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Item 7. Management’s Discussion and Analysis

2024-12-13 compared with 2023-12-08 · 71 added, 164 removed, 162 unchanged (59% of the section changed)

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This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes thereto, included herein.

CRITICAL ACCOUNTING POLICIES

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes.

Actual results could differ significantly from those estimates.

We believe the following discussion addresses our most critical accounting policies, which are those that are important to the presentation of our financial condition and results of operations and require management's most subjective and complex judgments.

We believe the following discussion addresses our most critical accounting estimates, which are those that are important to the presentation of our financial condition and results of operations and require management's most subjective and complex judgments.

Intangible Assets, Other Than Goodwill

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Non-amortized intangible assets are tested for impairment annually on the first day of the fourth fiscal quarter or more frequently if events or changes in circumstances suggest the asset might be impaired.

The quantitative impairment test consists of comparing the fair value of each masthead or domain name with its carrying amount.

We use a relief from royalty approach which utilizes a discounted cash flow model to determine the fair value of each masthead, domain name, or trade name.

The quantitative impairment test consists of comparing the fair value of each masthead with its carrying amount.

We use a relief from royalty approach which utilizes a discounted cash flow model to determine the fair value of each masthead.

Management's judgments and estimates of future operating results in determining the intangibles fair values are consistently applied to each underlying business in determining the fair value of each intangible asset.

In 2024, 2023, and 2022, we recognized impairment charges of $7.8 million, $7.7 million, and $14.2 million, respectively.

Only one of our mastheads has a fair value that is 20% over its carrying value, therefore our mastheads could experience impairment in the future if we do not achieve our revenue projections.

As of September 29, 2024 the masthead carrying value is $10.9 million.

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The carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of such asset group.

In 2021, we recognized $0.2 million of impairment on intangible assets subject to amortization.

There were no indicators of impairment on intangible assets subject to amortization in 2024, 2023 or 2022.

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All of these estimates are subject to uncertainty as future results may or may not be achieved.

In 2023, the royalty rates utilized range from 0% to 1.0%;

In 2024, the royalty rates utilized a range from 0% to 1.0%;

a 50-basis point decrease in royalty rates would result in an additional $4.6 million of impairment.

The Company’s discount rate utilized in the analysis has ranged from 10.5% in 2021 to 13.0% 2023, depending on market conditions.

The Company’s discount rate utilized in the analysis has ranged from 11.0% in 2022 to 12.5% in 2024, depending on market conditions.

Increasing the discount rate by 100 basis points would result in an additional $0.1 million of impairment.

The Company has had various revenue forecasts utilized in the analysis over different years.

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

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

For information related to the Company's Goodwill impairment analysis, refer to Note 4 to the Consolidated Financial Statements.

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To determine the expected long-term rate of return of assets, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets, input from the actuaries and investment consultants and long- term inflation assumptions.

In 2023, we used an expected return of assets assumption of 5.0% for both our pension plan assets and our postretirement and postemployment benefit plan assets.

A 50-basis point decrease in discount rates would result in an increase to pension and postretirement and postemployment benefits liabilities of $10.6 million.

A 50-basis point decrease in expected rate of return of assets results would result in an increase to pension and postretirement and postemployment benefits expense of $1.1 million.

In 2024, we used an expected return of assets assumption of 5.0% for our pension plan assets and 6.0% for our postretirement and postemployment benefit plan assets.

A 50-basis point decrease in discount rates would result in an increase of $9.5 million to pension and $0.5 million to postretirement and postemployment benefits liabilities.

A 50-basis point decrease in expected rate of return of assets results would result in an increase of $0.9 million to pension and $0.1 million postretirement and postemployment benefits expense.

We are subject to income taxes in the U.S.

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Print advertising revenue 81,488 125,804 (35.2) % 184,963 (32.0) %

Digital advertising revenue 193,173 181,465 6.5 % 141,391 28.3 %

Digital advertising and marketing services revenue 194,213 193,173 0.5 % 181,465 6.5 %

Advertising and marketing services revenue 275,701 318,977 (13.6) % 366,428 (12.9) %

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Depreciation and amortization 27,616 30,621 (9.8) % 36,544 (16.2) %

Assets loss (gain) on sales, impairments and other 1,882 9,716 (80.6) % 8,214 NM

Assets loss on sales, impairments and other, net 11,193 1,882 NM 9,716 NM

Restructuring costs and other 19,253 12,673 51.9 % 22,720 (44.2) %

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Interest expense (41,232) (41,471) (0.6) % (41,770) (0.7) %

Curtailment gain — 1,027 (100.0) % 23,830 NM

Pension withdrawal cost — (1,200) (100.0) % (2,335) NM

Pension and OPEB related benefit (cost) and other, net 1,910 2,420 (21.1) % 19,022 (87.3) %

Curtailment/Settlement gains 3,593 — NM 1,027 (100.0) %

Total non-operating expense, net (35,729) (40,251) (11.2) % (24,056) 67.3 %

(Loss) income before income taxes (3,082) 795 (487.7) % 32,047 NM

Income tax (benefit) expense (349) 698 (150.0) % 7,255 (90.4) %

Net (loss) income (2,733) 97 (2917.4) % 24,792 NM

Earnings (loss) per common share:

Basic (0.90) (0.35) 156.5 % 3.98 NM

Diluted (0.90) (0.35) 156.5 % 3.90 NM

We acquired or disposed of certain properties in each of 2023, 2022 and 2021.

(Loss) income before income taxes (31,183) (3,082) NM 795 NM

Income tax (benefit) expense (7,610) (349) NM 698 NM

Net (loss) income (23,573) (2,733) NM 97 NM

Loss per common share:

Basic (4.35) (0.90) NM (0.35) NM

Diluted (4.35) (0.90) NM (0.35) NM

We disposed of certain properties in each of 2024, 2023 and 2022.

Discussions of the year ended September 25, 2022 and comparison of the years ended September 24, 2023 and September 25, 2022 can be found in the " Management's Discussion and Analysis of Financial Condition

and Res ults of Operations" section of our Annual Report on Form 10-K for the year ended September 24, 2023, filed on December 8, 2023, which section is incorporated by reference herein.

To facilitate a comparison of our results without the impact of the 53rd week of revenues and expenses, certain revenue and expense trends, as described below, are presented on a comparative basis which is calculated by removing the 53rd week of revenue or expense in 2024.

OPERATING REVENUE

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Total operating revenue totaled $611.4 million in 2024, down $79.8 million, or 11.5%, compared to 2023.

On a comparative basis total operating revenue declined 13.0%.

Advertising and marketing services revenue totaled $275.7 million in 2024, down $43.3 million, or 13.6% compared to 2023.

Print advertising revenues were $125.8 million in 2023, down $59.2 million, or 32.0% compared to 2022.

The decline is due to the secular downward trend in print advertising.

On a comparative basis, Advertising and marketing services revenue declines 14.9%.

Digital advertising and marketing services revenue totaled $194.2 million in 2024, up 0.5% compared to 2023.

On a comparative basis, revenue declined 0.9%.

Digital advertising and marketing services revenue represented 70.4% of 2024 total advertising and marketing services revenue compared to 60.6% in 2023.

The increase in digital advertising is due to growth at Amplified, our full service digital marketing service.

Revenue at Amplified increased 20.3% in 2023 totaling $91.2 million.

Subscription revenue totaled $313.3 million in 2023, or down 11.4%, compared to 2022.

The change in subscription revenue is due to decline in full access volume, consistent with historical and industry trends.

The decrease was partially offset by growth in selective price increases on our full access subscriptions and in digital-only subscribers and digital-only revenue which were up 35.6% and 51.0%, respectively.

As of September 2023, we had over 721,000 digital-only subscribers compared to 532,000 in 2022.

Other revenue, which primarily consist of digital services revenue from BLOX Digital and commercial printing revenue totaled $58.9 million, a 3.4% decrease compared to 2022.

Digital services revenue totaled $19.4 million in 2023, a 7.8% increase compared to 2022.

Commercial printing revenue totaled $20.1 million in 2023, a 6.2% decline from 2022.

Revenue at BLOX Digital, including intercompany revenue, totaled $35.0 million, an increase of 13.2%, due to increased market share and increases in average revenue per user due to additional value-added service offerings.

Total digital revenue including digital advertising revenue, digital-only subscription revenue and digital services revenue totaled $273.2 million in 2023, a 14.1% increase over 2022, and represented 39.5% of our total operating revenue in 2023, compared to 30.7% in 2022.

Revenue Comparison 2022-2021

Total operating revenue totaled $781.0 million in 2022, down $13.7 million, or 1.7%, compared to 2021.

Advertising and marketing services revenue totaled $366.4 million in 2022, down 0.8% compared to 2021.

Print advertising revenues were $81.5 million in 2024, down $44.3 million, or 35.2% compared to 2023.

The decline is due to the secular downward trend in print advertising.

Digital advertising and marketing services revenue totaled $181.5 million in 2022, up 28.3% compared to 2021.

Digital advertising and marketing services revenue represented 49.5% of 2022 total advertising and marketing services revenue compared to 38.3% in 2021.

The increase in digital advertising is due to growth at Amplified, our full service digital marketing service.

Revenue at Amplified increased 82.9% in 2022 totaling $75.8 million.

On a comparative basis, print advertising revenue was down 36.5%.

The decline is due to continued secular declines in demand for print advertising and a reduced product portfolio through sales and elimination of products that do not meet profitability standards.

Subscription revenue totaled $281.9 million in 2024, or down 10.0%, compared to 2023.

The change in subscription revenue is due to decline in full access volume, consistent with historical and industry trends.

As of September 2022, we had 532,000 digital-only subscribers compared to 402,000 in 2021.

Other revenue, which primarily consist of digital services revenue from BLOX Digital and commercial printing revenue totaled $60.9 million, a 10.0% decrease compared to 2021.

Digital services revenue totaled $17.9 million in 2022, a 5.4% decrease compared to 2021.

Commercial printing revenue totaled $21.5 million in 2022, a 14.4% decline from 2021.

Revenue at BLOX Digital, including intercompany revenue, totaled $30,906,000, an increase of 13.6%, due to increased market share and increases in average revenue per user due to additional value-added service offerings.

Decline in full access volume, consistent with historical and industry trends were partially offset by selective increases on our full access subscriptions, growth in digital-only subscribers and price increases on digital subscriptions.

Digital-only subscribers grew 7.1% since 2023 and now total more than 771,000.

Digital-only subscription revenue grew 38.9% compared to 2023.

On a comparative basis, digital-only revenue grew 36.2%.

Other revenue, which primarily consists of commercial printing revenue and digital services from BLOX Digital, totaled $53.8 million, a 8.7% decrease compared to 2023.

On a comparative basis other revenue decreased 9.7%.

Digital services revenue totaled $20.5 million in 2024, a 5.9% increase compared to 2023.

On a comparative basis digital services revenue increased 5.3%.

Commercial printing revenue totaled $17.5 million in 2024, a 13.0% decline compared to 2023, primarily driven by reduction in print volumes from our partners.

On a comparative basis, commercial printing revenue was down 14.6%.

Total digital revenue including digital advertising revenue, digital-only subscription revenue and digital services revenue totaled $299.1 million in 2024, a 9.4% increase over 2023, and represented 48.9% of our total operating revenue in 2024, compared to 39.5% in 2023.

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Newsprint and ink costs decreased $8.5 million in 2024, or a 33.7% decrease compared to 2023.

This decrease was attributable to declines in newsprint volumes partially offset by higher newsprint prices.

See Item 7A, “Commodities”, included herein, for further discussion and analysis of the impact of newsprint on our business.

This decrease was attributable to declines in newsprint volumes.

Other operating expenses decreased $21.1 million in 2024, or a 6.5% decrease compared to 2023.

Other operating expenses include all operating costs not considered to be compensation, newsprint and ink, depreciation and amortization, or restructuring costs and other.

The largest components are costs associated with printing and distribution of our printed products, digital investments, digital cost of goods sold and facility expenses.

The decrease is attributable to other print-related costs due to lower volumes of our print products partially offset by increases in investments to fund our digital growth strategy.

Restructuring costs and other totaled $12.7 million and $22.7 million in 2023 and 2022, respectively.

Restructuring costs and other in 2023 are predominately severance.

Restructuring costs and other in 2022 include severance costs, litigation expenses, restructuring expenses, and advisor expenses associated with the unsolicited offer in November 2021.

Depreciation expense decreased $2.8 million, or 19.2%, in 2023.

Amortization expense decreased $3.2 million, or 14.3%, in 2023.

Assets loss (gain) on sales, impairments and other was a net loss of $1.9 million in 2023 compared to a net loss of $9.7 million in 2022.

Impairment losses in 2023 totaled $7.7 million for mastheads.

Impairment losses in 2022 totaled $13.5 million for mastheads, $7.8 million for leases, and $0.7 million for the disposal of a non-core business, respectively.

Assets loss (gain) on sales are part the Company's ongoing real estate and non-core asset monetization.

They totaled a net gain of $6.0 million in 2023 and a net gain of $12.3 million in 2022.

Operating Expense Comparison 2022-2021

Total operating expenses were $761.8 million, a 2.3% increase compared to 2021.

Cash Costs were $692.8 million, a 1.0% increase compared to 2021.

Compensation expense decreased $13.1 million in 2022, or a 4.0% decrease compared to 2021.

The decrease is attributable to reductions in FTEs due to continued business transformation efforts, partially offset by investments in digital talent.

Newsprint and ink costs increased $0.3 million in 2022, or a 1.1% increase compared to 2021.

This increase was attributable to higher newsprint prices offset by a decline in newsprint volumes.

See Item 7A, “Commodities”, included herein, for further discussion and analysis of the impact of newsprint on our business.

Other operating expenses increased $19.3 million in 2022, or a 5.9% increase compared to 2021.

Other operating expenses include all operating costs not considered to be compensation, newsprint and ink, depreciation and amortization, or restructuring costs and other.

The largest components are costs associated

with printing and distribution of our printed products, digital investments, digital cost of goods sold and facility expenses.

The increase is attributable to increases in investments to fund our digital growth strategy partially offset by lower delivery and other print-related costs due to lower volumes of our print products.

Other operating expenses include all operating costs not considered to be compensation, newsprint, depreciation and amortization, or restructuring costs and assets loss on sales, impairments, and other, net.

The largest components are costs associated with printing and distribution of our printed products, digital cost of goods sold

and facility expenses.

The decrease is primarily attributable to lower delivery and other print-related costs due to lower volumes of our print edition.

Restructuring costs and other totaled $19.3 million and $12.7 million in 2024 and 2023, respectively.

Restructuring costs and other in 2022 include severance costs, litigation expenses, restructuring expenses, and advisor expenses associated with the unsolicited offer in November 2021.

Restructuring costs and other in 2021 are predominately severance.

Restructuring costs and other include severance costs, litigation expenses, and restructuring expenses.

The increase is attributable to one-time costs to outsource certain operations.

Depreciation expense decreased $1.2 million, or 10.1%, in 2024.

Amortization expense decreased $1.8 million, or 9.6%, in 2024.

The decrease in both is attributable to assets becoming fully depreciated or amortized.

Assets loss (gain) on sales, impairments and other was a net loss of $11.2 million in 2024 compared to a net loss of $1.9 million in 2023.

Impairment losses in 2022 totaled $13.5 million for mastheads, $7.8 million for leases, and $0.7 million for the disposal of a non-core business, respectively.

Impairment losses in 2021 totaled $1.0 million for mastheads.

Impairment losses in 2024 and 2023 totaled $7.8 million and $7.7 million for mastheads.

Additionally, $1.3 million and $1.3 million of goodwill was allocated to the sale of certain non-core operations in 2024 and 2023, respectively.

Assets loss (gain) on sales are part the Company's ongoing real estate and non-core asset monetization.

They totaled a net gain of $12.3 million in 2022 and a net loss of $7.2 million in 2021.

They totaled a net loss of $2.2 million in 2024 and a net gain of $6.0 million in 2023.

Equity In Equity Investments

Equity in earnings of TNI and MNI increased $0.9 million in 2023, or 15.4%, compared to 2022.

Equity in earnings of TNI and MNI decreased $0.8 million in 2022 compared to 2021.

Equity in earnings of TNI and MNI decreased $2.0 million in 2024, or 30.0%, compared to 2023.

NON-OPERATING INCOME AND EXPENSES

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Interest expense decreased $0.2 million, or 0.6%, to $41.2 million in 2024 due to lower debt balances.

Our weighted average cost of debt, excluding amortization of debt financing cost, was 9.0% in 2023 and 2022.

Included in other non-operating income and expense is income related to our defined benefit pension plans and other postemployment benefit plans, which totaled $1.2 million and $20.5 million in 2023 and 2022, respectively.

We recognized pension withdrawal costs in 2023 and 2021 of $1.2 million and $12.9 million, respectively, in connection with the withdrawal from pension plans that covered certain employees.

No withdrawal costs were recognized in 2022.

The withdrawal liabilities will be paid over the next 20 years.

As more fully discussed in Note 5 of the Notes to the Consolidated Financial Statements, included herein, we recorded a liability for the Warrants, issued in connection with the Warrant Agreement in previous years.

We re-measured the liability to fair value each reporting period, with changes reported in other non-operating income (expenses).

Due to the fluctuation in the price of our Common Stock and changes in interest rates, the estimated fair value of the warrant liability can change each period.

We recorded non-operating income of $0.1 million and $0.3 million in 2022 and 2021 respectively, due to the change in fair value of the Warrants.

Non-operating Income and Expense Comparison 2022-2021

Interest expense decreased $3.0 million, or 6.7%, to $41.8 million in 2022 due to lower debt balances.

Our weighted average cost of debt, excluding amortization of debt financing cost, was 9.0% in 2022 and 2021.

Included in other non-operating income and expense is income related to our defined benefit pension plans and other postemployment benefit plans, which totaled $20.5 million and $33.3 million in 2022 and 2021, respectively.

We recognized a non-cash curtailment gain of $23.8 million and a reduction in our benefit obligation in 2021 by eliminating postretirement medical coverage for certain employees.

We recognized pension withdrawal costs in 2021 of $12.9 million in connection with the withdrawal from pension plans that covered certain employees.

The withdrawal liabilities will be paid over the next 20 years.

During 2022 we notified certain participants in our defined benefit plans of changes to be made to the plans.

The Company froze future benefits for 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 plan 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 defined benefit plan effective in the second quarter of fiscal 2022.

During September of 2022, the Company, as sponsor of the Lee Enterprises Incorporated Pension Plan (the "Plan") executed an agreement pursuant to which the Plan used a portion of its assets to purchase annuities from an insurance company (the "Insurer") and thereby assumed $85.6 million of the Plan's liabilities in exchange for $81.4 million of Plan assets.

The non-cash settlement gain of $4.2 million is recorded in Pension and OPEB related benefit (cost) and other, net.

We re-measured the liability to fair value each reporting period, with changes reported in other non-operating income (expenses).

Due to the fluctuation in the price of our Common Stock and changes in interest rates, the estimated fair value of the warrant liability can change each period.

We recorded non-operating income of $0.1 million and $0.3 million in 2022 and 2021 respectively, due to the change in fair value of the Warrants.

INCOME TAX EXPENSES

In 2023, we recorded income tax benefit of $0.3 million, or 11.3% of pretax loss and in 2022, we recorded an income tax expense of $0.7 million, or 87.8% of pretax income.

In 2021, we recorded an income tax expense of $7.3 million, or 22.6% of pre-tax income.

Our weighted average cost of debt was 9.0% in 2024 and 2023.

Other non-operating income and expense consists of benefits associated with our pension and other postretirement plans.

We recorded $5.1 million of periodic pension and other postretirement benefits in 2024 compared to $1.2 million in 2023.

The increase was attributable due to the Company recognizing a non-cash curtailment gain of $1.2 million in 2024 as a result of outsourcing certain postemployment defined benefit plan functions.

Additionally, in 2024, the Company completed a voluntary lump sum payment of future benefits to terminated vested participants.

The offer was accepted by 522 participants, representing a $22.6 million pension plan liability.

As a result of the offer, a non-cash settlement gain of $2.4 million was recorded in Curtailment/Settlement gain on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.

Both assets and liabilities of the plan were reduced by $22.6 million.

INCOME TAX BENEFIT

In 2024, we recorded income tax benefit of $7.6 million, or 24.4% of pretax loss and in 2023, we recorded an income tax benefit of $0.3 million, or 11.3% of pretax loss.

See Note 12 of the Notes to the Consolidated Financial Statements, included herein, for a discussion of the difference between the expected federal income tax rate and the actual tax rates.

NET INCOME AND EARNINGS PER SHARE

Net loss was $2.7 million in 2023 compared to net income of $0.1 million in 2022.

In 2021, net income was $24.8 million.

Losses per share was $0.90 per share in 2023 compared to losses per share of $0.35 per share in 2022.

In 2021, diluted earnings per share were $3.90 per share.

Net loss was $23.6 million in 2024 compared to net loss of $2.7 million in 2023.

Losses per share was $4.35 in 2024 compared to losses per share of $0.90 in 2023.

NON-GAAP FINANCIAL MEASURES

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In this report, we present Adjusted EBITDA and cash costs, which are non-GAAP financial performance measures that exclude from our reported GAAP results the impact of certain items consisting primarily of restructuring charges and non-cash charges.

We believe such expenses, charges, and gains are not indicative of normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years and with peer group companies.

We believe such expenses, charges, and gains are not indicative of normal, ongoing operations, and their inclusion in results makes for more difficult comparisons between years

and with peer group companies.

In the future, however, we are likely to incur expenses, charges, and gains similar to the items for which the applicable GAAP financial measures have been adjusted and to report non-GAAP financial measures excluding such items.

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It is also a measure used to calculate the leverage ratio of the Company, which is a key financial ratio monitored and used by the Company and its investors.

Adjusted EBITDA is defined as net income (loss), plus non-operating expenses, income tax expense, depreciation and amortization, assets loss (gain) on sales, impairments

and other, restructuring costs and other, stock compensation and our 50% share of EBITDA from TNI and MNI, minus equity in earnings of TNI and MNI.

Adjusted EBITDA is defined as net income (loss), plus non-operating expenses, income tax expense, depreciation and amortization, assets loss (gain) on sales, impairments and other, restructuring costs and other, stock compensation and our 50% share of EBITDA from TNI and MNI, minus equity in earnings of TNI and MNI.

Cash Costs represent a non-GAAP financial performance measure of operating expenses which are measured on an accrual basis and settled in cash.

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Equity in earnings of TNI and MNI (4,572) (6,527) (5,657)

Assets loss (gain) on sales, impairments and other, net 1,882 9,716 8,214

Assets loss on sales, impairments and other, net 11,193 1,882 9,716

Depreciation and amortization 27,616 30,621 36,544

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Depreciation and amortization 27,616 30,621 36,544

Assets (gain) loss on sales, impairments and other, net 1,882 9,716 8,214

Assets loss on sales, impairments and other, net 11,193 1,882 9,716

Restructuring costs and other 19,253 12,673 22,720

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LIQUIDITY AND CAPITAL RESOURCES

Our operations have historically generated positive cash flow, and are expected to continue providing sufficient liquidity, together with cash on hand, to meet our future cash requirements, which primarily relate to operating expenses, interest expense and capital expenditures.

Our operations have historically generated positive cash flow and are expected to provide sufficient liquidity, together with cash on hand, to meet our requirements, primarily operating expenses, interest expense and capital expenditures for at least the next twelve months.

A summary of our cash flows is included in the narrative below.

Operating Activities

Cash required for operating activities totaled $2.5 million in 2023 compared to cash provided by operating activities of $3.4 million in 2022, a decrease of $6.0 million.

The decrease was primarily driven by a decrease in operating results of $18.2 million (defined as net income (loss) adjusted for non-working capital items) and partially offset by an increase in cash from working capital of $12.3 million, primarily related to favorable changes in accounts receivable and inventories, offset by unfavorable changes in unearned revenue, accrued interest, and pension and postretirement obligations.

Cash provided by operating activities totaled $3.4 million in 2022 compared to $50.1 million in 2021, a decrease of $46.6 million.

The decrease was primarily driven by a decrease in operating results of $25.4 million (defined as net income (loss) adjusted for non-working capital items) and a decrease in cash from working capital of $21.2 million, primarily related to unfavorable changes in accounts receivable and income taxes payable, partially offset by favorable changes in accounts payable and pension and postretirement obligations.

Cash provided from operating activities totaled $1.1 million in 2024 compared to cash required by operating activities of $3.2 million in 2023, an increase of $4.3 million.

The increase was driven by an increase in working capital of $19.7 million, primarily related to favorable changes in accounts payable and unearned revenue partially offset by a decrease in operating results of $15.4 million (defined as net loss adjusted for non-working capital items).

Investing Activities

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Proceeds from sales of assets totaled $13.5 million and $12.0 million in 2024 and 2023, respectively.

Cash provided by investing activities totaled $6.3 million in 2022 and cash required for investing activities totaled $2.3 million in 2021.

Capital spending totaled $7.5 million in 2022 and 2021, respectively.

Proceeds from sales of assets totaled $14.8 million and $4.6 million in 2022 and 2021, respectively.

We anticipate that funds necessary for capital expenditures, which are expected to be $10.0 million in 2024, and other requirements, will be available from internally generated funds.

Financing Activities

Cash required for financing activities totaled $7.1 million in 2023 and $19.7 million in 2022 and $55.4 million in 2021.

Cash required for financing activities totaled $9.8 million in 2024 and $7.1 million in 2023.

Debt reduction accounted for the majority of the usage of funds in 2024 and 2023, respectively.

Excluding payments required from the Company's future excess cash flow (as defined in Note 5), the only required principal payments include payments from net cash proceeds from asset sales (as defined in the Credit Agreement) and payments upon certain instances of change in control.

Current maturities of long-term debt are from excess cash flows.

There are no other scheduled mandatory principal payments required under the Credit Agreement.

Our liquidity, consisting of cash on the balance sheet, totaled $9.6 million at September 29, 2024.

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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.

At September 24, 2023, the principal amount of our outstanding debt totals $455.7 million.

The 2020 Refinancing as defined in Note 5, significantly extended our debt maturity profile with final maturity of our debt in 2045.

Our largest source of advertising and marketing services revenue, retail advertising, is seasonal and tends to fluctuate with retail sales in markets served.

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We continuously evaluate price increases, productivity improvements, sourcing efficiencies and other cost reductions to mitigate the impact of inflation.

CONTRACTUAL OBLIGATIONS

The following table summarizes our significant contractual obligations at September 24, 2023:

(Thousands of Dollars) Payments (or Commitments) Due (Years)

Nature of Obligation Total Less

Than 1 1-3 3-5 More

Debt (Principal Amount) (1)

455,741 — — — 455,741

Interest expense (2)

881,859 41,017 123,050 123,050 594,742

Operating lease obligations 57,142 12,179 20,329 14,025 10,609

Withdrawal liabilities 27,305 1,564 3,127 3,127 19,487

Capital expenditure commitments 3,707 3,707 — — —

1,425,754 58,467 146,506 140,202 1,080,579

(1) Maturities of long-term debt are presented based on mandatory payments.

See Note 5 of the Notes to the Consolidated Financial Statements, included herein.

(2) Interest expense includes an estimate of interest expense for the Term Note, until its maturity in March 2045.

Interest expense under the Term Note is estimated using the 9.0% contractual rate applied to the outstanding balance as reduced by future contractual maturities of such debt.

See Note 5 of the Notes to Consolidated Financial Statements, included herein.

The table above excludes future cash requirements for pension, postretirement and postemployment obligations.

The periods in which these obligations will be settled in cash are not readily determinable and are subject to numerous future events and assumptions.

See Notes 7 and 8 of the Notes to the Consolidated Financial Statements, included herein.

The contractual obligations above exclude unrecognized tax benefits to be recorded in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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.

A substantial amount of our deferred income tax liabilities will not result in future cash payments.

See Note 12 of the Notes to the Consolidated Financial Statements, included herein.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 7. Management’s Discussion and Analysis