Lee Enterprises(LEE) - 2023 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION This section provides a comprehensive overview of the company's financial performance and position, including statements, notes, and management's analysis Item 1. Financial Statements This section presents the unaudited consolidated financial statements of Lee Enterprises, Incorporated, including the balance sheets, income statements, statements of stockholder's equity, and cash flow statements, along with their accompanying notes, for the periods ended June 25, 2023, and June 26, 2022. It provides a detailed overview of the company's financial position, performance, and cash movements Consolidated Balance Sheets This statement presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Consolidated Balance Sheets (Thousands of Dollars) | (Thousands of Dollars) | June 25, 2023 | September 25, 2022 | | :--------------------- | :------------ | :----------------- | | ASSETS | | | | Total current assets | 109,168 | 109,123 | | Total investments | 35,445 | 33,349 | | Property and equipment, net | 66,093 | 73,713 | | Goodwill | 329,504 | 329,504 | | Other intangible assets, net | 107,111 | 121,373 | | Total assets | 722,824 | 744,042 | | LIABILITIES AND EQUITY | | | | Total current liabilities | 124,657 | 131,136 | | Long-term debt, net of current maturities | 457,981 | 462,554 | | Total liabilities | 708,225 | 726,805 | | Total stockholders' equity | 12,207 | 15,005 | | Total equity | 14,599 | 17,237 | | Total liabilities and equity | 722,824 | 744,042 | - Total assets decreased by $21.2 million (2.85%) from $744.0 million in September 2022 to $722.8 million in June 2023, primarily due to a decrease in property and equipment, and other intangible assets[7] - Total liabilities decreased by $18.6 million (2.56%) from $726.8 million in September 2022 to $708.2 million in June 2023, driven by reductions in current liabilities and long-term debt[9] - Total equity decreased by $2.6 million (15.31%) from $17.2 million in September 2022 to $14.6 million in June 2023[9] Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) This statement outlines the company's financial performance over periods, including revenues, expenses, and net income or loss Consolidated Statements of Income (Loss) - Three Months Ended (Thousands of Dollars, Except Per Common Share Data) | (Thousands of Dollars, Except Per Common Share Data) | June 25, 2023 | June 26, 2022 | Change (%) | | :--------------------------------------------------- | :------------ | :------------ | :--------- | | Total operating revenue | 171,310 | 195,037 | (12.2)% | | Total operating expenses | 160,296 | 189,648 | (15.5)% | | Operating income | 12,208 | 6,439 | 89.6% | | Income (loss) before income taxes | 2,528 | 352 | 618.2% | | Net income (loss) | 2,134 | 196 | 988.8% | | (Loss) income attributable to Lee Enterprises, Incorporated | 1,503 | (269) | NM | | Basic Earnings (loss) per common share | 0.26 | (0.05) | NM | | Diluted Earnings (loss) per common share | 0.25 | (0.05) | NM | Consolidated Statements of Income (Loss) - Nine Months Ended (Thousands of Dollars, Except Per Common Share Data) | (Thousands of Dollars, Except Per Common Share Data) | June 25, 2023 | June 26, 2022 | Change (%) | | :--------------------------------------------------- | :------------ | :------------ | :--------- | | Total operating revenue | 527,129 | 587,333 | (10.3)% | | Total operating expenses | 504,418 | 563,219 | (10.4)% | | Operating income | 26,245 | 28,325 | (7.3)% | | Income (loss) before income taxes | (2,644) | 9,064 | (129.2)% | | Net income (loss) | (1,407) | 6,701 | (121.0)% | | (Loss) income attributable to Lee Enterprises, Incorporated | (3,283) | 5,113 | (164.1)% | | Basic Earnings (loss) per common share | (0.56) | 0.89 | (162.8)% | | Diluted Earnings (loss) per common share | (0.56) | 0.87 | (164.3)% | Consolidated Statements of Stockholder's Equity This statement details changes in the company's equity components, including common stock, retained earnings, and comprehensive income Stockholders' Equity Changes (Thousands of Dollars) | Item | September 26, 2022 | December 25, 2022 | March 26, 2023 | June 25, 2023 | | :------------------------------------------ | :----------------- | :---------------- | :------------- | :------------ | | Accumulated Deficit | (261,229) | (260,130) | (266,015) | (264,512) | | Common Stock | 60 | 60 | 60 | 61 | | Additional paid-in capital | 259,521 | 259,487 | 259,964 | 260,425 | | Accumulated Other Comprehensive Loss | 16,653 | 16,513 | 16,373 | 16,233 | | Total Stockholders' Equity | 15,005 | 15,930 | 10,382 | 12,207 | - Total stockholders' equity decreased from $15.0 million at September 26, 2022, to $12.2 million at June 25, 2023, primarily due to accumulated deficit and other comprehensive losses, partially offset by additional paid-in capital[12] Consolidated Statements of Cash Flows This statement reports the cash generated and used by the company across operating, investing, and financing activities Consolidated Statements of Cash Flows - Nine Months Ended (Thousands of Dollars) | Activity | June 25, 2023 | June 26, 2022 | | :--------------------------------------- | :------------ | :------------ | | Net cash (required for) provided by operating activities | (1,484) | 716 | | Net cash provided by investing activities | 5,079 | 8,515 | | Net cash required for financing activities | (2,825) | (19,682) | | Net increase (decrease) in cash and cash equivalents | 770 | (10,451) | | Cash and cash equivalents, End of period | 16,955 | 15,661 | - Net cash required for operating activities was $1.5 million in the nine months ended June 25, 2023, a decrease from $0.7 million provided in the prior year, mainly due to a decrease in operating results[16][106] - Net cash provided by investing activities decreased to $5.1 million in 2023 from $8.5 million in 2022, primarily due to lower proceeds from asset sales[16][108] - Net cash required for financing activities significantly decreased to $2.8 million in 2023 from $19.7 million in 2022, largely due to reduced debt payments[16][110] Notes to Consolidated Financial Statements This section provides detailed explanations and additional information supporting the figures presented in the consolidated financial statements 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The unaudited interim Consolidated Financial Statements are prepared in accordance with SEC rules for quarterly reports and include all normal recurring adjustments - The unaudited interim Consolidated Financial Statements are prepared in accordance with SEC rules for quarterly reports and include all normal recurring adjustments. The Company's fiscal year ends on the last Sunday in September, with fiscal year 2023 ending September 24, 2023[19][20] - The consolidated statements include wholly-owned subsidiaries and an 82.5% interest in BLOX Digital (formerly TownNews). Interests in TNI Partners and Madison Newspapers, Inc. (both 50%) are accounted for using the equity method[21] 2 REVENUE This section details the company's revenue recognition policies and disaggregates revenue by source Revenue Disaggregated by Source (Thousands of Dollars) | Revenue Source | 3 Months Ended June 25, 2023 | 3 Months Ended June 26, 2022 | 9 Months Ended June 25, 2023 | 9 Months Ended June 26, 2022 | | :----------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Print advertising revenue | 29,216 | 44,814 | 102,503 | 145,032 | | Digital advertising revenue | 49,904 | 46,187 | 143,903 | 132,356 | | Print subscription revenue | 61,842 | 78,079 | 193,799 | 234,962 | | Digital subscription revenue | 15,715 | 10,969 | 42,039 | 28,953 | | Print other revenue | 9,773 | 10,671 | 30,542 | 32,430 | | Digital other revenue | 4,860 | 4,317 | 14,343 | 13,600 | | Total operating revenue | 171,310 | 195,037 | 527,129 | 587,333 | - Revenue is recognized when performance obligations are satisfied. The Company's primary contract liabilities are unearned revenue from subscriptions paid in advance, with $45.5 million recognized in the nine months ended June 25, 2023, from the September 25, 2022, contract liability[23][25] 3 INVESTMENTS IN ASSOCIATED COMPANIES This section details the company's equity method investments in associated companies and their financial contributions Equity in Earnings of Associated Companies (Thousands of Dollars) | Company | 3 Months Ended June 25, 2023 | 3 Months Ended June 26, 2022 | 9 Months Ended June 25, 2023 | 9 Months Ended June 26, 2022 | | :------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | TNI | 791 | 869 | 2,624 | 3,220 | | MNI | 404 | 181 | 911 | 991 | - The Company holds a 50% interest in TNI Partners and Madison Newspapers, Inc. (MNI), accounted for using the equity method. TNI's net income for the nine months ended June 25, 2023, was $5.2 million, with the Company's equity in earnings at $2.6 million. MNI's net income for the same period was $1.8 million, with the Company's equity in earnings at $0.9 million[28][29][30] 4 GOODWILL AND OTHER INTANGIBLE ASSETS This section provides details on the company's goodwill and other intangible assets, including their carrying values and amortization Goodwill and Other Intangible Assets (Thousands of Dollars) | Asset Category | June 25, 2023 | September 25, 2022 | | :----------------------------- | :------------ | :----------------- | | Goodwill | 329,504 | 329,504 | | Non-amortized intangible assets: Mastheads | 26,346 | 26,346 | | Amortizable intangible assets, net | 80,765 | 95,027 | | Total intangibles, net | 436,615 | 450,877 | - Goodwill remained stable at $329.5 million. Amortizable intangible assets, primarily customer and newspaper subscriber lists, decreased from $95.0 million to $80.8 million, with a weighted average amortization period of 11.70 years[31] 5 DEBT This section outlines the company's debt structure, including principal balances, interest rates, and payment schedules - The Company's debt consists of a single 25-year term loan with BH Finance LLC, with an aggregate principal balance of $460.0 million at a 9% annual fixed rate, maturing on March 16, 2045. The fair value as of June 25, 2023, was $462.4 million[32][33] - Principal debt payments of $2.6 million were made during the nine months ended June 25, 2023. An additional $2.0 million payment is expected in Q4 2023 from non-core asset sales[34] 6 PENSION, POSTRETIREMENT AND POSTEMPLOYMENT DEFINED BENEFIT PLANS This section details the company's pension and postretirement benefit plans, including costs and liabilities Net Periodic Pension and Postretirement Cost (Benefit) Components (Thousands of Dollars) | Component | 3 Months Ended June 25, 2023 | 3 Months Ended June 26, 2022 | 9 Months Ended June 25, 2023 | 9 Months Ended June 26, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Pension cost (benefit) | 264 | (2,722) | 792 | (9,873) | | Postretirement medical benefit | (545) | (562) | (1,635) | (1,686) | - The Company recorded a net periodic pension cost of $0.8 million for the nine months ended June 25, 2023, compared to a benefit of $9.9 million in the prior year. Postretirement medical benefit was a net benefit of $1.6 million for the nine months ended June 25, 2023[36] - Accrued withdrawal liabilities for multiemployer pension plans were $23.1 million as of June 25, 2023, payable over 20 years[37] 7 INCOME TAXES This section provides an analysis of the company's income tax expense or benefit and effective tax rates Income Tax Expense (Benefit) and Effective Rates | Period | Income (Loss) Before Taxes (Thousands) | Income Tax Expense (Benefit) (Thousands) | Effective Tax Rate | | :------------------------------------ | :------------------------------------- | :--------------------------------------- | :----------------- | | 3 Months Ended June 25, 2023 | 2,528 | 394 | 15.6% | | 3 Months Ended June 26, 2022 | 352 | 156 | 44.3% | | 9 Months Ended June 25, 2023 | (2,644) | (1,237) | 46.8% | | 9 Months Ended June 26, 2022 | 9,064 | 2,363 | 26.1% | - The effective income tax rate for the nine months ended June 25, 2023, was 46.8% on a pretax loss, compared to 26.1% on pretax income for the same period in 2022. Differences from the U.S. federal statutory rate of 21% are primarily due to state taxes, non-deductible expenses, and adjustments to uncertain tax positions[38][39] 8 EARNINGS PER COMMON SHARE This section presents the basic and diluted earnings per common share for the reported periods Earnings (Loss) Per Common Share | Metric | 3 Months Ended June 25, 2023 | 3 Months Ended June 26, 2022 | 9 Months Ended June 25, 2023 | 9 Months Ended June 26, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income (loss) attributable to Lee Enterprises, Incorporated (Thousands) | 1,503 | (269) | (3,283) | 5,113 | | Basic EPS | 0.26 | (0.05) | (0.56) | 0.89 | | Diluted EPS | 0.25 | (0.05) | (0.56) | 0.87 | - For the three months ended June 25, 2023, diluted EPS was $0.25, a significant improvement from a loss of $0.05 in the prior year. For the nine months ended June 25, 2023, diluted EPS was a loss of $0.56, compared to earnings of $0.87 in the prior year[41] 9 COMMITMENTS AND CONTINGENT LIABILITIES This section discusses the company's legal commitments and potential liabilities arising from its normal course of business - The Company is involved in various legal actions in the normal course of business. Management believes the disposition of these matters will not have a material adverse effect on the Consolidated Financial Statements[42][43] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations for the three and nine months ended June 25, 2023. It highlights the strategic shift towards a digital-first subscription platform, analyzes revenue and expense trends, and discusses liquidity and capital resources EXECUTIVE OVERVIEW This overview introduces the company's business model, strategic focus, and primary revenue generation methods - Lee Enterprises is a digital-first subscription platform providing local news, information, advertising, and marketing services to 75 mid-sized communities in 26 states, with over 606,000 digital subscribers[45] - The core strategy focuses on growing digital audiences and engagement through improved subscriber experience and offering omni-channel advertising and marketing solutions[45] - Revenue is generated primarily through advertising and marketing services, digital and print subscriptions, and digital services via BLOX Digital[48] STRATEGY This section details the company's core operating strategy, emphasizing digital growth and diversified service offerings - The operating strategy is locally focused around three pillars[49] - Digital subscription platforms: Fastest growing in local media[49] - Amplified Digital®: Offers a full suite of digital marketing solutions to local advertisers[49] - BLOX Digital (SaaS content platform): One of the largest web-hosting and content management SaaS providers in North America, serving over 2,000 customers[49] - Key strategic goals include growing digital audiences, expanding the digital subscription base, and diversifying advertiser offerings with video advertising and e-commerce through Amplified Digital[50] RESULTS OF OPERATIONS This section analyzes the company's financial performance, focusing on revenue and expense trends for the reported periods Three Months Ended June 25, 2023 This section provides a detailed analysis of the company's financial results for the three months ended June 25, 2023 Operating Revenue - Three Months Ended (Thousands of Dollars) | Revenue Category | June 25, 2023 | June 26, 2022 | Percent Change | | :----------------------------- | :------------ | :------------ | :------------- | | Advertising and marketing services | 79,120 | 91,001 | (13.1)% | | Print advertising revenue | 29,216 | 44,814 | (34.8)% | | Digital advertising revenue | 49,904 | 46,187 | 8.0% | | Subscription revenue | 77,557 | 89,048 | (12.9)% | | Print subscription revenue | 61,842 | 78,079 | (20.8)% | | Digital subscription revenue | 15,715 | 10,969 | 43.3% | | Other revenue | 14,633 | 14,988 | (2.4)% | | Total operating revenue | 171,310 | 195,037 | (12.2)% | - Total operating revenue decreased by 12.2% to $171.3 million. Digital advertising revenue increased by 8.0% to $49.9 million, driven by a 15% increase in Amplified Digital revenue. Digital subscription revenue grew 43.3% to $15.7 million, with digital-only subscribers increasing 21.0% to 606,000[55][56] - Total Digital Revenue (digital advertising, digital subscription, digital services) increased 14.7% to $70.5 million, representing 41.1% of total operating revenue[58] Operating Expenses - Three Months Ended (Thousands of Dollars) | Expense Category | June 25, 2023 | June 26, 2022 | Percent Change | | :----------------------------- | :------------ | :------------ | :------------- | | Compensation | 63,582 | 78,126 | (18.6)% | | Newsprint and ink | 6,346 | 7,542 | (15.9)% | | Other operating expenses | 80,010 | 88,004 | (9.1)% | | Depreciation and amortization | 7,478 | 8,818 | (15.2)% | | Restructuring costs and other | 3,780 | 6,072 | (37.7)% | | Total operating expenses | 160,296 | 189,648 | (15.5)% | - Total operating expenses decreased by 15.5% to $160.3 million. Compensation expense decreased 18.6% due to headcount reductions, while newsprint and ink costs decreased 15.9% due to lower volumes[60][61][62] - Operating income increased significantly by 89.6% to $12.2 million[53][66] - Net income was $2.1 million, and diluted EPS was $0.25, compared to net income of $0.2 million and diluted loss per share of $0.05 in the prior year[72] Nine Months Ended June 25, 2023 This section provides a detailed analysis of the company's financial results for the nine months ended June 25, 2023 Operating Revenue - Nine Months Ended (Thousands of Dollars) | Revenue Category | June 25, 2023 | June 26, 2022 | Percent Change | | :----------------------------- | :------------ | :------------ | :------------- | | Advertising and marketing services | 246,406 | 277,388 | (11.2)% | | Print advertising revenue | 102,503 | 145,032 | (29.3)% | | Digital advertising revenue | 143,903 | 132,356 | 8.7% | | Subscription revenue | 235,838 | 263,915 | (10.6)% | | Print subscription revenue | 193,799 | 234,962 | (17.5)% | | Digital subscription revenue | 42,039 | 28,953 | 45.2% | | Other revenue | 44,885 | 46,030 | (2.5)% | | Total operating revenue | 527,129 | 587,333 | (10.3)% | - Total operating revenue decreased by 10.3% to $527.1 million. Digital advertising and marketing services revenue increased 8.7% to $143.9 million, driven by a 24.8% increase in Amplified Digital revenue. Digital subscription revenue grew 45.2% to $42.0 million[77][78] - Total digital revenue increased 14.5% to $200.3 million, representing 38.0% of total operating revenue[80] Operating Expenses - Nine Months Ended (Thousands of Dollars) | Expense Category | June 25, 2023 | June 26, 2022 | Percent Change | | :----------------------------- | :------------ | :------------ | :------------- | | Compensation | 207,859 | 246,333 | (15.6)% | | Newsprint and ink | 20,244 | 22,254 | (9.0)% | | Other operating expenses | 249,353 | 258,665 | (3.6)% | | Depreciation and amortization | 23,097 | 27,445 | (15.8)% | | Restructuring costs and other | 8,120 | 19,862 | (59.1)% | | Total operating expenses | 504,418 | 563,219 | (10.4)% | - Total operating expenses decreased by 10.4% to $504.4 million. Compensation expense decreased 15.6% due to FTE reductions, and restructuring costs decreased 59.1% to $8.1 million[82][83][85] - Operating income decreased by 7.3% to $26.2 million[75][87] - Net loss was $1.4 million, and diluted loss per share was $0.56, compared to net income of $6.7 million and diluted EPS of $0.87 in the prior year[95] NON-GAAP FINANCIAL MEASURES This section defines and reconciles non-GAAP financial measures used by management to assess operational performance - The Company uses non-GAAP financial measures, Adjusted EBITDA and Cash Costs, to supplement GAAP results. These measures exclude restructuring charges and non-cash charges to provide a clearer view of ongoing operations and facilitate comparisons[96][97] - 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 50% share of EBITDA from TNI and MNI, minus equity in earnings of TNI and MNI[98][99] - Cash Costs represent operating expenses measured on an accrual basis and settled in cash, excluding depreciation and amortization, assets loss (gain) on sales, impairments and other, other non-cash operating expenses, and restructuring costs and other[100] Reconciliation of Adjusted EBITDA (Thousands of Dollars) | Metric | 3 Months Ended June 25, 2023 | 3 Months Ended June 26, 2022 | 9 Months Ended June 25, 2023 | 9 Months Ended June 26, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) | 2,134 | 196 | (1,407) | 6,701 | | Adjusted EBITDA | 23,240 | 22,960 | 55,185 | 65,971 | Reconciliation of Cash Costs (Thousands of Dollars) | Metric | 3 Months Ended June 25, 2023 | 3 Months Ended June 26, 2022 | 9 Months Ended June 25, 2023 | 9 Months Ended June 26, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating expenses | 160,296 | 189,648 | 504,418 | 563,219 | | Cash Costs | 149,938 | 173,672 | 477,456 | 527,252 | LIQUIDITY AND CAPITAL RESOURCES This section evaluates the company's ability to meet its financial obligations and fund operations through cash flows and available resources - The Company's operations are expected to generate sufficient liquidity to meet requirements, including operating expenses, interest expense, and capital expenditures[104] - Cash required by operating activities was $1.5 million in 2023, a $2.2 million change from $0.7 million provided in 2022, primarily due to decreased operating results partially offset by favorable working capital changes[106] - Cash provided by investing activities decreased to $5.1 million in 2023 from $8.5 million in 2022, mainly due to lower proceeds from asset sales ($7.2 million in 2023 vs. $14.8 million in 2022)[108] - Cash required for financing activities decreased significantly to $2.8 million in 2023 from $19.7 million in 2022, with debt reduction being the primary use of funds[110] - Liquidity, consisting of cash on the balance sheet, totaled $17.0 million on June 25, 2023. The Company expects existing cash and cash flows to cover all interest and principal payments due in the next twelve months[112] CHANGES IN LAWS AND REGULATIONS This section discusses the potential impact of evolving legal and regulatory changes on the company's operations - The Company is monitoring potential increases in minimum wage rates by various governments, though most employees are paid above current minimums. The full impact cannot be determined until changes are enacted[114] FORWARD-LOOKING STATEMENTS This section outlines the Company's forward-looking statements, emphasizing that they are based on current expectations and subject to risks and uncertainties. It advises readers not to place undue reliance on these statements and notes that the Company does not undertake to publicly update or revise them, except as required by law - Forward-looking statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially[115] - Key risks include the impact of the COVID-19 pandemic, ability to manage declining print revenue, changes in advertising and subscription demand, technology changes, commodity and energy costs, interest rates, labor costs, cybersecurity breaches, and competition[115][120] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the Company's exposure to market risks, specifically from changes in interest rates and commodity prices, and how these risks are managed INTEREST RATES ON DEBT This section assesses the company's exposure to interest rate fluctuations on its debt portfolio - The Company's debt structure is entirely fixed rate, eliminating the impact of interest rate increases. There are no interest rate hedging instruments in place[118] COMMODITIES This section analyzes the company's exposure to commodity price volatility, particularly for newsprint - Newsprint prices declined in Q3 2023, with further reductions announced for Q4 2023. Despite reduced consumption, the newsprint supply chain remains challenged due to capacity reductions[119] - A $10 per tonne price increase on 27.7-pound newsprint would result in an annualized reduction in income before taxes of approximately $0.3 million[121] Item 4. Controls and Procedures This section details the evaluation of the Company's disclosure controls and procedures, identifying material weaknesses as of September 25, 2022, and outlining the remediation plans and actions being undertaken EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES This section details the assessment of the company's internal controls over financial reporting and disclosure effectiveness - As of September 25, 2022, the Company's disclosure controls and procedures were not effective due to unremediated material weaknesses in internal control[123] - Identified material weaknesses include[124][125] - Inappropriately designed information technology general controls for user access in certain information systems[125] - Inappropriately designed controls over data from third-party service organizations without SOC 1 Type 2 reports, specifically regarding completeness and accuracy validation[125] - Inappropriately designed controls to validate the accuracy of tax basis for certain deferred tax assets and liabilities, leading to an immaterial error correction[125] Remediation Plans and Actions This section outlines the specific steps and initiatives undertaken to address identified material weaknesses in internal controls - Management is committed to remediating the identified material weaknesses through initiatives including[124][125] - Establishing a project team led by the Corporate Compliance function to review, evaluate, and remediate internal controls[125] - Conducting a complete user access review for IT systems to refine roles, establish appropriate access, and enhance provisioning and monitoring controls[125] - Providing training to personnel on user access policies and procedures[125] - Enhancing internal control design for evaluating data from third-party service organizations without SOC 1, Type 2 reports[125] - Enhancing internal control design to validate the accuracy of tax basis for deferred tax assets and liabilities, including improved record retention[126] PART II OTHER INFORMATION This section includes additional information not covered in the financial statements, such as legal proceedings and risk factors Item 1. Legal Proceedings This section reiterates the Company's involvement in routine legal actions and management's opinion that these will not materially adversely affect the consolidated financial statements - The Company is involved in various legal actions arising in the normal course of business. Management believes these will not have a material adverse effect on the Consolidated Financial Statements[128] Item 1.A Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the 2022 Form 10-K, and highlights additional risks associated with strategic initiatives - No material changes to risk factors previously disclosed in the 2022 Form 10-K[129] - New risks include those associated with evaluating and pursuing growth opportunities through strategic investments, joint ventures, and acquisitions, which may involve general business risk, integration and synergy risk, market acceptance risk, and potential distraction of management[130] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications, XBRL documents, and other relevant filings - The report includes various exhibits such as Rule 13a-14(a) and Section 1350 Certifications of the CEO and CFO, and Inline XBRL Instance, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, and Presentation Linkbase Documents[131][132] SIGNATURES This section contains the required signatures for the Form 10-Q, certifying its submission on behalf of Lee Enterprises, Incorporated - The report was signed by Timothy R. Millage, Vice President, Chief Financial Officer and Treasurer, on August 4, 2023[135]