LEE ENTERPRISES, Inc 10-Q

Item 3. 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, which is entirely fixed rate, eliminates the potential impact of an increase in interest rates. We have no interest rate hedging in place. COMMODITIES Newsprint prices remained steady in the quarter from the increases in prices implemented throughout 2022, but price reductions effective in Q3 of 2023 have been announced. Despite reduced consumption, the newsprint supply chain continues to be challenged due to significant capacity reductions taken in the last two years including paper machine permanent shutdowns, conversion to paper grades other than newsprint, and recovering demand, domestically and exports, for newsprint. Our long-term supply strategy continues to align the Company with those cost-effective suppliers most likely to continue producing and supplying newsprint to the North American market and geographically aligned with our 21 print locations. Where possible the Company will align supply with the lowest cost material, but may be restricted due to shipping expenses and paper production availability. A $10 per tonne price increase on 27.7-pound newsprint would result in an annualized reduction in income before taxes of approximately $0.3 million based on current and anticipated consumption trends in 2023, excluding consumption of TNI and MNI and the impact of LIFO accounting. Our fixed rate debt consists of $460.0 million principal amount of the Term Loan recorded at carrying value.