LEE ENTERPRISES, Inc 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk stemming from changes in interest rates and commodity prices. Changes in these factors could cause fluctuations in earnings and cash flows. In the normal course of business, exposure to certain of these market risks is managed as described below. INTEREST RATES ON DEBT Our debt structure is entirely fixed rate as of September 25, 2022. COMMODITIES Declining structural demand trends and the COVID-19 impact on our industry and advertising led North American newsprint producers' efforts to permanently reduce manufacturing capacity by approximately 60% of pre-pandemic levels. As a result producers are experiencing high capacity utilization and increased backlogs which in turn led to numerous price increases during 2021 and 2022. We are still experiencing rising costs in our operations. Our long term supply strategy continues to align and concentrate the Company's purchases with those cost effective suppliers most likely to continue producing and supply newsprint to the North American market. Where possible the Company will align supply with the lowest cost material. A $10 per tonne price increase for 27.7 pound newsprint would result in an annualized reduction in income before taxes of approximately $308,000 based on anticipated consumption in 2023 excluding consumption of TNI and MNI and the impact of LIFO accounting. 28 Table of Contents SENSITIVITY TO CHANGES IN VALUE Our fixed rate debt consists of $462,554,000 principal amount of the Term Loan recorded at carrying value. At September 25, 2022, the fair value is $463,446,000. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Information with respect to this Item is included herein under the caption “Consolidated Financial Statements”. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.