What changed in this filing

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Item 1. Financial Statements

2025-02-07 compared with 2024-08-02 · 84 added, 135 removed, 271 unchanged (45% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars) June 23,

(Thousands of Dollars) December 29,

2024 September 29,

24 unchanged sentences

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

(Thousands of Dollars and Shares, Except Per Share Data) June 23,

(Thousands of Dollars and Shares, Except Per Share Data) December 29,

2024 September 29,

15 unchanged sentences

Total liabilities 657,145 656,505

Commitments and Contingent Liabilities (Note 9)

Stockholders' equity:

4 unchanged sentences

issued and outstanding:

June 23, 2024;

December 29, 2024;

6,190 shares;

8 unchanged sentences

Accumulated other comprehensive income 19,805 19,920

Total stockholders' equity 3,968 21,240

Total Lee Enterprises, Inc.

Stockholders' deficit ( 26,653 ) ( 9,889 )

Non-controlling interests 2,476 2,555

Total equity 6,492 23,706

Total liabilities and equity 677,455 711,617

Total deficit ( 24,177 ) ( 7,334 )

Total liabilities and deficit 632,968 649,171

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME

Three months ended Nine months ended

(Thousands of Dollars, Except Per Common Share Data) June 23,

2024 June 25,

2023 June 23,

2024 June 25,

Three months ended

(Thousands of Dollars, Except Per Common Share Data) December 29,

2024 December 24,

Operating revenue:

8 unchanged sentences

Depreciation and amortization 6,265 7,295

Assets (gain) loss on sales, impairments and other, net ( 1,421 ) ( 900 ) 4,727 ( 4,255 )

Assets gain on sales, impairments and other, net ( 929 ) ( 1,469 )

Restructuring costs and other 5,150 4,265

1 unchanged sentence

Equity in earnings of associated companies 1,122 1,541

Operating income 4,925 12,208 8,206 26,245

Operating (loss) income ( 3,352 ) 7,833

Non-operating (expense) income:

4 unchanged sentences

(Loss) income before income taxes ( 12,981 ) 1,481

Income tax (benefit) expense ( 849 ) 394 ( 3,438 ) ( 1,237 )

Income tax expense 3,243 248

Net (loss) income ( 16,224 ) 1,233

2 unchanged sentences

Other comprehensive loss, net of income taxes ( 115 ) ( 2,314 )

Comprehensive (loss) income attributable to Lee Enterprises, Incorporated ( 4,413 ) 1,363 ( 18,366 ) ( 3,703 )

Comprehensive loss attributable to Lee Enterprises, Incorporated ( 16,863 ) ( 1,626 )

(Loss) earnings per common share:

2 unchanged sentences

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF DEFICIT

(Thousands of Dollars) Accumulated

3 unchanged sentences

Comprehensive

Income Non-Controlling Interests:

September 30, 2024 ( 292,341 ) 62 262,470 19,920 2,555 ( 7,334 )

Shares redeemed — — ( 331 ) — — ( 331 )

Income attributable to Lee Enterprises, Incorporated 688 — — — 688

Stock compensation — — 214 — 214

Other comprehensive loss — — — ( 2,286 ) ( 2,286 )

Deferred income taxes, net — — — ( 28 ) ( 28 )

December 24, 2023 ( 265,808 ) 61 260,950 24,529 19,732

Loss attributable to Lee Enterprises, Incorporated ( 16,748 ) — — — 524 ( 16,224 )

2 unchanged sentences

Deferred income taxes, net — — — 36 — 36

March 24, 2024 ( 277,987 ) 61 261,451 24,381 7,906

Shares issued — 1 — — 1

Loss attributable to Lee Enterprises, Incorporated ( 4,266 ) — — — ( 4,266 )

Stock compensation — — 474 — 474

Other comprehensive loss — — — ( 191 ) ( 191 )

Deferred income taxes, net — — — 44 44

June 23, 2024 ( 282,253 ) 62 261,925 24,234 3,968

Distributions to minority owners — — — — ( 603 ) ( 603 )

December 29, 2024 ( 309,089 ) 62 262,569 19,805 2,476 ( 24,177 )

(Thousands of Dollars) Accumulated

3 unchanged sentences

Comprehensive

Income Non-Controlling Interests:

September 25, 2023 ( 266,496 ) 61 260,832 26,843 2,466 23,706

4 unchanged sentences

Deferred income taxes, net — — — ( 28 ) — ( 28 )

Distributions to minority owners — — — — ( 553 ) ( 553 )

December 24, 2023 ( 265,808 ) 61 260,950 24,529 2,458 22,190

Shares redeemed — — ( 97 ) — ( 97 )

Loss attributable to Lee Enterprises, Incorporated ( 5,885 ) — — — ( 5,885 )

Stock compensation — — 574 — 574

Other comprehensive loss — — — ( 200 ) ( 200 )

Deferred income taxes, net — — — 60 60

March 26, 2023 ( 266,015 ) 60 259,964 16,373 10,382

Shares issued — 1 — — 1

Income attributable to Lee Enterprises, Incorporated 1,503 — — — 1,503

Stock compensation — — 461 — 461

Other comprehensive loss — — — ( 200 ) ( 200 )

Deferred income taxes, net — — — 60 60

June 25, 2023 ( 264,512 ) 61 260,425 16,233 12,207

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

(Thousands of Dollars) June 23,

2024 June 25,

Three months ended

(Thousands of Dollars) December 29,

2024 December 24,

Cash provided by (required for) operating activities:

Net loss ( 14,094 ) ( 1,407 )

Adjustments to reconcile net loss to net cash provided by (required for) operating activities:

Net (loss) income ( 16,224 ) 1,233

Adjustments to reconcile net loss to net cash (required for) provided by operating activities:

Depreciation and amortization 6,265 7,295

2 unchanged sentences

Stock compensation expense 430 214

Assets loss (gain) on sales, impairments and other, net 4,727 ( 4,255 )

Assets gain on sales, impairments and other, net ( 929 ) ( 1,469 )

Earnings, net of distributions, deemed returns on investment of TNI and MNI 228 ( 59 )

Gain on sale of investment — ( 1,736 )

Deferred income taxes ( 131 ) ( 645 )

Return of letters of credit collateral 894 778

Other, net ( 603 ) ( 550 )

1 unchanged sentence

Increase in receivables ( 2,682 ) ( 3,040 )

Decrease (increase) in inventories and other 1,069 ( 348 )

Decrease in accounts payable and other accrued liabilities ( 12,786 ) ( 14,435 )

Increase in inventories and other ( 406 ) ( 66 )

(Decrease) increase in accounts payable and other accrued liabilities 4,197 64

Decrease in pension and other postretirement and postemployment benefit obligations ( 893 ) ( 418 )

1 unchanged sentence

Other ( 115 ) ( 505 )

Net cash provided by (required for) operating activities 1,378 ( 1,718 )

Net cash (required for) provided by operating activities ( 7,337 ) 80

Cash provided by investing activities:

16 unchanged sentences

The accompanying unaudited, interim, Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for quarterly reports.

In the opinion of management, these financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Lee Enterprises, Incorporated and its subsidiaries (the “Company”) as of June 23, 2024, and our results of operations and cash flows for the periods presented.

In the opinion of management, these financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Lee Enterprises, Incorporated and its subsidiaries (the “Company”) as of December 29, 2024, and our results of operations and cash flows for the periods presented.

The Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's 2024 Annual Report on Form 10-K.

2 unchanged sentences

Fiscal year 2025 includes 52 weeks of operations and 2024 included 53 weeks of operations.

Because of seasonal and other factors, the results of operations for the three and nine months ended June 23, 2024, are not necessarily indicative of the results to be expected for the full year.

Because of seasonal and other factors, the results of operations for the three months ended December 29, 2024, are not necessarily indicative of the results to be expected for the full year.

The Consolidated Financial Statements include our accounts and those of our wholly owned subsidiaries, as well as our 82.5 % interest in INN Partners, L.C.

2 unchanged sentences

("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 intangible assets.

In 2024, certain prior period amounts within the consolidated financial statements have been adjusted to conform with current period presentation.

These matters did not change operating revenues, net income (loss), accumulated deficit, and earnings per share in all periods presented.

The following table presents our revenue disaggregated by source:

Three months Ended Nine months Ended

(Thousands of Dollars) June 23,

2024 June 25,

2023 June 23,

2024 June 25,

Three months Ended

(Thousands of Dollars) December 29,

2024 December 24,

Operating revenue:

13 unchanged sentences

The Company’s primary source of contract liabilities is unearned revenue 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.

Revenue recognized in the three and nine months ended June 23, 2024, that was included in the contract liability as of September 24, 2023, was $ 2.8 million and $ 37.3 million, respectively.

Revenue recognized in the three and nine months ended June 25, 2023, that was included in the contract liability as of September 25, 2022, was $ 4.3 million and $ 45.5 million, respectively.

Accounts receivable, excluding allowance for credit losses was $ 67.0 million and $ 74.4 million as of June 23, 2024, and September 24, 2023 , respectively.

Allowance for credit losses was $ 5.8 million and $ 5.3 million as of June 23, 2024, and September 24, 2023 , respectively.

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.

Revenue recognized in the three months ended December 29, 2024, that was included in the contract liability as of September 29, 2024, was $ 19.4 million.

Accounts receivable, excluding allowance for credit losses was $ 65.4 million and $ 67.2 million as of December 29, 2024, and September 29, 2024 , respectively.

Allowance for credit losses was $ 5.9 million and $ 6.5 million as of December 29, 2024, and September 29, 2024 , respectively.

Valuation and qualifying account information related to the allowance for credit losses related to continuing operations is as follows:

(Thousands of Dollars) June 23,

(Thousands of Dollars) December 29,

2024 September 29,

11 unchanged sentences

Summarized results of TNI are as follows:

Three months ended Nine months ended

(Thousands of Dollars) June 23,

2024 June 25,

2023 June 23,

2024 June 25,

Three months ended

(Thousands of Dollars) December 29,

2024 December 24,

Operating revenue 6,533 6,991

3 unchanged sentences

Equity in earnings of TNI 625 578

TNI makes periodic distributions of its earnings and for the three months ended June 23, 2024, and June 25, 2023, we received $ 0.6 million and $ 0.4 million in distributions, respectively.

In the nine months ended June 23, 2024 and June 25, 2023, we received $ 2.7 million and $ 2.8 million in distributions, respectively.

TNI makes periodic distributions of its earnings and for the three months ended December 29, 2024, and December 24, 2023, we received $ 0.5 million and $ 1.2 million in distributions, respectively.

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 operates their related digital platforms.

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 operates their related digital

Net income or loss of MNI (after income taxes) is allocated equally to us and The Capital Times Company (“TCT”).

1 unchanged sentence

Summarized results of MNI are as follows:

Three months ended Nine months ended

(Thousands of Dollars) June 23,

2024 June 25,

2023 June 23,

2024 June 25,

Three months ended

(Thousands of Dollars) December 29,

2024 December 24,

Operating revenue 9,759 10,602

5 unchanged sentences

Equity in earnings of MNI 497 386

MNI makes periodic distributions of its earnings and in the three months ended June 23, 2024 and June 25, 2023, we received $ 0.4 million and $ 0.2 million in distributions, respectively.

In the nine months ended June 23, 2024 and June 25, 2023, we received distributions of $ 1.0 million and $ 0.5 million, respectively.

MNI makes periodic distributions of its earnings and in the three months ended December 29, 2024 and December 24, 2023, we received $ 0.9 million and $ 0.4 million in distributions, respectively.

4 GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and identified intangible assets consist of the following:

(Thousands of Dollars) June 23,

(Thousands of Dollars) December 29,

2024 September 29,

9 unchanged sentences

Total intangibles, net 390,458 398,115

The weighted average amortization period for amortizable assets is approximately eleven years .

During the nine months ended June 23, 2024, the Company sold certain non-core operations.

The weighted average amortization period for amortizable assets is approximately ten years .

During the three months ended December 29, 2024, the Company sold certain non-core operations.

Goodwill was allocated to these operations, which totaled $ 4.2 million.

The Company reviews property, plant and equipment, goodwill and non-amortized intangible assets, which include only newspaper mastheads, 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 Accounting Standards Codification ("ASC") 350, Intangibles - Goodwill and Other and ASC 360, Property, Plant and Equipment.

All of the Company’s goodwill is attributed to the single reporting unit.

There was no impairment related to goodwill in 2023.

Impairment losses related to mastheads totaled $ 7.7 million were recorded in the fourth quarter of 2023.

During the second quarter of 2024, the Company identified the continuing decline of revenues as a triggering event.

Consequently, non-cash charges of $ 7.6 million were recorded to reduce the carrying value of mastheads, which are non-amortized intangible assets.

No impairment related to goodwill or property, plant and equipment was identified during this period.

The fair value of these mastheads were determined using the relief from royalty method and includes Level 3 inputs, which are fair values estimated using significant unobservable inputs.

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, estimated tax rates, and appropriate risk-adjusted weighted cost of capital.

The royalty rates utilized range from 0 % to 1.0 %.

The weighted average cost of capital utilized is 12.5 %.

Such charges are recorded in assets (gain) loss on sales, impairments and other, net in the Consolidated Statements of (loss) Income and Comprehensive (loss) Income.

During the third quarter of 2024, the Company disposed $ 42.9 million of gross cost and accumulated amortization related to fully amortized customer and newspaper subscriber lists.

The Company has debt consisting of a single 25-year term loan with BH Finance LLC, with an aggregate principal balance of $ 445.9 million at a 9 % annual fixed rate and maturing on March 16, 2045 (referred to herein as “Credit Agreement” and “Term Loan”).

On June 23, 2024, the fair value was $ 382.2 million, representing a Level 2 fair value measurement, which are fair values estimated using significant other observable inputs for similar instruments.

During the three and nine months ended June 23, 2024, we made $ 0.9 million and $ 3.0 million of principal debt payments, respectively, as a result of non-core asset sales.

Future payments are contingent on the Company's ability to generate future excess cash flow, as defined in the Credit

As of June 23, 2024, $ 2.6 million was recognized as current maturities of long-term debt in the Consolidated Balance Sheets due to non-core asset monetization.

On December 29, 2024, the fair value was $ 383.3 million, representing a Level 2 fair value measurement, which are fair values estimated using significant other observable inputs for similar instruments.

During the three months ended December 29, 2024, we made no principal debt payments.

Future payments are contingent on the Company's ability to generate future excess cash flow, as defined in the Credit Agreement.

As of December 29, 2024, $ — million was recognized as current maturities of long-term debt in the Consolidated Balance Sheets due to non-core asset monetization.

6 PENSION, POSTRETIREMENT AND POSTEMPLOYMENT DEFINED BENEFIT PLANS

1 unchanged sentence

Additionally, we provide retiree medical and life insurance benefits under postretirement plans at several of our operating locations.

Through June 23, 2024, our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annual actuarial calculations.

During the nine months ended June 23, 2024, the Company offered a voluntary lump sum payment of future benefits to terminated vested participants in the defined benefit pension plan.

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

The Company recognized a non-cash settlement gain of $ 2.4 million, which is reflected within "Curtailment/Settlement gains" on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

Pension plan assets and liabilities were reduced by $ 22.6 million.

During the nine months ended June 23, 2024, the Company completed the outsourcing of certain printing operations, which ceased postretirement medical benefits for a group of employees.

The Company recognized a non-cash curtailment gain of $ 1.2 million which is reflected within "Curtailment/Settlement gains" on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

Through December 29, 2024, our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annual actuarial calculations.

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

PENSION PLANS Three months ended Nine months ended

(Thousands of Dollars) June 23,

2024 June 25,

2023 June 23,

2024 June 25,

PENSION PLANS Three months ended

(Thousands of Dollars) December 29,

2024 December 24,

Service cost for benefits earned during the period 1 1

5 unchanged sentences

Net periodic pension (benefit) cost ( 72 ) ( 2,136 )

POSTRETIREMENT MEDICAL PLANS Three months ended Nine months ended

(Thousands of Dollars) June 23,

2024 June 25,

2023 June 23,

2024 June 25,

POSTRETIREMENT MEDICAL PLANS Three months ended

(Thousands of Dollars) December 29,

2024 December 24,

Service cost for benefits earned during the period 1 13

5 unchanged sentences

Net periodic postretirement benefit ( 664 ) ( 1,744 )

In the nine months ended June 23, 2024 and June 25, 2023, we made no contributions to our pension plans.

In the three months ended December 29, 2024 and December 24, 2023, we made no contributions to our pension plans.

W e have no required contributions to our pension plans for 2025.

1 unchanged sentence

In prior periods, the Company effectuated withdrawals from several multiemployer plans.

As of June 23, 2024 and September 24, 2023, we had $ 24.0 million and $ 25.1 million of accrued withdrawal liabilities.

As of December 29, 2024 and September 29, 2024, we had $ 23.3 million and $ 23.6 million of accrued withdrawal liabilities.

The liabilities reflect the estimated value of payments to the fund, payable over 20 -years.

7 INCOME TAXES

We recorded an income tax benefit of $ 0.8 million related to loss before taxes of $ 4.5 million for the three months ended June 23, 2024, and an income tax benefit of $ 3.4 million related to loss before income taxes of $ 17.5 million for the nine months ended June 23, 2024.

We recorded an income tax expense of $ 0.4 million related to income before taxes of $ 2.5 million for the three months ended June 25, 2023, and an income tax benefit of $ 1.2 million related to a loss before income taxes of $ 2.6 million for the nine months ended June 25, 2023.

The effective income tax rate for the three and nine months ended June 23, 2024, was 18.7 % and 19.6 %, respectively.

The effective income tax rate for the three and nine months ended June 25, 2023, were 15.6 % and 46.8 %, respectively.

We recorded an income tax expense of $ 3.2 million related to loss before taxes of $ 13.0 million for the three months ended December 29, 2024.

We recorded an income tax expense of $ 0.2 million related to income before taxes of $ 1.5 million for the three months ended December 24, 2023.

The effective

income tax rate for the three months ended December 29, 2024, was 25.0 %.

The effective income tax rate for the three months ended December 24, 2023, was 16.7 %.

The primary differences between these rates and the U.S.

federal statutory rate of 21% are because of state taxes, non-deductible expenses and adjustments to reserves for uncertain tax positions, including any related interest.

federal statutory rate of 21% are because of state taxes, non-deductible expenses, changes in valuation allowance, and adjustments to reserves for uncertain tax positions, including any related interest.

We file a consolidated federal tax return, as well as combined and separate tax returns in approximately 30 state and local jurisdictions.

3 unchanged sentences

The following table sets forth the computation of basic and diluted (loss) earnings per common share:

Three months ended Nine months ended

(Thousands of Dollars and Shares, Except Per Share Data) June 23,

2024 June 25,

2023 June 23,

2024 June 25,

Three months ended

(Thousands of Dollars and Shares, Except Per Share Data) December 29,

2024 December 24,

(Loss) income attributable to Lee Enterprises, Incorporated:

8 unchanged sentences

Diluted ( 2.80 ) 0.12

For the three months ended June 23, 2024 no shares were considered in the computation of diluted earnings per common share because the Company recorded net losses.

For the three months ended June 25, 2023, 136,853 shares were not considered in calculating diluted (losses) earnings per common share because their inclusion would result in an anti-dilutive effect on per share amounts.

For the nine months ended June 23, 2024 and June 25, 2023, 22,520 and no shares, respectively, were considered in the computation of diluted (losses) earnings per common share because the Company recorded net losses.

For the three months ended December 29, 2024 and December 24, 2023 we had no and 128,019 weighted average shares, respectively, not considered in the computation of diluted earnings per share because the Company recorded net losses.

Rights Agreement

6 unchanged sentences

The Rights have no voting or dividend privileges, and, unless and until they become exercisable, have no dilutive effect on the earnings of the Company.

The Rights Agreement applies equally to all current and future stockholders and is not intended to deter offers or preclude our Board of Directors from considering acquisition proposals that are fair and otherwise in the best interest of our stockholders.

otherwise in the best interest of our stockholders.

However, the overall effect of the Rights Agreement may render it more difficult or discourage a merger, tender offer, or other business combination involving us that is not supported by our Board of Directors.

3 unchanged sentences

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.

While we are unable to predict the ultimate outcome of these legal actions except for the case described below, which amounts are recognized in "Prepaids and Other" and "Compensation and other accrued liabilities" on the Consolidated Balance Sheets, 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.

The Company was named as a defendant by a group of Plaintiffs acting on behalf of a proposed class of digital subscribers in a lawsuit in 2022.

The lawsuit alleged that the Company violated the Video Privacy Protection Act (“VPPA”) by using pixels to track subscribers’ video viewing activity on Company websites and sharing it with Meta without consent.

The Company has agreed to a preliminary settlement with the Plaintiffs for $ 9.5 million, subject to required court approval.

The entire settlement amount will be paid by the Company’s insurance carriers.

The settlement liability and insurance receivable are recorded within “Compensation and other accrued liabilities” and “Prepaids and other” on the Consolidated Balance Sheets as of December 29, 2024 and September 29, 2024, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements