Deutsche Bank Trust Company Americas, as Collateral Agent, involving a $400,000,000 aggregate principal amount of 9.5% Senior Secured Notes, pursuant to an Indenture dated as of March 31, 2014 (Exhibit 10.1 to Form 8-K filed on March 27, 2014)

10.2 *	Joinder Agreement dated as of June 25, 2015, made by each Subsidiary Guarantor a party thereto in favor of U.S. Bank National Association, as Trustee and Deutsche Bank Trust Company Americas, as collateral agent (Exhibit 10.1 to Form 8-K filed on July 1, 2015)

10.3 *	First Lien Credit Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and JPMorgan Securities LLC and Deutsche Bank Securities Inc., as Joint Lead Arrangers and as Joint Bookrunners (Exhibit 10.1 to Form 8-K filed on April 4, 2014)

10.4 *	Second Lien Loan Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Lenders from time to time parties thereto, Wilmington Trust, National Association, as Administrative Agent and Collateral Agent, and JPMorgan Securities LLC and Deutsche Bank Securities Inc., as Joint Lead Arrangers and as Joint Bookrunners (Exhibit 10.2 to Form 8-K filed on April 4, 2014)

10.5 *	Security Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Subsidiary Guarantors and Deutsche Bank Trust Company Americas, as Collateral Agent (Exhibit 10.3 to Form 8-K filed on April 4, 2014)

10.6 *	Pari Passu Intercreditor Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the other Grantors from time to time parties thereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association and Deutsche Bank Trust Company Americas (Exhibit 10.4 to Form 8-K filed on April 4, 2014)

10.7 *	Joinder Agreement dated as of June 25, 2015, made by each Subsidiary Guarantor a party thereto in favor of JPMorgan Chase Bank, N.A., as collateral agent for the benefit of the Secured Creditors referred to in the First Lien Guarantee and Collateral Agreement dated as of March 31, 2014 referred to therein (Exhibit 10.2 to Form 8-K filed on July 1, 2015)

10.8 *	Pulitzer Pari Passu Intercreditor Agreement dated as of June 25, 2015 among Lee Enterprises, Incorporated, the other Grantors party thereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association and Deutsche Bank Trust Company Americas (Exhibit 10.3 to Form 8-K filed on July 1, 2015)

10.9 *	Junior Intercreditor Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the other Grantors from time to time parties thereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association, Deutsche Bank Trust Company Americas and Wilmington Trust, National Association (Exhibit 10.5 to Form 8-K filed on April 4, 2014)

Number	Description

10.10 *	Pulitzer Junior Intercreditor Agreement dated as of June 25, 2015 among Lee Enterprises, Incorporated, the other Grantors party hereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association, Deutsche Bank Trust Company Americas and Wilmington Trust, National Association (Exhibit 10.4 to Form 8-K filed on July 1, 2015)

10.11 *	First Lien Guarantee and Collateral Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Subsidiary Guarantors and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (Exhibit 10.6 to Form 8-K filed on April 4, 2014)

10.12 *	Amendment Agreement dated as of November 1, 2019 among Lee Enterprises, Incorporated, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (Exhibit 10.1 to Form 8-K filed on November 5, 2019)

10.13 *	Intercompany Subordination Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Subsidiary Guarantors, Pulitzer, Pulitzer Subsidiaries and JPMorgan Chase Bank, N.A. (Exhibit 10.7 to Form 8-K filed on April 4, 2014)

10.14*	Second Lien Guarantee and Collateral Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Subsidiary Guarantors, Pulitzer, Pulitzer Subsidiaries and Wilmington Trust, National Association, as Administrative Agent and Collateral Agent (Exhibit 10.8 to Form 8-K filed on April 4, 2014)

10.15 *	Second Amendment to Intercreditor Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, The Bank of New York Mellon Trust Company, N.A., Wilmington Trust, National Association, Pulitzer and the Pulitzer Subsidiaries (Exhibit 10.9 to Form 8-K filed on April 4, 2014)

10.16 *	Intercompany Subordination Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Subsidiary Guarantors, Pulitzer, Pulitzer Subsidiaries and Wilmington Trust, National Association (Exhibit 10.10 to Form 8-K filed on April 4, 2014)

10.17 *	Management Agreement dated as of June 26, 2018 between BH Media Group, Inc. and Lee Enterprises, Incorporated (Exhibit 10.1 to Form 8-K filed on June 26, 2018)

10.18 *	Operating Agreement of St. Louis Post-Dispatch LLC, dated as of May 1, 2000, as amended by Amendment No. 1 to Operating Agreement of St. Louis Post-Dispatch LLC, dated as of June 1, 2001 (Exhibit 10.5 to Form 10-Q for the Fiscal Quarter Ended June 30, 2005)

10.19*	Amendment Number Two to Operating Agreement of St. Louis Post-Dispatch LLC, effective February 18, 2009, between Pulitzer Inc. and Pulitzer Technologies, Inc. (Exhibit 10.13 to Form 10-Q for the Fiscal Quarter Ended March 29, 2009)

10.20*	Amended and Restated Joint Operating Agreement, dated December 22, 1988, between Star Publishing Company and Citizen Publishing Company (Exhibit 10.2 to Form 10-Q for the Fiscal Quarter Ended June 30, 2005)

10.21*	Amended and Restated Partnership Agreement, dated as of November 30, 2009, between Star Publishing Company and Citizen Publishing Company (Exhibit 10.2 to Form 10-Q for the Fiscal Quarter Ended December 27, 2009)

10.22*	Amended and Restated Management Agreement, dated as of November 30, 2009, between Star Publishing Company and Citizen Publishing Company (Exhibit 10.1 to Form 10-Q for the Fiscal Quarter Ended December 27, 2009)

10.23*	License Agreement (Star), as amended and restated November 30, 2009, between Star Publishing Company and TNI Partners (Exhibit 10.3 to Form 10-Q for the Fiscal Quarter Ended December 27, 2009)

10.24*	License Agreement (Citizen), as amended and restated November 30, 2009, between Citizen Publishing Company and TNI Partners (Exhibit 10.4 to Form 10-Q for the Fiscal Quarter Ended December 27, 2009)

10.25 *	License Agreement, dated as of May 1, 2000, by and between Pulitzer Inc. and St. Louis Post-Dispatch LLC (Exhibit 10.7 to Form 10-Q for the Fiscal Quarter Ended June 30, 2005)

10.26*	Non-Confidentiality Agreement, dated as of May 1, 2000 (Exhibit 10.10 to Form 10-Q for the Fiscal Quarter Ended June 30, 2005)

10.27.1 +*	Amended and Restated Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (effective October 1, 1999, as amended effective February 17, 2016) (Exhibit 10.1 to Form 8-K filed on February 23, 2016)

10.27.2 +*	Form of Restricted Stock Agreement related to Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (Effective October 1, 1999, as amended effective February 17, 2016) (Exhibit 10.2 to Form 8-K filed on February 23, 2016)

Number	Description

10.27.3 +*	Form of Incentive Stock Option Agreement related to Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (Effective October 1, 1999, as amended effective February 17, 2016) (Exhibit 10.3 to Form 8-K filed on February 23, 2016)

10.27.4 +*	Form of Non-Qualified Stock Option Agreement related to Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (Effective October 1, 1999, as amended effective February 17, 2016) (Exhibit 10.4 to Form 8-K filed on February 23, 2016)

10.28 +*	Amended and Restated Lee Enterprises, Incorporated 1996 Stock Plan for Non-Employee Directors Effective February 22, 2017 (Appendix A to Schedule 14A Definitive Proxy Statement for 2017)

10.29 +*	Lee Enterprises, Incorporated Supplementary Benefit Plan, Amended and Restated as of January 1, 2008 (Exhibit 10.25 to Form 10-K for the Fiscal Year Ended September 28, 2008)

10.30 +*	Lee Enterprises, Incorporated Outside Directors Deferral Plan, Amended and Restated as of January 1, 2008 (Exhibit 10.26 to Form 10-K for the Fiscal Year Ended September 28, 2008)

10.31.1 +*	Form of Amended and Restated Employment Agreement between Lee Enterprises, Incorporated and its President and Chief Executive Officer (Exhibit 10.31.2 to Form 10-K for the Fiscal Year Ended September 30, 2018)

10.31.2 +*	Form of Employment Agreement between Lee Enterprises, Incorporated and Certain of its Senior Executive Officers (Exhibit 10.31.3 to Form 10-K for the Fiscal Year Ended September 30, 2018)

10.32 +*	Form of Indemnification Agreement for Lee Enterprises, Incorporated Directors and Executive Officers Group (Exhibit 10.32 to Form 10-K for the Fiscal Year Ended September 30, 2018)

10.33 +*	Lee Enterprises, Incorporated Amended and Restated Incentive Compensation Program (Effective February 22, 2017) (Appendix B to Schedule 14A Definitive Proxy Statement for 2017)

21	Subsidiaries and associated companies

23	Consent of KPMG LLP, Independent Registered Public Accounting Firm

24	Power of Attorney

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	State of Organization	Percentage of Voting Securities Owned

Lee Enterprises, Incorporated	Delaware	Parent
Lee Publications, Inc.	Delaware	100	%
Lee Procurement Solutions Co.	Iowa	100	%
Lee Consolidated Holdings Co.	South Dakota	100	%
Lee Foundation	Iowa	100	%
Accudata, Inc.	Iowa	100	%
Amplified Digital, LLC	Delaware	100	%
Fairgrove LLC	Delaware	100	%
Flagstaff Publishing Co.	Washington	100	%
Hanford Sentinel, Inc.	Washington	100	%
Journal-Star Printing Co.	Nebraska	100	%
Napa Valley Publishing Co.	Washington	100	%
Pantagraph Publishing Co.	Delaware	100	%
Pulitzer Inc.	Delaware	100	%
Pulitzer Missouri Newspapers, Inc.	Delaware	100	%
Pulitzer Newspapers, Inc.	Delaware	100	%
Pulitzer Network Systems LLC	Delaware	100	%
Pulitzer Technologies, Inc.	Delaware	100	%
Santa Maria Times, Inc.	Nevada	100	%
Sioux City Newspapers, Inc.	Iowa	100	%
Southwestern Oregon Publishing Co.	Oregon	100	%
St. Louis Post-Dispatch LLC	Delaware	100	%
Star Publishing Company	Arizona	100	%
Suburban Journals of Greater St. Louis LLC	Delaware	100	%
Ynez Corporation	California	100	%
INN Partners, L.C. d/b/a TownNews.com	Iowa	82.5	%
Madison Newspapers, Inc. d/b/a Capital Newspapers	Wisconsin	50	%
TNI Partners	Arizona	50	%

1	I have reviewed this Annual report on Form 10-K ("Annual Report") of Lee Enterprises, Incorporated ("Registrant");

2	Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report;

3	Based on my knowledge, the Consolidated Financial Statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Annual Report;

4	The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

		a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared;

		b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

		c)	evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this Annual Report based on such evaluation; and

		d)	disclosed in this Annual Report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an Annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5	The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the Audit Committee of Registrant's Board of Directors (or persons performing the equivalent functions):

		a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

		b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.



(i)		this Annual report on Form 10-K for the period ended September 29, 2019 ("Annual Report"), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(ii)		the information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of Lee Enterprises, Incorporated for the periods presented in the Annual Report.