Lee Enterprises
Annual Report 2014

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934For The Fiscal Year Ended September 28, 2014OR[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934Commission File Number 1-6227LEE ENTERPRISES, INCORPORATED(Exact name of Registrant as specified in its Charter)Delaware42-0823980(State of incorporation)(I.R.S. Employer Identification No.)201 N. Harrison Street, Suite 600, Davenport, Iowa 52801(Address of principal executive offices)(563) 383-2100Registrant's telephone number, including area codeTitle of Each ClassName of Each Exchange On Which RegisteredSecurities registered pursuant to Section 12(b) of the Act: Common Stock - $0.01 par valueNew York Stock ExchangePreferred Share Purchase RightsNew York Stock ExchangeIndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or such shorter period that theRegistrant was required to submit and post such files). Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (S 229.405 of this Chapter) is not contained herein, and willnot be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. [X] Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition of “largeaccelerated filer", "accelerated filer" and "smaller reporting company” in Rule 12b-2 of the Exchange Act: Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer (Do not check if a smaller reporting company) [ ] Smaller Reporting Company [ ] Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities ExchangeAct of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [X] No [ ] State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the commonequity was last sold, or the average bid and asked price of such common equity, as of the last business day of the Registrant's most recently completedsecond fiscal quarter. Based on the closing price of the Registrant's Common Stock on the New York Stock Exchange on March 30, 2014, such aggregatemarket value is approximately $224,932,644. For purposes of the foregoing calculation only, as required, the Registrant has included in the shares owned byaffiliates the beneficial ownership of Common Stock of officers and directors of the Registrant and members of their families, and such inclusion shall not beconstrued as an admission that any such person is an affiliate for any purpose. Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of November 30, 2014. Common Stock, $0.01 par value,53,759,748 shares. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Lee Enterprises, Incorporated Definitive Proxy Statement to be filed in January 2015 are incorporated by reference in Part III of this Form 10-K. TABLE OF CONTENTSPAGE Forward-Looking Statements1 Part I Item 1Business1 Item 1ARisk Factors12 Item 1BUnresolved Staff Comments18 Item 2Properties18 Item 3Legal Proceedings18 Item 4Mine Safety Disclosures18 Part II Item 5Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities19 Item 6Selected Financial Data21 Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations22 Item 7AQuantitative and Qualitative Disclosures about Market Risk42 Item 8Financial Statements and Supplementary Data43 Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure43 Item 9AControls and Procedures43 Item 9BOther Information45 Part III Item 10Directors, Executive Officers and Corporate Governance45 Item 11Executive Compensation45 Item 12Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters45 Item 13Certain Relationships and Related Transactions, and Director Independence45 Item 14Principal Accounting Fees and Services45 Part IV Item 15Exhibits and Financial Statement Schedules46 Signatures47 Consolidated Financial Statements48 Exhibit Index92References to “we”, “our”, “us” and the like throughout this document refer to Lee Enterprises, Incorporated and subsidiaries (the "Company").References to "2014", "2013", "2012" and the like refer to the fiscal years ended the last Sunday in September. FORWARD-LOOKING STATEMENTSThe Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This report contains information thatmay be deemed forward-looking that is based largely on our current expectations, and is subject to certain risks, trends and uncertainties thatcould cause actual results to differ materially from those anticipated. Among such risks, trends and other uncertainties, which in some instancesare beyond our control, are:•Our ability to generate cash flows and maintain liquidity sufficient to service our debt;•Our ability to comply with the financial covenants in our credit facilities;•Our ability to refinance our debt as it comes due;•That the warrants issued in our refinancing will not be exercised;•The impact and duration of adverse conditions in certain aspects of the economy affecting our business;•Changes in advertising demand;•Potential changes in newsprint, other commodities and energy costs;•Interest rates;•Labor costs;•Legislative and regulatory rulings;•Our ability to achieve planned expense reductions;•Our ability to maintain employee and customer relationships;•Our ability to manage increased capital costs;•Our ability to maintain our listing status on the NYSE;•Competition; and•Other risks detailed from time to time in our publicly filed documents.Any statements that are not statements of historical fact (including statements containing the words “may”, “will”, “would”, “could”, “believes”,“expects”, “anticipates”, “intends”, “plans”, “projects”, “considers” and similar expressions) generally should be considered forward-lookingstatements. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this report.We do not undertake to publicly update or revise our forward-looking statements, except as required by law.PART I ITEM 1. BUSINESS Lee Enterprises, Incorporated is a leading provider of local news and information, and a major platform for advertising, in the markets we serve,which are located primarily in the Midwest, Mountain West and West regions of the United States. With the exception of St. Louis, Missouri, our 50daily newspaper markets, across 22 states, are principally midsize or small. Through our paid and unpaid print and digital platforms, we reach anoverwhelming majority of adults in our markets.Our products include:•50 daily and 38 Sunday newspapers with print and digital subscribers totaling 1.1 million and 1.4 million, respectively, for the six monthsended September 28, 2014, read by nearly four million people in print;•Websites and mobile and tablet apps in all of our markets that complement our newspapers and attracted 30.0 million unique visitors inSeptember 2014, with 231.3 million page views; and•Nearly 300 weekly newspapers and classified and niche publications.Our markets have established retail bases, and most are regional shopping hubs. We are located in four state capitals. Six of our top ten marketsby revenue include major universities, and seven are home to major corporate headquarters. Based on data from the Bureau of Labor of Statisticsas of October 2014, the unemployment rate in five of our top ten markets by revenue was lower than the national average. We believe that all ofthese factors have had a positive impact on advertising revenue. Community newspapers remain a valuable source of local news and informationto1readers and an effective means for local advertisers to reach their customers. We believe our audiences across these communities tend to beloyal readers that actively seek our content and serve as an attractive target for our advertisers.We do not face significant competition from other local daily newspapers in most of our markets, although there is significant competition foraudience in those markets from other media. In our top ten markets by revenue, only two have significant local daily print competition.Lee Enterprises, Incorporated was founded in 1890, incorporated in 1950, and listed on the New York Stock Exchange ("NYSE") in 1978. Until2001, we also operated a number of network-affiliated and satellite television stations. We have acquired and divested a number of businessessince 2001. The acquisition of Pulitzer Inc., the most significant of these transactions, is discussed more fully below.On December 12, 2011, the Company and certain of its subsidiaries filed voluntary, prepackaged petitions in the U.S. Bankruptcy Court for theDistrict of Delaware (the "Bankruptcy Court") for relief under Chapter 11 of the U.S. Bankruptcy Code (the "U.S. Bankruptcy Code") (collectively,the "Chapter 11 Proceedings"). Our interests in TNI Partners ("TNI") and Madison Newspapers, Inc. ("MNI") were not included in the filings. Duringthe Chapter 11 Proceedings, we, and certain of our subsidiaries, continued to operate as "debtors in possession" under the jurisdiction of theBankruptcy Court and in accordance with the applicable provisions of the U.S. Bankruptcy Code. In general, as debtors-in-possession, we wereauthorized under the U.S. Bankruptcy Code to continue to operate as an ongoing business, but were not to engage in transactions outside theordinary course of business without the prior approval of the Bankruptcy Court.On January 23, 2012, the Bankruptcy Court approved our Second Amended Joint Prepackaged Plan of Reorganization (the "Plan") under the U.S.Bankruptcy Code and on January 30, 2012 (the "Effective Date") the Company emerged from the Chapter 11 Proceedings. On the Effective Date,the Plan became effective and the transactions contemplated by the Plan were consummated. Implementation of the Plan resulted primarily inrefinancing of our debt that extended the maturity to December 2015 or April 2017. The Chapter 11 Proceedings did not adversely affectemployees, vendors, contractors, customers or any aspect of Company operations. Stockholders retained their interest in the Company, subject tomodest dilution.In May 2013, we refinanced a portion of our debt, extending the maturity to April 2017. In 2014, we completed a long-term, comprehensiverefinancing of our remaining debt (the "2014 Refinancing"). Final maturities of our debt have been extended to dates extending from April 2017through December 2022. As a result, refinancing risk has been substantially reduced for the next several years.Prior to 2014, we experienced significant net losses in all but one year since 2007 due primarily to non-cash charges for impairment of intangibleand other assets in 2013, 2011, 2009 and 2008 and reorganization costs in 2012. Our ability to operate as a going concern is dependent on ourability to remain in compliance with debt covenants and to refinance or amend our debt agreements as they become due, or earlier if availableliquidity is consumed. We are in compliance with our debt covenants at September 28, 2014. The information included herein should be evaluatedin that context. See Item 1A, “Risk Factors”, and Notes 4 and 5 of the Notes to Consolidated Financial Statements, included herein, for additionalinformation.STRATEGIC INITIATIVESWe are focused on several broad strategic initiatives:Continue Our Commitment To Provide Critical Local ContentWe provide valuable, intensely local and original news and information that, in many cases, we believe our audiences cannot otherwise readilyobtain. Our large and talented news and editorial staff provides constant, real-time local news with significant breadth, depth and reliability.We believe the strength of our brands and the size of our news staff allow us to provide more comprehensive coverage of local news than ourcompetitors in our markets.Through the efforts of our journalists, we seek to provide information, engagement and leadership that is vital to our communities and critical to ourdemocracy. We believe we stir public awareness, advance ideas, inspire vision, create debate and provoke action. We contribute to communitybetterment, promote education, foster commerce and help improve quality of life.2Drive RevenueRevenue is a key imperative among our top priorities. We pursue revenue opportunities by gaining new local advertisers, introducing new productsand increasing our share of advertising and marketing services spending from existing customers. Our sales force is larger, and we believe ofhigher quality, than any local competitor, and we invest heavily in training, especially with respect to our expanding array of digital products.In 2014, no single advertiser accounted for more than 1.8% of advertising revenue and our top 10 advertisers represented 9.8% of advertisingrevenue.Reach A Huge, Attractive Audience Across Multiple PlatformsBased on detailed audience research conducted by a third party on our behalf for January to June 2014, we reached 78% of all adults over thecourse of a seven day period in 11 selected markets, which include most of our largest strategic business units. More than half of these adults-53%-read our newspapers in print, with 20% being both newspaper readers and visitors to our newspaper digital platforms. Another 12% wereexclusive digital users. The remaining 13% primarily used our newspapers to obtain advertising and other information.Furthermore, there is continuing strength of our audiences across all age groups. Among the 18-29 age group, for example, 39% read our printednewspapers, while 34% accessed our publications by web, mobile or tablet. Another 20% primarily used our newspapers to obtain advertising andother information.As media use continues to evolve, it is clear that our audiences are moving from one platform to another throughout the day-accessing our contentin print, on desktops and laptops, on smartphones and on tablets, using browsers, apps and replica edition viewers. We continue to develop newand innovative ways of reaching our audience wherever they are by, among other things, continually refining content and presentation to maximizethe unique and evolving capabilities of each platform.Increase Monetization Of Our Highly Visited Digital Platforms Through A Full Access Subscription ModelOn our digital platforms, we provide news stories 24 hours a day and post regular updates of developing stories, often including video. Customersare able to access our stories digitally on websites, mobile devices and tablets. We offer advertisers a wide array of digital products, includingvideo, digital couponing, behavioral targeting, banner ads and social networking.In most of our markets, our websites are the leading local digital news source. As with mobile, we have moved quickly to develop applications fortablet computers, and with our mobile audience growth and high advertiser interest we expect mobile and tablet advertising revenue to increase.As new digital technologies emerge, we expect to move rapidly to make our content available through them.As a result, our digital audience has grown rapidly. Unique visitors to our digital sites increased by 29.2% to 30.0 million in September 2014compared to 23.2 million in September 2013, while page views have increased by 10.6% to 231.3 million page views in September 2014 comparedto 209.1 million page views in September 2013.We are focused on continually improving the functionality, as well as the look and feel, of all our platforms, providing greater depth of news,information and advertising with easy access. Currently, we are arming our journalists with new tools to give them real-time information aboutaudience engagement on our digital platforms, helping inform their decisions on both presentation and coverage.Beginning in April 2014, we introduced full access subscriptions in several of our larger markets, and intend to expand this to all markets by June2015. The full access model provides subscribers with complete digital access, including desktop, mobile, tablet and replica editions. These areoffered as packages with print home delivery or as digital-only subscriptions, with subscription rates reflective of the expanded access. The bulk ofthe impact of this initiative on our revenue and subscriber base will be realized in 2015, with the remainder in 2016.Offer Innovative Digital Marketing Solutions For Midsize And Small BusinessesOur digital businesses have experienced rapid growth since 2010 after recession-related declines in 2008 and 2009. Digital advertising grew 12.0%in 2014 and reached 18.5% of total advertising and marketing services revenue in the313 weeks ended September 28, 2014. Total digital revenue in 2014 increased 17.1% over the prior year, and we expect total digital revenue, whichrepresented 13.7% of total operating revenue in 2014, to continue to grow.In addition to digital advertising, we provide digital marketing services aimed at midsize and small businesses ("SMBs"), including searchmarketing, social media and reputation management, audience extension, business profiles and website hosting and design. As the needs of ourcustomers have evolved in an increasingly digital world, we have developed and continue to improve on additional marketing services to servethese demands. Lee Local offers SMBs solutions for search engine optimization (“SEO”), local online marketing, social media marketing, videoadvertising and web design. Lee Local helps to maximize marketing dollars to increase audience, expand brands, and enhance web presence. Webelieve that these innovative solutions will continue to drive meaningful new opportunities for us to grow our digital marketing revenue.We have also developed Amplified Digital Solutions, a robust suite of custom digital marketing services that include: SEO amplification, searchengine marketing (“SEM”), web and mobile production, social media services and reputation monitoring and management. Amplified DigitalSolutions also acts as a full service digital media buying agency that can purchase digital marketing campaigns outside our owned and operatedproducts and platforms for extended audience targeting. In 2014 Amplified Digital Solutions grew by 16.3%.INN Partners, L.C. ("TownNews"), of which we own 82.5%, provides digital infrastructure and digital publishing services for nearly 1,600 daily andweekly newspapers, along with universities, television stations and niche publications, as well as for us. We believe TownNews represents apowerful opportunity for us to drive additional digital revenue.We are also a member of the Local Media Consortium (the “Consortium”). The Consortium partners with companies like Google, Yahoo! and othertechnology companies and service providers aimed at increasing the potential share of new revenue and audience-building programs available to,as well as the quality of information and advertising services available from, Consortium members. The Consortium currently includes more than55 companies and more than 1,200 local newspapers, as well as television and radio outlets, across the United States.Aggressively Manage CostsWe have aggressively transformed our business model and carefully controlled our costs to maintain our margins and cash flows. Since 2007, wereduced cash costs(1) of our continuing operations by $297 million, or more than 37%. We regionalized many staff functions, consolidated and/orselectively outsourced printing and ad production, discontinued unprofitable publications, reduced newsprint volume significantly, and sharpenedour focus on cost management in all areas. We have reduced personnel while protecting our strengths in news, sales and digital products.Generate Strong And Stable Free Cash Flow With A Commitment To Reduce Our DebtThroughout the last economic downturn and subsequent recovery, and during a time of unprecedented transition for our industry, we have postedsteady results. Our operating cash flow margins(1) have improved nearly back to pre-recession levels, with modest capital expenditures, and wehave continued to generate significant free cash flow(1).Since 2009, we have dedicated substantially all of our free cash flow to debt repayment, and we intend to continue to use our free cash flow toreduce debt. Our operating cash flow(1) has been relatively stable for the last six years. During that time, we have continued our focus on costefficiencies while investing in revenue drivers. We believe that our operating cash flow margin(1) of more than 23% in 2014 remains among thehighest in the industry.The principal amount of debt was reduced by a net amount of $42.8 million in 2014. Another $32.0 million, which was borrowed to fund costs of the2014 Refinancing, was also repaid in 2014. Since 2005, we have reduced debt by $883 million.(1) See "Non-GAAP Financial Measures: in Item 7, included herein, for additional information.PULITZER In 2005, we acquired Pulitzer Inc. (“Pulitzer”). Pulitzer published 14 daily newspapers and more than 100 weekly newspapers and specialtypublications. Pulitzer also owned a 50% interest in TNI, as discussed more fully below. The acquisition of Pulitzer increased our paid circulation bymore than 50% and revenue by more than 60% at that time. The acquisition was financed primarily with debt.4Pulitzer newspaper operations include St. Louis, Missouri, where its subsidiary, St. Louis Post-Dispatch LLC (“PD LLC”), publishes the St. LouisPost-Dispatch, the only major daily newspaper serving the greater St. Louis metropolitan area, and a variety of specialty publications, andsupports its related digital products. St. Louis newspaper operations also include the Suburban Journals of Greater St. Louis, a group of weeklynewspapers and niche publications that focus on separate communities within the metropolitan area. Pulitzer and its subsidiaries and affiliates currently publish 11 daily newspapers and support the related digital products, as well as publishapproximately 75 weekly newspapers, shoppers and niche publications that serve markets in the Midwest, Southwest and West.TNI Partners As a result of the acquisition of Pulitzer, we own a 50% interest in TNI, the Tucson, Arizona newspaper partnership. TNI, acting as agent for oursubsidiary, Star Publishing Company (“Star Publishing”) and the owner of the remaining 50%, Citizen Publishing Company (“Citizen”), a subsidiaryof Gannett Co., Inc., (“Gannett”), is responsible for printing, delivery, advertising and subscription activities of the Arizona Daily Star and, until May2009, the Tucson Citizen, as well as their related digital products and specialty publications. In May 2009, Citizen discontinued print publication ofthe Tucson Citizen. TNI collects all receipts and income and pays substantially all operating expenses incident to the partnership's operations and publication of thenewspapers and other media. Under the amended and restated operating agreement between Star Publishing and Citizen, the Arizona Daily Starremains the separate property of Star Publishing. Results of TNI are accounted for using the equity method. Income or loss of TNI (before incometaxes) is allocated equally to Star Publishing and Citizen. Until the May 2009 discontinuation of print publication of the Tucson Citizen, TNI was subject to the provisions of the Newspaper Preservation Actof 1970, which permits joint operating agreements between newspapers under certain circumstances without violation of the Federal antitrust laws.Agency agreements generally allow newspapers operating in the same market to share certain printing and other facilities and to pool certainrevenue and expenses in order to decrease aggregate expenses and thereby allow the continuing operation of multiple newspapers in the samemarket. The TNI agency agreement (“Agency Agreement”), which remains in effect, has governed the operation since 1940. Both the Company and Citizenincur certain administrative costs and capital expenditures that are reported by their individual companies. The Agency Agreement expires in 2040,but contains an option, which may be exercised by either party, to renew the agreement for successive periods of 25 years each. Star Publishingand Citizen also have a reciprocal right of first refusal to acquire the 50% interest in TNI owned by Citizen and Star Publishing, respectively, undercertain circumstances. MADISON NEWSPAPERS We own 50% of the capital stock of MNI and 17% of the non-voting common stock of The Capital Times Company (“TCT”). TCT owns theremaining 50% of the capital stock of MNI. MNI publishes daily and Sunday newspapers, and other publications in Madison, Wisconsin, and otherWisconsin locations, and supports their related digital products. MNI conducts business under the trade name Capital Newspapers. We have acontract to furnish the editorial and news content for the Wisconsin State Journal, which is published by MNI, and periodically provide otherservices to MNI. Results of MNI are accounted for using the equity method. Net income or loss of MNI (after income taxes) is allocated equally tothe Company and TCT. 5ADVERTISING AND MARKETING SERVICES Approximately 67% of our 2014 revenue was derived from advertising and marketing services. The following broadly define major categories of advertising and marketing services revenue: Retail advertising is revenue earned from sales of display advertising space in the publication, or for preprinted advertising inserted in thepublication, to local accounts or regional and national businesses with local retail operations.Classified advertising, which includes employment, automotive, real estate for sale or rent, legal and other categories, is revenue earnedfrom sales of advertising space in the classified section of the publication or from publications consisting primarily of such advertising.Classified publications are periodic advertising publications available in racks or delivered free, by carriers or third-class mail, to all, orselected, households in a particular geographic area. Classified publications offer advertisers a cost-effective local advertising vehicle andare particularly effective in larger markets with higher media fragmentation. National advertising is revenue earned from display advertising space, or for preprinted advertising inserted in the publication, to nationalaccounts, if there is no local retailer representing the account in the market. Digital advertising consists of display, banner, behavioral targeting, search, rich media, directories, classified or other advertising on websitesor mobile devices associated and integrated with our print publications, other digital applications, or on third party affiliated websites, such asYahoo! Inc. (“Yahoo!”). Digital advertising is reported in combination with print advertising in the retail, classified and national categories.Niche publications are specialty publications, such as lifestyle, business, health or home improvement publications that contain significantamounts of advertising.Marketing services includes a robust suite of custom digital marketing services that include: SEO amplification, SEM, web and mobileproduction, social media services and reputation monitoring and management. Our services also include media buying in audience extensionnetworks (outside of those owned and operated by us) such as Centro Ad Lift, Google Ad Exchange and Facebook. The advertising environment is influenced by the state of the overall economy, including unemployment rates, inflation, energy prices andconsumer interest rates. Our enterprises are primarily located in midsize and small markets. Historically these markets have been more stablethan major metropolitan markets during downturns in advertising spending but may not experience increases in such spending as significant asthose in major metropolitan markets in periods of economic improvement.Several of our businesses operate in geographic groups of publications, or “clusters,” which provide operational efficiencies and extend salespenetration. Operational efficiencies are obtained through consolidation of sales forces, back office operations such as finance, human resources,management and/or production of the publications. Sales penetration can improve if the sales effort is successful in cross-selling advertising intomultiple publications and digital products. A table under the caption “Daily Newspapers and Markets” in Item 1, included herein, identifies thosegroups of our newspapers operating in clusters. Our newspapers, classified and specialty publications, and digital products compete with newspapers having national or regional circulation,magazines, radio, network, cable and satellite television, other advertising media such as outdoor, mobile, and movie theater promotions, otherclassified and specialty publications, direct mail, directories, as well as other information content providers such as digital sites. Competition foradvertising is based on audience size and composition, subscription levels, readership demographics, distribution and display mechanisms, priceand advertiser results. In addition, several of our daily and Sunday newspapers compete with other local daily or weekly newspapers. We believewe capture a substantial share of the total advertising dollars spent in each of our markets.The number of competitors in any given market varies. However, all of the forms of competition noted above exist to some degree in our markets,including those listed in the table under the caption “Daily Newspapers and Markets” in Item 1, included herein. 6AUDIENCES Based on independent research, we estimate that, in an average week, our newspapers and digital products reach approximately 78.2% of adultsin our larger markets. Scarborough Research from 2013 ranks the St. Louis Post-Dispatch and STLtoday.com as the market with the third highestcombination of newspaper and web reach of the 25 most populated U.S. markets. In 2010, for the first time, we measured use of our dailynewspapers by non-readers ("print users"). Audience reach is summarized as follows: All Adults(Percent, Past Seven Days)20072008200920102011201220132014 Print only52.049.646.643.843.437.836.933.1Print and digital13.216.916.415.916.419.617.820.0Digital only4.66.16.68.47.99.410.512.1Total readership69.872.669.668.167.766.865.265.2Print users (1)NANANA14.914.514.713.913.0Total reach69.872.669.683.082.281.579.178.2 Total print reach (1)65.266.563.074.674.372.168.666.1Total digital reach17.823.023.024.324.329.028.332.1 Age 18-29(Percent, Past Seven Days)20072008200920102011201220132014 Print only36.138.741.032.133.029.430.720.3Print and digital13.819.416.415.613.720.515.618.3Digital only6.49.58.39.511.610.710.515.3Total readership56.367.665.757.258.360.656.853.9Print users (1)NANANA21.821.123.722.019.5Total reach56.367.665.779.079.484.378.873.4 Total print reach (1)49.958.157.469.567.873.668.358.1Total digital reach20.228.924.725.125.331.226.133.6(1)Print users were not measured prior to 2010. As a result, print reach in 2010-2014 is not comparable to 2007-2009.Source:Lee Enterprises Audience Report, Thoroughbred Research. January-June 2007-2014.Markets:11 largest markets in 2008-2014. 2007 data excludes Tucson, AZ and La Crosse, WI.Margin of Error:Total sample +/- 1.1%, Total digital sample +/- 1.3% After advertising, subscriptions and single copy sales are our largest source of revenue. According to Editor and Publisher International Yearbookdata as reported by the NAA, nationwide daily newspaper circulation unit sales peaked in 1984 and Sunday circulation unit sales peaked in 1990.For the six months ended September 2014, our daily circulation units, which include TNI and MNI, as measured by the Alliance for Audited Media("AAM") were 1.1 million and Sunday circulation units were 1.4 million. Growth in audiences can, over time, also positively impact advertising revenue. Our strategies to improve audiences include continuousimprovement of content and promotional efforts. Content can include focus on local news, features, scope of coverage, accuracy, presentation,writing style, tone and type style. Promotional efforts include advertising, contests and other initiatives to increase awareness of our products.Customer service can also influence subscriptions. The introduction in 2010, and continued improvement since, of new mobile and tabletapplications has positively impacted our digital audiences. 7Our enterprises are also focused on increasing the number of subscribers who pay for their subscriptions via automated payment mechanisms,such as credit cards or bank account withdrawals. We have historically experienced higher retention of customers using these payment methods.Other initiatives vary from location to location and are determined principally by management at the local level in collaboration with our seniormanagement. Competition for subscriptions is generally based on the content, journalistic quality and price of the publication. Audience competition exists in all markets, even from unpaid products, but is most significant in markets with competing local daily newspapers.These markets tend to be near major metropolitan areas, where the size of the population may be sufficient to support more than one dailynewspaper.Our subscription sales channels continue to evolve through an emphasis on targeted direct mail and email to acquire new subscribers and retaincurrent subscribers.8DAILY NEWSPAPERS AND MARKETS The Company, TNI and MNI publish the following daily newspapers and maintain the following primary digital sites: Average Units (1) NewspaperPrimary WebsiteLocation Daily (2) Sunday St. Louis Post-Dispatchstltoday.comSt. Louis, MO150,835 438,058 Arizona Daily Star (3)azstarnet.comTucson, AZ77,528 124,007 The Timesnwitimes.comMunster, Valparaiso, andCrown Point, IN77,238 85,324 Capital Newspapers (4) Wisconsin State Journalmadison.comMadison, WI70,732 93,022 Daily Citizenwiscnews.com/bdcBeaver Dam, WI7,371 — Portage Daily Registerwiscnews.com/pdrPortage, WI3,724 — Baraboo News Republicwiscnews.com/bnrBaraboo, WI3,194 — Lincoln Group Lincoln Journal Starjournalstar.comLincoln, NE49,737 59,089 Columbus Telegramcolumbustelegram.comColumbus, NE6,705 7,811 Fremont Tribunefremonttribune.comFremont, NE6,430 — Beatrice Daily Sunbeatricedailysun.comBeatrice, NE4,417 — The Courierwcfcourier.comWaterloo and Cedar Falls,IA37,540 39,088 Quad-Cities Group Quad-City Timesqctimes.comDavenport, IA36,160 47,308 Muscatine Journalmuscatinejournal.comMuscatine, IA4,886 — Billings Gazettebillingsgazette.comBillings, MT32,663 36,884 Central Illinois Newspaper Group The Pantagraphpantagraph.comBloomington, IL30,364 34,515 Herald & Reviewherald-review.comDecatur, IL24,082 38,427 Journal Gazette & Times-Courierjg-tc.comMattoon/Charleston, IL10,761 — Sioux City Journalsiouxcityjournal.comSioux City, IA26,626 29,861 The Post-Starpoststar.comGlens Falls, NY23,573 28,001 The Bismarck Tribunebismarcktribune.comBismarck, ND22,739 25,625 Missoula Group Missoulianmissoulian.comMissoula, MT22,222 26,839Ravalli Republicravallinews.comHamilton, MT2,979(5) 2,979(5 ) River Valley Newspaper Group La Crosse Tribunelacrossetribune.comLa Crosse, WI22,054 30,962 Winona Daily Newswinonadailynews.comWinona, MN7,631 9,061 The Chippewa Heraldchippewa.comChippewa Falls, WI4,276 4,119 The Journal Timesjournaltimes.comRacine, WI21,575 24,350 The Southern Illinoisanthesouthern.comCarbondale, IL21,270 26,958 Casper Star-Tribunetrib.comCasper, WY20,798 21,026 Rapid City Journalrapidcityjournal.comRapid City, SD19,130 22,961 The Daily Newstdn.comLongview, WA18,536 16,741 The Daily Heraldheraldextra.comProvo, UT17,901 26,811 Magic Valley Group The Times-Newsmagicvalley.comTwin Falls, ID17,537 17,306 Elko Daily Free Presselkodaily.comElko, NV5,174(5) — 9 Average Units (1) NewspaperPrimary WebsiteLocation Daily (2) Sunday Central Coast Newspapers Santa Maria Timessantamariatimes.comSanta Maria, CA16,121 15,609 The Lompoc Recordlompocrecord.comLompoc, CA2,777 2,877 The Sentinelcumberlink.comCarlisle, PA13,828 11,816 Globe Gazetteglobegazette.comMason City, IA12,278 15,894 Helena/Butte Group Independent Recordhelenair.comHelena, MT12,248 12,626 The Montana Standardmtstandard.comButte, MT10,645 10,736 Mid-Valley News Group Albany Democrat-Heralddemocratherald.comAlbany, OR11,598 12,168 Corvallis Gazette-Timesgazettetimes.comCorvallis, OR9,524 9,566 Napa Valley Registernapavalleyregister.comNapa, CA11,185 11,437 The Times and Democratthetandd.comOrangeburg, SC9,792 9,641 Arizona Daily Sunazdailysun.comFlagstaff, AZ9,145 9,861 The Worldtheworldlink.comCoos Bay, OR7,003 — The Sentinelhanfordsentinel.comHanford, CA6,860 — The Citizenauburnpub.comAuburn, NY6,646 8,224 The Ledger Independentmaysville-online.comMaysville, KY5,114 — Daily Journaldailyjournalonline.comPark Hills, MO4,833 — 1,057,985 1,447,588 (1)Source: AAM: Six months ended September 2014, unless otherwise noted. Amounts are not comparable to the prior year period due to changes in AAMmeasurements(2)Not all newspapers are published Monday through Saturday(3)Owned by Star Publishing and published through TNI.(4)Owned by MNI.(5)Source: Company statistics. NEWSPRINT The basic raw material of newspapers, and classified and specialty publications, is newsprint. We purchase newsprint from U.S. and Canadianproducers. We believe we will continue to receive a supply of newsprint adequate for our needs and consider our relationships with newsprintproducers to be good. Newsprint purchase prices can be volatile and fluctuate based upon factors that include foreign currency exchange ratesand both foreign and domestic production capacity and consumption. Price fluctuations can have a significant effect on our results of operations.We have not entered into derivative contracts for newsprint. For the quantitative impacts of these fluctuations, see Item 7A, “Quantitative andQualitative Disclosures about Market Risk”, included herein. 10EXECUTIVE TEAM The following table lists our current executive team members:NameAgeServiceWith TheCompanyNamedTo CurrentPositionCurrent Position Mary E. Junck67June 1999January 2002Chairman, President and Chief ExecutiveOfficer Joyce L. Dehli56August 1987February 2006Vice President - News Paul M. Farrell59October 2013October 2013Vice President - Digital Sales Suzanna M. Frank44December 2003March 2008Vice President - Audience Astrid J. Garcia64December 2006December 2013Vice President - Human Resources James A. Green48March 2013March 2013Vice President - Digital Michael R. Gulledge54October 1982September 2012Vice President - Sales and Marketing Daniel K. Hayes69September 1969September 2005Vice President - CorporateCommunications Kevin D. Mowbray52September 1986May 2013Vice President and Chief Operating Officer Gregory P. Schermer60February 1989October 2012Vice President - Strategy Carl G. Schmidt58May 2001May 2001Vice President, Chief Financial Officer andTreasurer Michele Fennelly White52June 1994June 2011Vice President - Information Technologyand Chief Information OfficerMary E. Junck was elected Chairman, President and Chief Executive Officer in 2002. She was elected to the Board of Directors of the Company in1999. Joyce L. Dehli was appointed Vice President - News in 2006. Paul M. Farrell was appointed Vice President - Digital Sales in October 2013. From September 2012 to October 2013, he served as Publisher ofthe Connecticut Media Group of Hearst Media Services. From May 2007 to August 2012, he served as Vice President - Sales and Marketing ofthe Company.Suzanna M. Frank was appointed Vice President - Audience in March 2008. From 2003 to March 2008 she served as Director of Research andMarketing of the Company. Astrid J. Garcia was appointed Vice President - Human Resources in December 2013. From 2006 to November 2013 she served as Vice Presidentof Human Resources, Labor Relations and Operations of the St. Louis Post-Dispatch.James A. Green was appointed Vice President - Digital in March 2013. From June 2011 to March 2013, he served as Executive Vice Presidentand General Manager of Travidia, Inc., a developer of newspaper digital shopping media and marketing programs. From 2004 to June 2011 heserved as Chief Marketing Officer of Travidia, Inc.Michael R. Gulledge was elected Vice President - Sales and Marketing in September 2012 and named Publisher of the Billings Gazette in 2000.From 2005 to September 2012 he served as a Vice President - Publishing.Daniel K. Hayes was appointed Vice President - Corporate Communications in 2005.11Kevin D. Mowbray was elected Vice President and Chief Operating Officer in May 2013. From 2004 to May 2013 he served as a Vice President -Publishing and was Publisher of the St. Louis Post-Dispatch from 2006 until May 2013. Gregory P. Schermer was elected Vice President - Strategy in October 2012. From 1997 to October 2012 he served as Vice-President - InteractiveMedia. He was elected to the Board of Directors of the Company in 1999. Carl G. Schmidt was elected Vice President, Chief Financial Officer and Treasurer in 2001. From 2007 to May 2013, he also served as a VicePresident - Publishing. Michele Fennelly White was appointed Vice President - Information Technology and Chief Information Officer in June 2011. From 1999 to June2011, she served as Director of Technical Support. Ms. Junck and Messrs. Farrell, Green, Gulledge, Mowbray, Schermer and Schmidt have been designated by the Board of Directors as executiveofficers for United States Securities and Exchange Commission ("SEC") reporting purposes.EMPLOYEES At September 28, 2014, we had approximately 4,700 employees, including approximately 1,200 part-time employees, exclusive of TNI and MNI.Full-time equivalent employees in 2014 totaled approximately 4,500. We consider our relationships with our employees to be good.Bargaining units represent 420, or 70%, of the total employees of the St. Louis Post-Dispatch, which has six contracts with bargaining units withexpiration dates through October 2015.Approximately 45 employees in four additional locations are represented by collective bargaining units.CORPORATE GOVERNANCE AND PUBLIC INFORMATION We have a long, substantial history of sound corporate governance practices. Our Board of Directors has a lead independent director, and has hadone for many years. Currently, eight of ten members of our Board of Directors are independent, as are all members of the Board's Audit, ExecutiveCompensation and Nominating and Corporate Governance committees. The Audit Committee approves all services to be provided by ourindependent registered public accounting firm and its affiliates. At www.lee.net, one may access a wide variety of information, including news releases, SEC filings, financial statistics, annual reports, investorpresentations, governance documents, newspaper profiles and digital links. We make available via our website all filings made by the Companyunder the Securities Exchange Act of 1934 (the "Exchange Act"), including Forms 10-K, 10-Q and 8-K, and related amendments, as soon asreasonably practicable after they are filed with, or furnished to, the SEC. All such filings are available free of charge. The content of any websitereferred to in this Annual Report is not incorporated by reference unless expressly noted. ITEM 1A. RISK FACTORS Risk exists that our past results may not be indicative of future results. A discussion of our risk factors follows. See also, “Forward-LookingStatements”, included herein. In addition, a number of other factors (those identified elsewhere in this document) may cause actual results to differmaterially from expectations. DEBT AND LIQUIDITY We May Have Insufficient Earnings Or Liquidity To Meet Our Future Debt Obligations We have a substantial amount of debt, as discussed more fully (and certain capitalized terms used below defined) in Item 7,"Liquidity" and Note 5of the Notes to Consolidated Financial Statements, included herein. In February 2009, we completed a comprehensive restructuring of our then-existing credit agreement and a refinancing of our Pulitzer Notes debt, substantially enhancing our liquidity and operating flexibility. Since February2009, we have satisfied all interest payments and substantially all principal payments due under our debt facilities with our cash flows. 12Substantially all of our debt was scheduled to mature in April 2012. In January 2012 we used a voluntary, prepackaged petition under the U. S.Bankruptcy Code to accomplish a comprehensive refinancing that extended the maturity to December 2015 for most of our debt, with theremainder maturing in April 2017. In May 2013, we again refinanced the $94,000,000 remaining balance of the Pulitzer Notes (the "New PulitzerNotes") with BH Finance LLC ("Berkshire"), a subsidiary of Berkshire Hathaway, Inc.On March 31, 2014, we completed the 2014 Refinancing, which includes the following:•$400,000,000 aggregate principal amount of 9.5% Senior Secured Notes (the “Notes”), pursuant to an Indenture dated as of March 31,2014 (the “Indenture”) among the Company, certain subsidiaries party thereto from time to time (the “Subsidiary Guarantors”), U.S.Bank National Association, as Trustee (the "Notes Trustee"), and Deutsche Bank Trust Company Americas, as Collateral Agent; •$250,000,000 first lien term loan (the "1st Lien Term Loan") and $40,000,000 revolving facility (the "Revolving Facility") under a FirstLien Credit Agreement dated as of March 31, 2014 (together, the “1st Lien Credit Facility”) among the Company, the lenders partythereto from time to time (the “1st Lien Lenders”), and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent; and•$150,000,000 second lien term loan under a Second Lien Loan Agreement dated as of March 31, 2014 (the “ 2nd Lien Term Loan”)among the Company, the lenders party thereto from time to time (the “2nd Lien Lenders”), and Wilmington Trust, National Association,as Administrative Agent and Collateral Agent.The Notes, 1st Lien Credit Facility and 2nd Lien Term Loan enabled us to repay in full, including accrued interest, and terminate, on March 31, 2014:(i) the remaining principal balance of $593,000,000 under our previous 1st lien agreement, and related subsidiary guaranty, security and pledgeagreements, intercompany subordination and intercreditor agreements; and (ii) the remaining principal balance of $175,000,000 under our previous2nd lien agreement, and related subsidiary guaranty, security and pledge agreements, intercompany subordination and intercreditor agreements. Wealso used the proceeds of the refinancing to pay fees and expenses totaling $30,931,000 related to the 2014 Refinancing.Our ability to make payments on our indebtedness will depend on our ability to generate future cash flows. This ability, to a certain extent, issubject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.At September 28, 2014, after consideration of letters of credit, we have approximately $27,605,000 available for future use under our RevolvingFacility. Including cash, our liquidity at September 28, 2014 totals $44,750,000. This liquidity amount excludes any future cash flows. Ourunlevered free cash flow(1) has been stable for the last six years and has exceeded $152,000,000 in each year from 2009 through 2014, but therecan be no assurance that such cash flows will continue. We expect all interest and principal payments due in the next twelve months will besatisfied by our continuing cash flows, which will allow us to maintain an adequate level of liquidity.At September 28, 2014, the principal amount of our outstanding debt totals $804,750,000. At September 28, 2014, our debt, net of cash, is 4.7times our 2014 adjusted EBITDA(1), compared to a ratio of 4.8 at September 29, 2013.The 2014 Refinancing significantly enhances our debt maturity profile. Final maturities of our debt have been extended to dates extending fromApril 2017 through December 2022. As a result, refinancing risk has been substantially reduced for the next several years.There are numerous potential consequences under the Notes, 1st Lien Credit Facility, 2nd Lien Term Loan, and the New Pulitzer Notes, if an eventof default, as defined, occurs and is not remedied. Many of those consequences are beyond our control. The occurrence of one or more events ofdefault would give rise to the right of the applicable lenders to exercise their remedies under the Notes, 1st Lien Credit Facility, 2nd Lien Term Loanand the New Pulitzer Notes, respectively, including, without limitation, the right to accelerate all outstanding debt and take actions authorized insuch circumstances under applicable collateral security documents.(1) See "Non-GAAP Financial Measures: in Item 7, included herein, for additional information.13Our ability to operate as a going concern is dependent on our ability to remain in compliance with debt covenants and to refinance or amend ourdebt agreements as they become due, or earlier if available liquidity is consumed. The Notes, 1st Lien Credit Facility and 2nd Lien Term Loanhave only limited affirmative covenants with which we are required to maintain compliance. We are in compliance with our debt covenants atSeptember 28, 2014.ECONOMIC CONDITIONS General Economic Conditions May Continue To Impact Our Revenue And Operating Results According to the National Bureau of Economic Research, the United States economy was in a recession from December 2007 until June 2009. Itis widely believed that certain elements of the economy, such as housing, auto sales and employment, were in decline before December 2007,and some elements have recovered slowly in either nominal or real (inflation adjusted) terms. Our revenue, operating results and cash flows weresignificantly impacted by the recession and its aftermath. The duration and depth of an economic recession, and pace of economic recovery, inmarkets in which we operate, may influence our future results.OPERATING REVENUE Our Revenue May Not Return To Historical LevelsA significant portion of our revenue is derived from advertising. The demand for advertising is sensitive to the overall level of economic activity,both locally and nationally. Newspaper publishing is both capital and labor intensive and, as a result, newspapers have relatively high fixed costs.Accordingly, changes in advertising revenue could have a disproportionate effect on our results of operations.Operating revenue in most categories has decreased since 2007 and may decrease in the future. Such decreases may not be offset by growth inadvertising in other categories, such as digital revenue which has been rising since 2010. Historically, newspaper publishing has been viewed as acost-effective method of delivering various forms of advertising. There can be no guarantee that this historical perception will guide futuredecisions on the part of advertisers. Web sites and applications for mobile devices distributing news and other content continue to gain popularity.As a result, audience attention and advertising spending are shifting and may continue to shift from traditional media to digital media. As mediaaudiences fragment, we expect that advertisers will allocate greater portions of their future budgets to digital media, which can offer moremeasurable returns than traditional print media through pay for performance and keyword-targeted advertising. If our efforts to adapt to evolvingtechnological developments in the media industry are unsuccessful, or if we fail to correctly anticipate shifts in audience demand and digital mediatrends, we may be unable to provide the services, media and content that audiences and potential audiences in our markets prefer and we may beunable to provide the returns that our advertisers seek. This increased competition has had, and may continue to have, an adverse effect on ourbusiness and financial results. The digital media industry experiences additional competitive challenges because barriers to entry can be low andgeographic location is less relevant.Technological developments also pose other challenges that could adversely affect our revenue and competitive position. New delivery platformsmay lead to pricing restrictions and the loss of a direct relationship with consumers. We may also be adversely affected if the use of technologydeveloped to block the display of advertising on websites and other digital platforms proliferates.The rates we charge for advertising are, in part, related to the size of the audience of our publications and digital products. There is significantcompetition for readers and viewers from other media. Our business may be adversely affected to the extent individuals decide to obtain news,entertainment, classified listings and local shopping information from digital or other media, to the exclusion of our outlets for such information.Retail AdvertisingMany advertisers, including major retail store chains, automobile manufacturers and dealers, banks and telecommunications companies, haveexperienced significant merger and acquisition activity over the last several years, and some have gone out of business, effectively reducing thenumber of brand names under which the merged entities operate. Our retail revenue is also being impacted by the pace of the current economicrecovery. For example, a slow recovery in the housing market impacts retail advertising related to home improvement, furniture and homeelectronics.14Classified AdvertisingClassified advertising is the category that has been most significantly impacted by changing advertising trends and the current economicenvironment. All categories of classified advertising have generally declined since 2007.See "Advertising and Marketing Services” in Item 1, included herein, for additional information on the risks associated with advertising revenue.Subscription RevenueAdvertising and subscription revenue is affected by readership of our publications and digital products. Although our aggregate print and digitalaudience is relatively stable, subscription sales have nonetheless been declining for many years, reflecting general trends in the newspaperindustry, including consumer migration toward digital platforms and other media for news and information. The possibility exists that futuresubscription price increases may be difficult to accomplish or maintain as a result of future declines in subscription sales, and that pricedecreases may be necessary to retain or grow subscription volume. We are maintaining our share of audience through digital audience growth andstrong newspaper readership.In addition, as audience attention increasingly focuses on digital media, circulation of our newspapers may be adversely affected, which maydecrease subscription revenue and exacerbate declines in print advertising. We face increasing competition from other digital sources forsubscription revenue. This competition has intensified as a result of the continued development of digital media technologies. To maintain oursubscription base, we may be required to incur additional costs that we may not be able to recover through subscription and advertising revenue.We may not be able to achieve a profitable balance between subscription levels and advertising revenue. In addition, if we are not successful ingrowing our digital businesses, including digital subscription revenue, to offset declines in revenue from our print products, our business, financialcondition and prospects will be adversely affected.In 2011, we began introducing charges for digital content using a metered model in certain of our markets that ended free, unlimited access to ournewspapers’ websites. In 2014, we began the transition of our subscriptions to full digital access, including desktop, mobile and tablet. If we arenot successful in the implementation of this strategy, our ability to produce anticipated subscription revenue and sustain our print and/or digitalaudiences may be negatively impacted. Our ability to build a subscriber base on our digital platforms through these packages depends on marketacceptance, consumer habits, pricing, an adequate digital infrastructure, terms of delivery platforms and other factors. In addition, the priceincrease may result in fewer page views or unique visitors to our digital platforms if viewers are unwilling to pay to gain access to our digitalcontent. Stagnation, or a decline in traffic levels, may adversely affect our advertiser base and advertising rates and result in a decline in digitalrevenue.See "Audiences” in Item 1, included herein, for additional information on the risks associated with subscription revenue.If We Are Not Successful In Growing And Managing Our Digital Business, Our Business, Financial Condition, Results Of Operations AndProspects Could Be Adversely AffectedOur future growth depends to a significant degree upon the development and management of our digital business. The growth of our digitalbusiness over the long term depends on various factors, including, among other things, the ability to:•Continue to increase digital audiences;•Attract advertisers to our digital platforms;•Maintain or increase the advertising rates on our digital platforms;•Exploit new and existing technologies to distinguish our products and services from those of competitors and develop new content,products and services;•Invest funds and resources in digital opportunities; and15•Partner with, or use services from, providers that can assist us in effectively growing our digital business.In addition, we expect that our digital business will continue to increase as a percentage of our total revenue. In 2014, total digital revenue(including revenue from digital subscriptions) comprised 13.7% of total revenue, as compared to 11.4% in 2013. As our digital business becomes agreater portion of our overall business, we will face a number of increased risks from managing our digital operations, including, but not limited, tothe following:•Continuing training of our sales force to more effectively sell advertising in the digital advertising arena versus our historical printadvertising business;•Attracting and retaining employees with skill sets and the knowledge base needed to successfully operate our digital business; and•Managing the transition to a digital business from a historically print-focused business.OPERATING EXPENSES We May Not Be Able To Reduce Future Expenses To Offset Potential Revenue Declines We reduced cash costs of our continuing operations (compensation, newsprint and ink, other operating expenses and workforce adjustments) by$297 million, or more than 37%, since 2007. Such expense reductions are not expected to significantly impact our ability to deliver advertising,news or other content to our customers. As a result of the significant reductions of our cost structure we have achieved since 2007, future costreductions will be more difficult to accomplish. Newsprint comprises a significant amount of our operating costs. See “Newsprint” in Item 1, and “Commodities” in Item 7A, included herein, foradditional information on the risks associated with changes in newsprint costs.In addition, technological developments and any changes we make to our business may require significant capital investments. We may be limitedin our ability to invest funds and resources in digital products, services or opportunities and we may incur costs of research and development inbuilding and maintaining the necessary and continually evolving technology infrastructure. As a result, our digital business could suffer.We May Incur Additional Non-Cash Impairment ChargesWe have significant amounts of goodwill and identified intangible assets. Since 2007 we have recorded impairment charges totaling almost $1.3billion to reduce the value of certain of these assets. Should general economic, market or business conditions decline, and have a negative impacton our stock price or projected future cash flows, we may be required to record additional impairment charges in the future. Such charges wouldnot impact our cash flows or debt covenant compliance. See “Critical Accounting Policies” in Item 7, included herein, for additional information onthe risks associated with such assets.Sustained Increases In Funding Requirements Of Our Pension and Postretirement ObligationsMay Reduce The Cash Available For Our BusinessPension liabilities, net of plan assets, totaled $50.2 million at September 28, 2014. Contributions to pension plans are expected to total $3.8 millionin 2015. At September 28, 2014, the assets of our postretirement plans exceeded plan liabilities by $14.1 million.Our pension and postretirement plans invest in a variety of equity and debt securities, many of which were affected by the disruption in the creditand capital markets in 2008 and thereafter. Future volatility and disruption in the securities markets could cause declines in the values of ourpension assets. In addition, a decrease in the discount rates used to determine the liability for obligations could result in increased futurecontributions. If either occurs, we may need to make additional cash contributions above what is currently estimated, which could reduce the cashavailable for our business. Moreover, under the Pension Protection Act of 2006 (the "PPA"), future losses of asset value may necessitateaccelerated funding of pension plans in the future to meet minimum federal statutory requirements. Legislation passed in 2012 and 2014temporarily reduced funding requirements for our pension plans, but those payments will eventually need to be restored unless discount ratesand/or plan assets increase.16In October 2014, the Society of Actuaries released new mortality tables. The new tables generally result in increases in life expectancy. We usedthe new mortality tables to value our pension and postretirement liabilities at September 28, 2014, which increased such liabilities, in total, byapproximately $18.5 million, with a corresponding decrease in accumulated other comprehensive income in our Consolidated Balance Sheet as ofthat date.We May Be Subject To Withdrawal Liability In Connection With Certain Multiemployer Pension Plans, Which May Reduce The CashAvailable For Our BusinessPursuant to our collective bargaining obligations, we contribute to three multiemployer pension plans on behalf of certain of our employees. Basedon the most recent communications from the plans’ administrators, two of these plans are currently in “critical” status, as that term is used inrelation to such plans under the PPA. For plans that are in critical status, benefit reductions may apply and/or we could be required to makeadditional contributions.If, we were to withdraw from one of these plans or trigger a partial withdrawal due to declines in contribution base units, and the plan had unfundedvested benefits at the time of our withdrawal or partial withdrawal, we could owe the plan significant withdrawal liability, which could reduce thecash available for our business. EQUITY CAPITAL A Decrease In Our Stock Price May Limit The Ability To Trade Our StockOr For The Company To Raise Equity CapitalUnder the NYSE listing standards, if our common stock fails to maintain an adequate per share price and our total market capitalization falls below$50.0 million, our common stock could be removed from the NYSE and traded in the over the counter market. In July 2011, the NYSE notified usthat our common stock did not meet the NYSE continued listing standards due to the failure to maintain an adequate share price. Under the NYSErules, our common stock was allowed to continue to be listed during a cure period. In February 2012, after completing our debt refinancing, theNYSE notified us that we were again in compliance with the minimum closing price standard. In January 2013, the NYSE notified us that we hadreturned to full compliance with all continued listing standards. However, there can be no assurance that we will continue to be able to meet theselisting standards, and the removal of our common stock from the NYSE could adversely affect our ability to raise equity capital.OTHERCybersecurity Risks Could Harm Our Ability To Operate EffectivelyIn 2014, 17.0% of our advertising and marketing services revenue was obtained from digital advertising, primarily on our digital platforms, and oneof our businesses provides digital infrastructure and digital publishing services for other companies.We use computers in substantially all aspects of our business operations. Such uses give rise to cybersecurity risks, including themisappropriation of personally identifiable information that we store and manage. We have preventive systems and processes in place to protectagainst the risk of cyber incidents. However, the techniques used to obtain unauthorized access and to disable systems and websites changefrequently and may be difficult to detect for long periods of time. There can be no assurance that we, or the security systems we implement, willprotect against all of these rapidly changing risks. Prolonged system outages or a cyber incident that goes undetected could reduce our printand/or digital revenue, increase our operating costs, disrupt our operations, harm our reputation, lead to legal exposure to customers and/or subjectus to liability under laws and regulations that protect personal data. We maintain insurance coverage against certain of such risks, but cannotguarantee that such coverage will be sufficient with respect to any given incident.We May Not Be Able To Protect Our Intellectual Property Rights, Which May Adversely Affect Our BusinessOur business depends on our intellectual property, including our valuable brands and content. We believe our proprietary trademarks and otherintellectual property rights are important to our continued success and our competitive position.Unauthorized parties may attempt to copy or otherwise obtain and use our content or infringe upon, dilute, reproduce, misappropriate or otherwiseviolate our intellectual property. There can be no assurance that the steps we have taken to protect our proprietary rights will be successful in anygiven case.17ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Our executive offices are located in leased facilities at 201 North Harrison Street, Suite 600, Davenport, Iowa. The initial lease term expires in2019. All of our principal printing facilities are owned, except Madison, Wisconsin (which is owned by MNI), Tucson (which is jointly owned by StarPublishing and Citizen), St. Louis (as described below) and leased land for the Helena, Montana plant. All facilities are well maintained, in goodcondition, suitable for existing office and publishing operations, as applicable, and adequately equipped. With the exception of St. Louis, none ofour facilities is individually significant to our business.Information related to St. Louis facilities at September 28, 2014 is as follows:(Square Feet)OwnedLeased PD LLC749,0006,000Suburban Journals36,00017,000 Nearly 40% of our daily newspapers, as well as many of our nearly 300 other publications, are printed at other Company facilities, or such printingis outsourced, to enhance operating efficiency. We are continuing to evaluate additional insourcing and outsourcing opportunities in order to moreeffectively manage our operating and capital costs. Our newspapers and other publications have formal or informal backup arrangements for printing in the event of a disruption in productioncapability.ITEM 3. LEGAL PROCEEDINGS In 2008, a group of newspaper carriers filed suit against us in the United States District Court for the Southern District of California, claiming to beour employees and not independent contractors. The plaintiffs sought relief related to alleged violations of various employment-based statutes, andrequested punitive damages and attorneys' fees. In 2010, the trial court granted the plaintiffs' petition for class certification. We filed aninterlocutory appeal which was denied. After concluding discovery, a motion to decertify the class was filed, which was granted as to plaintiffs'minimum wage, overtime, unreimbursed meal, and unreimbursed rest period claims. In July 2014 we reached a settlement with the plaintiffs, whichremains subject to court approval, and recorded a liability of $2,300,000 in 2014.We are involved in a variety of other legal actions that arise in the normal course of business. Insurance coverage mitigates potential loss forcertain of these other matters. While we are unable to predict the ultimate outcome of these other legal actions, it is our opinion that the dispositionof these matters will not have a material adverse effect on our Consolidated Financial Statements, taken as a whole.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.18PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock is listed on the NYSE. In March 2011, in accordance with sunset provisions established in 1986, we effected conversion of alloutstanding shares of Class B Common Stock to Common Stock. The table below includes the high and low prices of Common Stock for eachcalendar quarter during the past three years and the closing price at the end of each quarter. Quarter Ended (Dollars)December March June September 2014 High3.92 5.42 4.78 4.72Low2.60 3.30 3.81 3.24Closing3.47 4.47 4.45 3.38 2013 High1.75 1.48 2.18 3.20Low1.10 1.15 1.21 2.03Closing1.14 1.27 2.04 2.70 2012 High0.91 1.73 1.99 1.67Low0.49 0.69 1.07 1.15Closing0.70 1.28 1.62 1.48 Under the NYSE listing standards, if our Common Stock fails to maintain an adequate per share price and total market capitalization of less than$50,000,000, our Common Stock could be removed from the NYSE and traded in the over the counter market. In July 2011, the NYSE notified usthat our Common Stock did not meet the NYSE continued listing standards due to the failure to maintain an adequate share price. Under theNYSE rules, our Common Stock was allowed to continue to be listed during a cure period. In February 2012, after completing our debt refinancing,the NYSE notified us that we were again in compliance with the minimum closing price standard. In January 2013, the NYSE notified us that wehad returned to full compliance with all continued listing standards.At September 28, 2014, we had 6,647 holders of record of our Common Stock. Our debt agreements generally limit our ability to pay dividends and repurchase Common Stock unless in each case no default has occurred andwe have satisfied certain financial measurements. See Note 5 of the Notes to Consolidated Financial Statements, included herein.19PERFORMANCE PRESENTATION The following graph compares the percentage change in the cumulative total return of the Company, the Standard & Poor's ("S&P") 500 StockIndex, and a peer group index, in each case for the five years ended September 30, 2014 (with September 30, 2009 as the measurement point).Total return is measured by dividing (a) the sum of (i) the cumulative amount of dividends declared for the measurement period, assuming dividendreinvestment and (ii) the difference between the issuer's share price at the end and the beginning of the measurement period, by (b) the share priceat the beginning of the measurement period.Copyright©: 2014 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. The value of $100 invested on September 30, 2009 in stock of the Company, the Old Peer Group Index, New Peer Group Index and in the S&P500 Stock Index, including reinvestment of dividends, is summarized in the table below. September 30 (Dollars)2009 2010 2011 2012 2013 2014 Lee Enterprises, Incorporated100.00 97.45 28.36 53.82 96.00 122.91Old Peer Group Index100.00 95.69 74.89 116.59 184.50 203.00New Peer Group Index100.00 102.93 78.19 142.03 216.07 232.69S&P 500 Stock Index100.00 110.16 111.42 145.07 173.13 207.30 The S&P 500 Stock Index includes 500 U.S. companies in the industrial, transportation, utilities and financial sectors and is weighted by marketcapitalization. The New Peer Group Index is comprised of six U.S. publicly traded companies with significant newspaper publishing operations(excluding the Company) and is weighted by market capitalization. The New Peer Group Index includes A.H. Belo Corp., Gannett, JournalCommunications, Inc., The McClatchy Company, The New York Times Company and The E.W. Scripps Company. Graham Holdings Company(formerly known as The Washington Post Company) which is included in the Old Peer Group Index, has been excluded from the New Peer GroupIndex due to the sale of its publishing business in 2014.20ITEM 6. SELECTED FINANCIAL DATA Selected financial data is as follows:(Thousands of Dollars and Shares, Except Per Common Share Data)2014 2013 2012 2011 2010 OPERATING RESULTS (1) (2) Operating revenue656,697 674,740 706,921 723,221 743,927Operating expenses, excluding depreciation, amortization, andimpairment of intangible and other assets501,642 514,013 544,204 560,729 575,659Depreciation and amortization48,511 55,527 65,191 69,244 71,086Loss (gain) on sales of assets, net(1,338) 110 (52) 252 —Impairment of intangible and other assets (3)2,980 171,094 1,388 204,289 899Curtailment gains— — — 16,137 45,012Equity in earnings of associated companies8,297 8,685 7,231 6,151 7,746Reduction in investment in TNI (3)— — — 11,900 —Operating income (loss)113,199 (57,319) 103,421 (100,905) 149,041Financial income385 300 236 296 411Interest expense(79,724) (89,447) (83,078) (52,696) (63,117)Debt financing costs(22,927) (646) (2,823) (12,612) (8,514) Income (loss) from continuing operations7,671 (76,478) (13,381) (145,156) 47,326Discontinued operations, net of income taxes— (1,246) (2,918) (1,525) (1,148)Net income (loss)7,671 (77,724) (16,299) (146,681) 46,178 Income (loss) attributable to Lee Enterprises, Incorporated6,795 (78,317) (16,698) (146,868) 46,105 Income (loss) from continuing operations attributable to LeeEnterprises, Incorporated6,795 (77,071) (13,780) (145,343) 47,253 EARNINGS (LOSS) PER COMMON SHARE Basic: Continuing operations0.13 (1.49) (0.28) (3.24) 1.06Discontinued operations— (0.02) (0.06) (0.03) (0.03) 0.13 (1.51) (0.34) (3.27) 1.03 Diluted: Continuing operations0.13 (1.49) (0.28) (3.24) 1.05Discontinued operations— (0.02) (0.06) (0.03) (0.03) 0.13 (1.51) (0.34) (3.27) 1.03 Weighted average common shares: Basic52,273 51,833 49,261 44,847 44,555Diluted53,736 51,833 49,261 44,847 44,955 BALANCE SHEET INFORMATION (End of Year) Total assets811,275 827,705 1,061,136 1,158,248 1,440,116Debt, including current maturities (4)804,750 847,500 945,850 994,550 1,081,590Debt, net of cash, restricted cash and investments (4)787,605 829,938 931,930 966,023 1,052,545Stockholders' equity (deficit)(178,253) (170,350) (114,633) (101,346) 56,823(1)Results of discontinued operations have been restated for all periods presented.(2)2012 includes 53 weeks of business operations. All other years include 52 weeks.21(3)The Company recorded pretax, non-cash impairment charges to reduce the carrying value of assets as follows:(Thousands of Dollars)2014 2013 2012 2011 2010 Continuing operations: Goodwill— — — 186,281 —Non-amortized intangible assets1,936 1,567 — 13,109 —Amortizable intangible assets— 169,041 — 4,199 —Property and equipment1,044 486 1,388 700 899 2,980 171,094 1,388 204,289 899Reduction in investment in TNI— — — 11,900 — 2,980 171,094 1,388 216,189 899 Discontinued operations— — 3,606 850 2,391(4)Principal amount of debt, excluding fair value adjustments. See Note 5 of the Notes to Consolidated Financial Statements,included herein. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion includes comments and analysis relating to our results of operations and financial condition as of, and for each of thethree years ended, September 28, 2014. This discussion should be read in conjunction with the Consolidated Financial Statements and relatedNotes thereto, included herein. NON-GAAP FINANCIAL MEASURES No non-GAAP financial measure should be considered as a substitute for any related GAAP financial measure. However, we believe the use ofnon-GAAP financial measures provides meaningful supplemental information with which to evaluate our financial performance, or assist inforecasting and analyzing future periods. We also believe such non-GAAP financial measures are alternative indicators of performance used byinvestors, lenders, rating agencies and financial analysts to estimate the value of a publishing business and its ability to meet debt servicerequirements. The non-GAAP financial measures we use are defined as follows:Adjusted EBITDA is defined as operating income (loss), plus depreciation, amortization, impairment charges, stock compensation and our50% share of EBITDA from associated companies, minus equity in earnings of associated companies and curtailment gains.Adjusted Income (Loss) and Adjusted Earnings (Loss) Per Common Share are defined as income (loss) attributable to Lee Enterprises,Incorporated and earnings (loss) per common share adjusted to exclude both unusual matters and those of a substantially non-recurringnature.Cash Costs are defined as compensation, newsprint and ink, other operating expenses and certainunusual matters, such as workforce adjustment costs. Depreciation, amortization, impairment charges,other non-cash operating expenses and other unusual matters are excluded.Operating Cash Flow is defined as operating income (loss) plus depreciation, amortization and impairment charges, minus equity inearnings of associated companies and curtailment gains. Operating cash flow margin is defined as operating cash flow divided byoperating revenue. The terms operating cash flow and EBITDA are used interchangeably.Unlevered Free Cash Flow is defined as operating income (loss), plus depreciation, amortization, impairment charges, stockcompensation, distributions from associated companies and cash income tax refunds, minus equity in earnings of associated companies,curtailment gains, cash income taxes, pension contributions and capital expenditures. Changes in working capital, asset sales, minorityinterest and discontinued operations are excluded. Free Cash Flow also includes financial income, interest expense and debt financingand reorganization costs.22We also present comparable 52 week results, which are defined as 2014 and 2013 results on a reported basis compared to 2012 results on a 52week basis excluding the extra week of operations.Tables reconciling operating cash flow, adjusted EBITDA, unlevered free cash flow and free cash flow to operating income (loss), the most directlycomparable measure under GAAP, are set forth in Item 7, included herein, under the caption "Selected Consolidated Financial Information".Reconciliations of adjusted income (loss) and adjusted earnings (loss) per common share to income (loss) attributable to Lee Enterprises,Incorporated and earnings (loss) per common share, respectively, the most directly comparable measures under GAAP, are set forth in Item 7,included herein, under the caption “Overall Results”.The subtotals of operating expenses representing cash costs can be found in tables in Item 7, included herein, under the captions “2014 vs. 2013”and “2013 vs. 2012”.We also present selected information for Lee Legacy and Pulitzer. Lee Legacy constitutes the business of the Company, including MNI, butexcluding Pulitzer and TNI. See "Selected Lee Legacy Financial Information, and "Selected Pulitzer Financial Information" in Item 7, includedherein.CRITICAL ACCOUNTING POLICIES Our discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which havebeen prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affectthe reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis,we evaluate our estimates.We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, theresults of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from othersources. Actual results may differ from these estimates under different assumptions or conditions. Additional information follows with regard tocertain of the most critical of our accounting policies.Goodwill and Other Intangible Assets In assessing the recoverability of goodwill and other non-amortized intangible assets, we annually assess qualitative factors affecting our businessto determine if the probability of a goodwill impairment is more likely than not. Our assessment includes reviewing internal and external factorsaffecting our business, such as cash flow projections, stock price and other industry or market considerations. This assessment is normally madein the last fiscal quarter of each year.We analyze goodwill and other non-amortized intangible assets for impairment more frequently if impairment indicators are present. Suchindicators of impairment include, but are not limited to, changes in business climate and operating or cash flow losses related to such assets.Should we determine that a goodwill impairment is more likely than not, we make a determination of the fair value of our business. Fair value isdetermined using a combination of an income approach, which estimates fair value based upon future revenue, expenses and cash flowsdiscounted to their present value, and a market approach, which estimates fair value using market multiples of various financial measurescompared to a set of comparable public companies in the publishing industry. Fair value is allocated to our assets and liabilities to determine animplied goodwill fair value. A non-cash impairment charge will generally be recognized when the book value of goodwill exceeds its implied fairvalue.Should we determine that a non-amortized intangible asset impairment is more likely than not, we make a determination of the individual asset'sfair value. Fair value is determined using the relief from royalty method, which estimates fair value based upon appropriate royalties of futurerevenue discounted to their present value. The impairment amount, if any, is calculated based on the excess of the carrying amount over the fairvalue of such asset. We review our amortizable intangible assets for impairment when indicators of impairment are present. We assess recoverability of these assetsby comparing the estimated undiscounted cash flows associated with the asset or asset23group with their carrying amount. The impairment amount, if any, is calculated based on the excess of the carrying amount over the fair value ofthose assets.The required valuation methodology and underlying financial information that are used to determine fair value require significant judgments to bemade by us and represent a Level 3 fair value measurement. These judgments include, but are not limited to, long term projections of futurefinancial performance and the selection of appropriate discount rates used to determine the present value of future cash flows. Changes in suchestimates or the application of alternative assumptions could produce significantly different results. We also periodically evaluate our determination of the useful lives of amortizable intangible assets. Any resulting changes in the useful lives ofsuch intangible assets will not impact our cash flows. However, a decrease in the useful lives of such intangible assets would increase futureamortization expense and decrease future reported operating results and earnings per common share.In 2014 and 2012, we performed a qualitative analysis to test our goodwill for impairment and concluded that the likelihood of an impairment wasless than 50%. In 2013, we performed additional quantitative analysis of the carrying value of our goodwill and concluded the implied fair value ofgoodwill was in excess of its carrying value. As a result no goodwill impairment was recorded.In 2014 and 2013, due to continuing revenue declines, we recorded non-cash charges to reduce the carrying value of non-amortized intangibleassets. In 2013 we determined that the cash flows from amortizable intangible assets were not sufficient to recover their carrying values. As aresult, we recorded non-cash charges to reduce the carrying values of such assets to fair value. We also recorded pretax, non-cash charges toreduce the carrying value of property and equipment in 2014, 2013 and 2012. We recorded deferred income tax benefits related to these charges. A summary of impairment charges is included in the table below:(Thousands of Dollars)2014 2013 2012 Continuing operations: Non-amortized intangible assets1,936 1,567 —Amortizable intangible assets— 169,041 —Property and equipment1,044 486 1,388 2,980 171,094 1,388 Discontinued operations— — 3,606Future 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 impairment charges in the future. Pension, Postretirement and Postemployment Benefit Plans We evaluate our liability 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 ofcompensation increases, when applicable, employee turnover rates, anticipated mortality rates, expected investment returns on plan assets, assetallocation assumptions of plan assets, and other factors. If we used different estimates and assumptions regarding these plans, the funded statusof the plans could vary significantly, resulting in recognition of different amounts of expense over future periods. Increases in market interest rates, which may impact plan assumptions, generally result in lower service costs for current employees, higherinterest expense and lower liabilities. Actual returns on plan assets that are lower than the plan assumptions will generally result in decreases in aplan's funded status and may necessitate additional contributions.In October 2014, the Society of Actuaries released new mortality tables. The new tables generally result in increases in life expectancy. We usedthe new mortality tables to value our pension and postretirement liabilities at September 28, 2014, which increased such liabilities, in total, byapproximately $18.5 million, with a corresponding decrease in accumulated other comprehensive income in our Consolidated Balance Sheet as ofthat date.24Income Taxes Deferred income taxes are provided using the asset and liability method, whereby deferred income tax assets are recognized for deductibletemporary differences and loss carryforwards and deferred income tax liabilities are recognized for taxable temporary differences. Temporarydifferences are the difference between the reported amounts of assets and liabilities and their tax basis. Deferred income tax assets are reducedby 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 berealized through future income. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dateof enactment.We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income taxpositions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement arereflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits as acomponent of income tax expense. Changes in accounting for uncertain tax positions can result in additional variability in our effective income taxrate. We file income tax returns with the Internal Revenue Service (“IRS”) and various state tax jurisdictions. From time to time, we are subject toroutine audits by those agencies, and those audits may result in proposed adjustments. We have considered the alternative interpretations thatmay be assumed by the various taxing agencies, believe our positions taken regarding our filings are valid, and that adequate tax liabilities havebeen 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 Operations and Comprehensive Income (Loss) in the periods in which suchmatters are ultimately determined. We do not believe the final resolution of such matters will be material to our consolidated financial position orcash flows. Revenue Recognition Advertising revenue is recorded when advertisements are placed in the publication or on the related digital platform. Subscription revenue isrecorded over the print or digital subscription term or as newspapers are individually sold. Other revenue is recognized when the related product orservice has been delivered. Unearned revenue arises in the ordinary course of business from advance subscription payments for print or digitalproducts or advance payments for advertising. 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 exposure to large claims. We accrue our estimated health care costs in the period in which such costs are incurred, including anestimate of incurred but not reported claims. Other risks are insured and carry deductible losses of varying amounts. Our accrued reserves for health care and workers compensation claims are based upon estimates of the remaining liability for retained lossesmade by consulting actuaries. The amount of workers compensation reserve has been determined based upon historical patterns of incurred andpaid loss development factors from the insurance industry.An increasing frequency of large claims, deterioration in overall claim experience or changes in federal or state laws affecting our liability for suchclaims could increase the volatility of expenses for such self-insured risks.IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDSIn May 2014, the Financial Accounting Standards Board ("FASB") issued new accounting requirements for the recognition of revenue fromcontracts with customers. The new requirements also include additional disclosure about the nature, amount, timing and uncertainty of revenueand cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costsincurred to obtain or fulfill a contract. The adoption of these requirements is required in 2018. We have not yet determined the potential impact onour Consolidated Financial Statements.In August 2014, the FASB issued a new going concern standard. The new standard changes the period that companies use to evaluate their abilityto meet obligations to a look-forward period of one year from the financial statement issuance date, from one year from the balance sheet date.The new standard also changes disclosure requirements. The25adoption of the new standard is required in 2017. We do not expect the adoption of this standard to have a material impact on our ConsolidatedFinancial Statements, taken as a whole.26CONTINUING OPERATIONS2014 vs. 2013 Operating results, as reported in the Consolidated Financial Statements, are summarized below:(Thousands of Dollars and Shares, Except Per Share Data)2014 2013 PercentChange 52 Weeks 52 Weeks Advertising and marketing services revenue: Retail282,407 292,417 (3.4)Classified: Employment33,123 33,560 (1.3)Automotive29,547 34,424 (14.2)Real estate17,699 18,862 (6.2)All other44,298 47,197 (6.1)Total classified124,667 134,043 (7.0)National24,867 23,999 3.6Niche publications and other10,060 10,081 (0.2)Total advertising and marketing services revenue442,001 460,540 (4.0)Subscription176,826 177,056 (0.1)Commercial printing12,050 12,625 (4.6)Other25,820 24,519 5.3Total operating revenue656,697 674,740 (2.7)Compensation243,054 254,831 (4.6)Newsprint and ink37,994 43,481 (12.6)Other operating expenses219,329 213,021 3.0Workforce adjustments1,265 2,680 (52.8)Cash costs501,642 514,013 (2.4)Operating cash flow155,055 160,727 (3.5)Depreciation20,920 21,302 (1.8)Amortization27,591 34,225 (19.4)Loss (gain) on sales of assets, net(1,338) 110 NMImpairment of intangible and other assets2,980 171,094 (98.3)Equity in earnings of associated companies8,297 8,685 (4.5)Operating income (loss)113,199 (57,319) NMNon-operating expense, net(99,238) (81,904) 21.2Income (loss) from continuing operations before income taxes13,961 (139,223) NMIncome tax expense (benefit)6,290 (62,745) NMIncome (loss) from continuing operations7,671 (76,478) NMDiscontinued operations, net of income taxes— (1,246) NMNet income (loss)7,671 (77,724) NMNet income attributable to non-controlling interests(876) (593) 47.7Income (loss) attributable to Lee Enterprises, Incorporated6,795 (78,317) NMOther comprehensive income (loss), net(17,497) 21,101 NMComprehensive loss(10,702) (57,216) (81.3) Income (loss) from continuing operations attributable to Lee Enterprises, Incorporated6,795 (77,071) NM Earnings (loss) per common share: Basic0.13 (1.51) NMDiluted0.13 (1.51) NMTotal revenue decreased approximately 2.7% in 2014 compared to the prior year on a reported basis. Excluding the impact of a subscription-related expense reclassification as a result of moving to fee-for-service delivery contracts at several of our newspapers, operating revenuedecreased 3.7%. The reclassification will increase both print subscription27revenue and operating expenses, with no impact on operating cash flow or operating income. Certain delivery expenses were previously reportedas a reduction of revenue. A table below details the impact of the reclassification on revenue and cash costs. Unless otherwise noted, thecomparisons below are presented on a reported basis.Advertising and Marketing Services Revenue2014 advertising and marketing services revenue decreased $18,539,000, or 4.0%, compared to 2013. Retail advertising decreased 3.4%. Retailpreprint insertion revenue decreased 1.7%. Digital retail advertising on a stand alone basis increased 8.1%, partially offsetting print declines.Classified revenue decreased 7.0% in 2014. Employment revenue decreased 1.3% while automotive advertising decreased 14.2%, real estatedecreased 6.2% and other classified decreased 6.1%. Digital classified revenue on a stand-alone basis increased 7.6%, partially offsetting printdeclines.National advertising increased $868,000, or 3.6% on a reported basis. Digital national advertising on a stand-alone basis increased 96.2%.Advertising in niche publications and other decreased 0.2%.On a stand-alone basis, digital advertising and marketing services revenue increased 12.0%, to $75,179,000, in 2014, representing 17.0% of totaladvertising and marketing services revenue. Total digital revenue for 2014, including advertising and marketing services, subscriptions and allother digital business, totaled $90,198,000, an increase of 17.1% from a year ago. Print advertising and marketing services revenue on a stand-alone basis decreased 6.8%.Subscription and Other Revenue2014 subscription revenue decreased $230,000, or 0.1%, compared to 2013 on a reported basis. The decreases are primarily due to decreases inprint subscribers partially offset by price increases, increases in digital subscribers and the subscription-related expense reclassification.Our average daily newspaper circulation, including TNI, MNI and digital subscribers, totaled 1.1 million for the six months ended September 2014,as measured by the AAM. Sunday circulation totaled 1.4 million. Amounts are not comparable to the prior year period due to changes in AAMmeasurements.Our mobile, tablet, desktop and app sites, including TNI and MNI, attracted 30.0 million unique visitors in the month of September 2014, anincrease of 29.2% from September 2013, with 231.3 million page views. Research in our larger markets indicates we are maintaining our share ofaudience through the combination of digital audience growth and strong newspaper readership.Commercial printing revenue decreased $575,000, or 4.6% in 2014. Other revenue increased $1,301,000, or 5.3%, in 2014.Operating ExpensesCash costs decreased $12,371,000, or 2.4%, in 2014 compared to 2013. Excluding the impact of the subscription-related expense reclassification,cash costs decreased 3.7%, exceeding our published guidance of a decrease of 3.0-3.5%.Compensation expense decreased $11,777,000, or 4.6%, in 2014, driven by a decline in average full-time equivalent employees of 4.8%.Newsprint and ink costs decreased $5,487,000, or 12.6%, in 2014, primarily as a result of a reduction in newsprint volume of 11.5%. See“Commodities” in Item 7A, included herein, for further discussion and analysis of the impact of newsprint on our business.Other operating expenses, which are comprised of all operating costs not considered to be compensation, newsprint, depreciation, amortization, orunusual matters, increased $6,308,000, or 3.0%, in 2014, due to the subscription-related expense reclassification.Reductions in staffing resulted in workforce adjustment costs totaling $1,265,000 and $2,680,000 in 2014 and 2013, respectively.28Certain results, excluding the impact of the subscription-related expense reclassification, are as follows:(Thousands of Dollars)20142013PercentChange Subscription revenue, as reported176,826177,056(0.1)Adjustment for subscription-related expense reclassification(6,707)—NMSubscription revenue, as adjusted170,119177,056(3.9) Total operating revenue, as reported656,697674,740(2.7)Adjustment for subscription-related expense reclassification(6,707)—NMTotal operating revenue, as adjusted649,990674,740(3.7) Other operating expenses, as reported219,329213,0213.0Adjustment for subscription-related expense reclassification(6,707)—NMOther operating expenses, as adjusted212,622213,021(0.2) Total cash costs, as reported501,642514,013(2.4)Adjustment for subscription-related expense reclassification(6,707)—NMTotal cash costs, as adjusted494,935514,013(3.7)Approximately $6,246,000, or 93.1% of the reclassification impacts revenue and cash costs of our Lee Legacy operations, and approximately$461,000, or 6.9% impacts Pulitzer. The subscription-related expense reclassification also increased both revenue and cash costs of MNI by$4,500,000 in 2014 and is not included in the table above.Operating Cash Flow and Results of OperationsAs a result of the factors noted above, operating cash flow decreased 3.5%, to $155,055,000, in 2014 compared to $160,727,000 in 2013.Operating cash flow margin decreased to 23.6% in 2014 from 23.8% in 2013, reflecting a larger percentage decrease in operating revenue than thedecrease in operating expenses and the impact of the subscription-related expense reclassification.Depreciation expense decreased $382,000, or 1.8%, in 2014 and amortization expense decreased $6,634,000, or 19.4%, in 2014 due to fullamortization of certain assets in prior years and impairment charges in the prior year.In 2014 and 2013, due to continuing revenue declines, we recorded non-cash charges to reduce the carrying value of non-amortized intangibleassets.In 2013 we determined that the cash flows from certain amortizable intangible assets were not sufficient to recover their carrying values. As aresult, we recorded a non-cash charge to reduce their carrying values of such assets to fair value. We also recorded pre-tax, non-cash charges toreduce the carrying value of property and equipment in 2014 and 2013. We recorded deferred income tax benefits related to these charges. A summary of impairment charges is included in the table below:(Thousands of Dollars)20142013 Continuing operations: Non-amortized intangible assets1,9361,567Amortizable intangible assets—169,041Property and equipment1,044486 2,980171,094Equity in earnings in associated companies decreased $388,000 in 2014.The factors noted above resulted in operating income of $113,199,000 in 2014, compared to an operating loss of $57,319,000 in 2013. Operatingincome margin increased to 17.2% from a deficit of 8.5% a year ago.29Non-operating Income and ExpenseInterest expense decreased $9,723,000, or 10.9%, to $79,724,000 in 2014 due primarily to lower debt balances and the refinancing of the PulitzerNotes in May 2013. Interest expense in 2014 also includes $2,394,000 of non-cash amortization of a present value adjustment of debt comparedto $5,117,000 in 2013.We charged $22,927,000 of debt financing costs to expense and also recorded a $2,300,000 loss related to a litigation settlement in 2014. Thelitigation settlement is classified as other, net in the Consolidated Statements of Operations and Comprehensive Income (Loss).As more fully discussed in Note 5 of the Notes to Consolidated Financial Statements, included herein (and certain capitalized terms used belowdefined), in connection with the 2014 Refinancing, we issued Warrants, which were recorded at fair value and are included in other liabilities in ourConsolidated Balance Sheets. We remeasure the related liability to fair value each reporting period. Due to the decrease in the price of ourCommon Stock since March 31, 2014, we recorded non-operating income of $6,122,000 related to the decrease in the value of the Warrants in2014.In 2013, we recognized a gain of $7,093,000 from a distribution related to the partial sale of assets in a private equity investment. This gain isclassified as other, net in the Consolidated Statements of Operations and Comprehensive Income (Loss).Overall ResultsWe recognized income tax expense of 45.1% of income from continuing operations before income taxes in 2014 and income tax benefit of 45.1%of loss from continuing operations before income taxes in 2013. See Note 11 of the Notes to Consolidated Financial Statements, included herein,for a reconciliation of the expected federal income tax rate to the actual tax rates.As a result of the factors noted above, income attributable to Lee Enterprises, Incorporated (which includes discontinued operations) totaled$6,795,000 in 2014 compared to a loss of $78,317,000 in 2013. We recorded earnings per diluted common share of $0.13 in 2014 and a loss perdiluted common share of $1.51 in 2013. Excluding unusual matters, as detailed in the table below, diluted earnings per common share, asadjusted, were $0.41 in 2014, compared to $0.47 in 2013. Per share amounts may not add due to rounding. 2014 2013 (Thousands of Dollars, Except Per Share Data)Amount Per Share Amount Per Share Income (loss) attributable to Lee Enterprises, Incorporated, as reported6,795 0.13 (78,317) (1.51)Adjustments: Impairment of intangible and other assets2,980 171,094 Gain on sales of investments, net— (6,909) Debt financing and reorganization costs22,927 646 Other, net891 7,828 26,798 172,659 Income tax effect of adjustments, net(11,487) (70,991) 15,311 0.28 101,668 1.96Unusual matters related to discontinued operations— — 1,014 0.02Income attributable to Lee Enterprises, Incorporated, as adjusted22,106 0.41 24,365 0.47302013 vs. 2012Operating results, as reported in the Consolidated Financial Statements, are summarized below:(Thousands of Dollars and Shares, Except Per Share Data)2013 2012 PercentChange 52 Weeks 53 Weeks Operating revenue: Retail292,417 307,226 (4.8)Classified: Employment33,560 36,911 (9.1)Automotive34,424 39,054 (11.9)Real estate18,862 20,805 (9.3)All other47,197 51,837 (9.0)Total classified134,043 148,607 (9.8)National23,999 29,506 (18.7)Niche publications and other10,081 10,224 (1.4)Total advertising and marketing services revenue460,540 495,563 (7.1)Subscription177,056 173,971 1.8Commercial printing12,625 12,731 (0.8)Other24,519 24,656 (0.6)Total operating revenue674,740 706,921 (4.6)Compensation254,831 274,427 (7.1)Newsprint and ink43,481 51,635 (15.8)Other operating expenses213,021 213,502 (0.2)Workforce adjustments2,680 4,640 (42.2)Cash costs514,013 544,204 (5.5)Operating cash flow160,727 162,717 (1.2)Depreciation21,302 23,495 (9.3)Amortization34,225 41,696 (17.9)Loss (gain) on sales of assets, net110 (52) NMImpairment of intangible and other assets171,094 1,388 NMEquity in earnings of associated companies8,685 7,231 20.1Operating income (loss)(57,319) 103,421 NMNon-operating expense, net(81,904) (88,198) (7.1)Income (loss) from continuing operations before reorganization costs and income taxes(139,223) 15,223 NMReorganization costs— 37,765 NMLoss from continuing operations before income taxes(139,223) (22,542) NMIncome tax benefit(62,745) (9,161) NMLoss from continuing operations(76,478) (13,381) NMDiscontinued operations, net of income taxes(1,246) (2,918) (57.3)Net loss(77,724) (16,299) NMNet income attributable to non-controlling interests(593) (399) 48.6Loss attributable to Lee Enterprises, Incorporated(78,317) (16,698) NMOther comprehensive loss, net21,101 (7,348) NMComprehensive loss(57,216) (24,046) NM Loss from continuing operations attributable to Lee Enterprises, Incorporated(77,071) (13,780) NM Loss per common share: Basic(1.51) (0.34) NMDiluted(1.51) (0.34) NM31Because of period accounting, year-over-year comparisons are distorted. 2012 included an additional week of business activity, which added bothrevenue and operating expenses in comparison with 2013. The table below summarizes certain key 2013 financial results on a comparable basis,excluding the extra week of operations in 2012:(Thousands of Dollars)20132012PercentChange 52 Weeks52 Weeks Advertising and marketing services revenue460,540487,023(5.4)Total digital revenue77,02772,1086.8Subscription revenue177,056170,7403.7Total operating revenue674,740694,596(2.9)Operating expenses, excluding depreciation, amortization and unusual matters511,333531,170(3.7)Operating cash flow160,727158,8411.2Adjusted EBITDA173,766170,3152.0Operating income (loss)(57,319)99,371NMUnless otherwise noted, the comparisons below are presented on a reported basis.Excluding the additional week of operations in 2012, total revenue decreased approximately 2.9% in 2013 compared to the prior year. 2013 totaloperating revenue decreased 4.6% compared to 2012 a reported basis.Advertising and Marketing Services RevenueExcluding the extra week of operations in 2012, 2013 advertising and marketing services revenue decreased 5.4% compared to 2012. On areported basis, 2013 advertising and marketing services revenue decreased $35,023,000, or 7.1%, compared to 2012. Retail advertising decreased4.8%. Retail preprint insertion revenue decreased 0.3%. Digital retail advertising on a stand-alone basis increased 4.5%, partially offsetting printdeclines.Classified revenue decreased 9.8% in 2013. Employment revenue decreased 9.1% while automotive advertising decreased 11.9%, real estatedecreased 9.3% and other classified decreased 9.0%. Digital classified revenue on a stand-alone basis increased 1.4%, partially offsetting printdeclines. National advertising decreased $5,507,000, or 18.7% in 2013. Digital national advertising on a stand-alone basis decreased 16.8%. Advertising inniche publications and other decreased 1.4%.On a stand-alone basis, digital advertising and marketing services revenue increased 2.3% in 2013, representing 14.6% of total advertising andmarketing services revenue. Year-over-year total digital advertising has been rising steadily since December 2009. Print advertising and marketingservices revenue on a stand-alone basis decreased 8.5% in 2013.Subscription and Other RevenueExcluding the extra week of operations in 2012, 2013 subscription revenue increased 3.7% compared to 2012. On a reported basis, 2013subscription revenue increased $3,085,000, or 1.8%, compared to 2012, primarily due to price increases and increases in digital subscribers,which were partially offset by decreases in print subscribers.Our average daily newspaper circulation units, including TNI and MNI, as measured by the AAM, decreased 3.6% and Sunday circulationincreased 7.3% for the six months ended September 2013 compared to the six months ended September 2012. Amounts are not comparable tothe prior year period due to changes in AAM measurements.Our mobile, tablet, desktop and app sites, including TNI and MNI, attracted 23.2 million unique visitors in the month of September 2013, anincrease of 2.7% from September 2012, with 209.1 million page views. Commercial printing revenue decreased $106,000, or 0.8%, in 2013. Other revenue decreased $137,000, or 0.6%, in 2013.32Operating ExpensesExcluding the extra week of operations in 2012, 2013 cash costs excluding unusual matters decreased 3.7% compared to 2012. On a reportedbasis, 2013 operating expenses excluding depreciation, amortization and unusual matters decreased $28,231,000, or 5.2%, compared to 2012.Compensation expense decreased $19,596,000.0, or 7.1% , in 2013, driven by a decline in average full time equivalent employees of 8.3%.Newsprint and ink costs decreased $8,154,000, or 15.8%, in 2013 as a result of a reduction in newsprint volume of 13.6%. See“Commodities” inItem 7A, included herein, for further discussion and analysis of the impact of newsprint on our business.Other operating expenses, which are comprised of all operating costs not considered to be compensation, newsprint, depreciation, amortization, orunusual matters, decreased $481,000, or 0.2%, in 2013.Reductions in staffing resulted in workforce adjustment costs, primarily severance, totaling $2,680,000 and $4,640,000 in 2013 and 2012,respectively.Operating Cash Flow and Results of OperationsAs a result of the factors noted above, operating cash flow decreased 1.2%, to $160,727,000, in 2013 compared to $162,717,000 in 2012.Operating cash flow margin increased to 23.8% in 2013 from 23.0% in 2012, reflecting a larger percentage decrease in operating expenses thanthe decrease in operating revenue.Depreciation expense decreased $2,193,000, or 9.3%, in 2013 and amortization expense decreased $7,471,000, or 17.9%, in 2013.In 2013, due to continuing revenue declines, we recorded non-cash charges to reduce the carrying value of non-amortized intangible assets.In 2013 we determined that the cash flows from certain amortizable intangible assets were not sufficient to recover their carrying values. As aresult, we recorded a non-cash charge to reduce the carrying values of such assets to fair value. We also recorded non-cash charges to reducethe carrying value of property and equipment in 2013 and 2012. We recorded deferred income tax benefits related to these charges. A summary of impairment charges is included in the table below:(Thousands of Dollars)20132012 Continuing operations: Non-amortized intangible assets1,567—Amortizable intangible assets169,041—Property and equipment4861,388 171,0941,388 Discontinued operations—3,606Equity in earnings in associated companies increased $1,454,000 in 2013.The factors noted above resulted in operating loss of $57,319,000 in 2013, compared to operating income of $103,421,000 in 2012.Non-operating Income and ExpenseInterest expense increased $6,369,000, or 7.7%, to $89,447,000 in 2013 due primarily to higher interest rates on our debt since the January 2012refinancing, which were partially offset by lower debt balances and refinancing of the Pulitzer Notes. Our weighted average cost of debt was 9.2%at September 29, 2013, the same as a year ago. Interest33expense includes $5,117,000 and $3,919,000 of non-cash amortization of a present value adjustment of debt in 2013 and 2012, respectively.In 2013, we recognized a gain of $7,093,000 from a distribution related to the partial sale of assets in a private equity investment. This gain isclassified as other, net in the Consolidated Statements of Operations and Comprehensive Income (Loss).Changes to our pension plans in 2011 and 2010 were the subject of litigation, or arbitration claims, under the terms of the respective collectivebargaining agreements. In 2012, we settled all such claims with payments to plan participants totaling $2,802,000. These payments are classifiedas other, net in the Consolidated Statements of Operations and Comprehensive Income (Loss).Overall ResultsWe recognized $37,765,000 of reorganization costs in 2012. We recognized income tax benefit of 45.1% and 40.6% of loss from continuingoperations before income taxes in 2013 and 2012, respectively. See Note 11 of the Notes to Consolidated Financial Statements, included herein,for a reconciliation of the expected federal income tax rate to the actual tax rates.As a result of the factors noted above, loss attributable to Lee Enterprises, Incorporated (which includes discontinued operations) totaled$78,317,000 in 2013 compared to a loss of $16,698,000 in 2012. We recorded loss per diluted common share of $1.51 in 2013 and $0.34 in 2012.Excluding unusual matters, as detailed in the table below, diluted earnings per common share, as adjusted, were $0.47 in 2013, compared to $0.42in 2012. Per share amounts may not add due to rounding. 2013 2012 (Thousands of Dollars, Except Per Share Data)Amount Per Share Amount Per Share 52 Weeks 53 Weeks Loss attributable to Lee Enterprises, Incorporated, as reported(78,317) (1.51) (16,698) (0.34)Adjustments: Impairment of intangible and other assets171,094 1,388 Gain on sales of investments, net(6,909) — Debt financing and reorganization costs646 40,588 Other, net7,828 12,381 172,659 54,357 Income tax effect of adjustments, net(70,991) (19,489) 101,668 1.96 34,868 0.71Unusual matters related to discontinued operations1,014 0.02 2,694 0.05Income attributable to Lee Enterprises, Incorporated, as adjusted24,365 0.47 20,864 0.42DISCONTINUED OPERATIONSIn March 2013, we sold The Garden Island newspaper and digital operations in Lihue, HI for $2,000,000 in cash, plus an adjustment for workingcapital. The transaction resulted in a loss of $2,170,000, after income taxes, and was recorded in discontinued operations in the ConsolidatedStatements of Operations and Comprehensive Income (Loss) in 2013. Operating results of The Garden Island have been classified asdiscontinued operations for all periods presented.In October 2012, we sold the North County Times in Escondido, CA for $11,950,000 in cash, plus an adjustment for working capital. Thetransaction resulted in a gain of $1,168,000, after income taxes, and was recorded in discontinued operations in the Consolidated Statements ofOperations and Comprehensive Income (Loss) in 2013. Operating results of the North County Times have been classified as discontinuedoperations for all periods presented.34LIQUIDITY AND CAPITAL RESOURCES Operating Activities Cash provided by operating activities of continuing operations was $82,075,000, $90,067,000 and $80,037,000 in 2014, 2013 and 2012,respectively. We recorded net income of $7,671,000 in 2014 and a net loss of $77,724,000 and $16,299,000 in 2013 and 2012, respectively. Non-cash debt financing and reorganization costs charged to expense totaled $22,927,000, $646,000, and $40,588,000 in 2014, 2013 and 2012,respectively. Depreciation and amortization decreased as discussed more fully under "Results of Operations". We also recognized non-cashimpairment of intangible and other assets totaling $2,980,000, $171,094,000 and $1,388,000 in 2014, 2013 and 2012, respectively. The loss fromcontinuing operations in 2013 was caused primarily by non-cash charges for impairment of intangible and other assets, net of the related deferredincome tax benefit. Changes in deferred income taxes, operating assets and liabilities and income taxes accounted for the bulk of the remainder ofthe changes in cash provided by operating activities of continuing operations in all years. Pension liabilities, net of plan assets, totaled $50.2 million as of September 28, 2014, an increase of $19.6 million from September 30, 2013, dueto a decrease in discount rates used to measure the liabilities and adoption of new mortality tables, partially offset by strong asset returns.Contributions to pension plans are expected to total $3.8 million in 2015.Investing Activities Cash required for investing activities of continuing operations totaled $9,284,000, $1,296,000 and $784,000 in 2014, 2013 and 2012, respectively.Capital spending totaled $13,661,000 in 2014, $9,740,000 in 2013 and $7,843,000 in 2012. Restricted cash increased $441,000 in 2014 and wasreduced $4,972,000 in 2012. We received $4,485,000, $7,802,000 and $1,353,000 from insurance and sales of assets in 2014, 2013 and 2012,respectively. We anticipate that funds necessary for capital expenditures, which are expected to total up to $12,000,000 in 2015, and other requirements, will beavailable from internally generated funds, or availability under our Revolving Facility. Financing Activities Cash required for financing activities of continued operations totaled $73,649,000 in 2014, $99,318,000 in 2013 and $93,068,000 in 2012. We paid$31,587,000, $1,071,000 and $32,408,000 of debt financing and reorganization costs in 2014, 2013 and 2012, respectively. The increase in suchcosts in 2014 and 2012 was due to the 2014 Refinancing and the Chapter 11 Proceedings, respectively. Debt reduction accounted for the majorityof the remaining usage of funds in all years. As discussed more fully in Note 1 and Note 5 of the Notes to Consolidated Financial Statements, included herein, in January 2012, in conjunctionwith the effectiveness of the Plan, we refinanced all of our debt. The Plan refinanced our then-existing credit agreement and extended the April2012 maturity in a structure of first and second lien debt with the existing lenders. We also amended the Pulitzer Notes, and extended the April2012 maturity with the existing Noteholders. In May 2013, we refinanced the remaining balance of the Pulitzer Notes and on March 31, 2014 wecompleted the 2014 Refinancing. 35Debt is summarized as follows: Interest Rates (%)(Thousands of Dollars)September 28 2014September 29 2013September 28 2014 Revolving Facility5,000—5.651st Lien Term Loan226,750—7.25Notes400,000—9.502nd Lien Term Loan150,000—12.00New Pulitzer Notes23,00063,0009.00Previous credit agreements—784,500 Unamortized present value adjustment—(12,942) 804,750834,558 Less current maturities of long-term debt31,40019,150 Current amount of present value adjustment—(4,779) Total long-term debt773,350820,187 At September 28, 2014, our weighted average cost of debt, excluding amortization of debt financing costs, is 9.3%.Aggregate maturities of debt total $31,400,000 in 2015, $31,400,000 in 2016, $35,200,000 in 2017, $25,000,000 in 2018, $131,750,000 in 2019 and$550,000,000 thereafter.Liquidity At September 28, 2014, after consideration of letters of credit, we have approximately $27,605,000 available for future use under our RevolvingFacility. Including cash, our liquidity at September 28, 2014 totals $44,750,000. This liquidity amount excludes any future cash flows. We expectall interest and principal payments due in the next twelve months will be satisfied by our cash flows, which will allow us to maintain an adequatelevel of liquidity. The Warrants, if and when exercised, would provide additional liquidity in an amount up to $25,140,000.At September 29, 2014, the principal amount of our outstanding debt totals $804,750,000. For the last twelve months ending September 28, 2014 ,the principal amount of our debt, net of cash, is 4.7 times our adjusted EBITDA, compared to a ratio of 4.8 at September 29, 2013. Since the endof our fiscal year ended September 28, 2014 through December 12, 2014, we have reduced debt an additional $15,250,000.The 2014 Refinancing significantly enhances our debt maturity profile. Final maturities of our debt have been extended to dates extending fromApril 2017 through December 2022. As a result, refinancing risk has been substantially reduced for the next several years.There are numerous potential consequences under the Notes, 1st Lien Credit Facility, 2nd Lien Term Loan and the New Pulitzer Notes, if an event ofdefault, as defined, occurs and is not remedied. Many of those consequences are beyond our control. The occurrence of one or more events ofdefault would give rise to the right of the applicable lender(s) to exercise their remedies under the Notes, 1st Lien Credit Facility, 2nd Lien Term Loanand the New Pulitzer Notes, respectively, including, without limitation, the right to accelerate all outstanding debt and take actions authorized insuch 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 refinance or amend ourdebt agreements as they become due, or earlier if available liquidity is consumed. The Notes, 1st Lien Credit Facility and 2nd Lien Term Loan haveonly limited affirmative covenants with which we are required to maintain compliance. We are in compliance with our debt covenants atSeptember 28, 2014.In 2014, we filed a Form S-3 shelf registration statement ("Shelf") with the SEC, which has been declared effective. The Shelf gives us theflexibility to issue and publicly distribute various types of securities, including preferred stock, common stock, warrants, secured or unsecureddebt securities, purchase contracts and units consisting of any combination of such securities, from time to time, in one or more offerings, up toan aggregate amount of $750,000,000. SEC issuer eligibility rules require us to have a public float of at least $75,000,000 in order to use the Shelf.Subject36to maintenance of the minimum level of equity market float and the conditions of our existing debt agreements, the Shelf may enable us to sellsecurities quickly and efficiently when market conditions are favorable or financing needs arise. Under our existing debt agreements, net proceedsfrom the sale of any securities may be used generally to reduce debt.Other Matters Cash and cash equivalents decreased $858,000 in 2014, increased $3,642,000 in 2013 and decreased $9,635,000 in 2012. SEASONALITY Our largest source of publishing revenue, retail advertising, is seasonal and tends to fluctuate with retail sales in markets served. Historically,retail advertising is higher in the December and June quarters. Advertising and marketing services revenue is lowest in the March quarter. Quarterly results of operations are summarized in Note 18 of the Notes to Consolidated Financial Statements, included herein.INFLATION Price increases (or decreases) for our products are implemented when deemed appropriate by us. We continuously evaluate price increases,productivity improvements, sourcing efficiencies and other cost reductions to mitigate the impact of inflation.CHANGES IN LAWS AND REGULATIONS Energy Costs Energy costs can be volatile, and may increase in the future as a result of carbon emissions and other regulations being developed by the UnitedStates Environmental Protection Agency.Health Care Costs The Affordable Care Act was enacted into law in 2010. As a result, in 2010 we wrote off $2,012,000 of deferred income tax assets due to the lossof future tax deductions for providing retiree prescription drug benefits. We expect the Affordable Care Act will continue to evolve. More recently, certain provisions applicable to employers were delayed. We expect ourfuture health care costs to increase based on analysis published by the United States Department of Health and Human Services, input fromindependent advisors and our understanding of various provisions of the Affordable Care Act that differ from our previous medical plans, such as: •Certain preventive services provided without charge to employees;•Automatic enrollment of new employees;•Higher maximum age for dependent coverage;•Elimination of lifetime benefit caps; and•Free choice vouchers for certain lower income employees. Administrative costs are also likely to increase as a result of new compliance reporting and mandatory fees per participant. New costs beingimposed on other medical care businesses, such as health insurers, pharmaceutical companies and medical device manufacturers, may bepassed on to us in the form of higher costs. We may be able to mitigate certain of these future cost increases through changes in plan design.We do not expect the Affordable Care Act will have a significant impact on our postretirement medical benefit obligation liability.37Pension PlansIn 2012, the Surface Transportation Extension Act of 2012 (“STEA”) was signed into law. STEA provides for changes in the determination ofdiscount rates that resulted in a near-term reduction in minimum funding requirements for our defined benefit pension plans. STEA will also resultin an increase in future premiums to be paid to the Pension Benefit Guarantee Corporation ("PBGC").in 2014, the Highway and Transportation Funding Act ("HATFA") was signed into law. HATFA generally extends the relief offered under STEA andfurther increases premiums to be paid to the PBGC.In October 2014, the Society of Actuaries released new mortality tables. The new tables generally result in increases in life expectancy. We usedthe new mortality tables to value our pension and postretirement liabilities at September 28, 2014, which increased such liabilities, in total, byapproximately $18,515,000, with a corresponding decrease in accumulated other comprehensive income in our Consolidated Balance Sheet as ofthat date.Income TaxesCertain states in which we operate are considering changes to their corporate income tax rates. Until such changes are enacted, the impact ofsuch changes cannot be determined.CONTRACTUAL OBLIGATIONS The following table summarizes our significant contractual obligations at September 28, 2014:(Thousands of Dollars)Payments (or Commitments) Due (Years) Nature of ObligationTotal LessThan 1 1-3 3-5 MoreThan 5 Debt (Principal Amount) (1)804,750 31,400 66,600 156,750 550,000Interest expense (2)(3)481,563 73,698 140,057 125,808 142,000Operating lease obligations11,919 2,592 4,262 2,863 2,202Capital expenditure commitments1,549 1,549 — — — 1,299,781 109,239 210,919 285,421 694,202(1)Maturities of long-term debt are limited to mandatory payments and, accordingly, exclude excess cash flow, asset sale and other payments under the1st Lien Credit Facility, Notes, the 2nd Lien Term Loan and the New Pulitzer Notes as such amounts cannot be determined. See Note 5 of the Notes toConsolidated Financial Statements, included herein.(2)Interest expense includes an estimate of interest expense for the Notes, 1st Lien Credit Facility, 2nd Lien Term Loan and New Pulitzer Notes until theirmaturities in March 2022, March 2019, December 2022 and April 2017, respectively. Interest expense under the Notes is estimated using the 9.5%contractual rate applied to the outstanding balance as reduced by future contractual maturities of such debt. Interest expense under the 1st Lien TermLoan is estimated based on the 30 day minimum LIBOR level of 1.0% as increased by our applicable margin of 6.25% applied to the outstandingbalance, as reduced by future contractual maturities of such debt. Interest expense under the Revolving Facility is estimated based on the current 30day LIBOR level as increased by our applicable margin of 5.5% applied to the outstanding balance, as reduced by future contractual maturities of suchdebt. Interest expense under the 2nd Lien Term Loan is estimated using the 12.0% contractual rate applied to the outstanding balance during eachperiod. Interest expense under the New Pulitzer Notes is estimated using the 9.0% contractual rate applied to the outstanding balance as reduced byfuture contractual maturities of such debt. Changes in interest rates in excess of the minimum LIBOR level, use of borrowing rates not based onLIBOR, use of interest rate hedging instruments, and/or principal payments in excess of contractual maturities or based on other requirements of theNotes, 1st Lien Credit Facility, 2nd Lien Term Loan or New Pulitzer Notes could significantly change this estimate. See Note 5 of the Notes toConsolidated Financial Statements, included herein.(3)Interest expense excludes non-cash present value adjustments and amortization of debt financing costs previously paid. See Note 5 of the Notes toConsolidated Financial Statements, included herein. The table above excludes future cash requirements for pension, postretirement and postemployment obligations. The periods in which theseobligations will be settled in cash are not readily determinable and are subject to numerous future events and assumptions. We estimate cashrequirements for these obligations in 2015 will total approximately $3,800,000. See Notes 6 and 7 of the Notes to Consolidated FinancialStatements, included herein.Commitments exclude unrecognized tax benefits to be recorded in accordance with FASB ASC Topic 740, Income Taxes. We are unable toreasonably estimate the ultimate amount or timing of cash settlements with the respective taxing authorities for such matters. A substantialamount of our deferred income tax liabilities will not result in future cash payments. See Note 11 of the Notes to Consolidated FinancialStatements, included herein.38SELECTED CONSOLIDATED FINANCIAL INFORMATION(UNAUDITED) 2014 2013 2012(Thousands of Dollars)AmountPercent ofRevenueAmountPercent ofRevenueAmountPercent ofRevenue 52 Weeks 52 Weeks 53 Weeks Advertising and marketing services442,001 460,540 495,563 Subscription176,826 177,056 173,971 Other37,870 37,144 37,387 Total operating revenue656,697 674,740 706,921 Compensation243,054 254,831 274,427 Newsprint and ink37,994 43,481 51,635 Other operating expenses219,329 213,021 213,502 Depreciation and amortization48,511 55,527 65,139 Loss (gain) on sales of assets, net(1,338) 110 1,388 Impairment of intangible and other assets2,980 171,094 — Workforce adjustments1,265 2,680 4,640 Total operating expenses551,795 740,744 610,731 Equity in earnings of TNI and MNI8,297 8,685 7,231 Operating income (loss)113,19917.2(57,319)(8.5)103,42114.6Adjusted to exclude: Depreciation and amortization48,5117.455,5278.265,1399.2Loss (gain) on sales of assets, net(1,338)(0.2)110—1,3880.2Impairment of intangible and other assets2,9800.5171,09425.4——Equity in earnings of TNI and MNI(8,297)(1.3)(8,685)(1.3)(7,231)(1.0)Operating cash flow155,05523.6160,72723.8162,71723.0Add: Ownership share of TNI and MNI EBITDA (50%)11,236 11,761 10,569 Adjusted to exclude: Stock compensation1,481 1,261 1,080 Adjusted EBITDA167,772 173,749 174,366 Adjusted to exclude: Ownership share of TNI and MNI EBITDA (50%)(11,236) (11,761) (10,569) Add (deduct): Distributions from TNI and MNI9,996 11,398 9,086 Capital expenditures, net of insurance proceeds(11,824) (9,740) (7,843) Pension contributions(1,522) (6,016) (6,807) Cash income tax refunds6,022 9,126 1,140 Unlevered free cash flow159,208 166,756 159,373 Add (deduct): Financial income385 300 236 Interest expense to be settled in cash(77,330) (84,012) (78,288) Debt financing costs paid(31,587) (1,071) (32,408) Free cash flow50,676 81,973 48,913 39SELECTED LEE LEGACY ONLY FINANCIAL INFORMATION(UNAUDITED) 2014 2013 2012(Thousands of Dollars)AmountPercent ofRevenueAmountPercent ofRevenueAmountPercent ofRevenue 52 Weeks 52 Weeks 53 Weeks Advertising and marketing services306,818 317,161 338,329 Subscription113,992 110,335 106,614 Other33,208 31,079 30,552 Total operating revenue454,018 458,575 475,495 Compensation180,641 185,470 195,162 Newsprint and ink27,084 30,195 34,335 Other operating expenses118,971 112,768 114,510 Depreciation and amortization33,163 27,291 29,377 Loss (gain) on sales of assets, net(1,362) 134 256 Impairment of intangible and other assets378 523 — Workforce adjustments551 1,546 1,172 Total operating expenses359,426 357,927 374,812 Equity in earnings of MNI3,384 3,509 3,201 Operating income97,97621.6104,15722.7103,88421.8Adjusted to exclude: Depreciation and amortization33,1637.327,2916.029,3776.2Loss (gain) on sales of assets, net(1,362)—134—256—Impairment of intangible and other assets3780.15230.1——Equity in earnings of MNI(3,384)(0.7)(3,509)(0.8)(3,201)(0.7)Operating cash flow126,77127.9128,59628.0130,31627.4Add: Ownership share of MNI EBITDA (50%)5,905 5,964 5,816 Adjusted to exclude: Stock compensation1,481 1,261 1,080 Adjusted EBITDA134,157 135,821 137,212 Adjusted to exclude: Ownership share of MNI EBITDA (50%)(5,905) (5,964) (5,816) Add (deduct): Distributions from MNI4,750 5,250 3,900 Capital expenditures, net of insurance proceeds(9,688) (7,713) (6,810) Pension contributions(87) — — Cash income tax refunds (payments)(266) (365) 72 Intercompany charges not settled in cash(9,678) (8,396) (8,584) Other(2,000) (2,000) (2,000) Unlevered free cash flow111,283 116,633 117,974 Add (deduct): Financial income385 300 236 Interest expense to be settled in cash(73,491) (74,641) (65,574) Debt financing costs paid(31,579) (140) (26,707) Free cash flow6,598 42,152 25,929 40SELECTED PULITZER ONLY FINANCIAL INFORMATION(UNAUDITED) 2014 2013 2012(Thousands of Dollars)AmountPercent ofRevenueAmountPercent ofRevenueAmountPercent ofRevenue 52 Weeks 52 Weeks 53 Weeks Advertising and marketing services135,183 143,379 157,234 Subscription62,834 66,721 67,357 Other4,662 6,065 6,835 Total operating revenue202,679 216,165 231,426 Compensation62,413 69,361 79,265 Newsprint and ink10,910 13,286 17,300 Other operating expenses100,358 100,253 98,992 Depreciation and amortization15,348 28,236 35,762 Loss (gain) on sales of assets, net24 (24) 1,132 Impairment of intangible and other assets2,602 170,571 — Workforce adjustments714 1,134 3,468 Total operating expenses192,369 382,817 235,919 Equity in earnings of TNI4,913 5,176 4,030 Operating income (loss)15,2237.5(161,476)(74.7)(463)(0.2)Adjusted to exclude: Depreciation and amortization15,3487.628,23613.135,76215.5Loss (gain) on sales of assets, net24—(24)—1,1320.5Impairment of intangible and other assets2,6021.3170,57178.9——Equity in earnings of TNI(4,913)(2.4)(5,176)(2.4)(4,030)(1.7)Operating cash flow28,28414.032,13114.932,40114.0Add: Ownership share of TNI EBITDA (50%)5,331 5,797 4,753 Adjusted EBITDA33,615 37,928 37,154 Adjusted to exclude: Ownership share of TNI EBITDA (50%)(5,331) (5,797) (4,753) Add (deduct): Distributions from TNI5,246 6,148 5,186 Capital expenditures, net of insurance proceeds(2,136) (2,027) (1,033) Pension contributions(1,435) (6,016) (6,807) Cash income tax refunds6,288 9,491 1,068 Intercompany charges not settled in cash9,678 8,396 8,584 Other2,000 2,000 2,000 Unlevered free cash flow47,925 50,123 41,399 Deduct: Interest expense to be settled in cash(3,839) (9,371) (12,714) Debt financing costs paid(8) (931) (5,701) Free cash flow44,078 39,821 22,984 41ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk stemming from changes in interest rates and commodity prices. Changes in these factors could cause fluctuationsin earnings and cash flows. In the normal course of business, exposure to certain of these market risks is managed as described below. INTEREST RATES ON DEBT Our debt structure, which is predominantly fixed rate, significantly reduces the potential impact of an increase in interest rates. At September 28,2014, 28.8% of the principal amount of our debt is subject to floating interest rates. Our primary exposure is to LIBOR. A 100 basis point increaseor decrease to LIBOR would, if in excess of LIBOR minimums discussed more fully below, decrease or increase, respectively, income beforeincome taxes on an annualized basis by approximately $2,317,500 based on $231,750,000 of floating rate debt outstanding at September 28,2014.Our debt under the 1st Lien Term Loan is subject to minimum interest rate levels of 1.0%. Based on the difference between interest rates inDecember 2014 and our 1.0% minimum rate, LIBOR would need to increase approximately 68 basis points for six month borrowing up toapproximately 85 basis points for one month borrowing before our borrowing cost would begin to be impacted by an increase in interest rates.We regularly evaluate alternatives to hedge our interest rate risk, but have no hedging instruments in place.COMMODITIESCertain materials used by us are exposed to commodity price changes. We manage this risk through instruments such as purchase orders andnon-cancelable supply contracts. We participate in a buying cooperative with other publishing companies, primarily for the acquisition of newsprint.We are also involved in continuing programs to mitigate the impact of cost increases through identification of sourcing and operating efficiencies.Primary commodity price exposures are newsprint and, to a lesser extent, ink and energy costs.Canadian paper suppliers are benefiting from a stronger U.S. dollar in 2014. However, eroding North American domestic newsprint demand,coupled with significant declines in offshore exports, put downward price pressure on newsprint prices in the second half of 2014. In 2014, NorthAmerican newsprint producers reduced production capacity. Despite the capacity reduction, oversupply is still a significant producer issue asdemand from U.S. publishers has declined. Additional downtime and permanent supply closures are anticipated in 2015. Long-term supplystrategy has been considered in our supplier selection, while taking advantage of any current pricing opportunities.Future price changes, if any, will be influenced primarily by the balance between supply capacity and demand, domestic and export, in addition tothe producers' ability to mitigate input cost pressures and the U.S. dollar to Canadian dollar exchange rate. The final extent of future pricechanges, if any, is subject to negotiations with each newsprint producer.A $10 per tonne price increase for 30 pound newsprint would result in an annualized reduction in income before income taxes of approximately$594,000, based on anticipated consumption in 2015, excluding consumption of TNI and MNI and the impact of LIFO accounting. Such prices mayalso decrease. We manage significant newsprint inventories, which may help to mitigate the impact of future price increases.SENSITIVITY TO CHANGES IN VALUE At September 28, 2014, the fair value of floating rate debt, which consists primarily of our 1st Lien Term Loan, is $231,895,000, based on anaverage of private market price quotations. Our fixed rate debt consists of $400,000,000 principal amount of the Notes, $150,000,000 principalamount under the 2nd Lien Term Loan and $23,000,000 principal amount of New Pulitzer Notes. At September 28, 2014, based on an average ofprivate market price quotations, the fair values were $407,500,000 and $161,625,000 for the Notes and 2nd Lien Term Loan, respectively. The NewPulitzer Notes are held by a single investor. We are unable, as of September 28, 2014, to determine the fair value of the New Pulitzer Notes. Thevalue, if determined, may be more or less than the carrying amount.42ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Information with respect to this Item is included herein under the caption “Consolidated Financial Statements”.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTSON ACCOUNTING AND FINANCIAL DISCLOSURE Information with respect to this Item is included in our Proxy Statement to be filed in January 2015, which is incorporated herein by reference,under the caption “Relationship with Independent Registered Public Accounting Firm”.ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURESUnder the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, weconducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e)and 15d-15(e) under the Exchange Act, as of September 28, 2014, the end of the period covered by this annual report (the “Evaluation Date”).Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls andprocedures were effective such that the information relating to the Company, including our consolidated subsidiaries, required to be disclosed inour SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) isaccumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timelydecisions regarding required disclosure.MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGThe Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as such term isdefined in Rule 13a-15(f) of the Exchange Act. Any internal control system, no matter how well designed, has inherent limitations and may notprevent or detect misstatements. Accordingly, even those systems determined to be effective can provide only reasonable assurance with respectto 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, weassessed the effectiveness of our internal control over financial reporting as of the Evaluation Date, using the criteria set forth in the InternalControl-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on thisassessment, management has concluded that our internal control over financial reporting is effective as of the Evaluation Date.Our independent registered public accounting firm, KPMG LLP, has issued a report on the Company's internal control over financial reporting.KPMG’s report on the audit of internal control over financial reporting appears in this Annual Report.CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTINGThere have been no changes in our internal control over financial reporting that occurred during the 13 weeks ended September 28, 2014 that havematerially affected or are reasonably likely to materially affect our internal control over financial reporting.43REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and StockholdersLee Enterprises, Incorporated:We have audited Lee Enterprises, Incorporated and subsidiaries’ (the Company) internal control over financial reporting as of September 28, 2014,based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting andfor its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on InternalControl over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on ouraudit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting wasmaintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk thata material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Ouraudit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides areasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directorsof the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition ofthe 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 anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate.In our opinion, Lee Enterprises, Incorporated and subsidiaries maintained, in all material respects, effective internal control over financial reportingas of September 28, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO).We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidatedbalance sheets of Lee Enterprises, Incorporated and subsidiaries as of September 28, 2014 and September 29, 2013, and the related consolidatedstatements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the 52-week periods endedSeptember 28, 2014 and September 29, 2013, and the 53-week period ended September 30, 2012, and our report dated December 12, 2014expressed an unqualified opinion on those consolidated financial statements./s/ KPMG LLPChicago, IllinoisDecember 12, 201444ITEM 9B. OTHER INFORMATION None. 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” inPart I of this Annual Report, is included in our Proxy Statement to be filed in January 2015, which is incorporated herein by reference, under thecaptions “Proposal 1 - Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance”. Our executive officers are thoseelected 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, andprincipal financial and accounting officer. The Code is monitored by the Audit Committee of our Board of Directors and is annually affirmed by ourdirectors and executive officers. We maintain a corporate governance page on our website which includes the Code. The corporate governancepage 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 toany 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 2015, 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 beincorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERS Information with respect to this Item is included in our Proxy Statement to be filed in January 2015, 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 TRANSACTIONSAND DIRECTOR INDEPENDENCE Information with respect to this Item is included in our Proxy Statement to be filed in January 2015, which is incorporated herein by reference,under the caption “Directors' Meetings and Committees of the Board of Directors”. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information with respect to this Item is included in our Proxy Statement to be filed in January 2015, which is incorporated herein by reference,under the caption “Relationship with Independent Registered Public Accounting Firm”. 45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 Operations and Comprehensive Income (Loss) - Years ended September 28, 2014, September 29, 2013 andSeptember 30, 2012Consolidated Balance Sheets - September 28, 2014 and September 29, 2013Consolidated Statements of Stockholders' Equity (Deficit) - Years ended September 28, 2014, September 29, 2013 and September 30, 2012Consolidated Statements of Cash Flows - Years ended September 28, 2014, September 29, 2013 and September 30, 2012Notes to Consolidated Financial StatementsReport of Independent Registered Public Accounting Firm 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 Notesto Consolidated Financial Statements, included herein. EXHIBITS See Exhibit Index, included herein. 46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 onForm 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on the 12th day of December 2014. LEE ENTERPRISES, INCORPORATED/s/ Mary E. Junck /s/ Carl G. SchmidtMary E. Junck Carl G. SchmidtChairman, President and Chief Executive Officer Vice President, Chief Financial Officer and Treasurer(Principal Executive Officer) (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theRegistrant and in their respective capacities on the 12th day of December 2014.Signature /s/ Richard R. Cole DirectorRichard R. Cole /s/ Nancy S. Donovan DirectorNancy S. Donovan /s/ Leonard J. Elmore DirectorLeonard J. Elmore /s/ Mary E. Junck Chairman, President and Chief Executive Officer, and DirectorMary E. Junck /s/ Brent Magid DirectorBrent Magid /s/ William E. Mayer DirectorWilliam E. Mayer /s/ Herbert W. Moloney III DirectorHerbert W. Moloney III /s/ Andrew E. Newman DirectorAndrew E. Newman /s/ Gregory P. Schermer Vice President - Strategy, and DirectorGregory P. Schermer /s/ Carl G. Schmidt Vice President, Chief Financial Officer and TreasurerCarl G. Schmidt /s/ Mark B. Vittert DirectorMark B. Vittert 47CONSOLIDATED FINANCIAL STATEMENTSPAGE Consolidated Statements of Operations and Comprehensive Income (Loss)49 Consolidated Balance Sheets50 Consolidated Statements of Stockholders' Equity (Deficit)52 Consolidated Statements of Cash Flows53 Notes to Consolidated Financial Statements54 Report of Independent Registered Public Accounting Firm91 48CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(Thousands of Dollars, Except Per Common Share Data)2014 2013 2012 52 Weeks 52 Weeks 53 WeeksOperating revenue: Advertising and marketing services442,001 460,540 495,563Subscription176,826 177,056 173,971Other37,870 37,144 37,387Total operating revenue656,697 674,740 706,921Operating expenses: Compensation243,054 254,831 274,427Newsprint and ink37,994 43,481 51,635Other operating expenses219,329 213,021 213,502Depreciation20,920 21,302 23,495Amortization of intangible assets27,591 34,225 41,696Impairment of intangible and other assets2,980 171,094 1,388Loss (gain) on sales of assets, net(1,338) 110 (52)Workforce adjustments1,265 2,680 4,640Total operating expenses551,795 740,744 610,731Equity in earnings of associated companies8,297 8,685 7,231Operating income (loss)113,199 (57,319) 103,421Non-operating income (expense): Financial income385 300 236Interest expense(79,724) (89,447) (83,078)Debt financing costs(22,927) (646) (2,823)Other, net3,028 7,889 (2,533)Total non-operating expense, net(99,238) (81,904) (88,198)Income (loss) before reorganization costs and income taxes13,961 (139,223) 15,223Reorganization costs— — 37,765Income (loss) before income taxes13,961 (139,223) (22,542)Income tax expense (benefit)6,290 (62,745) (9,161)Income (loss) from continuing operations7,671 (76,478) (13,381)Discontinued operations, net of income taxes— (1,246) (2,918)Net income (loss)7,671 (77,724) (16,299)Net income attributable to non-controlling interests(876) (593) (399)Income (loss) attributable to Lee Enterprises, Incorporated6,795 (78,317) (16,698)Other comprehensive income (loss), net(17,497) 21,101 (7,348)Comprehensive loss(10,702) (57,216) (24,046) Income (loss) from continuing operations attributable to Lee Enterprises, Incorporated6,795 (77,071) (13,780) Earnings (loss) per common share: Basic: Continuing operations0.13 (1.49) (0.28)Discontinued operations— (0.02) (0.06) 0.13 (1.51) (0.34) Diluted: Continuing operations0.13 (1.49) (0.28)Discontinued operations— (0.02) (0.06) 0.13 (1.51) (0.34) The accompanying Notes are an integral part of the Consolidated Financial Statements.49CONSOLIDATED BALANCE SHEETS(Thousands of Dollars)September 28 2014 September 29 2013 ASSETS Current assets: Cash and cash equivalents16,704 17,562Accounts receivable, less allowance for doubtful accounts: 2014 $4,526; 2013 $4,50162,343 63,215Income taxes receivable620 6,634Inventories6,655 6,409Deferred income taxes1,228 2,017Other8,585 8,488Total current assets96,135 104,325Investments: Associated companies37,790 39,489Other10,661 10,558Total investments48,451 50,047Property and equipment: Land and improvements23,645 23,626Buildings and improvements180,570 184,838Equipment292,209 299,828Construction in process4,548 2,868 500,972 511,160Less accumulated depreciation343,601 342,247Property and equipment, net157,371 168,913Goodwill243,729 243,729Other intangible assets, net212,657 242,184Postretirement assets, net14,136 14,956Other38,796 3,551 Total assets811,275 827,705 The accompanying Notes are an integral part of the Consolidated Financial Statements.50(Thousands of Dollars and Shares, Except Per Share Data)September 28 2014 September 29 2013 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt31,400 14,371Accounts payable27,245 22,448Compensation and other accrued liabilities24,348 28,493Accrued interest4,812 9,074Unearned revenue30,903 32,605Total current liabilities118,708 106,991Long-term debt, net of current maturities773,350 820,187Pension obligations50,170 30,583Postretirement and postemployment benefit obligations10,359 7,253Deferred income taxes14,766 21,224Income taxes payable5,097 5,257Other16,369 5,900Total liabilities988,819 997,395Equity (deficit): Stockholders' equity (deficit): Serial convertible preferred stock, no par value; authorized 500 shares; none issued— —Common Stock, authorized 120,000 shares; issued and outstanding:537 524September 28, 2014; 53,747 shares; $0.01 par value September 29, 2013; 52,434 shares; $0.01 par value Class B Common Stock, $2 par value; authorized 30,000 shares; none issued— —Additional paid-in capital245,323 242,537Accumulated deficit(414,282) (421,077)Accumulated other comprehensive income (loss)(9,831) 7,666 Total stockholders' deficit(178,253) (170,350) Non-controlling interests709 660Total deficit(177,544) (169,690)Total liabilities and deficit811,275 827,705 The accompanying Notes are an integral part of the Consolidated Financial Statements. 51CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) Amount Shares (Thousands of Dollars and Shares)2014 2013 2012 2014 2013 2012 Common Stock: Balance, beginning of year524 523 89,915 52,434 52,291 44,958Change in par value— — (89,466) — — —Shares issued13 1 74 1,313 143 7,333Balance, end of year537 524 523 53,747 52,434 52,291Additional paid-in capital: Balance, beginning of year242,537 241,039 140,887 Change in par value— — 89,466 Stock compensation1,494 1,261 1,080 Shares issued1,292 237 9,606 Balance, end of year245,323 242,537 241,039 Accumulated deficit: Balance, beginning of year(421,077) (342,760) (326,062) Net income (loss)7,671 (77,724) (16,299) Net income attributable to non-controllinginterests(876) (593) (399) Balance, end of year(414,282) (421,077) (342,760) Accumulated other comprehensive income(loss): Balance, beginning of year7,666 (13,435) (6,086) Change in pension and postretirementbenefits(29,591) 35,764 (12,455) Deferred income taxes, net12,094 (14,663) 5,106 Balance, end of year(9,831) 7,666 (13,435) Total stockholders' deficit(178,253) (170,350) (114,633) 53,747 52,434 52,291 The accompanying Notes are an integral part of the Consolidated Financial Statements.52CONSOLIDATED STATEMENTS OF CASH FLOWS(Thousands of Dollars)2014 2013 2012 52 Weeks 52 Weeks 53 WeeksCash provided by operating activities: Net income (loss)7,671 (77,724) (16,299)Results of discontinued operations— (1,246) (2,918)Income (loss) from continuing operations7,671 (76,478) (13,381)Adjustments to reconcile loss from continuing operations to net cash provided by operatingactivities of continuing operations: Depreciation and amortization47,173 55,637 65,139Impairment of intangible and other assets2,980 171,094 1,388Stock compensation expense1,481 1,261 1,080Distributions greater than earnings of MNI1,366 1,742 700Amortization of debt fair value adjustment2,394 5,117 3,919Debt financing costs22,927 594 2,823Reorganization costs— — 37,765Gain on sales of investments— (7,093) —Deferred income tax expense (benefit)6,425 (54,807) (779)Changes in operating assets and liabilities: Decrease in receivables872 4,710 1,085Decrease in inventories and other217 904 1,942Increase (decrease) in accounts payable, compensation and other accrued liabilitiesand unearned revenue(5,315) (2,280) 358Decrease in pension, postretirement and postemployment benefit obligations(6,078) (9,602) (8,898)Change in income taxes receivable or payable5,854 1,117 (9,078)Other, net(5,892) (1,849) (4,026)Net cash provided by operating activities of continuing operations82,075 90,067 80,037Cash provided by (required for) investing activities of continuing operations: Purchases of property and equipment(13,661) (9,740) (7,843)Decrease (increase) in restricted cash(441) — 4,972Proceeds from insurance and sales of assets4,485 7,802 1,353Distributions greater than earnings of TNI333 972 1,156Other, net— (330) (422)Net cash required for investing activities of continuing operations(9,284) (1,296) (784)Cash provided by (required for) financing activities of continuing operations: Proceeds from long-term debt805,000 94,000 1,004,795Payments on long-term debt(847,750) (192,350) (1,065,455)Debt financing and reorganization costs paid(31,587) (1,071) (32,408)Common stock transactions, net688 103 —Net cash required for financing activities of continuing operations(73,649) (99,318) (93,068)Net cash provided by (required for) discontinued operations: Operating activities— (552) 661Investing activities— 14,741 3,519Net increase (decrease) in cash and cash equivalents(858) 3,642 (9,635)Cash and cash equivalents: Beginning of year17,562 13,920 23,555End of year16,704 17,562 13,920 The accompanying Notes are an integral part of the Consolidated Financial Statements.53NOTES TO CONSOLIDATED FINANCIAL STATEMENTS References to "we", "our", "us" and the like throughout the Consolidated Financial Statements refer to Lee Enterprises, Incorporated andsubsidiaries (the "Company"). References to "2014", "2013", "2012" and the like refer to the fiscal years ended the last Sunday in September. Lee Enterprises, Incorporated is a leading provider of local news and information and a major platform for advertising, in primarily midsize markets,with 46 daily newspapers and a joint interest in four others, rapidly growing digital products and nearly 300 weekly newspapers and specialtypublications in 22 states. We currently operate in a single operating segment.On December 12, 2011, the Company and certain of its subsidiaries filed voluntary, prepackaged petitions in the U.S. Bankruptcy Court for theDistrict of Delaware (the "Bankruptcy Court") for relief under Chapter 11 of the U.S. Bankruptcy Code (the "U.S. Bankruptcy Code") (collectively,the "Chapter 11 Proceedings"). Our interests in TNI Partners ("TNI") and Madison Newspapers, Inc. ("MNI") were not included in the filings. Duringthe Chapter 11 Proceedings, we, and certain of our subsidiaries, continued to operate as "debtors in possession" under the jurisdiction of theBankruptcy Court and in accordance with the applicable provisions of the U.S. Bankruptcy Code. In general, as debtors-in-possession, we wereauthorized under the U.S. Bankruptcy Code to continue to operate as an ongoing business, but were not to engage in transactions outside theordinary course of business without the prior approval of the Bankruptcy Court.On January 23, 2012, the Bankruptcy Court approved our Second Amended Joint Prepackaged Plan of Reorganization (the "Plan") under the U.S.Bankruptcy Code and on January 30, 2012 (the "Effective Date") the Company emerged from the Chapter 11 Proceedings. On the Effective Date,the Plan became effective and the transactions contemplated by the Plan were consummated. Implementation of the Plan resulted primarily inrefinancing of our debt that extended the maturity to December 2015 or April 2017. The Chapter 11 Proceedings did not adversely affect theinterests of employees, vendors, contractors, customers or any aspect of Company operations. Stockholders retained their interest in theCompany, subject to modest dilution. As a result, “fresh start” accounting was not used.In May 2013, we refinanced a portion of our debt, extending the maturity to April 2017. On March 31, 2014, we refinanced all of our remaining debt,extending the related maturity dates to March 2019, March 2022 or December 2022. See Notes 5 and 9.1 SIGNIFICANT ACCOUNTING POLICIESBasis 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 INN Partners, L.C. (“TownNews”). TNI and MNI are accounted for under the equitymethod.Fiscal Year All of our enterprises use period accounting with the fiscal year ending on the last Sunday in September. 2014 and 2013 include 52 weeks ofbusiness operations for the Company and MNI and 2012 includes 53 weeks of business operations. TNI has 52 weeks of operations in 2014 and2012 and a 53rd week of business operations in 2013.Subsequent Events We have evaluated subsequent events through December 12, 2014. No events have occurred subsequent to September 28, 2014 that requiredisclosure or recognition in these financial statements, except as included herein.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 disclosureof contingent assets and liabilities. On an on-going basis, we evaluate our estimates. We base our estimates on historical experience and onvarious other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgmentsabout the carrying54values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under differentassumptions 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 sinceacquisition 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 cashequivalents. Outstanding checks in excess of funds on deposit are included in accounts payable and are classified as financing activities in the ConsolidatedStatements of Cash Flows.Accounts Receivable We evaluate our allowance for doubtful accounts receivable based on historical credit experience, payment trends and other economic factors.Delinquency is determined based on timing of payments in relation to billing dates. Accounts considered to be uncollectible are written off.Inventories Newsprint inventories are priced at the lower of cost or market, with cost being determined by the first-in, first-out or last-in, first-out methods.Newsprint inventories at September 28, 2014 and September 29, 2013 are less than replacement cost by $2,761,000 and $3,087,000, respectively. The components of newsprint inventory by cost method are as follows:(Thousands of Dollars)September 282014 September 292013 First-in, first-out2,297 2,219Last-in, first-out2,404 2,278 4,701 4,497 Other inventories consisting of ink, plates and film are priced at the lower of cost or market, with cost being determined by the first-in, first-outmethod. Other Investments Other investments primarily consist of marketable securities held in trust under a deferred compensation arrangement and investments for whichno established market exists. Marketable securities are classified as trading securities and carried at fair value with gains and losses reported inearnings. Non-marketable securities are carried at cost. 55Property and Equipment Property and equipment are carried at cost. Equipment, except for printing presses and preprint insertion equipment, is depreciated primarily bydeclining-balance methods. The straight-line method is used for all other assets. The estimated useful lives are as follows: Years Buildings and improvements5 - 54Printing presses and insertion equipment3 - 28Other3 - 20 We capitalize interest as a component of the cost of constructing major facilities. At September 28, 2014 and September 29, 2013, capitalizedinterest is not significant.We recognize the fair value of a liability for a legal obligation to perform an asset retirement activity when such activity is a condition of a futureevent and the fair value of the liability can be estimated. Goodwill and Other Intangible Assets Intangible assets include covenants not to compete, consulting agreements, customer lists, newspaper subscriber lists and mastheads. Intangibleassets subject to amortization are being amortized using the straight-line method as follows: Years Customer lists15 - 23Newspaper subscriber lists11 - 33Non-compete and consulting agreements15 In assessing the recoverability of goodwill and other non-amortized intangible assets, we annually assess qualitative factors affecting our businessto determine if the probability of a goodwill impairment is more likely than not. Our assessment includes reviewing internal and external factorsaffecting our business, such as cash flow projections, stock price and other industry or market considerations. This assessment is made in thelast fiscal quarter of each year.We analyze goodwill and other non-amortized intangible assets for impairment more frequently if impairment indicators are present. Suchindicators of impairment include, but are not limited to, changes in business climate and operating or cash flow losses related to such assets.Should we determine that a goodwill impairment is more likely than not, we make a determination of the fair value of our business. Fair value isdetermined using a combination of an income approach, which estimates fair value based upon future revenue, expenses and cash flowsdiscounted to their present value, and a market approach, which estimates fair value using market multiples of various financial measurescompared to a set of comparable public companies in the publishing industry. Fair value is allocated to our assets and liabilities to determine animplied goodwill fair value. A non-cash impairment charge will generally be recognized when the book value of goodwill exceeds its implied fairvalue.Should we determine that a non-amortized intangible asset impairment is more likely than not, we make a determination of the individual asset'sfair value. Fair value is determined using the relief from royalty method, which estimates fair value based upon appropriate royalties of futurerevenue discounted to their present value. The impairment amount, if any, is calculated based on the excess of the carrying amount over the fairvalue of such asset. We review our amortizable intangible assets for impairment when indicators of impairment are present. We assess recoverability of these assetsby comparing the estimated undiscounted cash flows associated with the asset or asset group with their carrying amount. The impairment amount,if any, is calculated based on the excess of the carrying amount over the fair value of those assets.56The required valuation methodology and underlying financial information that are used to determine fair value require significant judgments to bemade by us and represent a Level 3 fair value measurement. These judgments include, but are not limited to, long term projections of futurefinancial performance and the selection of appropriate discount rates used to determine the present value of future cash flows. Changes in suchestimates or the application of alternative assumptions could produce significantly different results. We also periodically evaluate the useful lives of amortizable intangible assets. Any resulting changes in the useful lives of such intangible assetswill not impact our cash flows. However, a decrease in the useful lives of such intangible assets would increase future amortization expense anddecrease future reported operating results and earnings per common share. 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 impairment charges in the future. See Note 4.Minority Interest Minority interest in earnings of TownNews is recognized in the Consolidated Financial Statements. Revenue Recognition Advertising revenue is recorded when advertisements are placed in the publication or on the related digital platform. Subscription revenue isrecorded over the print or digital subscription term or as newspapers are individually sold. Other revenue is recognized when the related product orservice has been delivered. Unearned revenue arises in the ordinary course of business from advance subscription payments for print or digitalproducts or advance payments for advertising. Advertising Costs A substantial amount of our advertising and promotion expense consists of advertising placed in our own publications and digital platforms, usingavailable space. The incremental cost of such advertising is not significant and is not measured separately by us. External advertising costs arenot significant and 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 ofcompensation increases, when applicable, employee turnover rates, anticipated mortality rates, expected investment returns on plan assets, assetallocation assumptions of plan assets and other factors. If we used different estimates and assumptions regarding these plans, the funded statusof the plans could vary significantly, resulting in recognition of different amounts of expense over future periods. We use a fiscal year end measurement date for all our pension and postretirement obligations in accordance with Financial Accounting StandardsBoard ("FASB") Accounting Standards Codification ("ASC") Topic 715, Retirement Plans.Income Taxes Deferred income taxes are provided using the asset and liability method, whereby deferred income tax assets are recognized for deductibletemporary differences and loss carryforwards and deferred income tax liabilities are recognized for taxable temporary differences. Temporarydifferences are the difference between the reported amounts of assets and liabilities and their tax basis. Deferred income tax assets are reducedby a valuation allowance when, in our opinion, it is more likely than not 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 taxpositions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement arereflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits as acomponent of income tax expense.57Fair Value of Financial Instruments We utilize FASB ASC Topic 820, Fair Value Measurements and Disclosures, to measure and report fair value. FASB ASC Topic 820 defines fairvalue, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FASB ASC Topic 820establishes a three-level hierarchy of fair value measurements based on whether the inputs to those measurements are observable orunobservable, 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 notactive; 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.Valuation methodologies used for pension and postretirement assets measured at fair value are as follows: Cash and cash equivalents consist of short term deposits valued based on quoted prices in active markets. Such investments areclassified as Level 1. Equity securities valued based on the closing market price in an active market are classified as Level 1. Certain investments incommingled funds are valued at the net asset value of units held at the end of the period based upon the value of the underlyinginvestments as determined by quoted market prices. Such investments are classified as Level 2.Hedge funds consist of a long/short equity fund and a diversified fund of funds. These funds are valued at the net asset value of units heldat the end of the period based upon the value of the underlying investments, which is determined using multiple approaches including byquoted market prices and by private market quotations. Such investments are classified as Level 2 and Level 3. Debt securities consist of corporate bonds and government securities that are valued based upon quoted market prices. Such investmentsare classified as Level 1. Certain investments in commingled funds are valued at the net asset value of units held at the end of the periodbased upon the value of the underlying investments as determined by quoted market prices. Such investments are classified as Level 2.Treasury Inflation-Protected Securities ("TIPS") consist of low yield mutual funds and are valued by quoted market prices. Suchinvestments are classified as Level 1. Stock Compensation and Warrants We have several active stock-based compensation plans. We account for grants under those plans under the fair value expense recognitionprovisions of FASB ASC Topic 718, Compensation-Stock Compensation. We determine the fair value of stock options using the Black-Scholesoption 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 historicalexperience of similar awards, giving consideration to contractual terms of the awards, vesting schedules and expectations of future employeebehavior. 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 aremaining term equal to the option's expected term. When estimating forfeitures, we consider voluntary termination behavior as well as actualoption forfeitures. We amortize as compensation expense the value of stock options and restricted Common Stock using the straight-line method over the vesting orrestriction period, which is generally one to three years.58We also have 6,000,000 warrants outstanding to purchase shares of our Common Stock. Warrants are recorded at fair value determined using theBlack-Scholes option pricing formula. See Notes 5, 9 and 12. 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 exposure to large claims. We accrue our estimated health care costs in the period in which such costs are incurred, including anestimate of incurred but not reported claims. Other risks are insured and carry deductible losses of varying amounts. Letters of credit andperformance bonds totaling $5,820,000 at September 28, 2014 are outstanding in support of our insurance program. Our accrued reserves for health care and workers compensation claims are based upon estimates of the remaining liability for retained lossesmade by consulting actuaries. The amount of workers compensation reserve has been determined based upon historical patterns of incurred andpaid loss development factors from the insurance industry.Discontinued Operations In accordance with the provisions of FASB ASC Topic 360, Property, Land and Equipment, the operations and related losses on businesses sold,or identified as held for sale, have been presented as discontinued operations in the Consolidated Statements of Operations and ComprehensiveIncome (Loss) for all years presented. Gains are recognized when realized. 2 DISCONTINUED OPERATIONSIn March 2013, we sold The Garden Island newspaper and digital operations in Lihue, HI for $2,000,000 in cash, plus an adjustment for workingcapital. The transaction resulted in a loss of $2,170,000, after income taxes, and was recorded in discontinued operations in the ConsolidatedStatements of Operations and Comprehensive Income (Loss) in the 13 weeks ended March 31, 2013. Operating results of The Garden Island havebeen classified as discontinued operations for all periods presented.In October 2012, we sold the North County Times in Escondido, CA for $11,950,000 in cash, plus an adjustment for working capital. Thetransaction resulted in a gain of $1,168,000, after income taxes, and was recorded in discontinued operations in the Consolidated Statements ofOperations and Comprehensive Income (Loss) in the 13 weeks ended December 30, 2012. Operating results of the North County Times have beenclassified as discontinued operations for all periods presented.Results of discontinued operations consist of the following:(Thousands of Dollars)20132012 Operating revenue1,32131,416Costs and expenses(1,697)(36,093)Gain on sale of the North County Times1,801—Loss on sale of The Garden Island(3,340)— Loss from discontinued operations, before income taxes(1,915)(4,677)Income tax benefit(669)(1,759)Net loss(1,246)(2,918)593 INVESTMENTS IN ASSOCIATED COMPANIESTNI 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, aswell as the related digital platforms and specialty publications. TNI collects all receipts and income and pays substantially all operating expensesincident to the partnership's operations and publication of the newspaper and other media. Income or loss of TNI (before income taxes) is allocated equally to Star Publishing and Citizen. Summarized financial information of TNI is as follows:(Thousands of Dollars)September 28 2014 September 29 2013 ASSETS Cash and cash equivalents176 231Accounts receivable, net4,749 5,096Inventories1,582 735Other current assets125 125Investments and other assets78 13Total assets6,710 6,200 LIABILITIES AND MEMBERS' EQUITY Accrued expenses and other current liabilities2,160 1,800Unearned revenue3,036 3,273Total liabilities5,196 5,073Members' equity1,514 1,127Total liabilities and members' equity6,710 6,200 Summarized results of TNI are as follows:(Thousands of Dollars)2014 2013 2012 52 Weeks 53 Weeks 52 WeeksOperating revenue: Advertising and marketing services36,957 40,166 39,267Subscription17,525 18,248 17,452Other3,410 3,576 2,324Total operating revenue57,892 61,990 59,043Operating expenses: Compensation18,505 19,799 20,050Newsprint and ink8,123 9,626 10,695Other operating expenses20,672 20,971 18,823Workforce adjustments(71) — (31)Net income10,663 11,594 9,506 Company's 50% share5,331 5,797 4,753Less amortization of intangible assets418 621 723Equity in earnings of TNI4,913 5,176 4,03060Summarized cash flows of TNI are as follows:(Thousands of Dollars)2014 2013 2012 52 Weeks 53 Weeks 52 Weeks Net income10,663 11,594 9,506Cash provided by (required for) operating activities(442) 1,351 (589)Cash required for financing activities(10,276) (12,851) (8,875)Net increase (decrease) in cash and cash equivalents(55) 94 42Cash and cash equivalents: Beginning of year231 137 95End of year176 231 137Star Publishing's 50% share of TNI depreciation and certain general and administrative expenses associated with its share of the operation andadministration of TNI are reported as operating expenses (benefit) in our Consolidated Statements of Operations and Comprehensive Income(Loss). These amounts totaled $(60,000), $(488,000),and $(522,000), in 2014, 2013 and 2012, respectively. Fees for editorial services provided toTNI by Star Publishing totaled $5,908,000, $6,041,000, and $5,994,000 in 2014, 2013 and 2012, respectively. At September 28, 2014, the carrying value of the Company's 50% investment in TNI is $18,146,000. The difference between our carrying valueand our 50% share of the members' equity of TNI relates principally to goodwill of $12,366,000 and other identified intangible assets of $5,390,000,certain of which are being amortized over their estimated useful lives through 2020. See Note 4. Annual amortization of intangible assets is estimated to be $418,000 in 2015, 2016, 2017, 2018 and 2019.Madison Newspapers, Inc. We have a 50% ownership interest in MNI, which publishes daily and Sunday newspapers, and other publications in Madison, Wisconsin, andother Wisconsin locations, and operates their related digital sites. Net income or loss of MNI (after income taxes) is allocated equally to us andThe Capital Times Company (“TCT”). MNI conducts its business under the trade name Capital Newspapers. 61Summarized financial information of MNI is as follows:(Thousands of Dollars)September 28 2014 September 29 2013 ASSETS Cash and cash equivalents12,245 12,552Accounts receivable, net5,794 6,295Other current assets2,656 2,584Current assets20,695 21,431Investments and other assets2,871 2,871Property and equipment, net6,758 7,231Goodwill and other intangible assets26,118 26,616Total assets56,442 58,149 LIABILITIES AND STOCKHOLDERS' EQUITY Accrued expenses and other current liabilities3,502 3,611Unearned revenue5,226 4,887Deferred income taxes8,425 7,630Total liabilities17,153 16,128Stockholders' equity39,289 42,021Total liabilities and stockholders' equity56,442 58,149Summarized results of MNI are as follows:(Thousands of Dollars)2014 2013 2012 52 Weeks 52 Weeks 53 WeeksOperating revenue: Advertising and marketing services44,357 46,373 51.019Subscription21,578 17,421 17,173Other1,543 1,674 1,966Total operating revenue67,478 65,468 70,158Operating expenses: Compensation21,750 23,282 25,486Newsprint and ink5,166 5,871 6,927Other operating expenses28,477 24,046 25,568Workforce adjustments244 308 546Depreciation and amortization1,626 1,530 1,689Total operating expenses57,263 55,037 60,216Operating income10,215 10,431 9,942Non-operating income, net408 415 312Income before income taxes10,623 10,846 10,254Income tax expense3,855 3,895 3,785Net income6,768 6,951 6,469 Equity in earnings of MNI3,384 3,509 3,201 62Summarized cash flows of MNI are as follows:(Thousands of Dollars)2014 2013 2012 52 Weeks 52 Weeks 53 Weeks Net income6,768 6,951 6,469Cash provided by operating activities9,448 8,643 10,641Cash required for investing activities(255) (155) (379)Cash required for financing activities(9,500) (11,500) (6,800)Net increase (decrease) in cash and cash equivalents(307) (3,012) 3,462Cash and cash equivalents: Beginning of year12,552 15,564 12,102End of year12,245 12,552 15,564Fees for editorial services provided to MNI by us are included in other revenue in the Consolidated Statements of Operations and ComprehensiveIncome (Loss) and totaled $7,050,000, $7,346,000 and $8,098,000, in 2014, 2013 and 2012, respectively.At September 28, 2014, the carrying value of the Company's 50% investment in MNI is $19,644,000. 4 GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the carrying amount of goodwill related to continuing operations are as follows:(Thousands of Dollars)2014 2013 Goodwill, gross amount1,532,458 1,532,458Accumulated impairment losses(1,288,729) (1,288,729)Goodwill, end of year243,729 243,729Identified intangible assets related to continuing operations consist of the following:(Thousands of Dollars)September 28 2014 September 29 2013 Non-amortized intangible assets: Mastheads25,102 27,038Amortizable intangible assets: Customer and newspaper subscriber lists686,732 686,732Less accumulated amortization499,178 471,589 187,554 215,143Non-compete and consulting agreements28,524 28,524Less accumulated amortization28,523 28,521 1 3 212,657 242,184 In 2014 and 2012, we performed a qualitative analysis to test our goodwill for impairment and concluded that the likelihood of an impairment wasless than 50%. In 2013, we performed additional quantitative analysis of the carrying value of our goodwill and concluded the implied fair value ofgoodwill was in excess of its carrying value. As a result no goodwill impairment was recorded.In 2014 and 2013, due to continuing revenue declines, we recorded non-cash charges to reduce the carrying value of non-amortized intangibleassets. In 2013 we determined that the cash flows from amortizable intangible assets were not sufficient to recover their carrying values. As aresult, we recorded non-cash charges to reduce the carrying values of such assets to fair value. We also recorded pretax, non-cash charges toreduce the carrying value of property and63equipment in 2014, 2013 and 2012. We recorded deferred income tax benefits related to these charges.A summary of impairment charges is included in the table below:(Thousands of Dollars)2014 2013 2012 Continuing operations: Non-amortized intangible assets1,936 1,567 —Amortizable intangible assets— 169,041 —Property and equipment1,044 486 1,388 2,980 171,094 1,388 Discontinued operations— — 3,606Annual amortization of intangible assets for the years ending September 2015 to September 2019 is estimated to be $27,185,000, $26,059,000,$25,030,000, $16,653,000, and $15,972,000, respectively.5 DEBTIn January 2012, in conjunction with the effectiveness of the Plan, we refinanced all of our debt. The Plan refinanced our then-existing creditagreement and extended the April 2012 maturity in a structure of first and second lien debt with the existing lenders. We also amended the PulitzerNotes, as discussed more fully below (and certain capitalized terms used below defined), and extended the April 2012 maturity with the existingNoteholders.In May 2013, we again refinanced the $94,000,000 remaining balance of the Pulitzer Notes (the “New Pulitzer Notes”).On March 31, 2014, we completed a comprehensive refinancing of our remaining debt, exclusive of the New Pulitzer Notes (the “2014Refinancing”), which includes the following:•$400,000,000 aggregate principal amount of 9.5% Senior Secured Notes (the “Notes”), pursuant to an Indenture dated as of March 31,2014 (the “Indenture”) among the Company, certain subsidiaries party thereto from time to time (the “Subsidiary Guarantors”), U.S. BankNational Association, as Trustee (the "Notes Trustee"), and Deutsche Bank Trust Company Americas, as Collateral Agent; •$250,000,000 first lien term loan (the "1st Lien Term Loan") and $40,000,000 revolving facility (the "Revolving Facility") under a FirstLien Credit Agreement dated as of March 31, 2014 (together, the “1st Lien Credit Facility”) among the Company, the lenders party theretofrom time to time (the “1st Lien Lenders”), and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent; and•$150,000,000 second lien term loan under a Second Lien Loan Agreement dated as of March 31, 2014 (the “ 2nd Lien Term Loan”) amongthe Company, the lenders party thereto from time to time (the “2nd Lien Lenders”), and Wilmington Trust, National Association, asAdministrative Agent and Collateral Agent.The Notes, 1st Lien Credit Facility and 2nd Lien Term Loan enabled us to repay in full, including accrued interest, and terminate, on March 31, 2014:(i) the remaining principal balance of $593,000,000 under our previous 1st lien agreement, and related subsidiary guaranty, security and pledgeagreements, intercompany subordination and intercreditor agreements; and (ii) the remaining principal balance of $175,000,000 under our previous2nd lien agreement, and related subsidiary guaranty, security and pledge agreements, intercompany subordination and intercreditor agreements. Wealso used the proceeds of the refinancing to pay fees and expenses totaling $30,931,000 related to the 2014 Refinancing.NotesThe Notes are senior secured obligations of the Company and mature on March 15, 2022. The Notes were sold pursuant to Rule 144A andRegulation S under the Securities Act of 1933, as amended.64InterestThe Notes require payment of interest semiannually on March 15 and September 15 of each year, at a fixed annual rate of 9.5%. Interest on theNotes accrues from March 31, 2014. RedemptionWe may redeem some, or all, of the principal amount of the Notes at any time on or after March 15, 2018 as follows:Period BeginningPercentage of Principal Amount March 15, 2018104.75March 15, 2019102.375March 15, 2020100We may also redeem up to 35% of the Notes prior to March 15, 2017 at 109.5% of the principal amount using the proceeds of certain future equityofferings.If we sell certain of our assets or experience specific types of changes of control, we must, subject to certain exceptions, offer to purchase theNotes. Any redemption of the Notes must also satisfy any accrued and unpaid interest thereon.SecurityThe Notes are unconditionally guaranteed on a senior secured basis by each of our material domestic subsidiaries in which the Company holds adirect or indirect interest of more than 50% and which guaranty indebtedness for borrowed money, including the 1st Lien Credit Facility. Materialdomestic subsidiaries of the Company that are currently excluded from such subsidiary guarantee obligations under the Notes are MNI, except asnoted below, our wholly-owned subsidiary, Pulitzer Inc. ("Pulitzer"), its subsidiaries (collectively, the “Pulitzer Subsidiaries”) and TNI.At such time as the New Pulitzer Notes, as discussed more fully below, are satisfied, including any successor debt (the “Pulitzer Debt SatisfactionDate”), the Notes will also be guaranteed, on a second-priority basis, by Pulitzer and each Pulitzer Subsidiary that guarantees the indebtednessunder the 2nd Lien Term Loan or other borrowings incurred by the Company or any subsidiary guarantor.The Notes and the subsidiary guarantees are secured, subject to certain exceptions, priorities and limitations in the various agreements, by a lienon all property and assets of the Company and each subsidiary guarantor, other than the capital stock of MNI and any property and assets of MNI,Pulitzer, each Pulitzer Subsidiary and TNI (the “Lee Legacy Collateral”), on a first-priority basis, equally and ratably with all of the Company’s andthe subsidiary guarantors’ existing and future obligations under the 1st Lien Credit Facility, pursuant to a Security Agreement dated as of March 31,2014 (the “Notes Security Agreement”) among the Company and the subsidiary guarantors (collectively, the “Notes Assignors”) and DeutscheBank Trust Company Americas. Certain of the Notes Assignors, separately, have granted first lien mortgages or deeds of trust, covering their material real estate andimprovements for the benefit of the holders of the Notes.Also, the Notes are secured, subject to certain exceptions, priorities and limitations in the various agreements, by first priority security interests inthe capital stock of, and other equity interests owned by the Notes Assignors pursuant to the Notes Security Agreement.Prior to the Pulitzer Debt Satisfaction Date, none of the property and assets of Pulitzer and the Pulitzer Subsidiaries (collectively, the “PulitzerCollateral”) will be pledged to secure the Notes or the subsidiary guarantees. The Pulitzer Collateral includes the 50% interest in TNI owned by StarPublishing, but excludes any tangible and intangible assets owned by Star Publishing that are used by TNI in the conduct of its business. After thePulitzer Debt Satisfaction Date, the Notes and the subsidiary guarantees will be secured, subject to permitted liens, by a lien on the PulitzerCollateral owned by each of the Pulitzer Subsidiaries that become subsidiary guarantors on a second-priority basis, equally and ratably with all ofthe Company’s and the subsidiary guarantors’ existing and future obligations under the 1st Lien Credit Facility and certain other indebtedness forborrowed money incurred by the Company or any subsidiary guarantor.65The rights of the Notes Trustee and the 1st Lien Lenders with respect to the Lee Legacy Collateral are subject to:•A Pari Passu Intercreditor Agreement dated as of March 31, 2014 (the “Pari Passu Intercreditor Agreement”) among the Company, theother Grantors party thereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association and Deutsche Bank Trust CompanyAmericas; and•A Junior Intercreditor Agreement dated as of March 31, 2014 (the “Junior Intercreditor Agreement”) among the Company, the otherGrantors party hereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association, Deutsche Bank Trust Company Americas andWilmington Trust, National Association.Covenants and Other MattersThe Indenture contains certain of the restrictive covenants in the 1st Lien Credit Facility, as discussed more fully below, and limitations on our useof the Pulitzer Subsidiaries’ cash flows. However, many of these covenants will cease to apply if the Notes are rated investment grade by eitherMoody’s Investors Service, Inc. or Standard & Poor’s Ratings Group and there is no default or event of default under the Indenture.1st Lien Credit FacilityThe 1st Lien Credit Facility consists of the $250,000,000 1st Lien Term Loan that matures in March 2019 and the $40,000,000 Revolving Facilitythat matures in December 2018. The 1st Lien Credit Facility documents the primary terms of the 1st Lien Term Loan and the Revolving Facility. TheRevolving Facility may be used for working capital and general corporate purposes (including letters of credit). At September 28, 2014, afterconsideration of letters of credit, we have approximately $27,605,000 available for future use under the Revolving Facility.InterestInterest on the 1st Lien Term Loan, which has a principal balance of $226,750,000 at September 28, 2014, accrues at either (at our option) LIBORplus 6.25% (with a LIBOR floor of 1.0%) or at a base rate equal to highest of (i) the prime rate at the time, (ii) the federal funds rate plus 0.5%, or(iii) one month LIBOR plus 1.0%, plus 5.25% (with a base rate floor of 2.0%), and is payable quarterly, beginning in June 2014.The 1st Lien Term Loan was funded with original issue discount of 2.0%, or $5,000,000, which will be amortized as interest expense over the life ofthe 1st Lien Term Loan.Interest on the Revolving Facility, which has a principal balance of $5,000,000 at September 28, 2014, accrues at either (at our option) LIBOR plus5.5%, or at a base rate equal to highest of (i) the prime rate at the time, (ii) the federal funds rate plus 0.5%, or (iii) one month LIBOR plus 1.0%,plus 4.5%.Principal PaymentsQuarterly principal payments of $6,250,000 are required under the 1st Lien Term Loan, with other payments made either voluntarily, based on 90%of excess cash flow, as defined, or proceeds from asset sales, as defined. We may voluntarily prepay principal amounts outstanding or reducecommitments under the 1st Lien Credit Facility at any time without premium or penalty, upon proper notice and subject to certain limitations as tominimum amounts of prepayments.2014 payments made under the 1st Lien Term Loan or previous 1st lien agreement, are summarized as follows: 13 Weeks Ended(Thousands of Dollars)December 29 2013March 30 2014June 29 2014September 28 2014 Mandatory3,0003,0006,2506,250Voluntary3,3505,50010,750—Asset sales1501,500——Excess cash flow———— 6,50010,00017,0006,250662013 payments made under the previous 1st lien agreement are summarized as follows: 13 Weeks Ended(Thousands of Dollars)December 30 2012March 31 2013June 30 2013September 29 2013 Mandatory2,5002,5003,0003,000Voluntary9,75015,3502,2606,000Asset sales7,750—240—Excess cash flow———— 20,00017,8505,5009,000SecurityThe 1st Lien Credit Facility is secured, subject to certain priorities and limitations in the various agreements, by perfected security interests insubstantially all the assets of the Company and guaranteed by the Subsidiary Guarantors (together with the Company, the “1st Lien Assignors”),pursuant to a First Lien Guarantee and Collateral Agreement dated as of March 31, 2014 (the “1st Lien Guarantee and Collateral Agreement”)among the Company, the Subsidiary Guarantors and JPMorgan Chase Bank, N.A. (the "1st Lien Collateral Agent"), on a first-priority basis, equallyand ratably with all of the Company’s and the Subsidiary Guarantors’ existing and future obligations under the Notes. The 1st Lien Assignors’pledged assets include, among other things, equipment, inventory, accounts receivables, depository accounts, intellectual property and certain oftheir other tangible and intangible assets (excluding the assets of Pulitzer, the Pulitzer Subsidiaries, and TNI and the capital stock or assets ofMNI).Under the 1st Lien Credit Facility, certain of the 1st Lien Assignors, separately, have granted first lien mortgages or deeds of trust, subject to allrelevant terms and conditions of the applicable intercreditor agreements, covering certain real estate and improvements, to the 1st Lien Lenders(excluding the real estate of Pulitzer, the Pulitzer Subsidiaries, TNI and MNI).The 1st Lien Credit Facility is also secured by a pledge of interests in all of the capital stock of and other equity interests owned by the 1st LienAssignors (excluding the capital stock and equity interests held by Pulitzer and the Pulitzer Subsidiaries, as well as the capital stock and equityinterest of MNI and TNI, respectively). The rights of the 1st Lien Collateral Agent with respect to the Lee Legacy Collateral are subject to:•The Pari Passu Intercreditor Agreement;•The Junior Intercreditor Agreement; and•An Intercompany Subordination Agreement dated as of March 31, 2014 (the “1st Lien Intercompany Subordination Agreement”) amongthe Company, Subsidiary Guarantors, Pulitzer, Pulitzer Subsidiaries and JPMorgan Chase Bank, N.A.Covenants and Other MattersThe 1st Lien Credit Facility requires that we comply with certain affirmative and negative covenants customary for financing of this nature, includingmaintenance of a maximum total leverage ratio, which is only applicable to the Revolving Facility. The 1st Lien Credit Facility restricts us from paying dividends on our Common Stock and generally restricts us from repurchasing Common Stock,unless in each case no default shall have occurred and we have satisfied certain financial measurements. Further, the 1st Lien Credit Facilityrestricts or limits, among other things, subject to certain exceptions, the ability of the Company and its subsidiaries to: (i) incur indebtedness,(ii) enter into mergers, acquisitions and asset sales, (iii) incur or create liens and (iv) enter into transactions with certain affiliates. The 1st LienCredit Facility contains various representations and warranties and may be terminated upon occurrence of certain events of default. The 1st LienCredit Facility also contains cross-default provisions tied to the terms of each of the Indenture, 2nd Lien Term Loan and New Pulitzer Notes.672nd Lien Term LoanThe 2nd Lien Term Loan, which has a balance of $150,000,000 at September 28, 2014, bears interest at a fixed annual rate of 12.0%, payablequarterly, and matures in December 2022.Principal PaymentsThere are no scheduled mandatory amortization payments required under the 2nd Lien Term Loan.Under the 2nd Lien Term Loan, excess cash flows of Pulitzer and the Pulitzer Subsidiaries, as defined and subject to certain other conditions, mustbe used, (i) first, to repay the outstanding amount of the New Pulitzer Notes and (ii) second, (a) at any time after the Pulitzer Debt SatisfactionDate but prior to March 31, 2017, to make an offer to the 2nd Lien Lenders (which offer the 2nd Lien Lenders may accept or reject), to pay amountsunder the 2nd Lien Term Loan at par and (b) at any time after the Pulitzer Debt Satisfaction Date and on or after March 31, 2017, to pay suchamounts under the 2nd Lien Term Loan at par.The definition of excess cash flows of Pulitzer includes a deduction for interest costs incurred under the 2nd Lien Term Loan after the Pulitzer DebtSatisfaction Date. In addition, other changes to settlement of certain intercompany costs between the Company and Pulitzer will also be effectedafter the Pulitzer Debt Satisfaction Date, with the net result being a reduction in the excess cash flows of Pulitzer from historical levels.After the Pulitzer Debt Satisfaction Date, subject to certain other conditions in the 2nd Lien Term Loan, the balance of the 2nd Lien Term Loan can,or will be, reduced at par from proceeds from asset sales by Pulitzer or the Pulitzer Subsidiaries.Voluntary payments under the 2nd Lien Term Loan are otherwise subject to call premiums as follows:Period BeginningPercentage of Principal Amount March 31, 2014112March 31, 2017106March 31, 2018103March 31, 2019100SecurityThe 2nd Lien Term Loan is fully and unconditionally guaranteed on a joint and several basis by the Company, Subsidiary Guarantors, Pulitzer andthe Pulitzer Subsidiaries (collectively, the “2nd Lien Assignors”), other than MNI and TNI, pursuant to a Second Lien Guarantee and CollateralAgreement dated as of March 31, 2014 (the “2nd Lien Guarantee and Collateral Agreement”) among the 2nd Lien Assignors and Wilmington Trust,National Association.Under the 2nd Lien Guarantee and Collateral Agreement, the 2nd Lien Assignors have granted (i) second priority security interests, subject to certainpriorities and limitations in the various agreements, on substantially all of their tangible and intangible assets, including the stock and other equityinterests owned by the 2nd Lien Assignors, and (ii) have granted second lien mortgages or deeds of trust covering certain real estate, as collateralfor the payment and performance of their obligations under the 2nd Lien Term Loan. Assets of, or used in the operations or business of, TNI and ourownership interest in, and assets of, MNI are excluded.Assets of Pulitzer and the Pulitzer Subsidiaries, excluding assets of or assets used in the operations or business of, TNI, will become subject to(i) a first priority security interest in favor of the 2nd Lien Lenders; and (ii) a second priority security interest in favor of the secured parties under the1st Lien Credit Facility, as applicable, upon the Pulitzer Debt Satisfaction Date. The 2nd Lien Guarantee and Collateral Agreement is subject to:•The Junior Intercreditor Agreement;68•An Intercreditor Agreement dated as of January 30, 2012 among The Bank of New York Mellon Trust Company, N.A., Wilmington Trust,National Association, Pulitzer and the Pulitzer Subsidiaries, as amended by the First Amendment to Intercreditor Agreement datedMay 1, 2013, and as further amended by the Second Amendment to Intercreditor Agreement dated as of March 31, 2014 (the “SecondAmendment to Pulitzer Intercreditor Agreement”); and•An Intercompany Subordination Agreement dated as of March 31, 2014 (the “Pulitzer Intercompany Subordination Agreement”) amongthe Company, the Subsidiary Guarantors, Pulitzer, Pulitzer Subsidiaries and Wilmington Trust, National Association.Covenants and Other MattersThe 2nd Lien Term Loan requires that we comply with certain affirmative and negative covenants customary for financing of this nature, includingthe negative covenants under the 1st Lien Credit Facility discussed above. The 2nd Lien Term Loan contains various representations and warrantiesand may be terminated upon occurrence of certain events of default. The 2nd Lien Term Loan also contains cross-default provisions tied to theterms of the Indenture, 1st Lien Credit Facility and the New Pulitzer Notes.In connection with the 2nd Lien Term Loan, we entered into a Warrant Agreement dated as of March 31, 2014 (the “Warrant Agreement”) betweenthe Company and Wells Fargo Bank, National Association. Under the Warrant Agreement, certain affiliates or designees of the 2nd Lien Lendersreceived on March 31, 2014 their pro rata share of warrants to purchase, in cash, an initial aggregate of 6,000,000 shares of Common Stock,subject to adjustment pursuant to anti-dilution provisions (the “Warrants”). The Warrants represent, when fully exercised, approximately 10.1% ofshares of Common Stock outstanding at March 30, 2014 on a fully diluted basis. The exercise price of the Warrants is $4.19 per share.The Warrant Agreement contains a cash settlement provision in the event of a change of control prior to March 31, 2018 as well as otherprovisions requiring the Warrants be measured at fair value and are included in other liabilities in our Consolidated Balance Sheets. We willremeasure the liability to fair value each reporting period, with changes reported in other non-operating income (expense). The initial fair value ofthe Warrants was $16,930,000. At September 28, 2014, the fair value of the Warrants is $10,807,800.In connection with the issuance of the Warrants, we entered into a Registration Rights Agreement dated as of March 31, 2014 (the “RegistrationRights Agreement”). The Registration Rights Agreement requires, among other matters, that we use our commercially reasonable efforts tomaintain the effectiveness for certain specified periods of a shelf registration statement related to the shares of Common Stock to be issued uponexercise of the Warrants.New Pulitzer NotesIn conjunction with its formation in 2000, St. Louis Post-Dispatch LLC ("PD LLC") borrowed $306,000,000 (the “Pulitzer Notes”) from a group ofinstitutional lenders (the “Noteholders”). The Pulitzer Notes were guaranteed by Pulitzer pursuant to a Guaranty Agreement with the Noteholders.The aggregate principal amount of the Pulitzer Notes was payable in April 2009.In February 2009, the Pulitzer Notes and the Guaranty Agreement were amended (the “Notes Amendment”). Under the Notes Amendment, PD LLCrepaid $120,000,000 of the principal amount of the debt obligation. The remaining debt balance of $186,000,000 was refinanced by the Noteholdersuntil April 2012.In January 2012, in connection with the Plan, we entered into an amended Note Agreement and Guaranty Agreement, which amended the PulitzerNotes and extended the maturity with the Noteholders. After consideration of unscheduled principal payments totaling $15,145,000 ($10,145,000 inDecember 2011 and $5,000,000 in January 2012), offset by $3,500,000 of non-cash fees paid to the Noteholders in the form of additional PulitzerNotes debt, the amended Pulitzer Notes had a balance of $126,355,000 in January 2012.In May 2013, we refinanced the $94,000,000 remaining balance of the Pulitzer Notes (the “New Pulitzer Notes”) with BH Finance LLC ("Berkshire")a subsidiary of Berkshire Hathaway Inc.The New Pulitzer Notes bear interest at a fixed rate of 9.0%, payable quarterly. Pulitzer is a co-borrower under the New Pulitzer Notes, whicheliminated the former Guaranty Agreement made by Pulitzer under the Pulitzer Notes.69Principal PaymentsAt September 28, 2014, the balance of the New Pulitzer Notes is $23,000,000. We may voluntarily prepay principal amounts outstanding under theNew Pulitzer Notes at any time, in whole or in part, without premium or penalty (except as noted below), upon proper notice, and subject to certainlimitations as to minimum amounts of prepayments. The New Pulitzer Notes provide for mandatory scheduled prepayments totaling $6,400,000annually, beginning in 2014.In addition to the scheduled payments, we are required to make mandatory prepayments under the New Pulitzer Notes under certain otherconditions, such as from the net proceeds from asset sales. The New Pulitzer Notes also require us to accelerate future payments in the amountof our quarterly excess cash flow, as defined. The acceleration of such payments due to future asset sales or excess cash flow does not changethe due dates of other New Pulitzer Notes payments prior to the final maturity in April 2017.The New Pulitzer Notes are subject to a 5% redemption premium if 100% of the remaining balance of the New Pulitzer Notes is again refinancedby lenders, the majority of which are not holders of the New Pulitzer Notes at the time of such refinancing. This redemption premium is nototherwise applicable to any of the types of payments noted above.2014 payments made under the New Pulitzer Notes are summarized below. 13 Weeks Ended(Thousands of Dollars)December 29 2013March 30 2014June 29 2014September 28 2014 Mandatory6,400———Voluntary1,60010,00013,0009,000Asset sales————Excess cash flow———— 8,00010,00013,0009,0002013 payments made under the New Pulitzer Notes or Pulitzer Notes are summarized as follows: 13 Weeks Ended(Thousands of Dollars)December 30 2012March 31 2013June 30 2013September 29 2013 Mandatory3,8002,600——Voluntary—1,50014,00017,000Asset sales5,2001,900——Excess cash flow———— 9,0006,00014,00017,000SecurityObligations under the New Pulitzer Notes are fully and unconditionally guaranteed on a joint and several basis by Pulitzer's existing and futuresubsidiaries other than PD LLC and TNI. The New Pulitzer Notes are also secured by first priority security interests in the stock and other equityinterests owned by Pulitzer's subsidiaries including the 50% ownership interest in TNI. Also, Pulitzer, certain of its subsidiaries and PD LLCgranted a first priority security interest on substantially all of its tangible and intangible assets, excluding the assets of Star Publishing leased to,or used in the operations or business of, TNI and granted deeds of trust covering certain real estate in the St. Louis area, as collateral for thepayment and performance of their obligations under the New Pulitzer Notes.Covenants and Other MattersThe New Pulitzer Notes contain certain covenants and conditions including the maintenance, by Pulitzer, of minimum trailing 12 month EBITDA(minimum of $24,500,000 beginning September 28, 2014), as defined in the New Pulitzer Notes agreement, and limitations on capital expendituresand the incurrence of other debt. Our actual trailing 12 month EBITDA at September 28, 2014 is $42,884,000.70Further, the New Pulitzer Notes have limitations or restrictions on distributions, loans, advances, investments, acquisitions, dispositions andmergers. Such covenants require that substantially all future cash flows of Pulitzer are required to be directed first toward repayment of the NewPulitzer Notes, interest due under the 2nd Lien Agreement, or accumulation of cash collateral, and that cash flows of Pulitzer are largely segregatedfrom those of the Credit Parties.OtherCash payments to the Lenders, Noteholders and legal and professional fees related to the Plan totaled $38,628,000, of which $6,273,000 was paidin 2011, and the remainder of which was paid in 2012. In addition, previously capitalized financing costs of $4,514,000 at September 25, 2011 werecharged to expense in 2012 as debt financing costs prior to consummation of the Plan, with the remainder classified as reorganization costs in theConsolidated Statements of Operations and Comprehensive Income (Loss) upon consummation of the Plan. Debt under the Plan was considered compromised. As a result, the previous 1st lien agreement, previous 2nd lien agreement and Pulitzer Noteswere recorded at their respective present values, which resulted in a discount to the stated principal amount totaling $23,709,000. We used theeffective rates of the respective debt agreements to discount the debt to its present value. In determining the effective rates, we considered allcash outflows of the respective debt agreements including: mandatory principal payments, interest payments, fees paid to lenders in connectionwith the refinancing as well as, in the case of the previous 2nd lien agreement, Common Stock issued. The present value was being amortized as anon-cash component of interest expense over the terms of the related debt.As a result of the Plan, we recognized $37,765,000 of reorganization costs in the 2012 Consolidated Statements of Operations andComprehensive Income (Loss). The components of reorganization costs are summarized as follows:(Thousands of Dollars) Unamortized loan fees from previous credit agreements 1,740Fees paid in cash to lenders, attorneys and others 38,628Non-cash fees paid in the form of additional debt 12,250Fair value of stock granted to 2nd Lien Lenders 9,576Present value adjustment (23,709) 38,485Charged to expense in 2012 37,765Charged to expense in 2011 as other non-operating expense 720The refinancing of the Pulitzer Notes with the New Pulitzer Notes resulted in the acceleration of $1,565,000 of the present value adjustmentdiscussed above, which was partially offset by eliminating deferred interest expense of $1,189,000, and the net amount of which was recognized inthe 13 weeks ended June 30, 2013. Expenses related to the issuance of the New Pulitzer Notes are capitalized as debt issuance costs and will beamortized until the Pulitzer Debt Satisfaction Date.71We incurred $30,931,000 of fees and expenses related to the 2014 Refinancing, including a $1,750,000 premium (1% of the principal amount)related to the redemption of the previous 2nd lien agreement and $5,000,000 original issue discount on the 1st Lien Term Loan. In addition, at thedate of the 2014 Refinancing we had $10,549,000 of unamortized present value adjustments related to the previous 1st lien agreement and previous2nd lien agreement. We also recognized original issue discount of $16,930,000 on the 2nd Lien Term Loan related to the Warrants. Certain of theunamortized present value adjustments, the new fees and expenses and a portion of the value of the Warrants were charged to expense uponcompletion of the 2014 Refinancing while the remainder of such costs have been capitalized and are being amortized over the lives of therespective debt agreements. Debt financing costs are summarized as follows:(Thousands of Dollars) Prepayment premium - previous 2nd lien agreement 1,750Unamortized loan fees from previous credit agreements 10,549Fees paid in cash to arrangers, lenders, attorneys and others 24,181Original issue discount - 1st Lien Term Loan 5,000Fair value of Warrants granted to 2nd Lien Lenders 16,930 58,410 Charged to expense as a result of debt extinguishment 20,591Capitalized debt financing costs 37,819Amortization of debt financing costs totaled $2,145,000 in 2014. Amortization of such costs is estimated to total $4,218,000 in 2015, $4,426,000 in2016, $4,455,000 in 2017, $4,537,000 in 2018 and $4,210,000 in 2019. At September 28, 2014 we have $36,486,000 of unamortized debt financingcosts included in other assets in our Consolidated Balance Sheets.Debt is summarized as follows: Interest Rates (%)(Thousands of Dollars)September 28 2014September 29 2013September 28 2014 Revolving Facility5,000—5.651st Lien Term Loan226,750—7.25Notes400,000—9.502nd Lien Term Loan150,000—12.00New Pulitzer Notes23,00063,0009.00Previous credit agreements—784,500 Unamortized present value adjustment—(12,942) 804,750834,558 Less current maturities of long-term debt31,40019,150 Current amount of present value adjustment—(4,779) Total long-term debt773,350820,187 At September 28, 2014, our weighted average cost of debt, excluding amortization of debt financing costs, is 9.3%.Aggregate maturities of debt total $31,400,000 in 2015, $31,400,000 in 2016, $35,200,000 in 2017, $25,000,000 in 2018, $131,750,000 in 2019 and$550,000,000 thereafter.Liquidity At September 28, 2014, after consideration of letters of credit, we have approximately $27,605,000 available for future use under our RevolvingFacility. Including cash, our liquidity at September 28, 2014 totals $44,750,000. This liquidity amount excludes any future cash flows. We expectall interest and principal payments due in the next twelve months will be satisfied by our cash flows, which will allow us to maintain an adequatelevel of liquidity. The Warrants, if and when exercised, would provide additional liquidity in an amount up to $25,140,000.72The 2014 Refinancing significantly enhances our debt maturity profile. Final maturities of our debt have been extended to dates extending fromApril 2017 through December 2022. As a result, refinancing risk has been substantially reduced for the next several years.There are numerous potential consequences under the Notes, 1st Lien Credit Facility, 2nd Lien Term Loan, and the New Pulitzer Notes, if an eventof default, as defined, occurs and is not remedied. Many of those consequences are beyond our control. The occurrence of one or more events ofdefault would give rise to the right of the applicable lender(s) to exercise their remedies under the Notes, 1st Lien Credit Facility, 2nd Lien TermLoan, and the New Pulitzer Notes, respectively, including, without limitation, the right to accelerate all outstanding debt and take actionsauthorized 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 refinance or amend ourdebt agreements as they become due, or earlier if available liquidity is consumed. The Notes, 1st Lien Credit Facility and 2nd Lien Term Loanhave only limited affirmative covenants with which we are required to maintain compliance. We are in compliance with our debt covenants atSeptember 28, 2014.6 PENSION PLANS We have several non-contributory defined benefit pension plans that together cover selected employees. Benefits under the plans were generallybased on salary and years of service. Effective in 2012, substantially all benefits are frozen and no additional benefits are being accrued. Ourliability and related expense for benefits under the plans are recorded over the service period of active employees based upon annual actuarialcalculations. Plan funding strategies are influenced by government regulations. Plan assets consist primarily of domestic and foreign corporateequity securities, government and corporate bonds, hedge fund investments and cash. The net periodic cost (benefit) components of our pension plans are as follows:(Thousands of Dollars)2014 2013 2012 Service cost for benefits earned during the year156 216 30Interest cost on projected benefit obligation7,996 7,529 7,975Expected return on plan assets(9,932) (9,838) (8,891)Amortization of net loss423 2,287 2,370Amortization of prior service benefit(136) (136) (136)Net periodic pension cost (benefit)(1,493) 58 1,348 Net periodic pension benefit of $56,000 is allocated to TNI in 2014, 2013 and 2012. Changes in benefit obligations and plan assets are as follows:(Thousands of Dollars)2014 2013 Benefit obligation, beginning of year175,771 201,219Service cost156 216Interest cost7,996 7,529Actuarial loss (gain)26,526 (22,155)Benefits paid(11,252) (11,038)Benefit obligation, end of year199,197 175,771Fair value of plan assets, beginning of year:147,265 134,900Actual return on plan assets15,074 19,364Benefits paid(11,252) (11,038)Administrative expenses paid(1,509) (1,977)Employer contributions1,435 6,016Fair value of plan assets, end of year151,013 147,265Funded status - benefit obligation in excess of plan assets48,184 28,50673Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:(Thousands of Dollars)September 28 2014 September 29 2013 Pension obligations48,184 28,506Accumulated other comprehensive loss (before income taxes)(41,695) (19,091) Amounts recognized in accumulated other comprehensive income (loss) are as follows:(Thousands of Dollars)September 28 2014 September 29 2013 Unrecognized net actuarial loss(42,348) (19,880)Unrecognized prior service benefit653 789 (41,695) (19,091) We expect to recognize $1,765,000 and $137,000 of unrecognized net actuarial loss and unrecognized prior service benefit, respectively, in netperiodic pension cost in 2015. The accumulated benefit obligation for the plans total $199,197,000 at September 28, 2014 and $175,771,000 at September 29, 2013. Theprojected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligationsin excess of plan assets are $199,197,000, $199,197,000 and $151,013,000, respectively, at September 28, 2014.Assumptions Weighted-average assumptions used to determine benefit obligations are as follows:(Percent)September 28 2014 September 29 2013 Discount rate4.2 4.7Weighted-average assumptions used to determine net periodic benefit cost are as follows:(Percent)2014 2013 2012 Discount rate4.7 3.85 4.4Expected long-term return on plan assets7.0 7.5 7.9 For 2015, the expected long-term return on plan assets is 6.75%. The assumptions related to the expected long-term return on plan assets aredeveloped through an analysis of historical market returns, current market conditions and composition of plan assets.In October 2014, the Society of Actuaries released new mortality tables. The new tables generally result in increases in life expectancy. We usedthe new mortality tables to value our pension and postretirement liabilities at September 28, 2014, which increased such liabilities, in total, byapproximately $18,515,000, with a corresponding decrease in accumulated other comprehensive income in our Consolidated Balance Sheet as ofthat date. Plan Assets The primary objective of our investment strategy is to satisfy our pension obligations at a reasonable cost. Assets are actively invested to balancereal 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 criteriafor selecting and evaluating investment managers. The use of derivatives is strictly prohibited, except on a case-by-case basis where the managerhas a proven capability, and only to hedge quantifiable risks such74as exposure to foreign currencies. An investment committee, consisting of certain of our executives and supported by independent consultants, isresponsible for monitoring compliance with the investment policy. Assets are periodically redistributed to maintain the appropriate policy allocation.The weighted-average asset allocation of our pension assets is as follows:(Percent)Policy AllocationActual AllocationAsset ClassSeptember 28 2014September 28 2014September 29 2013 Equity securities504860Debt securities352030TIPS544Hedge fund investments10104Cash and cash equivalents—182 Plan assets include no Company securities. Assets include cash and cash equivalents and receivables from time to time due to the need toreallocate assets within policy guidelines. At September 28, 2014 and September 29, 2013, certain plan assets were in process of reallocation. InOctober 2014 and 2013, plan assets were within the policy allocation. In 2013, the policy allocation was amended to allow hedge fund investments. Fair Value Measurements The fair value hierarchy of pension assets at September 28, 2014 is as follows:(Thousands of Dollars)Level 1Level 2Level 3 Cash and cash equivalents27,213——Domestic equity securities58,754——International equity securities7,0077,562—TIPS6,498——Debt securities11,69017,769—Hedge fund investments—8,0308,351 In 2014, in connection with the allocation to hedge funds and debt securities, certain of our plan assets were classified as Level 3. Following is arollfoward of Level 3 plan assets in 2014:(Thousands of Dollars)Level 3 Balance, beginning of year—Purchases, issuances, sales, settlements7,300Unrealized gains1,051Balance, end of year8,351There were no purchases, sales or transfers of assets classified as Level 3 in 2013 or 2012.Cash Flows Based on our forecast at September 28, 2014, we expect to make contributions totaling $3,800,000 to our pension trust in 2015.75We anticipate future benefit payments to be paid from the pension trust as follows:(Thousands of Dollars) 201511,581201611,380201711,436201811,451201911,4662020-202456,934 Other Plans We are obligated under an unfunded plan to provide fixed retirement payments to certain former employees. The plan is frozen and no additionalbenefits are being accrued. The accrued liability under the plan is $2,264,000 and $2,354,000 at September 28, 2014 and September 29, 2013,respectively, of which $279,000 is included in compensation and other accrued liabilities in the Consolidated Balance Sheet at September 28,2014.7 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 ofparticipant contributions vary depending on the specific plan. In addition, PD LLC provides postemployment disability benefits to certain employeegroups prior to retirement. Our liability and related expense for benefits under the postretirement plans are recorded over the service period ofactive employees based upon annual actuarial calculations. We accrue postemployment disability benefits when it becomes probable that suchbenefits will be paid and when sufficient information exists to make reasonable estimates of the amounts to be paid. Plan assets may also beused to fund medical costs of certain active employees.The net periodic postretirement benefit cost (benefit) components for our postretirement plans are as follows:(Thousands of Dollars)2014 2013 2012 Service cost for benefits earned during the year596 728 728Interest cost on projected benefit obligation911 1,125 1,109Expected return on plan assets(1,483) (1,474) (2,129)Amortization of net actuarial gain(1,819) (1,324) (2,451)Amortization of prior service benefit(1,459) (1,459) (1,459)Net periodic postretirement benefit(3,254) (2,404) (4,202) 76Changes in benefit obligations and plan assets are as follows:(Thousands of Dollars)2014 2013 Benefit obligation, beginning of year23,432 30,728Service cost596 728Interest cost911 1,125Actuarial loss (gain)2,298 (7,338)Benefits paid, net of premiums received(1,905) (2,102)Medicare Part D subsidies174 291Benefit obligation, end of year25,506 23,432Fair value of plan assets, beginning of year33,920 34,263Actual return on plan assets1,167 1,495Employer contributions597 679Benefits paid, net of premiums and Medicare Part D subsidies received(1,731) (1,811)Benefits paid for active employees(1,072) (706)Fair value of plan assets at measurement date32,881 33,920Funded status - benefit obligation less than plan assets(7,375) (10,488) The accumulated benefit obligation for plans with benefit obligations in excess of plan assets was $6,761,000 at September 28, 2014. These plansare unfunded.Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:(Thousands of Dollars)September 28 2014 September 29 2013 Non-current assets14,136 14,956Postretirement benefit obligations6,761 4,468Accumulated other comprehensive income (before income tax benefit)27,250 34,214 Amounts recognized in accumulated other comprehensive income are as follows:(Thousands of Dollars)September 28 2014 September 29 2013 Unrecognized net actuarial gain16,394 21,899Unrecognized prior service benefit10,856 12,315 27,250 34,214 We expect to recognize $1,443,000 and $1,459,000 of unrecognized net actuarial gain and unrecognized prior service benefit, respectively, in netperiodic postretirement benefit in 2015.Assumptions Weighted-average assumptions used to determine benefit obligations are as follows:(Percent)September 28 2014 September 29 2013 Discount rate3.7 4.0Expected long-term return on plan assets4.5 4.5The assumptions related to the expected long-term return on plan assets are developed through an analysis of historical market returns, currentmarket conditions and composition of plan assets.77Weighted-average assumptions used to determine net periodic benefit cost are as follows:(Percent)2014 2013 2012 Discount rate4.0 3.85 4.4Expected long-term return on plan assets4.5 4.5 5.75 Assumed health care cost trend rates are as follows:(Percent)September 28 2014 September 29 2013 Health care cost trend rates7.5 7.5Rate to which the cost trend rate is assumed to decline (the “Ultimate Trend Rate”)5.0 5.0Year in which the rate reaches the Ultimate Trend Rate2018 2018 Administrative costs related to indemnity plans are assumed to increase at the health care cost trend rates noted above. Assumed health care cost trend rates have a significant effect on the amounts reported for the postretirement plans. A one percentage pointchange in assumed health care cost trend rates would have the following annualized effects on reported amounts for 2014: One Percentage Point (Thousands of Dollars)Increase Decrease Effect on net periodic postretirement benefit36 (32)Effect on postretirement benefit obligation742 (673) Plan Assets The primary objective of our investment strategy is to satisfy our postretirement obligations at a reasonable cost. Assets are actively invested tobalance 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 criteriafor selecting and evaluating investment managers. The use of derivatives is strictly prohibited, except on a case-by-case basis where the managerhas a proven capability, and only to hedge quantifiable risks such as exposure to foreign currencies. An investment committee, consisting ofcertain of our executives and supported by independent consultants, is responsible for monitoring compliance with the investment policy. Assetsare periodically redistributed to maintain the appropriate policy allocation.The weighted-average asset allocation of our postretirement assets is as follows:(Percent)Policy AllocationActual AllocationAsset ClassSeptember 28 2014September 28 2014September 29 2013 Equity securities202222Debt securities807475Cash and cash equivalents—44 Plan assets include no Company securities. Assets include cash and cash equivalents and receivables from time to time due to the need toreallocate assets within policy guidelines.78Fair Value Measurements The fair value hierarchy of postretirement assets at September 28, 2014 is as follows:(Thousands of Dollars)Level 1Level 2Level 3 Cash and cash equivalents1,294——Domestic equity securities4,1121,676—International equity securities719879—Debt securities—24,200— There were no purchases, sales or transfers of assets classified as Level 3 in 2014, 2013 or 2012. Cash Flows Based on our forecast at September 28, 2014, we do not expect to contribute to our postretirement plans in 2015.The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Modernization Act”) introduced a prescription drug benefit underMedicare (“Medicare Part D”) and a federal subsidy to sponsors of retiree health care benefit plans (“Subsidy”) that provide a benefit at leastactuarially equivalent (as that term is defined in the Modernization Act) to Medicare Part D. We concluded we qualify for the Subsidy under theModernization Act since the prescription drug benefits provided under our postretirement health care plans generally require lower premiums fromcovered retirees and have lower deductibles than the benefits provided in Medicare Part D and, accordingly, are actuarially equivalent to or betterthan, the benefits provided under the Modernization Act. 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)GrossPayments LessMedicarePart DSubsidy NetPayments 20153,070 (220) 2,85020162,130 (220) 1,91020172,090 (210) 1,88020182,010 (200) 1,81020192,000 (210) 1,7902020-20249,010 (860) 8,150 LitigationSeveral plan changes implemented prior to 2012 were the subject of litigation, or arbitration claims, under the terms of the respective collectivebargaining agreements. In 2012, we settled all such claims with payments to plan participants totaling $2,802,000. These payments are classifiedas other, net in the Consolidated Statements of Operations and Comprehensive Income (Loss). Postemployment Plan Our postemployment benefit obligation, representing certain disability benefits, is $3,597,000 at September 28, 2014 and $2,785,000 atSeptember 29, 2013. 8 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 foremployees whose incomes exceed qualified plan limits.79Retirement and compensation plan costs, including interest on deferred compensation costs, charged to continuing operations are $3,883,000 in2014, $3,729,000 in 2013 and $3,533,000 in 2012.Multiemployer Pension PlansWe contribute to three multiemployer defined benefit pension plans under the terms of collective-bargaining agreements ("CBAs") that covercertain of our union-represented employees. The risks of participating in these multiemployer plans are different from our company-sponsoredplans in the following aspects:•We play no part in the management of 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 participatingemployers;•If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remainingparticipating employers; and•If we choose to stop participating in one or more multiemployer plans, we may be required to pay those plans an amount based on theunfunded status of the plan, referred to as "withdrawal liability".Information related to these plans is outlined in the table below:(Thousands of Dollars)Zone StatusSeptember 30FundingImprovementPlan/RehabilitationPlan StatusContributions Pension Plan20142013Status201420132012SurchargeImposedExpirationDates of CBAs GCIU- Employer Retirement Fund91-6024903/001RedRedImplemented257238234No10/31/2015 7/1/2017CWA/ITU Negotiated Pension Plan13-6212879/001RedRedImplemented113121132No5/13/2014 12/31/2014 4/1/2015 8/31/2015District No. 9, International Association ofMachinists and Aerospace Workers PensionTrust43-0736847/001GreenGreenN/A374039N/A2/28/2015 Multiemployer plans in red zone status are generally less well funded than plans in green zone status.809 COMMON STOCK, CLASS B COMMON STOCK AND PREFERRED SHARE PURCHASE RIGHTS Common StockUnder the Plan, the par value of our Common Stock was changed from $2.00 per share to $0.01 per share effective January 30, 2012. Holders ofour previous 2nd lien agreement shared in the issuance of 6,743,640 shares of our Common Stock, an amount equal to 13% of outstanding shareson a pro forma basis as of January 30, 2012.In connection with the 2nd Lien Term Loan, we entered into the Warrant Agreement. Under the Warrant Agreement, certain affiliates or designeesof the 2nd Lien Lenders received on March 31, 2014 their pro rata share of Warrants to purchase, in cash, 6,000,000 shares of Common Stock,subject to adjustment pursuant to anti-dilution provisions. The Warrants represent, when fully exercised, approximately 10.1% of shares ofCommon Stock outstanding at March 30, 2014 on a fully diluted basis. The exercise price of the Warrants is $4.19 per share.The Warrant Agreement contains a cash settlement provision in the event of a change of control prior to March 31, 2018, as well as otherprovisions requiring the Warrants be measured at fair value and classified as other liabilities in our Consolidated Balance Sheets. We remeasurethe liability to fair value each reporting period, with changes reported in other non-operating income (expense). The initial fair value of the Warrantswas $16,930,000. At September 28, 2014, the fair value of the Warrants is $10,807,800.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 shelfregistration statement covering the shares of Common Stock upon exercise of the Warrants.Under the New York Stock Exchange ("NYSE") listing standards, if our Common Stock fails to maintain an adequate per share price and totalmarket capitalization of less than $50,000,000, our Common Stock could be removed from the NYSE and traded in the over-the-counter market. InJuly 2011, the NYSE notified us that our Common Stock did not meet the NYSE continued listing standards due to the failure to maintain anadequate share price. Under the NYSE rules, our Common Stock was allowed to continue to be listed during a cure period. In February 2012, theNYSE notified us that we were again in compliance with the minimum closing price standard. In January 2013, the NYSE notified us that we hadreturned to full compliance with all continued listing standards.Class B Common StockIn 1986, one share of Class B Common Stock was issued as a dividend for each share of Common Stock held by stockholders of record at thetime. The transfer of Class B Common Stock was restricted. As originally anticipated, the number of outstanding Class B shares decreased overtime through trading and reached the sunset level of 5,600,000 shares in March 2011. In March 2011, in accordance with the sunset provisionsestablished in 1986, we effected conversion of all outstanding shares of Class B Common Stock to Common Stock. As a result, all stockholdershave one vote per share on all future matters. Class B shares formerly had ten votes per share. Preferred Share Purchase RightsIn 1998, the Board of Directors adopted a Shareholder Rights Plan (the “Rights Plan”). Under the Rights Plan, the Board of Directors declared adividend of one Preferred Share Purchase Right (“Right”) for each outstanding share of our Common Stock and Class B Common Stock(collectively “Common Shares”). Rights are attached to, and automatically trade with, our Common Shares. In 2008, the Board of Directorsapproved an amendment to the Rights Plan. The amendment increased the beneficial ownership threshold to 25% from 20% for stockholderspurchasing Common Stock for passive investment only and decreased the threshold to 15% for all other investors. In addition, the amendmentextended the expiration of the Rights Plan to May 31, 2018 from May 31, 2008. Rights become exercisable only in the event that any person or group of affiliated persons other than a passive investor becomes a holder of 15%or more of our outstanding Common Shares, or commences a tender or exchange offer which, if consummated, would result in that person orgroup of affiliated persons owning at least 15% of our outstanding Common Shares. Once the Rights become exercisable, they entitle all otherstockholders to purchase, by payment of a $150 exercise price, one one-thousandth of a share of Series A Participating Preferred Stock, subjectto adjustment, with a value of twice the exercise price. In addition, at any time after a 15% position is acquired and prior to the acquisition of a50% position, the Board of Directors may require, in whole or in part, each outstanding Right (other81than Rights held by the acquiring person or group of affiliated persons) to be exchanged for one share of Common Stock or one one-thousandth ofa share of Series A Preferred Stock. The Rights may be redeemed at a price of $0.001 per Right at any time prior to their expiration.10 STOCK OWNERSHIP PLANS Total non-cash stock compensation expense is $1,481,000, $1,261,000 and 1,080,000, in 2014, 2013 and 2012, respectively.At September 28, 2014, we have reserved 3,344,109 shares of Common Stock for issuance to employees under an incentive and nonstatutorystock option and restricted stock plan approved by stockholders. At September 28, 2014, 1,011,254 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)2014 2013 2012 Under option, beginning of year2,769 3,102 1,812Granted15 51 1,520Exercised(342) (62) —Canceled(109) (322) (230)Under option, end of year2,333 2,769 3,102 Exercisable, end of year1,786 1,791 1,298Weighted average prices of stock options are as follows:(Dollars)2014 2013 2012 Granted2.99 1.20 1.16Exercised2.01 1.65 —Cancelled10.98 5.18 —Under option, end of year2.70 2.94 3.18 The following assumptions were used to estimate the fair value of 2014, 2013 and 2012 option awards: 2014 2013 2012 Volatility (Percent)91 121 122Risk-free interest rate (Percent)1.24 0.68 0.76Expected term (Years)4.5 4.7 4.7Estimated fair value (Dollars)2.02 0.98 0.95 82A summary of stock options outstanding at September 28, 2014 is as follows:(Dollars)Options Outstanding Options Exercisable Range ofExercisePricesNumberOutstanding(Thousands)Weighted AverageRemaining ContractualLife (Years) WeightedAverageExercise Price NumberExercisable (Thousands) WeightedAverageExercise Price 1 - 5 2,2646.8 1.75 1,717 1.9125 - 50691.6 33.99 69 33.99 2,3336.6 2.70 1,786 3.15 Total unrecognized compensation expense for unvested stock options at September 28, 2014 is $324,000, which will be recognized over aweighted average period of 0.7 years.The aggregate intrinsic value of stock options outstanding at September 28, 2014 is $3,697,000.Restricted Common Stock A summary of restricted Common Stock activity follows:(Thousands of Shares)2014 2013 2012 Outstanding, beginning of year500 500 —Granted817 — 500Forfeited(26) — —Outstanding, end of year1,291 500 500 Weighted average grant date fair values of restricted Common Stock are as follows:(Dollars)2014 2013 2012 Outstanding, beginning of year1.31 1.31 —Granted3.61 — 1.31Forfeited3.61 — —Outstanding, end of year2.72 1.31 1.31 Total unrecognized compensation expense for unvested restricted Common Stock at September 28, 2014 is $2,249,000, which will be recognizedover a weighted average period of 1.7 years.In December 2014, we issued 727,000 shares of restricted Common Stock to employees. The grant date fair value was $3.65 per share. Allrestrictions lapse in December 2017.Stock Purchase Plans We have 270,000 shares of Common Stock available for issuance pursuant to our Employee Stock Purchase Plan. We also have 8,700 shares ofCommon Stock available for issuance under our Supplemental Employee Stock Purchase Plan. There has been no activity under these plans in2014, 2013 or 2012.8311 INCOME TAXES Income tax expense (benefit) consists of the following:(Thousands of Dollars)2014 2013 2012 Current: Federal451 (7,915) (8,244)State(571) (693) (2,210)Deferred6,410 (54,806) (466) 6,290 (63,414) (10,920) Continuing operations6,290 (62,745) (9,161)Discontinued operations— (669) (1,759) 6,290 (63,414) (10,920) Income tax expense (benefit) related to continuing operations differs from the amounts computed by applying the U.S. federal income tax rate toincome (loss) before income taxes. The reasons for these differences are as follows:(Percent of Income (Loss) Before Income Taxes)2014 2013 2012 Computed “expected” income tax expense (benefit)35.0 (35.0) (35.0)State income tax expense (benefit), net of federal tax impact11.0 (2.6) (1.9)Net income of associated companies taxed at dividend rates(9.3) (0.8) (6.4)Domestic production deduction— 0.4 2.1Resolution of tax matters3.6 0.1 (3.9)Non-deductible expenses7.9 0.4 2.6Valuation allowance(4.5) (2.1) 1.8Warrant valuation(15.1) — —Non-deductible costs of Chapter 11 Proceedings— — 9.5CODI tax attribute reduction18.3 (4.8) (5.7)Other(1.8) (0.7) (3.7) 45.1 (45.1) (40.6)84Net deferred income tax liabilities consist of the following components:(Thousands of Dollars)September 28 2014 September 29 2013 Deferred income tax liabilities: Property and equipment(40,549) (46,242)Identified intangible assets(54,819) (53,461)Long-term debt(13,440) — (108,808) (99,703)Deferred income tax assets: Investments20,765 21,558Long-term debt— 45,945Accrued compensation5,182 5,056Allowance for doubtful accounts and losses on loans1,258 1,224Pension and postretirement benefits5,210 2,106Net operating loss carryforwards87,867 28,660Accrued expenses809 1,903Other618 468 121,709 106,920Valuation allowance(26,439) (26,424)Net deferred income tax liabilities(13,538) (19,207) Net deferred income tax liabilities are classified as follows:(Thousands of Dollars)September 28 2014 September 29 2013 Current assets1,228 2,017Non-current liabilities(14,766) (21,224)Net deferred income tax liabilities(13,538) (19,207) A reconciliation of 2014 and 2013 changes in gross unrecognized tax benefits is as follows:(Thousands of Dollars)2014 2013 Balance, beginning of year12,671 11,980Decreases in tax positions for prior years(1,592) (159)Increases in tax positions for the current year3,580 1,948Lapse in statute of limitations(1,139) (1,098)Balance, end of year13,520 12,671 Approximately $9,045,000 and $8,275,000 of the gross unrecognized tax benefit balances for 2014 and 2013, respectively, relate to state netoperating loss ("NOL") carryforwards which are netted against deferred taxes on our Consolidated Balance Sheets. The total amount ofunrecognized tax benefits that, if recognized, would impact the effective tax rate was $8,951,000 at September 28, 2014. We recognize interestand penalties related to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest related to unrecognizedtax benefits was, net of tax, $385,000 at September 28, 2014 and $534,000 at September 29, 2013. There were no amounts provided for penaltiesat September 28, 2014 or September 29, 2013. At September 28, 2014, we had approximately $1,008,948,000 of NOL carryforwards for state income tax purposes that expire between 2015 and2034. Such NOL carryforwards result in a deferred income tax asset of $30,796,000 at September 28, 2014, substantially all of which is offset by avaluation allowance. The valuation allowance not related to NOL carryforwards is $1,337,000 at September 28, 2014 and $2,131,000 atSeptember 29, 2013.852012 Federal NOL was carried back to 2010, resulting in a cash refund of $9,500,000, which was received in 2013. A Federal NOL based on 2013results was carried back to 2011, resulting in a refund of $6,244,000. The refund was received in 2014.In connection with the refinancing of debt under the Chapter 11 Proceedings, we realized substantial cancellation of debt income (“CODI”) forincome tax purposes. This income was not immediately taxable for Federal income tax purposes because the CODI resulted from ourreorganization under the U.S. Bankruptcy Code. For Federal income tax reporting purposes, we were required to reduce certain tax attributes,including any net operating loss carryforwards, capital losses, certain tax credit carryforwards, and the tax basis in certain assets and liabilities,including debt, in a total amount equal to the tax gain on the extinguishment of debt. The reduction in the basis of certain assets also resulted inreduced depreciation and amortization expense for income tax purposes beginning in 2013. As a result of the reduction in the tax basis of debt noted above, we have been recognizing additional interest expense for income tax purposes,beginning in 2012. This additional interest expense was scheduled to be recognized through the maturity dates of the debt ending in 2017. The2014 Refinancing resulted in all additional interest expense related to the CODI basis adjustment being deductible for income tax purposes in2014. We expect to report a Federal NOL of approximately $163,000,000 for 2014, a substantial amount of which is due to this additional interestexpense. This NOL results in a deferred income tax asset of $57,071,000, which is not offset by a valuation allowance because sufficient taxplanning strategies are available to us before the expiration of the NOL in 2034.12 FAIR VALUE OF FINANCIAL INSTRUMENTSThe following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable toestimate value.The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity ofthose instruments. Investments totaling $8,774,000, including our 17% ownership of the non-voting common stock of TCT, are carried at cost.The fair value of floating rate debt, which consists of our 1st Lien Term Loan, is $231,895,000, based on an average of private market pricequotations. Our fixed rate debt consists of $400,000,000 principal amount of the Notes, $150,000,000 principal amount under the 2nd Lien TermLoan and $23,000,000 principal amount of New Pulitzer Notes. At September 28, 2014, based on an average of private market price quotations,the fair values were $407,500,000 and $161,625,000 for the Notes and 2nd Lien Term Loan, respectively. The New Pulitzer Notes are held by asingle investor, Berkshire. We are unable, as of September 28, 2014, to determine the fair value of the New Pulitzer Notes. The value, ifdetermined, may be more or less than the carrying amount.As discussed more fully in Notes 5 and 9, we recorded a liability for the Warrants issued in connection with the Warrant Agreement. The liabilitywas initially measured at its fair value. We will remeasure 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 $16,930,000. At September 28, 2014, the fair value of the Warrants is$10,807,800.In 2014, 2013 and 2012, we reduced the carrying value of equipment no longer in use by $1,044,000, $486,000 and $1,388,000, respectively,based on estimates of the related fair value in the current market. Based on age, condition and marketability we estimated the equipment had novalue.8613 EARNINGS (LOSS) PER COMMON SHAREThe following table sets forth the computation of basic and diluted earnings (loss) per common share:(Thousands of Dollars and Shares, Except Per Common Share Data)2014 2013 2012 Income (loss) attributable to Lee Enterprises, Incorporated: Continuing operations6,795 (77,071) (13,780)Discontinued operations— (1,246) (2,918) 6,795 (78,317) (16,698) Weighted average Common Stock53,438 52,333 49,357Less non-vested restricted Common Stock(1,165) (500) (96)Basic average Common Stock52,273 51,833 49,261Dilutive stock options and restricted Common Stock1,463 — —Diluted average Common Stock53,736 51,833 49,261 Earnings (loss) per common share: Basic: Continuing operations0.13 (1.49) (0.28)Discontinued operations— (0.02) (0.06) 0.13 (1.51) (0.34) Diluted: Continuing operations0.13 (1.49) (0.28)Discontinued operations— (0.02) (0.06) 0.13 (1.51) (0.34) For 2014, 2013 and 2012, we had 3,121,000, 1,700,000 and 2,334,000 weighted average shares, respectively, not considered in the computation ofdiluted earnings (loss) per common share because the exercise prices of the related stock options and Warrants were in excess of the fair marketvalue of our Common Stock. No stock options were considered in the computation of loss per common share in 2013 or 2012. 14 ALLOWANCE FOR DOUBTFUL ACCOUNTSValuation and qualifying account information related to the allowance for doubtful accounts receivable related to continuing operations is asfollows:(Thousands of Dollars)2014 2013 2012 Balance, beginning of year4,501 4,872 5,359Additions charged to expense1,754 1,481 1,441Deductions from reserves(1,729) (1,852) (1,928)Balance, end of year4,526 4,501 4,872 8715 OTHER INFORMATION Compensation and other accrued liabilities consist of the following:(Thousands of Dollars)September 28 2014 September 29 2013 Compensation11,187 12,606Retirement plans3,952 4,357Other9,209 11,530 24,348 28,493 Cash payments are as follows:(Thousands of Dollars)2014 2013 2012 Interest81,363 84,479 72,131Debt financing and reorganization costs31,587 1,071 32,408Income tax refunds, net of payments6,022 9,126 1,140 Accumulated other comprehensive income (loss), net of deferred income taxes at September 28, 2014 and September 29, 2013, is related topension and postretirement benefits.16 COMMITMENTS AND CONTINGENT LIABILITIES Operating Leases We have operating lease commitments for certain of our office, production and distribution facilities. Management expects that in the normalcourse of business, existing leases will be renewed or replaced. Minimum lease payments during the five years ending September 2019 andthereafter are $2,592,000, $2,252,000, $2,010,000, $1,945,000, $918,000 and $2,202,000, respectively. Total operating lease expense is$3,276,000, $3,581,000 and $3,731,000, in 2014, 2013 and 2012, respectively. Capital Expenditures At September 28, 2014, we had construction and equipment purchase commitments totaling approximately $1,549,000. Redemption of PD LLC Minority Interest In February 2009, in conjunction with the Notes Amendment, PD LLC redeemed the 5% interest in PD LLC and STL Distribution Services LLC("DS LLC") owned by The Herald Publishing Company, LLC ("Herald") pursuant to a Redemption Agreement and adopted conforming amendmentsto the Operating Agreement. As a result, the value of Herald's former interest (the “Herald Value”) was to be settled, based on a calculation of 10%of the fair market value of PD LLC and DS LLC at the time of settlement, less the balance, as adjusted, of the Pulitzer Notes or the equivalentsuccessor debt, if any. We recorded a liability of $2,300,000 in 2009 as an estimate of the amount of the Herald Value to be disbursed. In 2011,we reduced the liability related to the Herald Value to $300,000 based on the current estimate of fair value.In 2014, we issued 100,000 shares of Common Stock in full satisfaction of the Herald Value. Such shares had a fair value of $298,000 on the dateof issuance.The redemption of Herald's interest in PD LLC and DS LLC may generate significant tax benefits to us as a consequence of the resulting increasein the tax basis of the assets owned by PD LLC and DS LLC and the related depreciation and amortization deductions. The increase in basis to beamortized for income tax purposes over a 15 year period beginning in February 2009 is approximately $258,000,000. 88Income Taxes Commitments exclude unrecognized tax benefits to be recorded in accordance with FASB ASC Topic 740, Income Taxes. We are unable toreasonably estimate the ultimate amount or timing of cash settlements with the respective taxing authorities for such matters. See Note 11. We file income tax returns with the Internal Revenue Service ("IRS") and various state tax jurisdictions. From time to time, we are subject toroutine audits by those agencies, and those audits may result in proposed adjustments. We have considered the alternative interpretations thatmay be assumed by the various taxing agencies, believe our positions taken regarding our filings are valid, and that adequate tax liabilities havebeen 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 Operations and Comprehensive Income (Loss) in the periods in which suchmatters are ultimately determined. We do not believe the final resolution of such matters will be material to our consolidated financial position orcash flows. We have various income tax examinations ongoing and at various stages of completion, but generally our income tax returns have been audited orclosed to audit through 2009. Legal Proceedings In 2008, a group of newspaper carriers filed suit against us in the United States District Court for the Southern District of California, claiming to beour employees and not independent contractors. The plaintiffs sought relief related to alleged violations of various employment-based statutes, andrequested punitive damages and attorneys' fees. In 2010, the trial court granted the plaintiffs' petition for class certification. We filed aninterlocutory appeal which was denied. After concluding discovery, a motion to decertify the class was filed, which was granted as to plaintiffs'minimum wage, overtime, unreimbursed meal, and unreimbursed rest period claims. In July 2014 we reached a settlement with the plaintiffs, whichremains subject to court approval, and recorded a liability of $2,300,000 in 2014.We are involved in a variety of other legal actions that arise in the normal course of business. Insurance coverage mitigates potential loss forcertain of these other matters. While we are unable to predict the ultimate outcome of these other legal actions, it is our opinion that the dispositionof these matters will not have a material adverse effect on our Consolidated Financial Statements, taken as a whole.17 IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDSIn 2013, FASB issued an amendment to an existing accounting standard, which requires an entity to provide information about the amountsreclassified out of Accumulated Other Comprehensive Income ("AOCI") by component. In addition, an entity is required to present, either on theface of the financial statements or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income, but only ifthe amount reclassified is required to be reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassifiedin their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. Thisguidance does not change the current requirements for reporting net income or other comprehensive income in the financial statements and iseffective beginning in 2014. The adoption of this standard did not have a material impact on our Consolidated Financial Statements.8918 QUARTERLY FINANCIAL DATA (UNAUDITED) Quarter Ended (Thousands of Dollars, Except Per Common Share Data)December March June September 2014 Operating revenue177,385 154,093 163,125 162,094 Income (loss) from continuing operations12,102 1,705 (9,511) 3,375Discontinued operations, net of income taxes— — — —Net income (loss)12,102 1,705 (9,511) 3,375 Income (loss) attributable to Lee Enterprises, Incorporated11,892 1,486 (9,746) 3,162 Earnings (loss) per common share: Basic: Continuing operations0.23 0.03 (0.19) 0.06Discontinued operations— — — — 0.23 0.03 (0.19) 0.06 Diluted: Continuing operations0.22 0.03 (0.19) 0.06Discontinued operations— — — — 0.22 0.03 (0.19) 0.06 2013 Operating revenue184,656 160,603 167,019 162,462 Income (loss) from continuing operations13,652 (3,562) 1,968 (88,536)Discontinued operations, net of income taxes1,046 (2,293) — 1Net income (loss)14,698 (5,855) 1,968 (88,535) Income (loss) attributable to Lee Enterprises, Incorporated14,580 (5,995) 1,795 (88,697) Earnings (loss) per common share: Basic: Continuing operations0.26 (0.07) 0.03 (1.71)Discontinued operations0.02 (0.04) — — 0.28 (0.12) 0.03 (1.71) Diluted: Continuing operations0.26 (0.07) 0.03 (1.71)Discontinued operations0.02 (0.04) — — 0.28 (0.12) 0.03 (1.71) Results of operations for the September quarter of 2014 and 2013 include non-cash impairment charges of $2,644,000 and $171,094,000,respectively.90Report of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersLee Enterprises, Incorporated:We have audited the accompanying consolidated balance sheets of Lee Enterprises, Incorporated and subsidiaries (the Company) as ofSeptember 28, 2014 and September 29, 2013, and the related consolidated statements of operations and comprehensive income (loss),stockholders’ equity (deficit), and cash flows for the 52-week periods ended September 28, 2014 and September 29, 2013, and the 53-week periodended September 30, 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these consolidated financial statements based on our audits. We did not audit the consolidated balance sheets of MadisonNewspapers, Inc., and Subsidiary (MNI), a 50% owned investee company, as of September 28, 2014 and September 29, 2013, and the relatedconsolidated statements of income, stockholders’ equity, and cash flows for the years then ended. The Company’s investment in MNI atSeptember 28, 2014 and September 29, 2013 was $19,644,000 and $21,011,000, respectively, and its equity in earnings of MNI was $3,384,000and $3,509,000 for the 52-week periods ended September 28, 2014 and September 29, 2013, respectively. The consolidated financial statementsof MNI for the years ended September 28, 2014 and September 29, 2013 were audited by other auditors whose report has been furnished to us,and our opinion, insofar as it relates to the amounts included for MNI for the 52-week periods ended September 28, 2014 and September 29, 2013,is based solely on the report of the other auditors.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of Lee Enterprises, Incorporated and subsidiaries as of September 28, 2014 and September 29, 2013, andthe results of their operations and their cash flows for the 52-week periods ended September 28, 2014 and September 29, 2013, and the 53-weekperiod ended September 30, 2012, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Lee Enterprises,Incorporated and subsidiaries’ internal control over financial reporting as of September 28, 2014, based on criteria established in Internal Control -Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report datedDecember 12, 2014 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting./s/ KPMG LLPChicago, IllinoisDecember 12, 201491EXHIBIT INDEX Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by us with the SEC, as indicated. Exhibits markedwith 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.NumberDescription 3.1 *Amended and Restated Certificate of Incorporation of Lee Enterprises, Incorporated effective as of January 30, 2012 (Exhibit 3.1to Form 8-K filed on February 3, 2012) 3.2 *Amended and Restated By-Laws of Lee Enterprises, Incorporated effective as of May 2, 2013 (Exhibit 3.1 to Form 8-K filed May7, 2013) 4.1 *The description of the Company's preferred stock purchase rights contained in its report on Form 8-K, filed on May 7, 1998, andrelated Rights Agreement, dated as of May 7, 1998 (“Rights Agreement”), between the Company and The First Chicago TrustCompany of New York (“First Chicago”), as amended by Amendment No. 1 to the Rights Agreement dated January 1, 2008between the Company and Wells Fargo Bank, N.A. (as successor rights agent to First Chicago) contained in the Company'sreport on Form 8-K filed on January 11, 2008 as Exhibit 4.2, and the related form of Certificate of Designation of the PreferredStock as Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of Rights as Exhibit C, included as Exhibit 1.1 tothe Company's registration statement on Form 8-A filed on May 26, 1998 (File No. 1-6227), as supplemented by Form 8-A/A,Amendment No. 1, filed on January 11, 2008. 4.2 *Indenture dated as of March 31, 2014 among Lee Enterprises, Incorporated, certain subsidiaries from time to time parties thereto,U.S. Bank National Association, as Trustee, and Deutsche Bank Trust Company Americas, as Collateral Agent (Exhibit 4.1 toForm 8-K filed on April 4, 2014) 4.3 *Warrant Agreement dated as of March 31, 2014 between Lee Enterprises, Incorporated and Wells Fargo Bank, NationalAssociation (Exhibit 4.2 to Form 8-K filed on April 4, 2014) 4.4 *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) 10.1 *Purchase Agreement dated March 21, 2014 among Lee Enterprises, Incorporated, certain subsidiaries party thereto from time totime, U.S. Bank National Association, as Trustee, and Deutsche Bank Trust Company Americas, as Collateral Agent, involving a$400,000,000 aggregate principal amount of 9.5% Senior Secured Notes, pursuant to an Indenture dated as of March 31, 2014(Exhibit 10.1 to Form 8-K filed on March 27, 2014) 10.2 *First Lien Credit Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Lenders from time to timeparties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and JPMorgan Securities LLC andDeutsche Bank Securities Inc., as Joint Lead Arrangers and as Joint Bookrunners (Exhibit 10.1 to Form 8-K filed on April 4, 2014) 10.3 *Second Lien Loan Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Lenders from time to timeparties thereto, Wilmington Trust, National Association, as Administrative Agent and Collateral Agent, and JPMorgan SecuritiesLLC and Deutsche Bank Securities Inc., as Joint Lead Arrangers and as Joint Bookrunners (Exhibit 10.2 to Form 8-K filed onApril 4, 2014) 10.4 *Security Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the Subsidiary Guarantors and DeutscheBank Trust Company Americas, as Collateral Agent (Exhibit 10.3 to Form 8-K filed on April 4, 2014) 10.5 *Pari Passu Intercreditor Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the other Grantors fromtime to time parties thereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association and Deutsche Bank Trust CompanyAmericas (Exhibit 10.4 to Form 8-K filed on April 4, 2014) 10.6 *Junior Intercreditor Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the other Grantors from time totime parties thereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association, Deutsche Bank Trust Company Americasand Wilmington Trust, National Association (Exhibit 10.5 to Form 8-K filed on April 4, 2014)92NumberDescription 10.7 *First Lien Guarantee and Collateral Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the SubsidiaryGuarantors and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (Exhibit 10.6 to Form 8-K filed onApril 4, 2014) 10.8 *Intercompany Subordination Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the SubsidiaryGuarantors, Pulitzer, Pulitzer Subsidiaries and JPMorgan Chase Bank, N.A. (Exhibit 10.7 to Form 8-K filed on April 4, 2014) 10.9*Second Lien Guarantee and Collateral Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, theSubsidiary Guarantors, Pulitzer, Pulitzer Subsidiaries and Wilmington Trust, National Association, as Administrative Agent andCollateral Agent (Exhibit 10.8 to Form 8-K filed on April 4, 2014) 10.10 *Second Amendment to Intercreditor Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, The Bank ofNew York Mellon Trust Company, N.A., Wilmington Trust, National Association, Pulitzer and the Pulitzer Subsidiaries (Exhibit10.9 to Form 8-K filed on April 4, 2014) 10.11 *Intercompany Subordination Agreement dated as of March 31, 2014 among Lee Enterprises, Incorporated, the SubsidiaryGuarantors, Pulitzer, Pulitzer Subsidiaries and Wilmington Trust, National Association (Exhibit 10.10 to Form 8-K filed on April 4,2014) 10.12 *Note Agreement dated as of May 1, 2013 by and among St. Louis Post-Dispatch LLC, Pulitzer Inc. and BH Finance LLC (Exhibit10.1 to Form 8-K filed on May 7, 2013) 10.13 *Subsidiary Guaranty Agreement dated as of May 1, 2013 by and among certain Subsidiaries of Pulitzer Inc. in favor of BHFinance LLC (Exhibit 10.2 to Form 8-K filed on May 7, 2013) 10.14 *Operating Agreement of St. Louis Post-Dispatch LLC, dated as of May 1, 2000, as amended by Amendment No. 1 to OperatingAgreement of St. Louis Post-Dispatch LLC, dated as of June 1, 2001 (Exhibit 10.5 to Form 10-Q for the Fiscal Quarter EndedJune 30, 2005) 10.15*Amendment Number Two to Operating Agreement of St. Louis Post-Dispatch LLC, effective February 18, 2009, between PulitzerInc. and Pulitzer Technologies, Inc. (Exhibit 10.13 to Form 10-Q for the Fiscal Quarter Ended March 29, 2009) 10.16*Amended and Restated Joint Operating Agreement, dated December 22, 1988, between Star Publishing Company and CitizenPublishing Company (Exhibit 10.2 to Form 10-Q for the Fiscal Quarter Ended June 30, 2005) 10.17*Amended and Restated Partnership Agreement, dated as of November 30, 2009, between Star Publishing Company and CitizenPublishing Company (Exhibit 10.2 to Form 10-Q for the Fiscal Quarter Ended December 27, 2009) 10.18*Amended and Restated Management Agreement, dated as of November 30, 2009, between Star Publishing Company and CitizenPublishing Company (Exhibit 10.1 to Form 10-Q for the Fiscal Quarter Ended December 27, 2009) 10.19*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) 10.20*License Agreement (Citizen), as amended and restated November 30, 2009, between Citizen Publishing Company and TNIPartners (Exhibit 10.4 to Form 10-Q for the Fiscal Quarter Ended December 27, 2009) 10.21 *Lease Agreement between Ryan Companies US, Inc. and Lee Enterprises, Incorporated dated May 2003 (Exhibit 10.7 to Form10-K for the Fiscal Year Ended September 30, 2003) 10.22 *License Agreement, dated as of May 1, 2000, by and between Pulitzer Inc. and St. Louis Post-Dispatch LLC (Exhibit 10.7 toForm 10-Q for the Fiscal Quarter Ended June 30, 2005) 10.23*Non-Confidentiality Agreement, dated as of May 1, 2000 (Exhibit 10.10 to Form 10-Q for the Fiscal Quarter Ended June 30, 2005)10.24 +*Form of Director Compensation Agreement of Lee Enterprises, Incorporated for non-employee director deferred compensation(Exhibit 10.7 to Form 10-K for the Fiscal Year Ended September 30, 2004) 10.25.1 +*Amended and Restated Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (effective October 1, 1999, as amendedeffective January 6, 2010) (Exhibit B to Schedule 14A Definitive Proxy Statement for 2010)93NumberDescription 10.25.2 *Forms of related Incentive Stock Option Agreement, Non-Qualified Stock Option Agreement and Restricted Stock Agreementrelated to Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (Effective October 1, 1999, as amended effectiveJanuary 6, 2010) (Exhibit 10.33.2 to Annual Report on Form 10-K for the fiscal year period ended September 29, 2013) 10.26 *Amended and Restated Lee Enterprises, Incorporated 1996 Stock Plan for Non-Employee Directors Effective February 17, 2010(Appendix A to Schedule 14A Definitive Proxy Statement for 2014) 10.27 +*Lee Enterprises, Incorporated Supplementary Benefit Plan, Amended and Restated as of January 1, 2008 (Exhibit 10.25 to Form10-K for the Fiscal Year Ended September 28, 2008) 10.28 +*Lee Enterprises, Incorporated Outside Directors Deferral Plan, Amended and Restated as of January 1, 2008 (Exhibit 10.26 toForm 10-K for the Fiscal Year Ended September 28, 2008) 10.29 +*Form of Amended and Restated Employment Agreement for certain Lee Enterprises, Incorporated Executive Officers Group(Exhibit 10.2 to Form 10-Q for the Fiscal Quarter Ended March 30, 2008) 10.30 +*Form of Indemnification Agreement for Lee Enterprises, Incorporated Directors and Executive Officers Group (Exhibit 10.2 toForm 10-Q for the Fiscal Quarter Ended March 30, 2008) 10.31 +*Lee Enterprises, Incorporated Amended and Restated Incentive Compensation Program (Appendix B to Schedule 14A DefinitiveProxy Statement for 2014) 21Subsidiaries and associated companies 23.1Consent of KPMG LLP, Independent Registered Public Accounting Firm 23.2Consent of Baker Tilly Virchow Krause LLP, Independent Registered Public Accounting Firm 23.3Report of Baker Tilly Virchow Krause LLP, Independent Registered Public Accounting Firm 24Power of Attorney 31.1Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 200294EXHIBIT 21LEE ENTERPRISES, INCORPORATEDAND SUBSIDIARIES SUBSIDIARIES AND ASSOCIATED COMPANIES State ofOrganizationPercentage of VotingSecurities Owned Lee Enterprises, IncorporatedDelaware ParentLee Publications, Inc.Delaware100%Lee Procurement Solutions Co.Iowa100%Lee Consolidated Holdings Co.South Dakota100%Lee FoundationIowa100%Accudata, Inc.Iowa100%Amplified Digital, LLCDelaware100%Fairgrove LLCDelaware100%Flagstaff Publishing Co.Washington100%Hanford Sentinel, Inc.Washington100%Journal-Star Printing Co.Nebraska100%K. Falls Basin Publishing, Inc.Oregon100%Napa Valley Publishing Co.Washington100%Pantagraph Publishing Co.Delaware100%Pulitzer Inc.Delaware100%Pulitzer Missouri Newspapers, Inc.Delaware100%Pulitzer Newspapers, Inc.Delaware100%Pulitzer Network Systems LLCDelaware100%Pulitzer Technologies, Inc.Delaware100%Santa Maria Times, Inc.Nevada100%Sioux City Newspapers, Inc.Iowa100%Southwestern Oregon Publishing Co.Oregon100%St. Louis Post-Dispatch LLCDelaware100%STL Distribution Services LLCDelaware100%Star Publishing CompanyArizona100%Suburban Journals of Greater St. Louis LLCDelaware100%Ynez CorporationCalifornia100%INN Partners, L.C. d/b/a TownNews.comIowa82.5%Community Distribution Partners, LLCMontana50%Madison Newspapers, Inc. d/b/a Capital NewspapersWisconsin50%TNI PartnersArizona50%EXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm The Board of DirectorsLee Enterprises, Incorporated:We consent to the incorporation by reference in the registration statements (No. 333-06435, No. 333-132768, Post-Effective Amendment No.1 to333-132768, No. 333-195862, No. 333-167908) on Form S-8 and (No. 333-192940 and Amendment No. 1 to 333-192940 and No. 333-197450 andAmendment No. 1 to 333-197450) on Form S-3 of Lee Enterprises, Incorporated and subsidiaries of our reports dated December 12, 2014, withrespect to the consolidated balance sheets of Lee Enterprises, Incorporated as of September 28, 2014 and September 29, 2013, and the relatedconsolidated statements of operations and comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the 52-week periodsended September 28, 2014 and September 29, 2013, and the 53-week period ended September 30, 2012, and the effectiveness of internal controlover financial reporting as of September 28, 2014, which reports appear in the September 28, 2014 annual report on Form 10-K of Lee Enterprises,Incorporated./s/ KPMG LLPChicago, IllinoisDecember 12, 2014EXHIBIT 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the registration statements (No. 333‑06435, No. 333‑132768, Post‑Effective Amendment No. 1 to333‑132768, No. 333‑195862, No. 333‑167908) on Form S‑8 and (No. 333‑192940 and Amendment No. 1 to 333‑192940 and No. 333‑197450 andAmendment No. 1 to 333‑197450) on Form S‑3 of Lee Enterprises, Incorporated and subsidiaries of our report dated November 25, 2014, relatingto our audit of the consolidated financial statements of Madison Newspapers, Inc. and subsidiary for the years ended September 28, 2014 andSeptember 29, 2013, which appears in Exhibit 23.3 of this annual report on Form 10‑K for the year ended September 28, 2014./s/ BAKER TILLY VIRCHOW KRAUSE, LLPMadison, WisconsinDecember 12, 2014EXHIBIT 23.3Report of Independent Registered Public Accounting FirmBoard of DirectorsMadison Newspapers, Inc.Madison, WisconsinWe have audited the accompanying consolidated balance sheet of Madison Newspapers, Inc. and Subsidiary (the "Company") as of September28, 2014 and September 29, 2013, and the related consolidated statements of income, stockholders' equity, and cash flows for the years thenended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinionon these consolidated financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of materialmisstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Ouraudit included consideration of its internal control over financial reporting as a basis for designing audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in theconsolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Companyas of September 28, 2014 and September 29, 2013, and the results of their operations and their cash flows for the years then ended, in conformitywith U.S. generally accepted accounting principles./s/ BAKER TILLY VIRCHOW KRAUSE, LLPMadison, WisconsinNovember 25, 2014 EXHIBIT 24POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned directors of Lee Enterprises, Incorporated, a Delaware corporation (the "Company),hereby severally constitute and appoint each of Mary E. Junck and Carl G. Schmidt, and each of them, to be our true and lawful attorneys-in-factand agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, tosign the Company's Annual Report on Form 10-K for the fiscal year ended September 28, 2014 (and any amendments thereto); granting unto suchattorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fullyfor all intents and purposes as he or she might or could do in person, hereby retifying and confirmation all that such attorneys-in-fact and agents,or his or her substitute or substitutes, shall lawfully do or cause to be done by virtue hereof./s/ Mary E. Junck /s/ Carl G. SchmidtMary E. Junck Carl G. SchmidtChairman, President and Chief Executive Officer Vice President, Chief Financial Officer and Treasurer(Principal Executive Officer) (Principal Financial and Accounting Officer) Signature Date /s/ Richard R. Cole Richard R. Cole, DirectorDecember 4, 2014 /s/ Nancy S. Donovan Nancy S. Donovan, DirectorDecember 4, 2014 /s/ Leonard J. Elmore Leonard J. Elmore, DirectorDecember 4, 2014 /s/ Brent Magid Brent Magid, DirectorDecember 4, 2014 /s/ William E. Mayer William E. Mayer, DirectorDecember 4, 2014 /s/ Herbert W. Moloney III Herbert W. Moloney III, DirectorDecember 4, 2014 /s/ Andrew E. Newman Andrew E. Newman, DirectorDecember 4, 2014 /s/ Gregory P. Schermer Gregory P. Schermer, DirectorDecember 4, 2014 /s/ Mark Vittert Mark Vittert, DirectorDecember 4, 2014Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Mary E. Junck, certify that:1I have reviewed this Annual report on Form 10-K ("Annual Report") of Lee Enterprises, Incorporated ("Registrant"); 2Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this Annual Report; 3Based on my knowledge, the Consolidated Financial Statements, and other financial information included in this AnnualReport, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant asof, and for, the periods presented in this Annual Report; 4The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the Registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this Annual Report is being prepared; b)designed such internal control over financial reporting, or caused such internal control over financial reporting tobe designed under our supervision, to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles; c)evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this AnnualReport our conclusions about the effectiveness of the disclosure controls and procedures as of the end of theperiod covered by this Annual Report based on such evaluation; and d)disclosed in this Annual Report any change in the Registrant's internal control over financial reporting thatoccurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of anannual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internalcontrol over financial reporting; and 5The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the Registrant's auditors and the Audit Committee of Registrant's Board of Directors (or personsperforming the equivalent functions): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarizeand report financial information; and b)any fraud, whether or not material, that involves management or other employees who have a significant role inthe Registrant's internal control over financial reporting. Date: December 12, 2014 /s/ Mary E. Junck Mary E. Junck Chairman, President and Chief Executive Officer Exhibit 31.2CERTIFICATION OF CHIEF FINANCIAL OFFICERI, Carl G. Schmidt, certify that:1I have reviewed this Annual report on Form 10-K ("Annual Report") of Lee Enterprises, Incorporated ("Registrant"); 2Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this Annual Report; 3Based on my knowledge, the Consolidated Financial Statements, and other financial information included in this AnnualReport, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrantas of, and for, the periods presented in this Annual Report; 4The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the Registrant, includingits consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this Annual Report is being prepared; b)designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles; c)evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in thisAnnual Report our conclusions about the effectiveness of the disclosure controls and procedures as of theend of the period covered by this Annual Report based on such evaluation; and d)disclosed in this Annual Report any change in the Registrant's internal control over financial reporting thatoccurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in thecase of an Annual report) that has materially affected, or is reasonably likely to materially affect, theRegistrant's internal control over financial reporting; and 5The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the Registrant's auditors and the Audit Committee of Registrant's Board of Directors (or personsperforming the equivalent functions): a)all significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the Registrant's ability to record,process, summarize and report financial information; and b)any fraud, whether or not material, that involves management or other employees who have a significantrole in the Registrant's internal control over financial reporting.Date: December 12, 2014 /s/ Carl G. Schmidt Carl G. Schmidt Vice President, Chief Financial Officer and Treasurer Exhibit 32 The following statement is being furnished to the Securities and Exchange Commission solely for purposes of Section 906 of the Sarbanes-OxleyAct of 2002 (18 U.S.C. 1350), which carries with it certain criminal penalties in the event of a knowing or willful misrepresentation. Securities and Exchange Commission450 Fifth Street, NWWashington, DC 20549 Re: Lee Enterprises, Incorporated Ladies and Gentlemen: In accordance with the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), each of the undersigned hereby certifiesthat to our knowledge: (i) this Annual report on Form 10-K for the period ended September 28, 2014 ("Annual Report"), fully complies with the requirements ofsection 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (ii) the information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operationsof Lee Enterprises, Incorporated for the periods presented in the Annual Report. Date: December 12, 2014 /s/ Mary E. Junck /s/ Carl G. SchmidtMary E. Junck Carl G. SchmidtChairman, President and Vice President, Chief Financial OfficerChief Executive Officer and Treasurer A signed original of this written statement required by Section 906 has been provided to Lee Enterprises, Incorporated and will be retained by LeeEnterprises, Incorporated and furnished to the Securities and Exchange Commission upon request. 

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