LEE ENTERPRISES, Inc 10-K

ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we concluded an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our Company’s reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation the Company identified a material weakness in its internal control over financial reporting. Due to the material weakness, our principal executive officer and our principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective. In light of the material weakness described below, management performed additional analysis and monitoring procedures around third-party data to ensure that our interim and annual consolidated financial statements were prepared in accordance with U.S. GAAP. Accordingly, management believes that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented, in accordance with U.S. GAAP. Management's Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) of the Exchange Act. Any internal control system, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Accordingly, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of the September 24, 2023 (the "Evaluation Date"), using the criteria set forth in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that our internal control over financial reporting was not effective as of the Evaluation Date due to a material weakness in the Company's internal control over financial reporting described below. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified by the Company is as follows: • Management did not design and implement controls to assess the reliability of certain internally generated information, or evaluate information received from certain third-party service providers, that are relevant to certain revenue recognized in the Company's Consolidated Financial Statements. Management previously reported this material weakness in Item 9A of our Annual Report on Form 10-K for the fiscal year ended September 25, 2022. The description of the material weakness has been updated to reflect information learned during the remediation process executed in fiscal 2023. BDO USA, P.C., our independent registered public accounting firm, has issued a report on our internal control over financial reporting as of September 24, 2023, which is included herein. As a result of the material weakness described above, such report includes an adverse audit report on the effectiveness of internal control over financial reporting as of September 24, 2023. 27 Table of Contents Remediation Plans and Actions Management is committed to remediating the material weakness that has been identified and maintaining an effective system of disclosure controls and procedures. During fiscal 2023, management executed certain actions steps to remediate the material weakness, including: • Established a project team to review, evaluate and remediate the material weakness in internal controls over financial reporting. The Company's recently expanded Corporate Compliance function is leading management's efforts related to effective control design, documentation and implementation, as well as remediate ineffective controls. • Enhanced the design of internal controls around evaluating data provided by third-parties, which included the initial implementation of a new revenue IT system. Management will continue to execute the remediation steps outlined above until the material weakness is remediated. The material weakness will not be considered remediated until the remediated and/or newly implemented internal controls operate for a sufficient period of time and management has concluded, through testing, that these internal controls are operating effectively. We are working to have the material weakness remediated as soon as possible. Remediation of Previously Reported Material Weaknesses As previously reported in Item 9A of our Annual Report on Form 10-K for the fiscal year ended September 25, 2022, management had concluded we had material weaknesses in internal control over financial reporting, specific to a) the Company's information technology general controls and b) controls to validate the accuracy of the tax basis associated with certain deferred tax assets and liabilities. To address the material weaknesses, during the fiscal year ended September 24, 2023 we (a) established a project team to review, evaluate, and remediate material weaknesses in internal controls over financial reporting including expanding our Corporate Compliance function, (b) underwent a complete user access review related to our information technology systems, (c) conducted additional training to relevant personnel, (d) enhanced existing internal control design, and (e) enhanced our record retention policy specifically around complex tax items. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING Other than as described above, there have been no changes in our internal control over financial reporting that occurred during the 13 weeks ended September 24, 2023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors Lee Enterprises, Incorporated Davenport, Iowa Opinion on Internal Control over Financial Reporting We have audited Lee Enterprises, Incorporated’s (the “Company”) internal control over financial reporting as of September 24, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of September 24, 2023, based on the COSO criteria. We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s assessment. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of September 24, 2023 and September 25, 2022, the related consolidated statements of income (loss) and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the fiscal years ended September 24, 2023 and September 25, 2022, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated December 8, 2023, expressed an unqualified opinion thereon. 28 Table of Contents Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness was identified regarding the following: a. Management did not design and implement controls to assess the reliability of certain internally generated information, or evaluate information received from certain third-party service providers, that are relevant to certain revenue recognized in the Company’s consolidated financial statements. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements, and this report does not affect our report dated December 8, 2023, on those consolidated financial statements. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ BDO USA, P.C. Chicago, Illinois December 8, 2023 ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 29 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information with respect to this Item, except for certain information related to our executive officers included under the caption “Executive Team” in Part I of this Annual Report, is included in our Proxy Statement to be filed in January 2024, which is incorporated herein by reference, under the captions “Proposal 1 - Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance”. Our executive officers are those elected officers whose names and certain information are set forth under the caption “Executive Team” in Part 1 of this Annual Report. We have a Code of Business Conduct and Ethics ("Code") that applies to all of our employees, including our principal executive officer, and principal financial and accounting officer. The Code is monitored by the Audit Committee of our Board of Directors and is annually affirmed by our directors and executive officers. We maintain a corporate governance page on our website which includes the Code. The corporate governance page can be found at www.lee.net by clicking on “Governance” under the "About" tab. A copy of the Code will also be provided without charge to any stockholder who requests it. Any future amendment to, or waiver granted by us from, a provision of the Code will be posted on our website. ITEM 11. EXECUTIVE COMPENSATION Information with respect to this Item is included in our Proxy Statement to be filed in January 2024, which is incorporated herein by reference, under the captions, “Compensation of Non-Employee Directors”, “Executive Compensation” and “Compensation Discussion and Analysis”; provided, however, that the subsection entitled “Executive Compensation - Executive Compensation Committee Report” shall not be deemed to be incorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information with respect to this Item is included in our Proxy Statement to be filed in January 2024, which is incorporated herein by reference, under the captions “Voting Securities and Principal Holders Thereof” and “Equity Compensation Plan Information”. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information with respect to this Item is included in our Proxy Statement to be filed in January 2024, which is incorporated herein by reference, under the caption “Directors' Meetings and Committees of the Board of Directors”. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information with respect to this Item is included in our Proxy Statement to be filed in January 2024, which is incorporated herein by reference, under the caption “Relationship with Independent Registered Public Accounting Firm”. 30 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following documents are filed as part of this Annual Report: FINANCIAL STATEMENTS Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) - 52 weeks ended September 24, 2023, 52 weeks ended September 25, 2022 and 52 weeks ended September 26, 2021 Consolidated Balance Sheets - September 24, 2023 and September 25, 2022 Consolidated Statements of Stockholders' Equity (Deficit) - 52 weeks ended September 24, 2023, 52 weeks ended September 25, 2022 and 52 weeks ended September 26, 2021 Consolidated Statements of Cash Flows - 52 weeks ended September 24, 2023, 52 weeks ended September 25, 2022 and 52 weeks ended September 26, 2021 Notes to Consolidated Financial Statements Reports of Independent Registered Public Accounting Firms* * BDO USA, P.C. Chicago, IL ; PCAOB Firm ID# 243 * KPMG LLP , Chicago, IL ; PCAOB Firm ID# 185 FINANCIAL STATEMENT SCHEDULES All schedules have been omitted as they are not required, not applicable, not deemed material or because the information is included in the Notes to Consolidated Financial Statements, included herein. EXHIBITS See Exhibit Index, included herein. 31 Table of Contents CONSOLIDATED FINANCIAL STATEMENTS PAGE Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) 33 Consolidated Balance Sheets 54 Consolidated Statements of Stockholders' Equity (Deficit) 56 Consolidated Statements of Cash Flows 57 Notes to Consolidated Financial Statements 58 Reports of Independent Registered Public Accounting Firm's 94 32 Table of Contents CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (Thousands of Dollars, Except Per Common Share Data) 2023 2022 2021 Operating revenue: Advertising and marketing services 318,977 366,428 369,283 Subscription 313,291 353,624 357,713 Other 58,870 60,917 67,653 Total operating revenue 691,138 780,969 794,649 Operating expenses: Compensation 266,907 317,789 330,896 Newsprint and ink 25,346 30,101 29,775 Other operating expenses 323,067 344,905 325,597 Depreciation and amortization 30,621 36,544 42,841 Assets loss (gain) on sales, impairments and other, net 1,882 9,716 8,214 Restructuring costs and other 12,673 22,720 7,182 Total operating expenses 660,496 761,775 744,505 Equity in earnings of associated companies 6,527 5,657 6,412 Operating income 37,169 24,851 56,556 Non-operating (expense) income: Interest expense ( 41,471 ) ( 41,770 ) ( 44,773 ) Curtailment gain — 1,027 23,830 Pension withdrawal cost ( 1,200 ) ( 2,335 ) ( 12,862 ) Pension and OPEB related benefit and other, net 2,420 19,022 9,296 Total non-operating expense, net ( 40,251 ) ( 24,056 ) ( 24,509 ) (Loss) income before income taxes ( 3,082 ) 795 32,047 Income tax (benefit) expense ( 349 ) 698 7,255 Net (loss) income ( 2,733 ) 97 24,792 Net income attributable to non-controlling interests ( 2,534 ) ( 2,114 ) ( 2,047 ) Loss attributable to Lee Enterprises, Incorporated ( 5,267 ) ( 2,017 ) 22,745 Other comprehensive income (loss), net of income taxes 10,190 ( 25,534 ) 62,237 Comprehensive income (loss) attributable to Lee Enterprises, Incorporated 4,923 ( 27,551 ) 84,982 Earnings (loss) per common share: Basic: ( 0.90 ) ( 0.35 ) 3.98 Diluted: ( 0.90 ) ( 0.35 ) 3.90 The accompanying Notes are an integral part of the Consolidated Financial Statements. 33 Table of Contents CONSOLIDATED BALANCE SHEETS (Thousands of Dollars) September 24 2023 September 25 2022 ASSETS Current assets: Cash and cash equivalents 14,548 16,185 Accounts receivable, less allowance for credit losses: 2023 $ 5,260 ; 2022 $ 5,237 69,104 69,522 Inventories 7,504 8,265 Prepaids and other 15,373 15,151 Total current assets 106,529 109,123 Investments: Associated companies 27,819 27,378 Other 5,572 5,971 Total investments 33,391 33,349 Property and equipment: Land and improvements 12,366 14,505 Buildings and improvements 83,140 95,111 Equipment 213,714 215,731 Construction in process 2,453 1,449 311,673 326,796 Less accumulated depreciation 250,439 253,083 Property and equipment, net 61,234 73,713 Operating lease right-of-use assets 40,822 47,490 Goodwill 329,504 329,504 Other intangible assets, net 94,988 121,373 Pension plan assets, net 10,843 528 Medical plan assets, net 21,565 19,066 Other 12,741 9,896 Total assets 711,617 744,042 The accompanying Notes are an integral part of the Consolidated Financial Statements. 34 Table of Contents (Thousands of Dollars and Shares, Except Per Share Data) September 24 2023 September 25 2022 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of lease liabilities 7,755 7,859 Accounts payable 36,290 28,608 Compensation and other accrued liabilities 29,448 44,740 Unearned revenue 40,843 49,929 Total current liabilities 114,336 131,136 Long-term debt, net of current maturities 455,741 462,554 Operating lease liabilities 36,580 46,003 Pension obligations 586 966 Postretirement and postemployment benefit obligations 8,618 9,221 Deferred income taxes 41,351 42,719 Income taxes payable 5,809 8,292 Withdrawal liabilities and other 24,890 25,914 Total liabilities 687,911 726,805 Equity: Stockholders' equity: Serial convertible preferred stock, no par value; authorized 500 shares; none issued — — Common Stock, authorized 12,000 shares; issued and outstanding: 61 60 September 24, 2023; 6,064 shares; $ 0.01 par value September 25, 2022; 5,979 shares; $ 0.01 par value Class B Common Stock, $ 2 par value; authorized 3,000 shares; none issued — — Additional paid-in capital 260,832 259,521 Accumulated deficit ( 266,496 ) ( 261,229 ) Accumulated other comprehensive income 26,843 16,653 Total stockholders' equity 21,240 15,005 Non-controlling interests 2,466 2,232 Total equity 23,706 17,237 Total liabilities and equity 711,617 744,042 The accompanying Notes are an integral part of the Consolidated Financial Statements. 35 Table of Contents CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) Amount Shares (Thousands of Dollars and Shares) 2023 2022 2021 2023 2022 2021 Common Stock: Balance, beginning of year 60 59 58 5,979 5,889 5,835 Shares issued 1 1 1 85 90 54 Balance, end of year 61 60 59 6,064 5,979 5,889 Additional paid-in capital: Balance, beginning of year 259,521 258,063 256,957 Stock compensation 1,806 1,487 854 Shares (redeemed) issued ( 495 ) ( 29 ) 252 Balance, end of year 260,832 259,521 258,063 Accumulated deficit: Balance, beginning of year ( 261,229 ) ( 259,212 ) ( 281,957 ) Net income (loss) ( 2,733 ) 97 24,792 Net income attributable to non-controlling interests ( 2,534 ) ( 2,114 ) ( 2,047 ) Balance, end of year ( 266,496 ) ( 261,229 ) ( 259,212 ) Accumulated other comprehensive income (loss): Balance, beginning of year 16,653 42,187 ( 20,050 ) Change in pension and postretirement benefits 13,364 ( 32,202 ) 82,204 Deferred income taxes, net ( 3,174 ) 6,668 ( 19,967 ) Balance, end of year 26,843 16,653 42,187 Total stockholders' equity 21,240 15,005 41,097 6,064 5,979 5,889 The accompanying Notes are an integral part of the Consolidated Financial Statements. 36 Table of Contents CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands of Dollars) 2023 2022 2021 Cash (required for) provided by operating activities: Net income ( 2,733 ) 97 24,792 Adjustments to reconcile net income (loss) to net cash provided by (required for) operating activities: Depreciation and amortization 30,621 36,544 42,841 Bad debt expense 6,942 5,190 1,505 Curtailment gain — ( 1,027 ) ( 23,830 ) Pension withdrawal cost 1,200 2,335 12,862 Stock compensation expense 1,806 1,337 854 Asset loss (gain) on sales, impairments and other, net 1,882 9,716 8,214 Gain on sale of investment ( 1,736 ) — — Deferred income taxes ( 4,542 ) ( 4,377 ) 5,160 Pension contributions — ( 112 ) ( 965 ) Other, net ( 2,290 ) ( 2,015 ) ( 1,253 ) Changes in operating assets and liabilities: Decrease (increase) in receivables ( 6,739 ) ( 7,804 ) ( 13,977 ) Decrease (increase) in inventories and other 977 ( 3,088 ) 1,237 (Decrease) increase in accounts payable, unearned revenue, other accrued liabilities and operating lease obligations ( 26,155 ) ( 14,645 ) 4,731 Decrease in pension, postretirement and postemployment benefit obligations ( 83 ) ( 21,449 ) ( 2,667 ) Change in income taxes payable 345 ( 236 ) ( 8,418 ) Other ( 2,019 ) 2,963 ( 1,008 ) Net cash (required for) provided by operating activities ( 2,524 ) 3,429 50,078 Cash provided by (required for) investing activities: Purchases of property and equipment ( 5,107 ) ( 7,536 ) ( 7,479 ) Proceeds from sales of assets 11,952 14,835 4,616 Distributions greater (less) than earnings of TNI and MNI ( 657 ) ( 576 ) 1,038 Other, net 1,791 ( 386 ) ( 453 ) Net cash provided by (required for) investing activities 7,979 6,337 ( 2,278 ) Cash required for financing activities: Principal payments on long-term borrowings ( 6,813 ) ( 20,062 ) ( 55,674 ) Sale (purchases) of common stock transactions ( 279 ) 369 253 Net cash required for financing activities ( 7,092 ) ( 19,693 ) ( 55,421 ) Net decrease in cash and cash equivalents ( 1,637 ) ( 9,927 ) ( 7,621 ) Cash and cash equivalents: Beginning of year 16,185 26,112 33,733 End of year 14,548 16,185 26,112 The accompanying Notes are an integral part of the Consolidated Financial Statements. 37 Table of Contents 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"). 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 75 principally mid-sized local media operations (including TNI Partners ("TNI") and Madison Newspapers, Inc. ("MNI")) across 26 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 BLOX Digital. TNI and MNI are accounted for under the equity method. Results of BLOX Digital are consolidated. On March 16, 2020, the Company completed the acquisition of BH Media Group, Inc. and The Buffalo News, Inc. for a combined purchase price of $ 140.0 million (collectively, the "Transactions"). The Transactions were funded pursuant to a Credit Agreement dated as of January 29, 2020, between the Company and BH Finance LLC, a Nebraska limited liability company affiliated with Berkshire (the "Credit Agreement"), as described further in Note 5. In 2021, we allocated revenue from our full access subscriptions between print and digital subscription revenues. In 2022, due to the increased prominence of digital-only revenues, we revised this presentation to classify full access subscriptions as print subscription revenue, and discretely present digital-only subscription revenues. 2021 amounts were reclassified in Note 2 to conform to the current year presentation. In 2023, certain prior period amounts have been adjusted to form with current period presentation. These matters did not change operating revenues, net income (loss), accumulated deficit, and earnings per share. Fiscal Year All of our enterprises use period accounting with the fiscal year ending on the last Sunday in September. References to "2023", "2022", "2021" and the like refer to the fiscal years ended the last Sunday in September. Fiscal years 2023, 2022, and 2021 include 52 weeks of operations. 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, which include estimates used in the valuation of goodwill and intangible assets periodically. We evaluate our estimates used in connection with our business combinations, the discount rate assumptions applied to our pension and postretirement plan obligations, the expected long-term rate of return on plan assets, and the provision for income taxes 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. 38 Table of Contents Accounts Receivable We evaluate our allowance for credit losses based on historical credit experience, payment trends and other economic factors. 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 24, 2023 and September 25, 2022 are less than replacement cost by $ 1.1 million and $ 1.4 million, respectively. The components of inventory by cost method are as follows: (Thousands of Dollars) September 24, 2023 September 25, 2022 Newsprint - FIFO method 200 393 Newsprint - LIFO method 612 447 Other inventory - FIFO method 2,173 2,219 Specific identification 4,519 5,206 7,504 8,265 Investments Investments in unconsolidated affiliates over which Lee exercises significant influence, but does not control, are accounted for by the equity method. Under this method, an investment account for each unconsolidated affiliate is increased by contributions made and by Lee's share of net income of the unconsolidated affiliate, and decreased by the share of net losses of and distributions from the unconsolidated affiliate. The Company has elected to account for distributions under the cumulative earnings approach. Property and Equipment Property and equipment are carried at cost. Equipment and all other assets are depreciated using the straight line method. The estimated useful lives are as follows: Years Buildings and improvements 5 - 40 Printing presses and insertion equipment 5 - 25 Leasehold improvements 3 - 10 Other 3 - 15 Depreciation expense for 2023, 2022 and 2021 was $ 11.6 million, $ 14.4 million, and $ 18.0 million, respectively. 39 Table of Contents Goodwill and Other Intangible Assets Goodwill and other intangible assets are summarized in Note 4. Intangible assets include customer lists, newspaper subscriber lists and mastheads. Intangible assets subject to amortization are being amortized using the straight-line method except for intangible assets acquired in the Transactions which are being amortized in an accelerated manner consistent with the expected economic benefit. Years Customer lists 10 - 20 Newspaper subscriber lists 10 - 20 We review goodwill and non-amortizing intangible assets, which include only newspaper mastheads, for impairment annually as of the first day of the fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that an asset may be impaired in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 350, Intangibles - Goodwill and Other. Under ASC Topic 350, the impairment test for goodwill and non-amortizing intangible assets must be based on estimated fair values. Impairment would occur when the carrying amount of the reporting unit is greater than its fair value. Companies with reporting units with zero or negative carrying value are required to disclose the amount of goodwill for those reporting units. Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets, current portion of long-term lease liabilities and operating lease liabilities on the Consolidated Balance Sheets. Finance leases would be included in property, plant and equipment, current portion of long-term debt and long-term debt on the Consolidated Balance Sheets. Amortization of operating lease ROU assets is included in other operating expenses. Amortization of finance leases would be included in depreciation expense. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The ROU asset is adjusted to include lease payments made to date and initial direct costs incurred and to deduct for lease incentives received and impairment recognized. As most of the Company's leases do not provide an implicit rate, We determined the incremental borrowing rate based on a senior secured collateral adjusted yield curve for the Company. This yield curve reflects the estimated rate that would have been paid by the Company to borrow on a collateralized basis over a similar term in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonable certain that the option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Certain lease agreements have lease and non-lease components, which are accounted for together. See Note 6 for additional information related to leases. Business Combinations The Company accounts for acquisitions in accordance with the provisions of ASC Topic 805 - Business Combinations, which provides guidance for recognition and measurement of identifiable assets and goodwill acquired, liabilities assumed, and any non-controlling interest in the acquiree at fair value. In a business combination, the assets acquired, liabilities assumed and non-controlling interest in the acquiree are recorded as of the date of acquisition at their respective fair values with limited exceptions. Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. Transaction costs are expensed as incurred. The operating results of the acquired business are reflected in the Company's Consolidated Financial Statements from the date of acquisition. Revenue Recognition 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. See Note 2. 40 Table of Contents Restructuring Costs and Other Restructuring costs and other primarily relate to severance expenses associated with involuntary terminations, as well as litigation, advisor, and other expenses associated with the unsolicited bid offer in November 2021. These costs are expensed as incurred. 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 apply a practical expedient under ASC Topic 715, Compensation – Retirement Benefits , which allows us to measure plan assets and benefit obligations using the month-end that is closest to our fiscal year-end. Accordingly, we measure our plan assets and benefit obligations as of September 30, or upon a remeasurement event. 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. Multiemployer Pension Plans The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover certain of the Company's union represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in that assets contributed are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer withdraws from or otherwise ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. Alternatively, if the Company chooses to stop participating in one of its multiemployer plans, it may incur a withdrawal liability based on its actuarially determined share of the unfunded status of the plan. Contributions made to multiemployer plans are based on collective-bargaining agreements and are accounted for under guidance related to multiemployer plans, which essentially provides that contributions to such plans are expensed when due. Any withdrawal liability would be recognized at the point withdrawal from the plan becomes probable. See Note 8 for additional information. 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 Measurements We utilize ASC Topic 820 - Fair Value Measurements and Disclosures , to measure and report fair value. ASC Topic 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC Topic 820 establishes a three-level hierarchy of fair value measurements based 41 Table of Contents 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 measured at fair value are as follows: Financial instruments 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 inactive market prices. Such investments are classified as Level 2. 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. Certain equity securities are part of a collective investment fund for which there is no readily determinable fair value. This fund is 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. Debt securities consist of government securities, corporate bonds, and mutual funds. Government securities and corporate bonds are valued based upon quoted market prices in an inactive market. Such investments are classified as Level 2. Mutual funds are valued based upon quoted market prices in an active market. Such investments are classified as Level 1. Hedge funds consist of a long/short equity funds and a diversified fund of funds for which there is no readily determinable fair value. 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. Segments Our business consists of approximately 50 strategic business units ("SBU's"). The SBUs generally include print and digital subscription products and the associated advertising and marketing services. Each of our SBUs have comparable types of costs (compensation, newsprint/ink, and other costs) to generate similar sources of advertising and marketing services revenue and subscription revenue, they produce products in similar manner; they have same class of customers and they use the same distribution processes. In other words, each SBU engages in the same business activities. Separate operating results of each SBU are not reviewed by the chief operating decision maker ("CODM"). The CODM reviews Consolidated Statements of Income and Consolidated Balance Sheets on a monthly basis, and reviews the Consolidated Statements of Cash Flows ("SOCF") on a quarterly basis. The balance sheets and SOCF are only prepared on a consolidated level. Selective revenue and expense details by SBU are reviewed by the CODM, however, the focus of those reviews is on details of advertising and marketing services revenue by SBU and subscription revenue by SBU. Complete operating results or other profitability measures by SBU are not reviewed by the CODM. Further, business decisions by the CODM, including the allocation of resources, are determined based on reviewing consolidated information. 42 Table of Contents Stock Compensation and Warrants We have several stock-based compensation plans. We account for grants under those plans under the fair value expense recognition provisions of 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 requisite service period or restriction period, which is generally one to four years . Prior to 2023, we also had 600,000 warrants outstanding to purchase shares of our Common Stock. Warrants were recorded at fair value determined using the Black-Scholes option pricing formula. These warrants expired in 2022. See Notes 5, 10 and 13. 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. We have posted cash collateral totaling $ 7.0 million and $ 4.6 million at September 24, 2023 and September 25,2022, respectively in support of our insurance programs recorded under Other on the Consolidated Balance Sheets. 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. New Accounting Pronouncements not yet Adopted In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07 - Segment Reporting to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This pronouncement is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact this will have on our Consolidated Financial Statements. Recently Issued Accounting Standards - Standards Adopted in 2023 and 2022 None Recently Issued Accounting Standards - Standards Adopted in 2021 In June 2016, the FASB issued a new standard ASC Topic 326 Financial Instruments - Credit Losses to replace the incurred loss impairment methodology 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 are required to use a forward-looking expected credit loss model for both accounts receivables and other financial instruments. The new standard was adopted on September 28, 2020, using a modified retrospective approach. This standard did not have a material impact on our Consolidated Financial Statements. In August 2018, the FASB issued ASU 2018-13 Fair Value Measurements that changes disclosure requirements related to fair value measurements as part of the disclosure framework project. The disclosure framework project aims to improve effectiveness of disclosures in the notes to the financial statements by focusing on 43 Table of Contents requirements that clearly communicate the most important information to users of the financial statements. The new guidance was adopted on September 28, 2020, and did not have a material impact on our Consolidated Financial Statements. In December 2019, the FASB issued new guidance that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC Topic 740 Income Taxes related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. This new guidance was adopted September 28, 2020, and did not have a material impact on our Consolidated Financial Statements. In August 2018, FASB issued ASU 2018-14 Compensation - Retirement Benefits - Defined Benefit Plans to amend disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The new standard was adopted on September 28, 2020 using a retrospective approach, and did not have a material impact on our Consolidated Financial Statements. 2. REVENUE Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. Revenues are recognized as performance obligations are satisfied either at a point in time, such as when an advertisement is published, or over time, such as audience subscription revenue. No single customer represented 10% or more of the Company's net revenue in any fiscal period presented. Advertising and marketing services revenue Print advertising revenue includes amounts charged to customers for retail, national, or classified advertising space purchased in our newspapers, advertising marketing services and other print advertising products such as preprint inserts and direct mail. Digital advertising revenue includes amounts for advertisements placed on our digital platforms, amounts charged to customers for digital marketing services which include: audience extension, Search Engine Optimization, Search Engine Marketing, web and mobile production, social media services and reputation monitoring and management. Payments for print and digital advertising revenue are 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 Print subscription revenue results from the sale of print editions of newspapers to individual subscribers and to sales outlets that resell the newspapers. Print subscriptions include full access to all forms of content provided. Single copy revenue is also included in subscription revenue. Subscription revenue from single-copy and home delivery subscriptions are recognized at the point in time the publications are delivered. Digital subscription revenue results from the sale of digital-only access to the Company's content delivered via digital products purchased. Digital subscription revenue is recognized over time as performance obligations are met throughout the subscription period. Payments for print and digital subscription revenue are 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, commercial printing and delivery of third party products. Digital services revenues, which are primarily delivered through BLOX Digital, 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 44 Table of Contents 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. Commercial printing and delivery revenue is recognized when the product is delivered to the customer. The following table presents our revenue disaggregated by source: (Thousands of Dollars) 2023 2022 2021 Operating revenue: Print advertising revenue 125,804 184,963 227,892 Digital advertising revenue 193,173 181,465 141,391 Advertising and marketing services revenue 318,977 366,428 369,283 Print subscription revenue 252,591 313,504 329,484 Digital-only subscription revenue 60,700 40,120 28,229 Subscription Revenue 313,291 353,624 357,713 Print other revenue 39,508 42,962 48,656 Digital other revenue 19,362 17,955 18,997 Other revenue 58,870 60,917 67,653 Total operating revenue 691,138 780,969 794,649 Contract Liabilities: The Company’s primary source of unearned revenue is from subscriptions paid in advance of the service provided. The Company expects to recognize the revenue related to unsatisfied performance obligations over the next twelve months in accordance with the terms of the subscriptions and other contracts with customers. The unearned revenue balances described herein are the Company's only contract liability. Unearned revenue was $ 40.8 million as of September 24, 2023, $ 49.9 million as of September 25, 2022, and $ 61.4 million as of September 26, 2021. Revenue recognized in 2023, 2022, and 2021 that was included in the contract liability as of September 25, 2022, September 26, 2021, and September 27, 2020 was $ 47.2 million, $ 54.7 million, and $ 56.1 million, respectively. Accounts receivable, excluding allowance for credit losses and contract assets, was $ 74.4 million, $ 74.8 million, and $ 71.6 million as of September 24, 2023, September 25, 2022 and September 26, 2021, respectively. Allowance for credit losses was $ 5.3 million and $ 5.2 million as of September 24, 2023 and September 25, 2022, respectively. Practical expedients: Sales commissions are expensed as incurred as the associated contractual periods are one year or less. These costs are recorded within compensation. The vast majority of our contracts have original expected lengths of one year or less and revenue is earned at a rate and amount that corresponds directly with the value to the customer. 45 Table of Contents 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 records 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: (Thousands of Dollars) September 24 2023 September 25 2022 ASSETS Current assets 1,901 2,801 Investments and other assets 1,240 1,584 Total assets 3,141 4,385 LIABILITIES AND MEMBERS' EQUITY (DEFICIT) Liabilities 3,837 5,005 Members' equity ( 696 ) ( 620 ) Total liabilities and members' equity (deficit) 3,141 4,385 Summarized results of TNI are as follows: (Thousands of Dollars) 2023 2022 2021 Operating revenue 31,076 34,153 34,782 Operating expenses 24,446 25,445 25,320 Operating income 6,630 8,708 9,462 Net income 7,142 8,708 9,462 Company's 50 % share 3,571 4,354 4,731 Less amortization of intangible assets — — — Equity in earnings of TNI 3,571 4,354 4,731 TNI makes periodic distributions of its earnings. We received $ 3.6 million, $ 3.8 million, and $ 5.2 million in distributions in 2023, 2022 and 2021, respectively. At September 24, 2023 and September 25, 2022, the carrying value of the Company's 50 % investment in TNI is $ 15.1 million and $ 15.3 million, respectively. The difference between our carrying value and our 50 % share of the members' equity of TNI relates principally to goodwill of $ 12.4 million and other identified intangible assets of $ 2.3 million, certain of which have been amortized over their estimated useful lives through 2020. See Note 4. TNI provides editorial services to the Company. Editorial service costs are included in other operating expenses in the Consolidated Statements of Income and Comprehensive Income and totaled $ 4.4 million, $ 5.2 million, and $ 4.5 million in 2023, 2022 and 2021, respectively. 46 Table of Contents 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: (Thousands of Dollars) September 24 2023 September 25 2022 ASSETS Current assets 8,916 5,837 Investments and other assets 29,267 29,903 Total assets 38,183 35,740 LIABILITIES AND MEMBERS' EQUITY Current liabilities 6,352 5,922 Other liabilities 6,303 5,696 Stockholders' equity 25,528 24,122 Total liabilities and members' equity 38,183 35,740 Summarized results of MNI are as follows: (Thousands of Dollars) 2023 2022 2021 Operating revenue 44,109 47,621 46,015 Operating expenses, excluding restructuring costs, depreciation and amortization 30,654 37,922 35,583 Restructuring costs 143 169 107 Depreciation and amortization 539 672 711 Operating income 12,773 8,858 9,614 Net income 5,911 2,605 3,362 Equity in earnings of MNI 2,956 1,303 1,681 MNI makes periodic distributions of its earnings. We received $ 2.2 million, $ 1.3 million, and $ 2.3 million in distributions in 2023, 2022 and 2021, 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 $ 5.4 million, $ 5.6 million, and $ 5.6 million in 2023, 2022 and 2021, respectively. At September 24, 2023 and September 25, 2022, the carrying value of the Company's 50 % investment in MNI is $ 12.8 million and $ 12.0 million, respectively. 47 Table of Contents 4. GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the carrying amount of goodwill are as follows: (Thousands of Dollars) 2023 2022 Goodwill, gross amount 1,618,233 1,618,933 Accumulated impairment losses ( 1,288,729 ) ( 1,288,729 ) Goodwill, beginning of year 329,504 330,204 Disposal — ( 700 ) Goodwill, end of year 329,504 329,504 Identified intangible assets related to continuing operations consist of the following: (Thousands of Dollars) September 24 2023 September 25 2022 Non-amortized intangible assets: Mastheads 18,675 26,346 Amortizable intangible assets: Customer and newspaper subscriber lists 306,766 323,568 Less accumulated amortization ( 230,453 ) ( 228,541 ) 76,313 95,027 Identified intangible assets 94,988 121,373 As discussed in Note 1, the Company reviews goodwill and non-amortized intangible assets for impairment annually on the first day of the fourth quarter, or more frequently if events or changes in circumstances indicate that an asset may be impaired in accordance with ASC Topic 350. All of the Company’s goodwill is attributed to the single reporting unit. When evaluating these assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired, known as Step 0. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we would calculate the estimated fair value of the reporting unit using discounted cash flows or a combination of discounted cash flow and market approaches. The Company performed its annual assessment on the first day of our fourth fiscal quarter, and determined the fair value of our single reporting unit was in excess of carrying value and as such, there was no impairment in 2023, 2022, and 2021.. In 2022, the Company disposed of a non-core operation with $ 0.7 million of attributable goodwill. For mastheads, the calculated fair value includes Level 3 inputs that were determined using the relief from royalty method. The key assumptions used in the fair value estimates under the relief from royalty method are revenue and market growth, royalty rates for newspaper mastheads (the royalty rates utilized range from 0.0 % to 1.0 %), estimated tax rates, and appropriate risk-adjusted weighted-average cost of capital (for 2023, 2022 and 2021, the weighted-average cost of capital used was 13.00 %, 11.00 % and 10.50 %, respectively). These assumptions reflect Lee's best estimates, but these items involve inherent uncertainties based on market conditions generally outside of the Company's control. A 50 -basis point decrease in royalty rates would result in an additional $ 9.3 million of impairment. Increasing the discount rate by 100 basis points would result in an additional $ 1.2 million of impairment. In 2023, 2022, and 2021, we recorded non-cash charges to reduce the carrying value of non-amortized intangible assets. Such charges are recorded in assets loss (gain) on sales, impairments and other in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). We recorded deferred income tax benefits related to these charges. Changes in market conditions and declines in revenue lead to the impairment charges noted above. 48 Table of Contents A summary of the pretax impairment charges is included in the table below: (Thousands of Dollars) 2023 2022 2021 Non-amortized intangible assets 7,671 14,203 787 Property, equipment and other assets — — 190 7,671 14,203 977 Amortization expense for 2023, 2022, and 2021 was $ 19.0 million, $ 22.2 million, and $ 24.9 million, respectively. Annual amortization of intangible assets for the years ending September 2024 to September 2028 is estimated to be $ 18.4 million, $ 12.8 million, $ 7.3 million, $ 7.1 million, and $ 5.5 million, respectively. The weighted average amortization period for amortizable assets is 11.5 years. 5. DEBT On March 16, 2020 concurrent with closing the Transactions, the Company completed a comprehensive refinancing of its debt (the "2020 Refinancing"). The 2020 Refinancing consists of the Credit Agreement and Term Loan. The proceeds of the Term Loan were used, along with cash on hand, to refinance the Company's $ 431.5 million it incurred in 2014 (the "2014 Refinancing") as well as to fund the acquisition of BH Media Newspaper Business assets and the stock of Buffalo News for $ 140.0 million in cash. With the closing of this transaction, BH Finance became Lee's sole lender. Proceeds of the Term Loan were used to finance the Transactions and refinance all of the Company's outstanding debt at par. The Term Loan matures in March 2045. The Company's debt is collateralized by all Company assets. As of September 24, 2023, the Company has $ 455.7 million in aggregate principal debt outstanding under the Term Loan. The debt has a fixed interest rate at September 24, 2023 of 9.0 %. During the twelve months ended September 24, 2023, we made principal debt payments of $ 6.8 million. Payments were from the sale of non-core assets. Future payments are contingent on the Company's ability to generate future Excess Cash Flow, as defined below. The Credit Agreement contains certain customary representations and warranties, certain affirmative and negative covenants and certain conditions, including restrictions on incurring additional indebtedness, creating certain liens, making certain investments or acquisitions, issuing dividends, repurchasing shares of stock of the Company and certain other capital transactions. Certain existing and future direct and indirect material domestic subsidiaries of the Company are guarantors of the Company's obligations under the Credit Agreement. The Credit Agreement restricts us from paying dividends on our Common Stock. This restriction does not apply to dividends issued with the Company's Equity Interests or from the proceeds of a sale of the Company's Equity Interests. Further, the Credit Agreement restricts or limits, among other things, subject to certain exceptions, the ability of the Company and its subsidiaries to: (i) incur additional indebtedness, (ii) make certain investments, (iii) enter into mergers, acquisitions and asset sales, (iv) incur or create liens and (v) enter into transactions with certain affiliates. The Credit Agreement contains various representations and warranties by the Company and may be terminated upon the occurrence of certain events of default, including non-payment. The Credit Agreement also contains cross-default provisions tied to other agreements with BH Finance entered into by the Company and its subsidiaries in connection with the 2020 Refinancing. Principal Payments Voluntary pre-payments under the Credit Agreement are not subject to call premiums and are payable at par, with the exception of the change-of-control provisions discussed below. 49 Table of Contents Excluding the Excess Cash Flow payments described below, there are no scheduled mandatory principal payments required under the Credit Agreement. The Company is required to make mandatory prepayments of the Term Loan as follows: • The Company must prepay the Term Loan in an aggregate amount equal to 100 % of any Net Cash Proceeds received by the Company or any Subsidiary from a sale, transfer, license, or other disposition of any property of the Company or any subsidiary in excess of $ 0.5 million in any ninety (90) day period. • The Company is required to prepay the Term Loan with excess cash flow, defined as cash on the balance sheet at quarter-end in excess of $ 20.0 million ("Excess Cash Flow"). Excess Cash Flow is used to prepay the Term Loan, at par, and is due within 50 -days of quarter-end. • If there is a Change of Control (as defined in the Credit Agreement), BH Finance has the option to require the Company to prepay the Term Loan in cash equal to 105 % of the unpaid principal balance, plus accrued and unpaid interest. The Company may, upon notice to BH Finance, at any time or from time to time, voluntarily prepay the Term Loan in whole or in part, at par, provided that any voluntary prepayment of the Term Loan shall be accompanied by payment of all accrued interest on the amount of principal prepaid to the date of prepayment. Warrants In connection with the 2 nd Lien Term Loan entered into in the 2014 Refinancing, 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 600,000 shares of Common Stock, subject to adjustment pursuant to anti-dilution provisions (the "Warrants"). The Warrants represented, 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 was $ 41.90 per share. The Warrants expired in March 2022. The Warrant Agreement contained provisions requiring the Warrants to be measured at fair value and included in warrants and other liabilities in our Consolidated Balance Sheets. We re-measured at 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 $ 16.9 million. See Note 13. Liquidity Pursuant to the terms of the Credit Agreement, our debt does not include a revolver. Our liquidity, consisting of cash on the balance sheet, totals $ 14.5 million at September 24, 2023. 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. There are numerous potential consequences under the 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 BH Finance to exercise their remedies under the Credit Agreement 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 Credit Agreement (as defined above) has only limited affirmative covenants with which we are required to maintain compliance and there are no leverage or financial performance covenants. We are in compliance with our debt covenants at September 24, 2023. 50 Table of Contents 6. LEASES We lease certain real estate, vehicles, and equipment. Our leases have remaining lease terms of 1 to 40 years, some of which may include options to extend the leases, and some of which may include options to terminate the leases. The exercise of lease renewal options and terminations are at our sole discretion. The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. In connection with the Transactions, the Company entered into a lease agreement between BH Media, as Landlord, and the Company, as Tenant, providing for the leasing of 68 properties and related fixtures (including production equipment) used in the BH Media Newspaper Business ("BH Lease"). The BH Lease commenced on March 16, 2020. The BH Lease requires the Company to pay annual rent of $ 8.0 million, payable in equal payments, as well as all operating costs relating to the properties (including maintenance, repairs, property taxes and insurance). Rent payments are subject to a Rent Credit (as defined in the Lease) equal to 8.00 % of the net consideration for any leased real estate sold by BH Media during the term of the Lease. As of September 24, 2023, the Company has earned monthly rent credits of $ 0.2 million, making current annual rent of $ 5.2 million. In connection with the BH Lease, the Company recognized $ 56.2 million and $ 56.2 million in right-of-use ("ROU") assets and offsetting lease liabilities as of March 16, 2020. During the period ended September 25, 2022, the Company permanently vacated office and distribution space related to 14 leases. The space was vacated as some of our locations have transitioned to long-term remote working arrangements and space consolidation. The abandonment of lease space is an indicator of impairment and the Company assessed the lease ROU asset and leasehold improvements for impairment. Estimates of fair value include Level 3 inputs which are subjective in nature and involve uncertainties and matters of significant judgement and are made at a specific point in time. During the period ended September 25, 2022, the Company recorded non-cash impairment losses of $ 7.8 million for right-of-use assets, which is recorded on the Consolidated Statements of Income (loss) and Comprehensive Income (loss) under the line item assets loss (gain) on sales, impairments and other. Total lease expense consists of the following: (Thousands of Dollars) 2023 2022 2021 Operating lease costs 12,688 13,786 14,846 Variable lease costs 1,175 1,201 92 Short-term lease costs 355 217 — Total Operating Lease Expense 14,218 15,204 14,938 Supplemental cash flow information related to our operating leases is as follows: (Thousands of Dollars) 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases 13,403 14,325 14,789 Right-of-use assets obtained in exchange for operating lease liabilities 3,855 990 932 51 Table of Contents As of September 24, 2023, maturities of lease liabilities were as follows: (Thousands of Dollars) 2024 12,179 2025 10,960 2026 9,369 2027 7,701 2028 6,324 Thereafter 10,609 Total lease payments 57,142 Less: interest ( 12,806 ) Present value of lease liabilities 44,336 Our lease contracts are discounted using the incremental borrowing rate for the Company. We determined the incremental borrowing rate based on a senior secured collateral adjusted yield curve for the Company. This yield curve reflects the estimated rate that would have been paid by the Company to borrow on a collateralized basis over a similar term in a similar economic environment. The weighted average revolving lease terms and discount rates for all of our operating leases were as follows. September 24, 2023 Weighted average remaining lease term (years) 5 years, 7 months, 4 days Weighted Average discount rate 7.88 % 7. DEFINED BENEFIT PENSION PLANS During 2022, the Company made several changes to its defined benefit plans. At the beginning of 2022, the Company was the sponsor of seven single-employer defined benefit plans, two of which were frozen to new participants and future benefits. As of September 24, 2023, we are the sponsor of one single-employer defined benefit plan, which provide benefits to certain current and former employees of Lee. During 2022 we notified certain participants in our defined benefit plans of changes to be made to the plans. The Company froze future benefits and participation for an additional four of the defined benefit plans. The freeze of future benefits resulted in a non-cash curtailment gain of $ 1.0 million related to the four plans. In connection with the freeze the Company provided certain benefit enhancements that resulted in an increase to our net pension liability and a decrease to accumulated other comprehensive income of $ 6.1 million. Additionally, the Company merged the six frozen plans into one fully-funded defined benefit plan, the Lee Enterprises Incorporated Pension Plan ("Plan") effective in the second quarter of fiscal 2022. During September of 2022, as part of a pension de-risking strategy for the Plan, the Company, executed an agreement pursuant to which it transferred to a third-party insurance company (the "Insurer") $ 85.6 million of the Plan's liabilities in exchange for $ 81.4 million of Plan assets and recorded a non-cash settlement gain of $ 4.2 million in Pension and OPEB related benefit (cost) and other, net. Collectively, the transactions are known as the "Annuity Purchase" During the year ended September 24, 2023, an immaterial defined benefit plan was merged into the Plan. The prior period net periodic pension cost (benefit) and changes in benefit obligations tables have been revised to include amounts from this plan that was previously excluded due to immateriality. 52 Table of Contents The net periodic cost (benefit) components of our pension plans are as follows: (Thousands of Dollars) 2023 2022 2021 Service cost for benefits earned during the year 19 488 2,529 Interest cost on projected benefit obligation 10,368 7,999 7,147 Expected return on plan assets ( 10,192 ) ( 18,261 ) ( 18,688 ) Amortization of net (gain) loss 10 ( 3,317 ) 4,018 Amortization of prior service benefit 852 641 ( 6 ) Settlement gain — ( 4,245 ) — Curtailment gain — ( 1,027 ) — Net periodic pension cost (benefit) 1,057 ( 17,722 ) ( 5,000 ) Changes in benefit obligations and plan assets are as follows: (Thousands of Dollars) 2023 2022 Benefit obligation, beginning of year 210,806 386,832 Service cost 19 488 Interest cost 10,368 7,999 Plan amendments — 6,077 Actuarial (gain) loss ( 9,876 ) ( 86,387 ) Benefits paid ( 12,130 ) ( 21,799 ) Liability (gain)/loss due to curtailment — ( 1,027 ) Settlements — ( 81,377 ) Benefit obligation, end of year 199,187 210,806 Fair value of plan assets, beginning of year: 211,058 400,907 Actual return on plan assets 12,638 ( 84,636 ) Benefits paid ( 12,130 ) ( 21,799 ) Administrative expenses paid ( 1,535 ) ( 2,149 ) Settlements — ( 81,377 ) Employer contributions — 112 Fair value of plan assets, end of year 210,031 211,058 Funded status 10,844 252 Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows: (Thousands of Dollars) September 24 2023 September 25 2022 Net pension assets 10,844 252 Accumulated other comprehensive income (before income taxes) 16,653 5,005 53 Table of Contents Amounts recognized in accumulated other comprehensive income (loss) are as follows: (Thousands of Dollars) September 24 2023 September 25 2022 Unrecognized net actuarial gain (loss) 21,246 10,450 Unrecognized prior service cost ( 4,593 ) ( 5,445 ) 16,653 5,005 We expect to recognize $ 0.8 million of unrecognized prior service cost in net periodic pension costs in 2024. Assumptions Weighted-average assumptions used to determine benefit obligations are as follows: (Percent) September 24 2023 September 25 2022 Discount rate 5.7 5.3 Interest crediting rate 2.5 2.5 Weighted-average assumptions used to determine net periodic benefit cost are as follows: (Percent) 2023 2022 2021 Discount rate - service cost 5.8 5.4 3.0 Discount rate - interest cost 5.7 5.3 1.9 Expected long-term return on plan assets 5.0 5.0 5.9 For 2023, the expected long-term return on Plan assets is 5.0 %. 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. For the year ended September 24, 2023, the most significant driver of the decrease in benefit obligation was the actual return on assets exceeding expected returns and higher actuarial gains experienced by the Plan. The Plan recognized actuarial gains due to increases in bond yields that resulted in increases to the discount rate. For the year ended September 25, 2022, the most significant driver of the decrease in benefit obligation was the higher actuarial gains experienced by all plans and the Annuity Purchase mentioned above. The plans recognized actuarial gains due to significant increases in bond yields that resulted in increases to the discount rates. Discount rate increases were partially offset by actual return on assets falling behind expected returns for the year. 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, 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. 54 Table of Contents The weighted-average asset allocation of our pension assets, is as follows: (Percent) Policy Allocation Actual Allocation Asset Class September 24 2023 September 24 2023 September 25 2022 Equity securities 25 25 41 Debt securities 65 62 43 Hedge fund investments 10 12 15 Cash and cash equivalents 1 1 1 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. Due to the timing of the annuity purchase (as discussed above), funds were organized in a way that provided sufficient liquidity for the transaction. This caused our pension plans asset allocation to differ significantly from our desired policy as of September 25, 2022. Fair Value Measurements The fair value hierarchy of pension assets at September 24, 2023 is as follows: (Thousands of Dollars) NAV Level 1 Level 2 Level 3 Cash and cash equivalents — 1,937 — — Domestic equity securities 2,252 30,885 — — International equity securities — 7,565 5,644 — Emerging equity securities — 6,263 — — Debt securities — 78,740 52,304 — Hedge fund investments 24,441 — — — The fair value hierarchy of pension assets at September 25, 2022 was as follows: (Thousands of Dollars) NAV Level 1 Level 2 Level 3 Cash and cash equivalents — 1,562 — — Domestic equity securities 2,235 67,661 — — International equity securities — 5,743 4,519 — Emerging equity securities — 4,996 — — Debt securities — 25,742 65,364 — Hedge fund investments 32,515 — — — 55 Table of Contents There were no purchases, sales or transfers of assets classified as Level 3 in 2023 or 2022. Pension assets that are excluded from the fair value hierarchy and are measured 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 $ 2.3 million and $ 2.2 million as of September 24, 2023 and September 25, 2022, 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 $ 11.7 million and $ 16.7 million as of September 24, 2023 and September 25, 2022, 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 $ 12.7 million and $ 15.9 million as of September 24, 2023 and September 25, 2022, respectively. We can redeem up to 50 % of our investment in this fund twice per year. The activity within Other comprehensive income (loss) for both pension plans and postretirement plans was as follows: (Thousands of Dollars) 2023 2022 2021 Comprehensive (loss) income, net of taxes: Change in unrecognized benefit plan gain (loss) arising during the period, net of taxes $ 240 , $ 279 , and $ 19,148 , respectively ( 560 ) ( 14,485 ) 59,663 Amortization of items to periodic pension and other post-employment benefit costs during the period, net of taxes $ 3,414 , $ 6,389 , and $ 819 , respectively 10,750 ( 11,049 ) 2,574 Other comprehensive (loss) income recognized in operations, net of taxes 10,190 ( 25,534 ) 62,237 Cash Flows Based on our forecast at September 24, 2023, we expect to make no contributions to our pension trust in 2024. We anticipate future benefit payments to be paid from the pension trust as follows: (Thousands of Dollars) 2024 16,262 2025 14,575 2026 14,816 2027 14,944 2028 15,021 2029-2033 74,092 Other Plans We are the plan sponsor for other funded and unfunded defined benefit pension plans that are not considered material. The net benefit obligation for these plans are $ 0.6 million and $ 1.0 million at September 24, 2023 and September 25, 2022, respectively. 56 Table of Contents Subsequent Event Subsequent to September 24, 2023, the Company offered a voluntary lump sum payment of future pension benefits to terminated vested participants of the Plan. As of November 30, 2023, 522 participants representing $ 22.6 million in Plan liabilities have elected to take the voluntary offer. 8. 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. 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) 2023 2022 2021 Service cost for benefits earned during the year 68 108 207 Interest cost on projected benefit obligation 598 340 429 Expected return on plan assets ( 1,182 ) ( 1,053 ) ( 1,007 ) Amortization of net actuarial gain ( 1,014 ) ( 994 ) ( 685 ) Amortization of prior service benefit ( 647 ) ( 647 ) ( 647 ) Curtailment gains — — ( 23,830 ) Net periodic postretirement benefit ( 2,177 ) ( 2,246 ) ( 25,533 ) Changes in benefit obligations and plan assets are as follows: (Thousands of Dollars) 2023 2022 Benefit obligation, beginning of year 12,287 18,538 Service cost 68 108 Interest cost 598 340 Actuarial (gain) loss ( 1,049 ) ( 4,729 ) Benefits paid, net of premiums received ( 652 ) ( 1,958 ) Medicare Part D subsidies — ( 12 ) Benefit obligation, end of year 11,252 12,287 Fair value of plan assets, beginning of year 23,903 26,802 Actual return on plan assets 2,393 ( 2,453 ) Employer contributions 165 1,525 Benefits paid, net of premiums and Medicare Part D subsidies received ( 660 ) ( 2,105 ) Plan participant contributions 8 134 Fair value of plan assets at measurement date 25,809 23,903 Funded status 14,557 11,616 57 Table of Contents Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows: (Thousands of Dollars) September 24 2023 September 25 2022 Non-current assets 21,565 19,066 Postretirement benefit obligations ( 7,008 ) ( 7,450 ) Accumulated other comprehensive income (before income tax benefit) 19,043 17,327 Amounts recognized in accumulated other comprehensive income (loss) before income tax benefit are as follows: (Thousands of Dollars) September 24 2023 September 25 2022 Unrecognized net actuarial gain 16,660 14,298 Unrecognized prior service benefit 2,383 3,029 19,043 17,327 We expect to recognize $ 1.2 million and $ 0.4 million of unrecognized net actuarial gain and unrecognized prior service benefit, respectively, in net periodic postretirement benefit in 2024 . Assumptions Weighted-average assumptions used to determine postretirement benefit obligations are as follows: (Percent) September 24 2023 September 25 2022 Discount rate 5.6 5.3 Expected long-term return on plan assets 5.0 5.0 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) 2023 2022 2021 Discount rate - service cost 5.9 5.5 2.5 Discount rate - interest cost 5.5 5.1 1.9 Expected long-term return on plan assets 5.0 5.0 4.0 For 2023 , the expected long-term return on plan assets is 5.0 %. 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. 58 Table of Contents Assumed health care cost trend rates are as follows: (Percent) September 24 2023 September 25 2022 Health care cost trend rates 3.9 10.6 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 2033 2032 Administrative costs related to indemnity plans are assumed to increase at the health care cost trend rates noted above. In 2021 , we notified certain participants in one of our postemployment medical plans of changes to their plan, including elimination of coverage for certain participants. These changes resulted in a non-cash curtailment gain of $ 23.8 million in 2021 . The curtailment gain is recorded in Curtailment gain in the Consolidated Statements of Income (loss) and Comprehensive Income (loss). These charges also reduced the postemployment benefit obligation by $ 23.8 million in 2021 . For the year ended September 24, 2023 , the most significant driver of the decrease in benefit obligations for the plans was the higher actual return on assets compared to expectations. The plans also recognized actuarial gains due to increases in bond yields that resulted in increases to the discount rates. For the year ended September 25, 2022, the most significant driver of the decrease in benefit obligations for the plans was the higher actuarial gains experienced by all plans. The plans recognized actuarial gains due to significant increases in bond yields that resulted in increases to the discount rates. Discount rate increases were partially offset by actual return on assets falling behind expected returns for the year. 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 24, 2023 and September 25, 2022 is $ 0.4 million and $ 0.6 million, 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 Asset Class September 24 2023 September 24 2023 September 25 2022 Equity securities 20 20 17 Debt securities 70 68 71 Hedge fund investment 10 12 12 Cash and cash equivalents — — — 59 Table of Contents 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 24, 2023 is as follows: (Thousands of Dollars) NAV Level 1 Level 2 Level 3 Cash and cash equivalents — 93 — — Domestic equity securities 870 2,303 — — Emerging equity securities — 535 — — International equity securities — 814 600 — Debt securities — 17,615 — — Hedge fund investment 2,979 — — — The fair value hierarchy of postretirement assets at September 25, 2022 is as follows: (Thousands of Dollars) NAV Level 1 Level 2 Level 3 Cash and cash equivalents — 26 — — Domestic equity securities 791 1,910 — — Emerging equity securities — 456 — — International equity securities — 573 480 — Debt securities — 17,248 — — Hedge fund investment 2,782 — — — There were no purchases, sales or transfers of assets classified as Level 3 in 2023 or 2022 . Postretirement assets that are excluded from the fair value hierarchy and are measured 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 $ 0.9 million and $ 0.8 million as of September 24, 2023 and September 25, 2022, 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 $ 3.0 million and $ 2.8 million as of September 24, 2023 and September 25, 2022, 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 24, 2023, we do not expect to contribute to our postretirement plans in 2024 . 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. 60 Table of Contents We anticipate future benefit payments to be paid either with future contributions to the plan or directly from plan assets, as follows: (Thousands of Dollars) Gross Payments Less Medicare Part D Subsidy Net Payments 2024 906 — 906 2025 906 — 906 2026 916 — 916 2027 933 — 933 2028 912 — 912 2029-2033 4,395 — 4,395 Postemployment Plan Our postemployment benefit obligation, which represents certain disability benefits, was $ 1.6 million at September 24, 2023 and $ 1.8 million at September 25, 2022. 9. OTHER RETIREMENT PLANS Substantially all of our employees are eligible to participate in a qualified defined contribution retirement plan. We also have a non-qualified plan for employees whose incomes exceed qualified plan limits. The defined contribution retirement plan costs were $ 3.5 million in 2023, $ 3.6 million in 2022 and $ 3.4 million in 2021. Multiemployer Pension Plans We contributed to various multiemployer defined benefit pension plans under the terms of collective bargaining agreements ("CBAs"). The risks of participating in these multiemployer plans are different from our Company-sponsored plans in the following aspects: • We do not manage the plan investments or any other aspect of plan administration; • Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; • If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and • If we choose to stop participating in one or more multiemployer plans, we may be required to fund over time an amount based on the unfunded status of the plan at the time of withdrawal, referred to as a "withdrawal liability". 61 Table of Contents Information related to these plans is outlined in the table below: (Thousands of Dollars) Zone Status September 30 Funding Improvement Plan/Rehabilitation Plan Status Contributions Pension Plan 2023 2022 Status 2023 2022 2021 Surcharge Imposed EIN Expiration Dates of CBAs GCIU- Employer Retirement Fund Critical Critical Implemented — — 10 No 91-6024903 N/A (1) District No. 9, International Association of Machinists and Aerospace Workers Pension Trust Green Endangered N/A — — 15 N/A 51-0138317 N/A (1) CWA/ITU negotiated Pension Plan Critical Critical Implemented — — 81 No 13-6212879 N/A (1) IAM National Pension Fund Green Green N/A 45 57 67 N/A 51-6031295 N/A (1) Operating Engineers Central Pension Fund of the International Union of Operating Engineers and Participating Employers Green Green N/A 32 50 49 N/A 36-6052390 12/31/2023 (1) The Company has withdrawn from the multiemployer plan The Company has effectuated withdrawals from all but one multiemployer plan. We record estimates of withdrawal liabilities as of the time the contracts agreeing to withdraw from those plans are ratified. As of September 24, 2023 and September 25, 2022, we had $ 25.1 million and $ 25.0 million of accrued withdrawal liabilities. The liabilities reflect the estimated net present value of payments to the fund, payable over 20 years. Several multiemployer plans have CBAs that expire in the next twelve months. It is reasonably possible that if the Company is unable to renegotiate these agreements employees could go on strike which could disrupt the normal operations of the Company. Of our employees in CBAs, approximately 55 % have CBAs that expire in the next 12 months. 62 Table of Contents 10. COMMON STOCK Warrant Agreement In connection with the previous 2nd Lien Term Loan entered into as part of the 2014 Refinancing, we entered into the Warrant Agreement. Under the Warrant Agreement, certain affiliates or designees of the 2nd Lien Lenders received on March 31, 2014, their pro rata share of Warrants to purchase, in cash, 600,000 shares of Common Stock, subject to adjustment pursuant to anti-dilution provisions. 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 was $ 41.90 per share. The Warrant Agreement contained a cash settlement provision in the event of a change of control prior to March 31, 2018, as well as other provisions requiring the Warrants to be measured at fair value and classified as warrants and other liabilities in our Consolidated Balance Sheets. We re-measured the liability to fair value each reporting period, with changes reported in other non-operating income (expense). The initial fair value of the Warrants was $ 16.9 million. The Warrants expired in March 2022. In connection with the issuance of the Warrants, we entered into the Registration Rights Agreement. The Registration Rights Agreement requires, among other matters, that we use our commercially reasonable efforts to file and maintain the effectiveness for certain specified periods of a shelf registration statement covering the shares of Common Stock upon exercise of the Warrants. 11. STOCK OWNERSHIP PLANS Total non-cash stock compensation expense is $ 1.8 million, $ 1.3 million and $ 0.9 million, in 2023, 2022 and 2021, respectively. At September 24, 2023, we have reserved 196,359 shares of Common Stock for issuance to employees under an incentive and non-statutory stock option and restricted stock plan approved by stockholders, of which 196,359 shares are available for granting of non-qualified stock options or issuance of restricted Common Stock. Stock Options Options are granted at a price equal to the fair market value on the date of the grant and are exercisable, upon vesting, over a ten-year period. A summary of stock option activity is as follows: (Thousands of Shares) 2023 2022 2021 Outstanding, beginning of year — 36 41 Exercised — ( 9 ) ( 2 ) Canceled — ( 27 ) ( 3 ) Outstanding, end of year — — 36 Exercisable, end of year — — 36 Weighted average prices of stock options are as follows: (Dollars) 2023 2022 2021 Exercised — 11.30 11.30 Cancelled — 11.30 11.30 Outstanding, end of year — 11.40 11.40 63 Table of Contents Restricted Common Stock A summary of restricted Common Stock activity is as follows: (Thousands of Shares) 2023 2022 2021 Outstanding, beginning of year 165 154 155 Granted 69 78 46 Vested ( 62 ) ( 66 ) ( 45 ) Forfeited ( 10 ) ( 1 ) ( 2 ) Outstanding, end of year 162 165 154 Weighted average grant date fair values of restricted Common Stock are as follows: (Dollars) 2023 2022 2021 Outstanding, beginning of year 21.21 16.70 21.50 Granted 17.87 30.01 11.20 Vested 17.27 20.93 27.30 Forfeited 24.04 23.60 16.10 Outstanding, end of year 21.14 21.21 16.70 Total unrecognized compensation expense for unvested restricted Common Stock at September 24, 2023 is $ 1.7 million, which will be recognized over a weighted average period of 1.4 years. Employee Stock Purchase Plans We have 27,000 shares of Common Stock available for issuance pursuant to our Employee Stock Purchase Plan. We also have 870 shares of Common Stock available for issuance under our Supplemental Employee Stock Purchase Plan. There has been no activity under these plans in 2023, 2022, or 2021. 12. INCOME TAXES Income tax expense (benefit) consists of the following: (Thousands of Dollars) 2023 2022 2021 Current: Federal 4,528 4,932 ( 2,431 ) State ( 336 ) 142 3,642 Deferred ( 4,541 ) ( 4,376 ) 6,044 ( 349 ) 698 7,255 64 Table of Contents Income tax (benefit) expense related to 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 (Loss) Income Before Income Taxes) 2023 2022 2021 Computed “expected” income tax expense 21.0 21.0 21.0 State income tax benefit, net of federal tax benefit ( 5.4 ) ( 8.9 ) 5.6 Net income of associated companies 31.2 ( 77.2 ) ( 1.8 ) Resolution of tax matters 69.7 ( 32.2 ) 3.2 Remeasurement due to state rate changes ( 84.0 ) ( 11.2 ) 0.1 Non-deductible expenses ( 28.5 ) 124.0 0.9 Provision to return adjustment ( 0.5 ) 70.2 — Valuation allowance 16.0 11.9 ( 6.0 ) Wage credit, net addback — ( 7.5 ) — Warrant valuation — ( 1.9 ) ( 0.4 ) Interest and penalties ( 9.0 ) — — Other 0.8 — — 11.3 88.2 22.6 Net deferred income tax liabilities consist of the following components: (Thousands of Dollars) September 24 2023 September 25 2022 Deferred income tax liabilities: Property and equipment ( 8,461 ) ( 11,712 ) Identified intangible assets ( 18,705 ) ( 21,649 ) ASC 842 - Leases DTL ( 9,890 ) ( 11,308 ) Other ( 615 ) — Investments ( 31,296 ) ( 26,489 ) ( 68,967 ) ( 71,158 ) Deferred income tax assets: Allowance for credit losses 1,655 802 Pension and postretirement benefits 1,102 3,445 Long-term debt 159 161 Interest deduction limitation 9,828 4,809 Operating loss carryforwards 25,749 26,224 ASC 842 - Leases DTA 11,037 13,112 Accrued compensation 2,341 1,914 Accrued expenses 1,510 1,663 Other — 2,964 53,381 55,094 Valuation allowance ( 25,765 ) ( 26,655 ) Net deferred income tax liabilities ( 41,351 ) ( 42,719 ) All deferred taxes are categorized as non-current. 65 Table of Contents A reconciliation of 2023 and 2022 changes in gross unrecognized tax benefits is as follows: (Thousands of Dollars) 2023 2022 Balance, beginning of year 18,242 18,279 Changes in tax positions for prior years ( 687 ) ( 307 ) Increases (decrease) in tax positions for the current year ( 347 ) 1,887 Lapse in statute of limitations ( 2,294 ) ( 1,617 ) Balance, end of year 14,914 18,242 Approximately $ 10.7 million and $ 11.9 million of the gross unrecognized tax benefit balances for 2023 and 2022, respectively, relate to state net operating losses which are netted against deferred taxes on our Consolidated Balance Sheet. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $ 2.5 million at September 24, 2023. The Company does not expect that unrecognized tax benefits will fluctuate significantly in the next twelve months. 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, $ 1.2 million at September 24, 2023 and $ 1.5 million at September 25, 2022. There were no amounts provided for penalties at September 24, 2023 or September 25, 2022. At September 24, 2023 and September 25, 2022, we had a deferred tax asset of $ 9.8 million and $ 4.8 million, respectively, related to disallowed interest expense. The Company is current undergoing a New York Franchise Tax audit that includes fiscal year periods 2019 through 2021. Certain of the Company's state income tax returns for the year ended September 25, 2016 are open for examination. The Federal and remaining state returns are open beginning with the September 24, 2017 year. At September 24, 2023, we have state tax benefits of approximately $ 43.3 million in net operating loss ("NOL") carryforwards that expire between 2022 and 2040. These NOL carryforwards result in a deferred income tax asset of $ 34.2 million at September 24, 2023, a portion of which is offset by a valuation allowance. 13. FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate value. The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of those instruments. Certain other investments totaling $ 3.9 million, including our 16.7 % ownership of the non-voting common stock and 0.7 % of the voting common stock of TCT, which represents 8.7 % of total TCT stock, and a private equity investment, are carried at cost. Certain other investments totaling $ 1.7 million, which include securities held in trust under a deferred compensation arrangement, are carried at fair value with gains and losses reported in earnings. These represent Level 2 fair value measurements. At September 24, 2023, we had no floating rate debt. Our fixed rate debt consists of $ 455.7 million principal amount of the Term Note. At September 24, 2023 the fair value is $ 392.2 million. This represents a Level 2 fair value measurement. As discussed more fully in Notes 5 and 10 , we recorded a liability for the Warrants issued in connection with the Warrant Agreement. The liability was initially measured at its fair value and we re-measure the liability to fair value each reporting period, with changes reported in other non-operating income (expense). The initial fair value of the Warrants was $ 16.9 million. The fair value of the Warrants at September 24, 2023, September 25, 2022, and September 26, 2021 was zero , $ 0.1 million and $ 0.3 million, respectively. In other, net non-operating income (expense) in the Consolidated Statements of Income (loss) and Comprehensive Income (Loss), we recognized income of $ 0 in 2023, $ 0.1 million in 2022, and $ 0.3 million in 2021, for adjustments in the fair value of the Warrants. The Warrants expired in March 2022. 66 Table of Contents The following assumptions were used to estimate the fair value of the Warrants: 2023 2022 2021 Volatility (Percent) — — 43 Risk-free interest rate (Percent) — — 0.05 Expected term (Years) — — 0.5 Estimated fair value (Dollars) — — 0.12 14. EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings per common share: (Thousands of Dollars and Shares, Except Per Common Share Data) 2023 2022 2021 (Loss) income attributable to Lee Enterprises, Incorporated: ( 5,267 ) ( 2,017 ) 22,745 Weighted average Common Stock 6,037 5,946 5,873 Less non-vested restricted Common Stock ( 170 ) ( 167 ) ( 156 ) Basic average Common Stock 5,867 5,779 5,717 Dilutive stock options and restricted Common Stock — — 109 Diluted average Common Stock 5,867 5,779 5,826 Earnings per common share: Basic: ( 0.90 ) ( 0.35 ) 3.98 Diluted ( 0.90 ) ( 0.35 ) 3.90 For 2021 we had 600,000 weighted average shares not considered in the computation of diluted earnings per share because the exercise prices of the related stock options and Warrants were in excess of the fair market value of our Common Stock. For 2023 and 2022 we had 48,955 and 74,304 weighted average shares, respectively, not considered in the computation of diluted earnings per share because the Company recorded net losses. 15. ALLOWANCE FOR CREDIT LOSSES Valuation and qualifying account information related to the allowance for credit losses related to continuing operations is as follows: (Thousands of Dollars) 2023 2022 2021 Balance, beginning of year 5,237 6,574 13,431 Additions charged to expense 6,942 5,190 1,505 Deductions from reserves ( 6,919 ) ( 6,527 ) ( 8,362 ) Balance, end of year 5,260 5,237 6,574 67 Table of Contents 16. OTHER INFORMATION Compensation and other accrued liabilities consist of the following: (Thousands of Dollars) September 24 2023 September 25 2022 Compensation 9,114 20,815 Retirement plans 327 549 Other 20,007 23,376 29,448 44,740 Supplemental cash flow information includes the following cash payments: (Thousands of Dollars) 2023 2022 2021 Interest 41,471 41,770 45,214 Income tax payments, net 3,722 5,311 7,604 Accumulated other comprehensive income (loss), net of deferred income taxes at September 24, 2023, and September 25, 2022, is related to pension and postretirement benefits. 17. COMMITMENTS AND CONTINGENT LIABILITIES Capital Expenditures At September 24, 2023, we had construction and equipment purchase commitments totaling approximately $ 3.7 million. Income Taxes Commitments exclude unrecognized tax benefits to be recorded in accordance with ASC Topic 740, Income Taxes. We are unable to reasonably estimate the ultimate amount or timing of cash settlements with the respective taxing authorities for such matters. See Note 12. We file income tax returns with the Internal Revenue Service and various state tax jurisdictions. From time to time, we are subject to routine audits by those agencies, and those audits may result in proposed adjustments. We have considered the alternative interpretations that may be assumed by the various taxing agencies, believe our positions taken regarding our filings are valid, and that adequate tax liabilities have been recorded to resolve such matters. However, the actual outcome cannot be determined with certainty and the difference could be material, either positively or negatively, to the Consolidated Statements of Income and Comprehensive Income (Loss) in the periods in which such matters are ultimately determined. We do not believe the final resolution of such matters will be material to our consolidated financial position or cash flows. We have various income tax examinations ongoing and at various stages of completion, but generally our income tax returns have been audited or closed to audit through 2014. Legal Proceedings We are involved in a variety of legal actions that arise in the normal course of business. Insurance coverage mitigates potential loss for certain of these matters. While we are unable to predict the ultimate outcome of these legal actions, it is our opinion that the disposition of these matters will not have a material adverse effect on our Consolidated Financial Statements, taken as a whole. 68 Table of Contents Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors Lee Enterprises, Incorporated Davenport, Iowa Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Lee Enterprises, Incorporated (the “Company”) as of September 24, 2023 and September 25, 2022, the related consolidated statements of income (loss) and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the fiscal years ended September 24, 2023 and September 25, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 24, 2023, and September 25, 2022, and the results of its operations and its cash flows for the fiscal years ended September 24, 2023, and September 25, 2022 , in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of September 24, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated December 8, 2023, expressed an adverse opinion thereon. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of indefinite-lived mastheads As described in Notes 1 and 4 to the consolidated financial statements, the Company’s non-amortized intangible assets in mastheads are $18.7 million as of September 24, 2023. The Company reviews the indefinite-lived mastheads for impairment on an annual basis or more frequently if events or changes in circumstances indicate the assets might be impaired. The impairment test consists of comparing the fair value of each masthead with its carrying amount. The Company determines fair value using the relief from royalty method, which utilizes a discounted cash flow model to determine the fair value of each masthead. The significant assumptions used in the determination of the fair value of indefinite-lived mastheads are the discount 69 Table of Contents rate (weighted-average cost of capital) and royalty rates. During the year ended September 24, 2023, the Company recognized impairments of $7.7 million on these indefinite-lived mastheads. We identified the determination of the fair values of the indefinite-lived mastheads as a critical audit matter because of the significant estimates and assumptions the Company makes to calculate their fair value, specifically the discount rate and royalty rates. Auditing the significant assumptions involved a high degree of subjective auditor judgment due to their significant estimation uncertainty, including the extent of specialized skills and knowledge needed. The following are the primary procedures we performed to address this critical audit matter: • Utilizing personnel with specialized skills and knowledge in valuation, who assisted in: • Evaluating the discount rate by developing an independent expectation range using independently obtained market data of guideline public companies and compared to the rate used by the Company; and • Evaluating the royalty rates by (i) evaluating management’s profit-split analysis and (ii) comparing them to a range based on publicly available royalty rates. /s/ BDO USA, P.C. We have served as the Company's auditor since 2021. Chicago, Illinois December 8, 2023 70 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Lee Enterprises, Incorporated: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of income (loss) and comprehensive income (loss), stockholders’ equity (deficit), and cash flows of Lee Enterprises, Incorporated and subsidiaries (the Company) for the 52-week period ended September 26, 2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the 52-week period ended September 26, 2021, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ KPMG LLP We served as the Company’s auditor from 2008 to 2021. Chicago, Illinois December 10, 2021 71 Table of Contents EXHIBIT INDEX Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by us with the SEC, as indicated. Exhibits marked with a plus (+) are management contracts or compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. All other documents listed are filed with this Annual Report on Form 10-K. 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 * Form of Indenture of Lee Enterprises, Incorporated (Exhibit 4.3 to Form S-3 Registration Statement filed on February 10, 2020) 4.2 * Warrant Agreement dated as of March 31, 2014 between Lee Enterprises, Incorporated and Equiniti Trust Company (formerly 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) 4.4 * Rights Agreement dated as of November 24, 2021, between Lee Enterprises, Incorporated and Equiniti Trust Company, as Rights Agent (Exhibit 4.1 to Current Report on Form 8-K filed on November 24, 2021) 10.1 * Asset and Stock Purchase Agreement dated January 29, 2020 by and among Lee Enterprises, Incorporated, Berkshire Hathaway Inc. and BH Media Group, Inc. (Exhibit 10.1 to Form 8-K filed on January 29, 2020) 10.2 * Credit Agreement dated January 29, 2020 by and between Lee Enterprises, Incorporated and BH Finance LLC (Exhibit 10.2 to Form 8-K filed on January 29, 2020) 10.3 * Form of Lease Agreement by and between Lee Enterprises, Incorporated and BH Media Group, Inc. (Exhibit 10.3 to Form 8-K filed on January 29, 2020) 10.4 * 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) 10.5 * 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) 10.6 * 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) 72 Table of Contents Number Description 10.7 * 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) 10.8 * 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) 10.9 * 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) 10.10 * 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) 10.11 * 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) 10.12 * Non-Confidentiality Agreement, dated as of May 1, 2000 (Exhibit 10.10 to Form 10-Q for the Fiscal Quarter Ended June 30, 2005) 10.13.1+ * Lee Enterprises, Incorporated 2020 Long-Term Incentive Plan (effective February 19, 2020) (Exhibit 4.2 to Registration Statement on Form S-8 (Reference No. 333-237605) filed on April 8, 2020) 10.13.2+* Form of Restricted Stock Agreement related to Lee Enterprises, Incorporated 2020 Long-Term Incentive Plan (Effective February 19, 2020) (Exhibit 10.2 to Form 8-K filed on February 23, 2016) 10.13.3+ * Form of Incentive Stock Option Agreement related to Lee Enterprises, Incorporated 2020 Long-Term Incentive Plan (Effective February 19, 2020) (Exhibit 10.3 to Form 8-K filed on February 23, 2016) 10.13.4+ * Form of Non-Qualified Stock Option Agreement related to Lee Enterprises, Incorporated 2020 Long-Term Incentive Plan (Effective February 19, 2020) (Exhibit 10.4 to Form 8-K filed on February 23, 2016) 10.14 +* 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) 10.15+ * 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) 10.16.1+* 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) 10.16.2+* 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) 73 Table of Contents Number Description 10.17+* 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) 10.18+* Lee Enterprises, Incorporated Amended and Restated Incentive Compensation Program (Effective February 22, 2017) (Appendix B to Schedule 14A Definitive Proxy Statement for 2017) 19 L ee Enterprises , Incorporated Insider Trading Policy effective as of September 21, 2023 21 Subsidiaries and associated companies 23 Consent of KPMG LLP, Independent Registered Public Accounting Firm 23.1 Consent of BDO USA, P.C. , 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 97 L ee Enterprises, Incorporated Recovery of Erroneously Awarded Executive Compensation Policy effective as of September 21, 2023 101.INS Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 74 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on the 8 th day of December 2023. LEE ENTERPRISES, INCORPORATED /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) 75 Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in their respective capacities on the 8 th day of December 2023. Signature /s/ Steven C. Fletcher Director Steven C. Fletcher /s/ Margaret R. Liberman Director Margaret R. Liberman /s/ Mary E. Junck Director Mary E. Junck /s/ Brent M. Magid Director Brent M. Magid /s/ Shaun E. McAlmont Director Shaun E. McAlmont /s/ Herbert W. Moloney III Director Herbert W. Moloney III /s/ David T. Pearson Director David T. Pearson /s/ Gregory P. Schermer Director Gregory P. Schermer /s/ Kevin D. Mowbray President and Chief Executive Officer, and Director Kevin D. Mowbray /s/ Timothy R. Millage Vice President, Chief Financial Officer and Treasurer Timothy R. Millage 76