Lee Enterprises
Annual Report 2017

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 24, 2017OR[ ] 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, a non-accelerated filer, smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer," "accelerated filer," "smaller reporting company,” and "emerging growth company" inRule 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 [ ] Emerginggrowth company [ ] If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] 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 31, 2017, such aggregatemarket value is approximately $136,159,000. 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, 2017. Common Stock, $0.01 par value,56,707,972 shares. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Lee Enterprises, Incorporated Definitive Proxy Statement to be filed in January 2018 are incorporated by reference in Part III of this Form 10-K. TABLE OF CONTENTSPAGE Forward-Looking Statements1 Part I Item 1Business1 Item 1ARisk Factors11 Item 1BUnresolved Staff Comments17 Item 2Properties17 Item 3Legal Proceedings18 Item 4Mine Safety Disclosures18 Part II Item 5Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities18 Item 6Selected Financial Data20 Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations21 Item 7AQuantitative and Qualitative Disclosures about Market Risk36 Item 8Financial Statements and Supplementary Data37 Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure37 Item 9AControls and Procedures37 Item 9BOther Information40 Part III Item 10Directors, Executive Officers and Corporate Governance40 Item 11Executive Compensation40 Item 12Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters40 Item 13Certain Relationships and Related Transactions, and Director Independence40 Item 14Principal Accounting Fees and Services40 Part IV Item 15Exhibits and Financial Statement Schedules41 Consolidated Financial Statements42 Signatures78 Exhibit Index79References to “we”, “our”, “us” and the like throughout this document refer to Lee Enterprises, Incorporated and subsidiaries (the "Company").References to "2017", "2016", "2015" 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 annual report ("Annual Report")contains information that may be deemed forward-looking that is based largely on our current expectations, and is subject to certain risks, trendsand uncertainties that could cause actual results to differ materially from those anticipated. Among such risks, trends and other uncertainties,which in some instances are 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;•Our ability to manage declining print revenue;•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;•Change in advertising and subscription demand;•Changes in technology that impact our ability to deliver digital advertising;•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, including this Annual Report andparticularly in "Risk Factors", Part I, Item 1A herein.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 AnnualReport. 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 high quality, trusted, local news and information, and a major platform for advertising in themarkets we serve. We are located primarily in the Midwest, Mountain West and West regions of the United States, and our 50 markets (includingTNI Partners ("TNI") and Madison Newspapers, Inc. ("MNI")), across 22 states are principally mid-sized or small. Our printed newspapers reachmore than 800,000 households daily and more than 1.2 million on Sunday, with estimated readership totaling three million. Our web and mobilesites are the number one digital source of local news in most of our markets, reaching more than 25 million unique visitors each month.Our products include:•47 daily and 34 Sunday newspapers; all with related digital operations; and•Nearly 300 weekly newspapers and classified and niche publications, most with related digital operations.We also operate TownNews.com, through our 82.5% owned subsidiary INN Partners, L.C. ("TownNews.com"). TownNews.com provides digitalinfrastructure and digital publishing services for nearly 1,600 daily and weekly newspapers as well as universities, television stations, nichepublications, and Lee Enterprises properties.1Our markets have established retail bases. Most are regional shopping hubs, and we are located in four state capitals. Six of our top ten markets,by revenue, include major universities, and seven are home to major corporate headquarters. We believe that operating the dominate provider oflocal news, information and advertising in these markets - combined with our ability to distribute our content across print and digital platforms -enables us to better execute our strategy.We generate revenue primarily through print and digital advertising, subscriptions to our publications and digital services, primarily throughTownNews.com. Our operations also provide commercial printing, distribution of third party publications and marketing services.Advertising and marketing services - Approximately 58% of our 2017 revenue was derived from advertising and marketing services. We provideadvertising and marketing solutions using a multi-platform sales approach that maximizes audience reach for our customers by offering multipleprint and digital advertising platforms and products including: print and digital display advertising, desktop, mobile, tablet and other specialty printproducts.The following broadly define major categories of advertising and marketing services revenue: Retail advertising is print or digital revenue earned from sales of display advertising in the publication, or from preprinted advertising insertedin the publication, from local, regional and national businesses with local retail operations.Classified advertising is revenue from the sale of advertising space, or from separate publications, consisting primarily of advertisingcategories, such as employment, automotive, real estate, legal notices, obituaries and other merchandise. Classified publications offeradvertisers a cost-effective, local advertising vehicle and can be particularly effective in larger markets with higher media fragmentation. National advertising is revenue earned from the sale of print or digital display advertising space, or from preprinted advertising inserted in thepublication, from national accounts that do not have a 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 applications that are integrated with our print publications, or on third party websites accessed through the extended audiencenetwork. 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 advertising. Marketing services is comprised of a suite of custom digital marketing services that include: Search Engine Optimization, Search EngineManagement, web and mobile production, social media services and reputation monitoring and management. Our marketing services alsoinclude media buying in audience extension networks (outside of those owned and operated by the Company) such as Centro DSP, GoogleAd Exchange and Facebook.The advertising environment is influenced by the state of the overall economy, including consumer confidence, retail sales, unemployment rates,inflation, energy prices and consumer interest rates. Our enterprises are primarily located in midsize and small markets. Historically our marketshave been more stable than major metropolitan markets because our focus is on local, rather than national, advertising. More than eighty percentof our advertising revenue is derived from local and regional businesses. We believe that local advertising tends to be less sensitive to economiccycles than national advertising because local businesses generally have fewer effective advertising channels through which they may reach theircustomers.Subscription - Approximately 34% of our 2017 revenue was derived from subscriptions to our printed and digital products. Subscription revenue isearned primarily from our full access subscription model, which provides subscribers print and digital access to our leading local news, informationand advertising content for one price. Digital only options are also available to subscribers.Our operating costs are primarily compensation, newsprint and delivery. Over the past several years we have adjusted our business model tocreate operational efficiencies and significantly reduce our cost structure.2We have centralized or regionalized most back office functions including the design of our newspapers. The centralized design centers haveenabled us to more cost effectively design and layout the newspaper. The centralized design centers - combined with a common contentmanagement system across all of our daily newspaper markets - has created additional operating efficiencies and cost savings. We havetemplated designs for our printed and digital editions, and we have created a national news desk that shares high quality content across all of ourmarkets, including national news, regional news and other special sections content. We believe we will continue to create additional operationalefficiencies and continue to transform our business model.Several of our businesses operate in geographic groups of publications, or “clusters,” which provide operational efficiencies, extend salespenetration and provide broader audiences for advertisers through consolidation of sales forces and back office management of operations suchas: finance, human resources, subscription management, and the production of the publications. A table under the caption “Daily Newspapers andMarkets” in Item 1, included herein, identifies those groups of our newspapers operating in clusters. We do not face significant daily print competition; however, our newspapers, classified and specialty publications, and digital products do competewith other forms of traditional media including: newspapers having national or regional distribution, magazines, radio, cable and satellite television,outdoor media, other classified and specialty publications, direct mail, directories, and national, regional and local advertising websites and contentproviders. Competition for advertising is based on audience size and composition, subscription levels, readership demographics, distribution anddisplay mechanisms, price and advertiser results. We believe we capture a substantial share of the total advertising dollars spent in each of ourmarkets. We also compete for circulation and readership against other news and information outlets.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.Lee Enterprises, Incorporated was founded in 1890, incorporated in 1950, and listed on the New York Stock Exchange ("NYSE") in 1978.We experienced significant net losses in 2008, 2009, 2011, 2012 and 2013 primarily due to non-cash charges for impairment of intangible and otherassets and reorganization costs, and as a result, we have negative equity of $91.2 million. Our ability to operate as a going concern is dependenton our ability to repay, refinance or amend our debt agreements as they become due, and remain in compliance with debt covenants. We are incompliance with our debt covenants at September 24, 2017. The information included herein should be evaluated in that context. See Item 1A,“Risk Factors”, and Notes 3 and 4 of the Notes to Consolidated Financial Statements, included herein, for additional information.STRATEGIC INITIATIVESWe are focused on several strategic initiatives:Comprehensive Local News That Drives Frequency And EngagementWe drive frequency and engagement with our products by delivering valuable, intensely local, original news and information that in many cases, webelieve, our audiences cannot otherwise readily obtain. Our large and talented news and editorial staff provide constant, real-time local news withsignificant breadth, depth and reliability. Our full access platform provides our subscribers with breaking news throughout the day on our digitalplatforms as well as in depth daily print and digital news and information.We believe the strength of our local brands is the result of the quality and size of our news gathering staff. This allows us to provide the mostcomprehensive coverage of local news in our markets. In most of our markets, we are the leading source of print and digital news and information.As the consumption of news on digital devices has expanded, we have moved quickly to develop applications that address audience and digitaladvertising demands for mobile and tablet advertising platforms. As new digital technologies emerge, we expect to move rapidly to make ourcontent available through them and monetize the audience accessing our content.We are focused on continually improving the functionality and design of all our news platforms, providing greater depth of coverage and increasingreader engagement. We are providing our journalists with tools to give them real-time3information about audience engagement on our digital platforms. This helps inform their decisions on both presentation and coverage.We believe our journalists are at the forefront of gathering and producing news and information about their local community. We seek to grow ourdigital audience by engaging our readers with news and information that we believe stirs public awareness, advances ideas, inspires vision,creates debate and provokes action. Through our news leadership we strive to contribute to community betterment, promote education, fostercommerce and help improve the quality of life in our markets.Accelerate And Expand Digital Revenue GrowthOur digital businesses have experienced rapid growth since 2010. Digital advertising grew 8.0% and reached 28.0% of total advertising andmarketing services revenue for the year ending September 24, 2017. We are growing digital revenue by offering an expansive array of digitalproducts including video: behavioral targeting, audience retargeting, banner ads, social networking, and digital couponing.We provide digital marketing services to small and midsized businesses ("SMBs"), including search engine marketing ("SEM"), social media,audience extension, business profiles, and website hosting and design. Amplified Local ("Amplified Local"), our marketing business aimed at thesmaller SMBs, offers small business solutions including: search engine optimization (“SEO”), local online marketing, social media marketing,video advertising and web site design. Amplified Local seeks to help small businesses maximize the return on marketing dollars by increasingaudience reach, expanding brands, and enhancing their web presence. We believe that these innovative solutions will continue to drive meaningfulnew opportunities for us to grow our digital marketing revenue. We also continue to expand our array of digital products to address advertisersevolving needs, react to competition while seeking to increase our share of advertising and marketing services spending from existing customers .Digital national revenue grew 6.0% in 2017, driven by our sweeps program and improved inventory management and pricing. Mobile advertisingincreased 2.0%, and digital retail advertising, which represents more than 60% of total digital advertising, increased 9.4% in 2017.We believe TownNews.com represents a powerful opportunity for us to drive additional digital revenue. In 2017, digital services revenue, which isprimarily TownNews.com, totaled more than $14 million. Since 2011, the compounded annual growth rate of TownNews.com revenue has been9%.We are a member of the Local Media Consortium (the “Consortium”). The Consortium partners with companies like Google, Yahoo! and othertechnology companies and service providers to increase the potential share of new revenue and audience-building programs available toconsortium members, as well as improve the quality of information and advertising services available from, Consortium members. The Consortiumcurrently includes more than 1,600 local newspapers and hundreds of local broadcast outlets in the United States.In 2017, no single advertiser accounted for more than 3% of advertising revenue and our top 10 advertisers represented 9.4% of advertisingrevenue.Our local sales forces are one of our core strengths and are larger than any local competitor, and we believe they are the most highly trained andproficient sales force in our markets. We have strong relationships with businesses in our markets and offer a wide array of products to deliver theadvertisers' message. Eighty percent of our advertising revenue now comes from local and regional businesses, and our sales executives pitchthe power of our audiences directly to these local decision makers.To address the evolving needs of local advertisers we changed the way we sell local advertising to maximize our opportunities with small andmedium-sized businesses. Local, controllable advertising accounts - those in which our local sales teams have direct contact with the advertisingdecision makers - are the core of our business. To address the needs of and better serve these local advertisers we developed the Edison Project,which is directly aimed at these local advertisers.With Edison, we completely restructured our local sales teams and simplified advertising packages, providing advertisers with an expanded robustdigital presence, increased frequency in print products, and longer advertising commitments.4Our Big Pitch initiative targets larger, local accounts such as a large local hardware store or regional hospital group. We pair creative advertisingcampaigns with our broad suite of products, both digital and print. Because of the success of this program we've added creative resources andaccelerated the number of pitches developed and made, providing greater creativity, faster speed to market, and more pitches closed.In fiscal year 2017, we introduced Digital Connect, a digital services package aimed at growing digital revenue from local businesses. DigitalConnect provides local businesses a turn-key package for expanding their digital presence through enhanced search engine management. DigitalConnect has been the fastest growing digital category this fiscal year 2017 and is expected to be a significant contributor to our digital revenuegrowth in 2018.Grow Audience Revenue And EngagementBased on independent audience research conducted on our behalf, for the period January 2016 to January 2017, we reached 74% of all adults overthe course of a seven-day period in 11 selected markets, which include most of our largest strategic business units. Forty six percent of the adultsin these markets read our newspapers in print, with 19% being both newspaper readers and visitors to our digital platforms. Another 16% weredigital users exclusively. The remaining 12%primarily used our newspapers to obtain advertising and other information.As media access and delivery vehicles continue to evolve, our audiences are evolving and increasingly moving from one delivery platform toanother throughout the day and accessing our content in print, on desktops and laptops, and on mobile devices. We seek to grow our audienceand engagement on whatever platform they choose by, among other things, continually improving content and presentation to maximize the uniqueand evolving capabilities of each platform. We have a large and growing digital audience for our products. Unique visitors to our digital sitesaveraged 25.3 million per month in 2017, while page views totaled 244.2 million per month in 2017.To serve our readers across all delivery platforms, we implemented a full access subscription model, which is now in place in substantially all ofour markets. Full access provides subscribers complete access to our print and digital products available in their market for a single subscriptionrate. We also sell digital only subscriptions.Transforming Our Business And Managing Our CostsWe are transforming our business model and reducing our costs to maintain our margins and operating cash flows. We have consolidated orregionalized many common functions; consolidated or selectively outsourced printing and ad production; discontinued unprofitable publications;reduced newsprint volume significantly; and continually seek to improve the efficiencies and reduce costs of our operation with additionalconsolidation and outsourcing. We have reduced personnel while protecting our strengths in news, sales and digital products. In 2017, on a sameproperty basis we reduced cash costs(1) excluding workforce adjustments 7.7%. We continue to implement cost efficiencies while investing inrevenue drivers.Generate Strong Adjusted EBITDA(1) With A Commitment To Reduce Our DebtThroughout the last economic downturn and ongoing recovery - at a time of unprecedented transition for our industry - we have posted strongadjusted EBITDA and consistent margins. We anticipate modest capital expenditures and pension contributions, and we expect to continue tosignificantly reduce our debt each year.The principal amount of debt was reduced by $68.8 million in 2017 and totaled $548.4 million as of September 24, 2017. Since 2005, we havereduced debt by more than $1 billion and we expect to continue to significantly reduce our debt in 2018. As a result of our debt reductions, interestexpense was reduced by $6.7 million in 2017 compared to 2016, providing additional free cash flow for debt service and other corporate uses suchas the June 30, 2017 acquisition of the Dispatch-Argus serving Moline and Rock Island, IL ("Dispatch-Argus") for $7.2 million.(1) See "Non-GAAP Financial Measures: in Item 7, included herein, for additional information.5PULITZER In 2005, we acquired Pulitzer Inc. (“Pulitzer”). We currently publish 9 daily newspapers that were acquired from Pulitzer and more than 60 weeklynewspapers and specialty publications. Pulitzer also includes our 50% interest in TNI, as discussed more fully below.Pulitzer newspapers largest operations include Bloomington, IL and St. Louis, Missouri, where its subsidiary, St. Louis Post-Dispatch LLC (“PDLLC”), publishes the St. Louis Post-Dispatch, our only major daily newspaper which serves the greater St. Louis metropolitan area. St. Louisnewspaper operations also include a variety of specialty publications, and supports its related digital products as well as the Suburban Journals ofGreater St. Louis, a group of weekly newspapers and niche publications that focus on separate communities within the metropolitan area. The 2005 acquisition was financed primarily with debt. The second lien term loan lenders have a first lien on Pulitzer assets. Excess cash flowfrom Pulitzer, as defined in the Second Lien Loan Agreement, and cash flow from Pulitzer asset sales are used to pay down the second lien termloan at par. On August 28, 2016 we sold substantially all of the assets of our Provo, Utah newspaper operations, a former Pulitzer newspaper, andproceeds from the sale were used to pay down the second lien term loan.TNI Partners In conjunction with the Pulitzer acquisition we obtained a 50% interest in TNI, the Tucson, Arizona newspaper partnership. TNI, acting as agent forour subsidiary, Star Publishing Company (“Star Publishing”) and Citizen Publishing Company (“Citizen”), the owner of the remaining 50%, asubsidiary of Gannett Co., Inc., (“Gannett”). TNI was responsible for printing, delivery, advertising and subscription activities of the Arizona DailyStar and the Tucson Citizen. In May 2009, Citizen discontinued print publication of the Tucson Citizen and in 2014 stopped publishing its digitalproduct.TNI collects all receipts and income and pays substantially all operating expenses incident to the partnership's operations and publication of thenewspaper 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. TNI makes weekly distributions to Star Publishing and Citizen of all available cash. The TNI agency agreement (“Agency Agreement”), has governed the operation since 1940. The Agency Agreement expires in 2040, but containsan option, which may be exercised by either party, to renew the agreement for successive periods of 25 years each. Star Publishing and Citizenalso have a reciprocal right of first refusal to acquire the 50% interest in TNI owned by Citizen and Star Publishing, respectively, under certaincircumstances. Both the Company and Citizen incur certain administrative costs and capital expenditures that are reported by their individualcompanies. MADISON NEWSPAPERS We own 50% of the capital stock of MNI and 8.7% of the common stock of The Capital Times Company (“TCT”). TCT owns 50% of the capitalstock of MNI. MNI publishes daily and Sunday newspapers, and other publications in Madison, Wisconsin, and other Wisconsin locations, andsupports their related digital products. MNI conducts business under the trade name Capital Newspapers. We have a contract to furnish theeditorial and news content for the Wisconsin State Journal, which is published by MNI, and periodically provide other services to MNI for a fee.Results of MNI are accounted for using the equity method. Net income or loss of MNI (after income taxes) is allocated equally to the Companyand TCT. MNI makes quarterly dividend payments to the Company and TCT. AUDIENCES Based on independent research, we estimate that, in an average week, our newspapers and digital products reach approximately 74% of adults inour larger markets. We also measure use of our daily newspapers for advertising, sports scores and entertainment listings ("print users"). 6Audience reach is summarized as follows: All Adults (Percent, Past Seven Days)20172016201520142013 Print only27.126.831.333.136.9Print and digital19.019.319.320.017.8Digital only15.516.612.512.110.5Total readership61.662.763.165.265.2Print users12.411.612.813.013.9Total reach74.074.375.978.279.1 Total print reach58.557.763.466.168.6Total digital reach34.535.931.832.128.3 Age 18-29 (Percent, Past Seven Days)20172016201520142013 Print only14.815.319.520.330.7Print and digital15.516.220.218.315.6Digital only19.623.412.715.310.5Total readership49.954.952.453.956.8Print users13.911.219.519.522.0Total reach63.866.171.973.478.8 Total print reach44.242.759.258.168.3Total digital reach35.139.632.933.626.1Source:Lee Enterprises Audience Report, Thoroughbred Research. January 2013-2017.Markets:11 largest markets in 2013-2017.Margin of Error:Total sample +/- 0.9%, Total digital sample +/- 1.1% After advertising, subscriptions and single copy sales are our largest source of revenue. For the 13 weeks ended September 2017, our dailycirculation units, which include TNI and MNI, as measured by the Alliance for Audited Media ("AAM") were 0.8 million and Sunday circulation unitswere 1.2 million. Growth in audiences can, over time, also positively impact advertising revenue. Our strategies to grow audiences include continuous improvementof content and promotional efforts to expand our audience. 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 ourproducts. Customer service can also influence print subscriptions. The continued improvement of mobile and tablet applications has positivelyimpacted our digital audiences. We have historically experienced higher retention of customers using credit cards or automatic bank account withdrawals, ("EZ pay") as the formof subscription payment. Accordingly we focus our enterprises on increasing the number of EZ pay subscribers. Other initiatives vary from locationto location and are determined principally by our centralized consumer sales and marketing group in collaboration with local management.Competition for subscriptions is generally based on the content, journalistic quality and price of the publication. Audience competition exists in all markets, from unpaid print and digital products, but is most significant in markets with competing local dailynewspapers. These markets tend to be near major metropolitan areas, where the size of the population may be sufficient to support more than onedaily newspaper.Our subscription sales channels continue to evolve through an emphasis on targeted telemarketing, direct mail and email to acquire newsubscribers and retain current subscribers.7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-Dispatch (3)stltoday.comSt. Louis, MO101,336 368,569 Arizona Daily Star (5) (3)azstarnet.comTucson, AZ49,915 100,886 Capital Newspapers (4) Wisconsin State Journalmadison.comMadison, WI57,833 74,190 Daily Citizenwiscnews.com/bdcBeaver Dam, WI5,458 — Portage Daily Registerwiscnews.com/pdrPortage, WI2,775 — Baraboo News Republicwiscnews.com/bnrBaraboo, WI2,449 — The Timesnwitimes.comMunster, Valparaiso, andCrown Point, IN58,081 68,087 Quad Cities Group Quad-City Timesqctimes.comDavenport & Muscatine, IA34,180 34,141 Dispatch-Argusqconline.comMoline, IL23,887 26,360 Central Illinois Newspaper Group The Pantagraph (3)pantagraph.comBloomington, IL24,807 27,458 Herald & Reviewherald-review.comDecatur &Mattoon/Charleston, IL25,845 22,038 Lincoln Group Lincoln Journal Starjournalstar.comLincoln, NE40,011 46,838 Columbus Telegramcolumbustelegram.comColumbus, NE4,037(6) — Fremont Tribunefremonttribune.comFremont, NE3,111(6) — Beatrice Daily Sunbeatricedailysun.comBeatrice, NE3,184(6) — River Valley Newspaper Group La Crosse Tribunelacrossetribune.comLa Crosse, WI18,782 23,583 Winona Daily Newswinonadailynews.comWinona, MN5,583 6,241 The Chippewa Heraldchippewa.comChippewa Falls, WI2,959(6) — The Courierwcfcourier.comWaterloo and Cedar Falls,IA32,463 29,646 Billings Gazettebillingsgazette.comBillings, MT24,781 27,672 Sioux City Journalsiouxcityjournal.comSioux City, IA20,917 23,052 The Bismarck Tribunebismarcktribune.comBismarck, ND18,854 22,683 The Post-Starpoststar.comGlens Falls, NY16,818 21,121 Missoula Group Missoulianmissoulian.comMissoula, MT15,474 19,004Ravalli Republicravallinews.comHamilton, MT1,933(6) 1,860(6) Helena/Butte Group Independent Recordhelenair.comHelena, MT10,306 10,928 The Montana Standardmtstandard.comButte, MT8,416 8,569 Rapid City Journalrapidcityjournal.comRapid City, SD15,608 19,322 The Journal Timesjournaltimes.comRacine, WI16,518 18,927 The Southern Illinoisanthesouthern.comCarbondale, IL12,029 18,378 Mid-Valley News Group Albany Democrat-Heralddemocratherald.comAlbany, OR8,380 8,776 Corvallis Gazette-Timesgazettetimes.comCorvallis, OR6,936 7,187 Casper Star-Tribunetrib.comCasper, WY15,101 15,493 8 Average Units (1) NewspaperPrimary WebsiteLocation Daily (2) Sunday Magic Valley Group The Times-Newsmagicvalley.comTwin Falls, ID14,455 12,797 Elko Daily Free Presselkodaily.comElko, NV3,218 — Globe Gazetteglobegazette.comMason City, IA9,668 11,995 Santa Maria Times (3)santamariatimes.comSanta Maria, CA7,784 11,971 The Daily Newstdn.comLongview, WA13,498 11,194 Napa Valley Register (3)napavalleyregister.comNapa, CA8,519 8,881 Arizona Daily Sun (3)azdailysun.comFlagstaff, AZ6,411(6) 7,687 The Citizenauburnpub.comAuburn, NY5,620 7,148 The Times and Democratthetandd.comOrangeburg, SC6,460 6,995 The Sentinelcumberlink.comCarlisle, PA6,780(6) — The World (3)theworldlink.comCoos Bay, OR4,473 — The Sentinel (3)hanfordsentinel.comHanford, CA4,575 — The Ledger Independentmaysville-online.comMaysville, KY3,773 — Daily Journal (3)dailyjournalonline.comPark Hills, MO3,654(6) — 787,655 1,129,677 (1)Source: AAM: September 2017 Quarterly Executive Summary Data Report, unless otherwise noted.(2)Not all newspapers are published Monday through Saturday(3)Owned by Pulitzer, Inc.(4)Owned by MNI.(5)Owned by Star Publishing and published through TNI.(6)Source: Company statistics. NEWSPRINT The raw material of newspapers, and our other print publications, is newsprint. We purchase newsprint from U.S. and Canadian producers. Webelieve we will continue to receive a supply of newsprint adequate for our needs and consider our relationships with newsprint producers to begood. Newsprint purchase prices can be volatile and fluctuate based upon factors that include foreign currency exchange rates and both foreignand domestic production capacity and consumption. Price fluctuations can effect our results of operations. We have not entered into derivativecontracts for newsprint. For the quantitative impacts of these fluctuations, see Item 7A, “Quantitative and Qualitative Disclosures about MarketRisk”, included herein. 9EXECUTIVE TEAM The following table lists our current executive team members:NameAgeServiceWith TheCompanyNamedTo CurrentPositionCurrent Position Mary E. Junck70June 1999February 2016Executive Chairman Kevin D. Mowbray55September 1986February 2016President and Chief Executive Officer Nathan E. Bekke48January 1992February 2015Vice President - Consumer Sales and Marketing Paul M. Farrell62October 2013October 2015Vice President - Sales Robert P. Fleck55May 2016May 2016Vice President - Sales and Marketing Suzanna M. Frank47December 2003March 2008Vice President - Audience Astrid J. Garcia67December 2006December 2013Vice President - Human Resources and Legal James A. Green51March 2013March 2013Vice President - Digital Michael R. Gulledge57October 1982October 2015Vice President - Advertising Sales Leadership John M. Humenik54December 1998February 2015Vice President - News Ronald A. Mayo56May 2015June 2015Vice President - Chief Financial Officer and Treasurer Michele Fennelly White55June 1994June 2011Vice President - Information Technology and ChiefInformation OfficerMary E. Junck was elected Executive Chairman in February 2016. From 2002 - February 2106 she served as President and Chief ExecutiveOfficer. She was elected to the Board of Directors of the Company in 1999. Kevin D. Mowbray was elected President and Chief Executive Officer in February 2016. From April 2015 - February 2016 he was Executive VicePresident and Chief Operating Officer. From May 2013 to April 2015 he served as Vice President and Chief Operating Officer. From 2004 to May2013 he served as a Vice President - Publishing and was Publisher of the St. Louis Post-Dispatch from 2006 until May 2013. He was elected tothe Board of Directors of the Company in February 2016. Nathan E. Bekke was appointed Vice President - Consumer Sales and Marketing in February 2015. From 2003 to February 2015, he served asPublisher of the Casper Star-Tribune. Paul M. Farrell was appointed Vice President - Sales in October 2015. From October 2013 to October 2015, he served as Vice President - DigitalSales. From September 2012 to October 2013, he served as Publisher of the Connecticut Media Group of Hearst Media Services. From May 2007to August 2012, he served as Vice President - Sales and Marketing of the Company.Robert P. Fleck was appointed Vice President - Sales and Marketing in May 2016 and named Publisher of the LaCrosse Tribune in 2017. Prior tojoining the Company, he was with The Tribune Company. His 24-year career with Tribune included Executive Vice President of Tribune PublishingCompany; General Manager and Senior Vice President for TRIBUNE365; and Senior Vice President of the Chicago Tribune Media Group.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.10Astrid J. Garcia was appointed Vice President - Human Resources and Legal in December 2013. From 2006 to November 2013 she served asVice President of 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.John M. Humenik was appointed Vice President - News in February 2015. He is also president and publisher of the Wisconsin State Journal andpresident of Madison Newspapers Inc., a position he has held since 2013. He was publisher and editor of the Arizona Daily Star from 2005 to 2010and additionally served as president of Tucson Newspapers Inc. until 2013.Ronald A. Mayo was elected Vice President, Chief Financial Officer and Treasurer in June 2015. Prior to joining the Company, he was ChiefFinancial Officer of Halifax Media Group from July 2014 to January 2015 and previously served as Vice President and Chief Financial Officer ofMediaNews Group, Inc., for 12 years.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. Mowbray, Farrell, Green, Gulledge, and Mayo have been designated by the Board of Directors as executive officers for USSecurities and Exchange Commission ("SEC") reporting purposes.EMPLOYEES At September 24, 2017, we had approximately 3,555 employees, including approximately 927 part-time employees, exclusive of TNI and MNI.Full-time equivalent employees in 2017 totaled approximately 3,626. We consider our relationships with our employees to be good.Bargaining units represent 344, or 69%, of the total employees of the St. Louis Post-Dispatch, which has six contracts with bargaining units withexpiration dates through September 2018.Approximately 34 employees in three additional locations are represented by collective bargaining units.CORPORATE GOVERNANCE AND PUBLIC INFORMATION We have a long history of sound corporate governance practices. Our Board of Directors has a lead independent director, and has had one formany years. Currently, six of nine 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. In addition, a number of other factors (those identified elsewhere in thisdocument) may cause actual results to differ materially from expectations. Potential investors should carefully consider the following risks andother information in this Annual Report in evaluating us and our common stock. See also, “Forward-Looking Statements”, included herein. 11ECONOMIC CONDITIONS Our operations rely on the local economies in which we serve, and we are also susceptible to general economic downturns, which havehad and could continue to have a material and adverse impact on our operating results It is difficult to estimate the level of economic growth or contraction as current and future conditions in the economy have an inherent degree ofuncertainty. Adverse changes may occur to our business as a result of weak global economic conditions, declining oil prices, wavering consumerconfidence, unemployment, declines in stock markets, contraction of credit availability, changes in interest rates, declines in real estate values, orother factors affecting economic conditions in general. These changes may negatively affect the sales of our products, increase exposure tolosses from bad debts, increase the cost and decrease the availability of financing, or increase costs associated with publishing and distributingour publications.OPERATING REVENUE Our operating revenue may be materially adversely affected if we do not successfully respond to the shift in newspaper readership andadvertising expenditures away from traditional print mediaA significant portion of our revenue is derived from advertising. The demand for advertising is sensitive to the overall level of economic strength,both locally and nationally. Our revenues are sensitive to economic trends and uncertainties as well as discretionary spending by advertisers andsubscribers. Changes in advertising and circulation revenue could have a material effect on our results of operations.Operating revenue in most print categories has decreased since 2007 and may decrease further in the future. Such decreases may not be offsetby growth in advertising in other categories, such as digital revenue which has been rising since 2010. Historically, newspaper publishing has beenviewed as a cost-effective method of delivering various forms of advertising. There can be no guarantee that this historical perception will guidefuture decisions on the part of advertisers. Web sites and applications for mobile devices distributing news and other content continue to gainpopularity. As a result, audience attention and advertising spending are shifting and may continue to shift from traditional print media to digitalmedia including those owned by the Company. As media audiences increasingly move to consume news and information digitally, we expect thatadvertisers will allocate greater portions of their future budgets to digital media advertising, which can offer more measurable returns thantraditional print media. If our efforts to adapt to evolving technological developments in the media industry are unsuccessful, or if we fail tocorrectly anticipate shifts in audience demand and digital media trends, we may be unable to provide the services, media and content thataudiences and potential audiences in our markets prefer and we may be unable to provide the returns on ad spending that our advertisers seek.This increased competition and shift to the digital consumption of news and information has had, and may continue to have, an adverse effect onour business and financial results. Significant capital investment may be required to respond to this shift.The digital media industry has greatercompetitive challenges than print because barriers to entry can be low and geographic location is less relevant.Technological developments also pose additional challenges that could adversely affect our revenue and competitive position. New deliveryplatforms may lead to pricing restrictions and the loss of a direct relationship with consumers. We may also be adversely affected if the use oftechnology developed 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 dealers, banks and telecommunications companies, have experienced significantmerger and acquisition activity over the last several years, and some have gone out of business or closed stores. Changes in the economy andconsumer shopping habits, in particular, in the brick and mortar retail sector along with the increasing use of online consumer shopping, has drivena change in advertising spending and retailers approach to advertising and marketing their goods and services.12Classified AdvertisingClassified print and digital advertising for employment, automotive and real estate have been significantly reduced by changing trends in how ouraudiences access and use our products and the increase in digital/classified advertising competitors.Subscription RevenueAdvertising and subscription revenue is affected by readership of our print publications and digital products. Although our combined print and digitalaudience is relatively stable, print subscription volumes have been declining for several years, reflecting general trends in the newspaper industry,including consumer migration toward digital media platforms for accessing news and information. The Company has increased its subscription rateand the possibility exists that future subscription price increases may be difficult to realize or maintain and as a result subscription sales maydecline, and price decreases may be necessary to retain or grow subscription volume. We believe we are maintaining our share of audience in ourlocal markets through digital audience growth and strong print newspaper readership.As audience attention increasingly migrate to digital media, print circulation of our newspapers may be adversely affected, which may decreasesubscription revenue and accelerate declines in print advertising. We face increasing competition from digital news sources which can impactsubscription revenue and audience growth. This competition has increased as a result of the continued development of new digital mediatechnologies. To maintain our subscription base, we may be required to incur additional costs that we may not be able to recover throughsubscription and advertising revenue. We may not be able to achieve a profitable balance between subscription levels and advertising revenue. Inaddition, if we are not successful in growing our digital businesses, including digital subscription revenue, to offset declines in revenue from ourprint products, our business, financial condition and prospects will be adversely affected.Our ability to retain a subscriber base with all access pricing depends on market acceptance, consumer habits, cost, an adequate digitalinfrastructure, terms of delivery platforms and other factors. The metered paywall model and/or subscription price increases may result in fewerpage views or unique visitors to our digital platforms if viewers are unwilling to pay to gain access to our digital content after reaching themaximum number of free articles in a month. Stagnation, or a decline in digital traffic levels, will adversely affect our advertiser base, advertisingrates and result in a decline in digital revenue.See "Audiences” in Item 1, included herein, for additional information on the risks associated with subscription revenue.If we are not successful in growing our digital business, our business, financial condition, results of operations and prospects could beadversely affectedThe future revenue performance of our digital business depends to a significant degree upon the growth development and management of oursubscriber and advertising audiences. The growth of our digital business over the long term depends on various factors, including, among otherthings, the ability to:•Continue to increase digital audiences;•Attract advertisers to our digital platforms;•Tailor our products to efficiently and effectively deliver content and advertising on mobile devices;•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;•Partner with, or use services from, providers that can assist us in effectively growing our digital business; and13•Create digital content and platforms that attracts and engages audiences in our markets.We expect that our digital business will continue to increase as a percentage of our total revenue. In 2017, total digital revenue (including revenuefrom advertising and marketing services and digital services, mainly TownNews.com) comprised 18.7% of total revenue, as compared to 16.4% in2016. As our digital business becomes a greater portion of our overall business, we will face a number of increased risks from managing our digitaloperations, including, but not limited, to the following:•Continuing training of our sales force to more effectively sell digital only advertising, combined digital and print advertising packagesversus our historical print advertising 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, including reducing the physical printing anddistribution infrastructure cost associated with the print business.We rely on revenue from printing and distribution of third-party publications and digital services that may be subject to many of thesame business and industry risks facing usWe generate a portion of our revenue from printing and distributing third-party publications, and our relationships with these third parties aregenerally pursuant to short-term contracts. Typically, these third parties are operating in the same industry and a similar geographical location asus. In addition, digital services revenue is derived primarily from third-party businesses in the same industry as us. As a result, revenue fromthese third parties is subject to the same macroeconomic and industry trends affecting our operations. If their businesses are adversely affectedby these trends, our associated revenue would be adversely affected.OPERATING EXPENSES We may not be able to reduce future expenses to offset potential revenue declines We reduced cash costs(1) of our operations (compensation, newsprint and ink, other operating expenses and workforce adjustments) significantlysince 2011. Such expense reductions are not expected to impact our ability to deliver advertising, news or other content to our customers. As aresult of the significant cost reductions to date, future cost reductions may not be as significant. Compensation and newspaper distributionaccount for 63% of our cash costs excluding workforce adjustments. Newsprint comprises approximately 6% of our cash costs excluding workforce adjustments. See “Newsprint” in Item 1, and “Commodities” in Item7A, included herein, for additional information on the risks associated with changes in newsprint costs.The technological developments and changes we need to make to our business successful, may require significant capital investments. We maybe limited in our ability to invest funds and resources in digital products, services or opportunities, and we may incur costs of research anddevelopment in building and maintaining the necessary and continually evolving technology infrastructure. As a result, our digital business couldsuffer if we are unable to make these investments.(1) See Non-GAAP Financial Measures: in Item 7, included herein, for additional information.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 reflect the reduced value of these assets. Should general economic, market or business conditions decline, and cause a negative impacton our stock price or projected future cash flows, we may need to record additional impairment charges in the future. Such charges would notimpact our cash flows or debt covenant compliance. See “Critical Accounting Policies” in Item 7, included herein, for additional information on therisks associated with such assets.14Sustained increases in costs of employee health and welfare benefits may reduce our profitabilityIn recent years, we experienced significant increases in the cost of employee medical benefits because of economic factors beyond our control,including increases in health care costs. At least some of these factors may continue to put upward pressure on the cost of providing medicalbenefits. Although we have actively sought to control increases in these costs, there can be no assurance that we will succeed in limiting costincreases, and continued upward pressure could reduce the profitability of our businesses.Sustained increases in funding requirements of our pension and postretirement obligations may reduce the cash available for ourbusinessPension liabilities, net of plan assets, totaled $43.5 million at September 24, 2017. The Company expects to make pension contributions of $4.9million in 2018. At September 24, 2017 the assets of one of our postretirement medical plans exceeded plan liabilities by $11.0 million.Our pension and postretirement plans invest in a variety of equity and debt securities. Future volatility and disruption in the securities marketscould cause declines in the asset values of our pension and postretirement plans. In addition, a decrease in the discount rates or changes tomortality estimates and other assumptions used to determine the liability could increase the benefit obligation of the plans. Unfavorable changes tothe plan assets and/or the benefit obligations could increase the level of required contributions above what is currently estimated, which couldreduce the cash available for our business and debt service. Legislation passed in 2012, 2014 and 2015 temporarily reduced funding requirementsfor our pension plans, but those payments will eventually need to be restored unless discount rates and/or plan assets increase.We expect to be subject to withdrawal liability in connection with one multiemployer pension plan and may be subject to additionalwithdrawal liabilities in connection with other multiemployer pension plans, which may reduce the cash available 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 Pension Protection Act of 2006. For plans that are in critical status, benefit reductions may apply and/or we couldbe required to make additional contributions.One of our enterprise's bargaining units withdrew from representation, and as a result we are subject to a claim from the multiemployer pensionplan for a withdrawal liability. The amount of such liability will be dependent on actions taken, or not taken, by the pension plan, as well as thefuture investment performance and funding status of the pension plan. The withdrawal liability is expected to be funded over a 20 year period.If, we were to withdraw from one of the remaining plans or trigger a partial withdrawal due to declines in contribution base units, and the plan hadunfunded vested benefits at the time of our withdrawal or partial withdrawal, we could incur a significant plan withdrawal liability, which couldreduce the cash available for our business.CAPITAL We may have insufficient earnings or liquidity to meet our future debt obligations We have $548.4 million of debt outstanding as of September 24, 2017, as discussed more fully below (and certain capitalized terms used belowdefined) in Item 7,"Liquidity" and Note 4 of the Notes to Consolidated Financial Statements, included herein. Since February 2009, we havesatisfied substantially all principal and interest payments due under our debt facilities with our cash flows and asset sales. As of September 24, 2017, our debt consists of the following:•$400,000,000 aggregate principal amount of 9.5% Senior Secured Notes (the “Notes”) due March 2022, pursuant to an Indenture datedas of March 31, 2014 (the “Indenture”), of which $385,000,000 is currently outstanding as of September 24, 2017; 15•$250,000,000 first lien term loan (the "1st Lien Term Loan") due March 2019 and $40,000,000 revolving facility (the "RevolvingFacility") under a First Lien Credit Agreement dated as of March 31, 2014 (together, the “1st Lien Credit Facility”), of which $45,145,000is outstanding at September 24, 2017; and•$150,000,000 12.0% second lien term loan under a Second Lien Loan Agreement dated as of March 31, 2014 (the “2nd Lien TermLoan”) due December 2022, of which $118,240,000 is outstanding at September 24, 2017.The ability to make payments on our indebtedness will depend on our ability to generate cash flows from operations in the future. Cash generatedfrom future asset sales could serve as an additional source of debt repayment. Our ability, to a certain extent, is subject to general economic,financial, competitive, business, legislative, regulatory and other factors that are beyond our control.At September 24, 2017, after consideration of letters of credit, we have approximately $33,818,000 available for future use under our RevolvingFacility. Including cash, our liquidity at September 24, 2017 totals $44,439,000. This liquidity amount excludes any future cash flows. Our adjustedEBITDA has been strong and has exceeded $144 million in each year from 2011 through 2017, but there can be no assurance that such results willcontinue. We expect all interest and principal payments due in the next twelve months will be satisfied by our cash flows and certain asset sales,which will allow us to maintain an adequate level of liquidity.At September 24, 2017, the principal amount of our outstanding debt totals $548,385,000. At September 24, 2017 and September 25, 2016 ourdebt, net of cash, is 3.7 times and 3.9 times our adjusted EBITDA, respectively.Final maturities of our debt are March 2019 through December 2022. As a result, we believe refinancing risk has been substantially reduced for thenext several years.There are numerous potential consequences under the Notes, 1st Lien Credit Facility, 2nd Lien Term Loan, if an event of default, as defined, occursand is not remedied. Many of those consequences are beyond our control. The occurrence of one or more events of default would give rise to theright of the applicable lenders to exercise their remedies under the Notes, 1st Lien Credit Facility, 2nd Lien Term Loan, respectively, including,without limitation, the right to accelerate the repayment of all outstanding debt and take actions authorized in such circumstances under applicablecollateral 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, if necessary. The Notes, 1st Lien Credit Facility and 2nd Lien Term Loan have only limited affirmativecovenants with which we are required to maintain compliance. We are in compliance with our debt covenants at September 24, 2017.The Notes, 1st Lien Credit Facility and 2nd Lien Term Loan each contain restrictive covenants that limit our ability to grow our business orreturn capital to our stockholdersThe Notes, 1st Lien Credit Facility and 2nd Lien Term Loan each contain various restrictions, covenants and representations and warranties. If wefail to comply with any of these covenants or breach these representations or warranties in any material respect, such noncompliance wouldconstitute a default, and the lenders could elect to declare all amounts outstanding under the agreements related thereto to be immediately dueand payable and enforce their respective interests against collateral pledged under such agreements.The covenants and restrictions generally limit or restrict our ability to, among other things:•incur or guarantee additional debt;•make certain investments, loans or acquisitions;•transfer or sell assets; and•make certain restricted payments, including repurchases of outstanding common stock and dividends.The restrictions described above may interfere with our ability to obtain new or additional financing or engage in other business activities, whichmay significantly limit or harm our results of operations, financial condition and liquidity.16A decrease in our stock price may limit the ability to trade our stock or 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 effectively and our reputationIn the 13-weeks ended September 24, 2017, 19.2% of our revenue was obtained from digital sources, including advertising and one of ourbusinesses, TownNews.com, that provides digital infrastructure and digital publishing services for us and other companies.We use technology 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 and disabling or taking over of our websites. We have preventivesystems and processes in place to protect against the risk of cyber incidents. However, the techniques used to obtain unauthorized access and todisable systems and websites change frequently and may be difficult to detect for long periods of time. There can be no assurance that we, or thesecurity systems we implement, will protect against all of these rapidly changing risks. Prolonged system outages or a cyber incident that goesundetected could reduce our print and/or digital revenue, increase our operating costs, disrupt our operations, harm our reputation, lead to legalexposure to customers and employees as well as subject us to liability under laws and regulations that protect our customers and employeespersonal data. We maintain insurance coverage against certain of such risks, but cannot guarantee that such coverage will be applicable orsufficient 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.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 April30, 2019.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.17Information related to St. Louis facilities at September 24, 2017 is as follows:(Square Feet)OwnedLeased PD LLC649,0001,700Suburban Journals9,0004,300 More than 40% of our daily newspapers, as well as many of our nearly 300 other publications, are printed at either another one of our printlocations or outsourced to a third party, to enhance operating efficiency. We are continuing to evaluate additional insourcing and outsourcingopportunities in order to more effectively 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 We are involved in a variety of legal actions that arise in the normal course of business. Insurance coverage mitigates potential loss for certain ofthese matters. While we are unable to predict the ultimate outcome of these legal actions, it is our opinion that the disposition of these matters willnot have a material adverse effect on our Consolidated Financial Statements, taken as a whole.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.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 2017 High3.76 3.30 3.10 2.40Low2.40 2.40 1.75 1.80Closing2.90 2.60 1.90 2.20 2016 High2.54 2.20 2.43 3.92Low1.43 1.15 1.69 1.74Closing1.68 1.80 1.91 3.75 2015 High3.93 3.73 3.55 3.40Low3.07 2.74 2.78 1.36Closing3.68 3.17 3.33 2.08 At September 24, 2017, we had 6,095 registered holders of record of our Common Stock. 18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 4 of the Notes to Consolidated Financial Statements, included herein.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, 2017 (with September 30, 2012 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© 2017 Standard & Poor's, a division of S&P Global. All rights reserved. The value of $100 invested on September 30, 2012 in stock of the Company, the Peer Group Index and in the S&P 500 Stock Index, includingreinvestment of dividends, is summarized in the table below. September 30 (Dollars)2012 2013 2014 2015 2016 2017 Lee Enterprises, Incorporated100.00 178.38 228.38 140.54 253.38 148.65Peer Group Index100.00 131.94 127.30 120.95 129.33 200.09S&P 500 Stock Index100.00 119.34 142.89 142.02 163.93 194.44 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 three U.S. publicly traded companies with significant newspaper publishing operations(excluding the Company) and is weighted by market capitalization. The Peer Group Index includes A.H. Belo Corp., The McClatchy Company andThe New York Times Company.19ITEM 6. SELECTED FINANCIAL DATA Selected financial data is as follows:(Thousands of Dollars and Shares, Except Per Common Share Data)2017 2016 2015 2014 2013 OPERATING RESULTS (1) Operating revenue566,943 614,364 648,543 660,877 677,774Operating expenses, excluding depreciation, amortization, andimpairment of intangible and other assets441,873 476,413 501,760 505,822 517,047Depreciation and amortization41,282 43,441 45,563 48,511 55,527Loss (gain) on sales of assets, net(3,667) (3,139) 106 (1,338) 110Impairment of intangible and other assets (1)2,517 2,185 — 2,980 171,094Equity in earnings of associated companies7,609 8,533 8,254 8,297 8,685Operating income (loss)92,547 103,997 109,368 113,199 (57,319)Interest expense(57,573) (64,233) (72,409) (79,724) (89,447)Debt financing and administration costs(4,818) (5,947) (5,433) (22,927) (646)Gain on insurance settlement— 30,646 — — —Other, net10,060 (6,268) 6,386 3,413 8,189 Income (loss) from continuing operations28,605 36,019 24,318 7,671 (76,478)Discontinued operations, net of income taxes— — — — (1,246)Net income (loss)28,605 36,019 24,318 7,671 (77,724) Income (loss) attributable to Lee Enterprises, Incorporated27,481 34,961 23,316 6,795 (78,317) Income (loss) from continuing operations attributable to LeeEnterprises, Incorporated27,481 34,961 23,316 6,795 (77,071) Basic: Continuing operations0.51 0.66 0.44 0.13 (1.49)Discontinued operations— — — — (0.02) 0.51 0.66 0.44 0.13 (1.51) Diluted: Continuing operations0.50 0.64 0.43 0.13 (1.49)Discontinued operations— — — — (0.02) 0.50 0.64 0.43 0.13 (1.51) Weighted average common shares: Basic53,990 53,198 52,640 52,273 51,833Diluted55,392 54,224 53,931 53,736 51,833 Total assets620,850 662,855 747,825 811,275 827,705Debt, including current maturities (2)548,385 617,167 725,872 804,750 847,500Debt, net of cash and restricted cash (2)537,764 600,183 714,738 787,605 829,938Stockholders' deficit(92,235) (128,485) (159,393) (178,253) (170,350)20(1)The Company recorded pretax, non-cash impairment charges to reduce the carrying value of assets as follows:(Thousands of Dollars)2017 2016 2015 2014 2013 Continuing operations: Goodwill— — — — —Non-amortized intangible assets2,035 818 — 1,936 1,567Amortizable intangible assets— — — — 169,041Property, equipment and other assets482 1,367 — 1,044 486 2,517 2,185 — 2,980 171,094(2)Principal amount of debt, excluding fair value adjustments. See Note 4 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 September 24, 2017and for 2017, 2016 and 2015. This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes thereto,included herein. NON-GAAP FINANCIAL MEASURES We use non-GAAP financial performance measures for purposes of evaluating our performance and liquidity. We believe that each of the non-GAAP measures presented provides useful information to investors by allowing them to view our businesses through the eyes of our managementand Board of Directors, facilitating comparison of results across historical periods, and providing a focus on the underlying ongoing operatingperformance and liquidity of our businesses. The non-GAAP financial measures we use are as follows:Adjusted EBITDA is a non-GAAP financial performance measure that enhances a financial statement user's overall understanding of theoperating performance of the Company. The measure isolates unusual, infrequent or non-cash transactions from the continuing operatingperformance of the business. This allows users to easily compare operating performance among various fiscal periods and understand howmanagement measures the performance of the business. This measure also provides users with a benchmark that can be used whenforecasting future operating performance of the Company that excludes unusual, nonrecurring or one time transactions. Adjusted EBITDA isalso a component of the calculation used by stockholders and analysts to determine the value of our business when using the marketapproach, which applies a market multiple to financial metrics. It is also a measure used to calculate the leverage ratio of the Company,which is a key financial ratio monitored and used by the Company and its investors. Adjusted EBITDA is defined as net income (loss), plusnonoperating expenses (income), net, income tax expense (benefit), depreciation, amortization, loss (gain) on sale of assets, impairmentcharges, workforce adjustment costs, stock compensation and our 50% share of EBITDA from TNI and MNI, minus equity in earnings ofTNI and MNI and curtailment gains.Adjusted Income (Loss) and Adjusted Earnings (Loss) Per Common Share are non-GAAP financial performance measures that we believeoffer a useful metric to evaluate overall performance of the Company by providing financial statement users the operating performance of theCompany on a per share basis excluding the impact of changes in the warrant valuation as well as unusual and infrequent transactions. It isdefined as income (loss) attributable to Lee Enterprises, Incorporated and diluted earnings (loss) per common share adjusted to exclude theimpact of the warrant valuation and the insurance settlement.Cash Costs is a non-GAAP financial performance measure of operating expenses that are settled in cash and is useful to investors inunderstanding the components of the Company’s cash operating costs. Generally, the Company provides forward-looking guidance of CashCosts, which can be used by financial statement users to assess the Company's ability to manage and control its operating cost structure.Cash Costs is defined as compensation, newsprint and ink, other operating expenses and workforce adjustments and other. Depreciation,amortization, impairment charges, other non-cash operating expenses and other expenses are excluded. Cash Costs are also presentedexcluding workforce adjustments, which are paid in cash.21We also present revenue and certain operating expense trends on a Same Property basis which excludes results from the acquisition of theDispatch-Argus and a small weekly publication acquired in 2017 as well as the operating results of the Daily Herald in Provo, UT, which wassold in August 2016. Same Property results are useful to investors in understanding the revenue and operating expense trends excluding theimpact of changes due to operations no longer owned by the Company or operations that were recently acquired.A table reconciling adjusted EBITDA to net income (loss), the most directly comparable measure under GAAP, is set forth below under the caption"Reconciliation of Non-GAAP Financial Measures".Reconciliations of adjusted income (loss) and adjusted earnings per diluted common share to income (loss) attributable to Lee Enterprises,Incorporated and earnings (loss) per diluted common share, respectively, the most directly comparable measures under GAAP, are set forth inItem 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 “2017 vs. 2016”and “2016 vs. 2015”.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES(UNAUDITED)The table below reconciles the non-GAAP financial performance measure of adjusted EBITDA to net income, the most directly comparable GAAPmeasure:(Thousands of Dollars)201720162015 Net Income28,60536,01924,318Adjusted to exclude Income tax expense11,61122,17613,594Non-operating expenses, net52,33145,80271,456Equity in earnings of TNI and MNI(7,609)(8,533)(8,254)Loss (gain) on sale of assets, net(3,667)(3,139)106Impairment of intangible and other assets2,5172,185—Depreciation and amortization41,28243,44145,563Workforce adjustments and other7,5231,8253,304Stock compensation2,0882,3061,971Add: Ownership share of TNI and MNI EBITDA (50%)9,92711,70511,246Adjusted EBITDA144,608153,787163,304 CRITICAL ACCOUNTING POLICIES Our discussion and analysis of operations and financial condition are based upon our Consolidated Financial Statements, which have beenprepared in accordance with Generally Accepted Accounting Principles ("GAAP"). The preparation of these financial statements requires us tomake estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingentassets and liabilities. We evaluate our estimates on an on-going basis.We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, 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.Intangible Assets, Other Than Goodwill In assessing the recoverability of non-amortized intangible assets, we annually assess qualitative factors affecting22our business to determine if the probability of a goodwill impairment is more likely than not. Our assessment includes reviewing internal andexternal factors affecting our business, such as revenue projections and other industry or market considerations. This assessment is made as ofthe first day of our fourth fiscal quarter of each year.We analyze non-amortized intangible assets for impairment more frequently if impairment indicators are present. Such indicators of impairmentinclude, but are not limited to, changes in business climate and operating or cash flow losses related to such assets.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 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 asset groups.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 2017 and 2016, due to continuing revenue declines, we recorded non-cash charges to reduce the carrying value of non-amortized intangibleassets. We also recorded pretax, non-cash charges to reduce the carrying value of property, equipment and other assets in 2017 and 2016. Werecorded deferred income tax benefits related to these charges. A summary of impairment charges is included in the table below:(Thousands of Dollars)2017 2016 2015 Continuing operations: Non-amortized intangible assets2,035 818 —Property, equipment and other assets482 1,367 — 2,517 2,185 —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.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 than23the plan assumptions will generally result in decreases in a plan's funded status and may necessitate additional contributions.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. We currently have recorded valuationallowances that we will maintain until, in our opinion, it is more likely than not that some portion or all of the deferred tax assets will 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. Our income taxexpense recorded in the future may be increased or decreased to the extent our valuation allowances change. An increase in the valuationallowance could result in additional income tax expense, while a decrease in the valuation allowance could result in a reduction to income taxexpense, in such period and could have a significant impact on our future earnings.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.Our current and deferred income tax provisions are calculated based on estimates and assumptions that could differ from the actual resultsreflected in income tax returns filed during the subsequent year. These estimates are reviewed and adjusted, if needed, throughout the year.Adjustments between our estimates and the actual results of filed returns are recorded when identified. 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 Income and Comprehensive Income in the periods in which such matters areultimately determined. See "Changes in Laws and Regulations." 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 as the product is delivered or made available or as newspapers are individually sold. Otherrevenue is recognized when the related product or service has been delivered. Unearned revenue arises in the ordinary course of business fromadvance subscription payments for print or digital products 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.24IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDSIn March 2017, the Financial Accounting Standards Board ("FASB") issued a new standard to improve the presentation of pension andpostretirement benefit expense. The new standard requires that the service cost component of pension and postretirement benefits expense isrecognized as compensation expense, while the remaining components of the expense are presented outside of operating income. The currentpresentation includes all components of the expense as Compensation in our Consolidated Statements of Income and Comprehensive Income.The adoption of the new standard is required in 2019. Based on 2017 results, the adoption of this standard will reduce operating income by$6,574,000, which includes the impact of a $3,741,000 curtailment gain, however net income will remain unchanged.In August 2016, the Financial Accounting Standards Board ("FASB") issued a new standard to conform the presentation in the statement of cashflows for certain transactions, including cash distributions from equity method investments, among others. The adoption of the new standard isrequired in 2019. The adoption of this standard may reclassify certain cash receipts within the Consolidated Statements of Cash Flows.In March 2016, the FASB issued a new standard that makes improvements to the accounting for employee share-based payments. The newstandard simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxesand statutory tax withholding requirements, as well as classification in the statement of cash flows. The adoption of the new standard is required in2018. We do not believe the impact from the adoption of this standard to have a material impact on the Consolidated Financial Statements.In February 2016, the FASB issued a new standard for the accounting treatment of leases. The new standard is based on the principle that entitiesshould recognize assets and liabilities arising from leases. The new standard does not significantly change the lessees’ recognition, measurementand presentation of expenses and cash flows from the previous accounting standard. Leases are classified as finance or operating. The newstandards primary change is the requirement for entities to recognize a lease liability for payments and a right of use asset representing the right touse the leased asset during the term on operating lease arrangements. Lessees are permitted to make an accounting policy election to notrecognize the asset and liability for leases with a term of twelve months or less. Lessors’ accounting under the new standard is largely unchangedfrom the previous accounting standard. In addition, the new standard expands the disclosure requirements of lease arrangements. Lessees andlessors will use a modified retrospective transition approach, which includes a number of practical expedients.We currently anticipate adopting the new lease standard in the first quarter of fiscal year 2020. To date we have made progress in our assessmentof the new lease standard. We are currently evaluating the provisions of the updated guidance and assessing the impact on our ConsolidatedFinancial Statements.In May 2014, the FASB issued new accounting requirements for the recognition of revenue from contracts with customers. The new requirementsinclude additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts,including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In April and May2016, the FASB also issued clarifying updates to the new standard specifically to address certain core principles including the identification ofperformance obligations, licensing guidance, the assessment of the collectability criterion, the presentation of taxes collected from customers,noncash considerations, contract modifications, and completed contracts at transition. The adoption of these requirements is required in 2019.We currently anticipate adopting the new revenue recognition standard using the modified retrospective approach in the fiscal year beginningOctober 1, 2018. This approach consists of recognizing the cumulative effect of initially applying the standard as an adjustment to openingretained earnings.During 2017, we established a project team to identify potential differences that would result from the application of this standard. We are in theprocess of reviewing our customer contracts, identifying contractual provisions that may result in a change in the timing or the amount of revenuerecognized and assessing the enhanced disclosure requirements of the new guidance. Based on our evaluation, we expect to adopt therequirements of the new standard in the first quarter of 2019 and anticipate using the modified retrospective transition method.25CONTINUING OPERATIONS2017 vs. 2016Operating results, as reported in the Consolidated Financial Statements, are summarized below:(Thousands of Dollars and Shares, Except Per Share Data)2017 2016 PercentChangeSameProperty Advertising and marketing services revenue: Retail212,737 238,641 (10.9)(10.0)Classified88,429 101,077 (12.5)(12.2)National20,049 22,114 (9.3)(8.6)Niche publications and other10,145 11,631 (12.8)(13.9)Total advertising and marketing services revenue331,360 373,463 (11.3)(10.6)Subscription191,922 194,002 (1.1)(0.6)Digital services14,008 14,240 (1.6)(1.3)Commercial printing9,742 12,269 (20.6)(20.0)Other19,911 20,390 (2.3)(2.3)Total operating revenue566,943 614,364 (7.7)(7.1)Compensation209,692 229,752 (8.7)(8.4)Newsprint and ink24,904 26,110 (4.6)(4.7)Other operating expenses199,754 218,726 (8.7)(7.4)Workforce adjustments and other7,523 1,825 NMNMCash costs441,873 476,413 (7.3)(6.5) 125,070 137,951 (9.3)(9.4)Depreciation16,026 17,291 (7.3) Amortization25,256 26,150 (3.4) Gain on sales of assets, net(3,667) (3,139) 16.8 Impairment of intangible and other assets2,517 2,185 15.2 Equity in earnings of associated companies7,609 8,533 (10.8) Operating income92,547 103,997 (11.0) Non-operating expense, net(52,331) (45,802) 14.3 Income before income taxes40,216 58,195 (30.9) Income tax expense11,611 22,176 (47.6) Net income28,605 36,019 (20.6) Net income attributable to non-controlling interests(1,124) (1,058) 6.2 Income attributable to Lee Enterprises, Incorporated27,481 34,961 (21.4) Other comprehensive income (loss), net6,710 (6,503) NM Comprehensive income (loss) attributable to Lee Enterprises, Incorporated34,191 28,458 20.1 Earnings per common share: Basic0.51 0.66 (22.7) Diluted0.50 0.64 (21.9) All of the revenue and operating expense trends discussed below are on a Same Property basis, unless otherwise noted, to reflect the impact ofthe acquisitions of the Dispatch-Argus and a small weekly publication in 2017 as well as the sale of the Daily Herald in Provo, UT in 2016.Advertising and Marketing Services RevenueIn 2017, advertising and marketing services revenue decreased $39,062,000, or 10.6%, compared to 2016. Retail advertising decreased 10.0%.The decrease in retail advertising revenue is due to continued softness in print advertising demand resulting in reduced advertising volumeprimarily from large retail, big box stores and classifieds. Digital retail advertising on a stand-alone basis increased 9.4%, partially offsetting printdeclines.26Classified revenue decreased $12,157,000, or 12.2%, in 2017 as we continue to experience a reduction in print advertising from automotive,employment and real estate in most of our markets which combined, declined 18.3%. While other classified revenue, which includes obituaries andlegal notices, declined $1,435,000, or 3.5%, in 2017. Digital classified revenue on a stand-alone basis increased 5.8%.National advertising decreased $1,869,000, or 8.6%. Digital national advertising on a stand-alone basis increased 6.0%.Niche publications and other decreased $1,610,000, or 13.9%, in 2017. Declines were primarily due to elimination of products that do not meet ourprofit margin standards.On a stand-alone basis, digital advertising included in advertising marketing services revenue increased 8.0% to $91,947,000, in 2017,representing 28.0% of total advertising and marketing services revenue. Total digital revenue including TownNews.com and all other digitalbusiness totaled $105,954,000 in 2017, an increase of 6.7% over 2016. TownNews.com generates the majority of its revenue from contentmanagement services at our properties as well as 1,600 other newspapers and other media operations. Print advertising, including preprints andprint marketing services revenue, decreased 16.2%.Subscription and Other RevenueSubscription revenue decreased $1,083,000, or 0.6%, in 2017. Selective price increases mostly offset paid subscription revenue declines fromreduced volume.Our average daily newspaper circulation, including TNI, MNI and digital subscribers, totaled 0.8 million in 2017. Sunday circulation totaled 1.2million.Digital services revenue decreased $189,000, or 1.3%, due to a decrease in online surveys revenue, offset by revenue growth at TownNews.com.Commercial printing revenue decreased $2,420,000, or 20.0%, in 2017 Period due to decreased volume from several of our existing customers.In 2017, our mobile, tablet, desktop and app sites, including TNI and MNI, attracted an average of 25.4 million unique visitors per month, with227.2 million monthly page views, a 5.7% increase compared to 2016. Increased audience engagement is driving a higher number pages viewedper user session in 2017. Research in our larger markets indicates we are maintaining our share of audience in our markets through thecombination of digital audience growth and strong print newspaper readership.Operating ExpensesOperating expenses on a GAAP basis decreased 7.1% in 2017. Excluding workforce adjustments, cash costs decreased $36,004,000 or, 7.7%, in2017.Compensation expense decreased $19,064,000, or 8.4%, in 2017, driven by a decline of 8.5% in average full time equivalent employees and lowerself-insured medical costs.Newsprint and ink costs decreased $1,226,000, or 4.7%, in 2017, as a result of a 12.2% reduction in newsprint volume partially offset by higherprices. See Item 7A, “Commodities”, included herein, for further discussion and analysis of the impact of newsprint on our business.Other operating expenses decreased $15,714,000, or 7.4%, in 2017. Other operating expenses include all operating costs not considered to becompensation, newsprint, depreciation, amortization, or workforce adjustments and other. The largest components of these costs include delivery,postage, outsourced printing, digital cost of goods sold and facility expenses. Cost reductions were primarily related to lower subscriber deliverycost from low print distribution volumes and a decrease in postage costs, as a result of a reduction in direct mail advertising volumes.Workforce adjustment an other costs totaled $7,523,000 and $1,825,000 in 2017 and 2016, respectively. The 2017 includes a $2,600,000 expenseto record an estimate of a partial withdrawal liability from one of our multiemployer pension plans.27Results of OperationsOn a GAAP basis, depreciation expense decreased $1,265,000, or 7.3%, and amortization expense decreased $894,000, or 3.4%, in 2017. Salesof operating assets and other, net totaled $3,667,000 in 2017 and included a $3,741,000 curtailment gain from the elimination of an unfundedemployee benefit plan. Sales of operating assets in 2016 resulted in a net gain of $3,139,000, including the gain on the sale of the Provo DailyHerald.In 2017, we recorded $2,517,000 of non-cash impairment charges compared to $2,185,000 in 2016.Equity in earnings of TNI and MNI decreased $924,000 in 2017.The factors noted above resulted in operating income of $92,547,000 in 2017 compared to $103,997,000 in 2016.Nonoperating Income and ExpensesInterest expense decreased $6,660,000, or 10.4%, to $57,573,000 in 2017 due to lower debt balances. Our weighted average cost of debt,excluding amortization of debt financing cost, increased to 9.9% in 2017 compared to 9.7% in 2016, as the majority of our debt repayments in2017 were made on the 1st Lien Term Loan, our lowest cost debt.In 2016, we recognized a $30,646,000 gain on an insurance settlement. The settlement represents our share of a subrogation recovery arising fromthe settlement of claims for damages suffered as a result of a 2009 loss at one of our production facilities.We recognized $4,818,000 of debt financing and administrative costs in 2017 compared to $5,947,000 in 2016 related to our 2014 refinancing, themajority of which was amortization. We also recognized a $1,250,000 gain on extinguishment of debt in 2016.As more fully discussed in Note 4 of the Notes to the Consolidated Financial Statements, included herein, we recorded a liability for the Warrants,issued in connection with the Warrant Agreement. We remeasure the liability to fair value each reporting period, with changes reported in other non-operating income (expenses). Due to the fluctuation in the price of our Common Stock the estimated fair value of the warrant liability can changeeach period. We recorded non-operating income of $10,181,000 in 2017 and non-operating expenses of $7,519,000, in 2016.Overall ResultsWe recognized income tax expense of $11,611,000, resulting in an effective tax rate of 28.9% in 2017 compared to 38.1% in 2016. The impact ofthe mark-to-market adjustment for our warrants has no related tax expense or benefit. See Note 10 of the Notes to the Consolidated FinancialStatements, included herein, for a discussion of the differences between the expected federal income tax rate to the actual tax rates.28As a result of the factors noted above, income attributable to Lee Enterprises, Incorporated totaled $27,481,000 in 2017 compared to $34,961,000in 2016. We recorded earnings per diluted common share of $0.50 in 2017 and $0.64 in 2016. Excluding the warrants fair value adjustment and thegain on insurance settlement, as detailed in the table below, diluted earnings per common share, as adjusted, were $0.31 in 2017, compared to$0.42 in 2016. Per share amounts may not add due to rounding. 2017 2016 (Thousands of Dollars, Except Per Share Data)AmountPer ShareAmountPer Share Income attributable to Lee Enterprises, Incorporated, as reported27,4810.5034,9610.64Adjustments: Warrants fair value adjustment(10,181) 7,519 Gain on insurance settlement— (30,646) (10,181) (23,127) Income tax effect of adjustments, net— 10,726 (10,181)(0.18)(12,401)(0.23)Income attributable to Lee Enterprises, Incorporated, as adjusted17,3000.3122,5600.42292016 vs. 2015Operating results, as reported in the Consolidated Financial Statements, are summarized below:(Thousands of Dollars and Shares, Except Per Share Data)2016 2015 PercentChange Advertising and marketing services revenue: Retail238,641 262,079 (8.9)Classified101,077 116,480 (13.2)National22,114 22,422 (1.4)Niche publications and other11,631 11,118 4.6Total advertising and marketing services revenue373,463 412,099 (9.4)Subscription194,002 194,474 (0.2)Digital services14,240 12,522 13.7Commercial printing12,269 11,875 3.3Other20,390 17,573 16.0Total operating revenue614,364 648,543 (5.3)Compensation229,752 239,028 (3.9)Newsprint and ink26,110 30,263 (13.7)Other operating expenses218,726 229,165 (4.6)Workforce adjustments1,825 3,304 (44.8)Cash costs476,413 501,760 (5.1) 137,951 146,783 (6.0)Depreciation17,291 18,418 (6.1)Amortization26,150 27,145 (3.7)Loss (gain) on sales of assets, net(3,139) 106 NMImpairment of intangible and other assets2,185 — NMEquity in earnings of associated companies8,533 8,254 3.4Operating income103,997 109,368 (4.9)Non-operating expense, net(45,802) (71,456) (35.9)Income from continuing operations before income taxes58,195 37,912 53.5Income tax expense22,176 13,594 63.1Net income36,019 24,318 48.1Net income attributable to non-controlling interests(1,058) (1,002) 5.6Income attributable to Lee Enterprises, Incorporated34,961 23,316 49.9Other comprehensive loss, net(6,503) (6,445) 0.9Comprehensive income attributable to Lee Enterprises, Incorporated28,458 16,871 68.7 Earnings per common share: Basic0.66 0.44 50.0Diluted0.64 0.43 48.8Advertising and Marketing Services RevenueIn 2016 advertising and marketing services revenue decreased $38,636,000, or 9.4%, compared to 2015. Retail advertising decreased 8.9%. Thedecrease in retail advertising revenue is due to reduced print advertising volume primarily from large retail, big box stores and classifieds. Digitalretail advertising on a stand-alone basis increased 8.9%, partially offsetting print declines.Classified revenue decreased $15,403,000, or 13.2% in 2016 as we continued to experience a reduction in print advertising from automotive,employment and real estate in most of our markets. Digital classified revenue on a stand-alone basis decreased 4.3%.30National advertising decreased $308,000 or 1.4%. Digital national advertising on a stand-alone basis increased 20.4% due to improvedmanagement of available ad positions offered on the national advertising exchanges and improved pricing. Revenue in niche publications and otherincreased $513,000, or 4.6%.On a stand-alone basis, digital advertising included in advertising and marketing services revenue increased 5.6%, to $86,279,000 in 2016,representing 23.1% of total advertising and marketing services revenue. Mobile advertising revenue, which is included in digital advertising,increased 19.6% in 2016. Total digital revenue, including TownNews.com and all other digital business totaled $100,519,000 in 2016, an increaseof 6.6% from a year ago. TownNews.com generates the majority of its revenue from content management services at our properties as well as1,600 other newspapers and other media operations. Print advertising, including preprints and print marketing services revenue decreased 13.1%.Subscription and Other RevenueSubscription revenue decreased $472,000, or 0.2% in 2016. Subscription revenue was virtually flat as price increases and the addition of premiumcontent days with higher single day pricing almost completely offset revenue declines from print subscription unit losses.Our average daily newspaper circulation, including TNI, MNI and digital subscribers, totaled 0.9 million in 2017. Sunday circulation totaled 1.3million.Digital services revenue increased $1,718,000, or 13.7%, in 2016, largely due to TownNews.com. Commercial printing revenue increased$394,000, or 3.3% in 2016, due to new customers offset by decreased volume for existing customers at several of our large markets. Otherrevenue increased $2,817,000, or 16.0% in 2016, due to an increase in revenue for delivery of third party newspapers.Our mobile, tablet, desktop and app sites, including TNI and MNI, attracted an average of 26.0 million unique visitors per month, with 218.8 millionpage views. Research in our larger markets indicates we are maintaining our share of audience in our markets through the combination of digitalaudience growth and strong print newspaper readership.Operating ExpensesOperating expenses decreased 5.2% in 2016. Excluding workforce adjustments, cash costs decreased $23,868,000, or 4.8% in 2016.Compensation expense decreased $9,276,000, or 3.9%, in 2016, driven by a decline of 7.9% in average full-time equivalent employees. Costsassociated with our self-insured medical plan increased $4.0 million in 2016 due to higher claims costs compared to 2015, offsetting some of thecosts due to the reduction in full-time equivalent employees.Newsprint and ink costs decreased $4,153,000, or 13.7%, in 2016, primarily as a result of reduction in newsprint volume of 10.7%. See Item 7A,“Commodities”, included herein, for further discussion and analysis of the impact of newsprint on our business.Other operating expenses decreased $10,439,000, or 4.6%, in 2016. Other operating expenses include all operating costs not considered to becompensation, newsprint, depreciation, amortization, or workforce adjustments and other. The largest components of these costs includeddelivery, postage, outsourced printing, digital cost of good sold, facility expenses among others. Cost reduction were primarily related to lowersubscriber delivery cost from declines in print volumes and a decrease in postage costs, as a result to a reduction in direct mail advertisingvolumes.Workforce adjustment costs totaled $1,825,000 and $3,304,000 in 2016 and 2015, respectively.Results of OperationsDepreciation expense decreased $1,127,000, or 6.1%, and amortization expense decreased $995,000, or 3.7%, in 2016. Sales of operating assetsincluding the sale of the Provo Daily Herald in August 2016, resulted in a net gain of $3,139,000 in 2016 compared to a net loss of $106,000 in2015.In 2016, we recorded $2,185,000 of non-cash impairment charges.31Equity in earnings in associated companies decreased $279,000 in 2016.The factors noted above resulted in operating income of $103,997,000 in 2016 compared to $109,368,000 in 2015Nonoperating Income and ExpensesInterest expense decreased $8,176,000, or 11.3%, to $64,233,000 in 2016 due to lower debt balances.In 2016, we recognized a $30,646,000 gain on an insurance settlement. The settlement represents our share of a subrogation recovery arising fromthe settlement of claims for damages suffered as a result of a 2009 loss at one of our production facilities.We recognized $5,947,000 of debt financing and administrative costs in 2016 compared to $5,433,000 in 2015, related to our 2014 refinancing. Wealso recognized $1,250,000 gain on extinguishment of debt in 2016.Due to the fluctuation in the price of our Common Stock, we recorded non-operating expenses of $7,519,000 in 2016 and non-operating income of$6,568,000 in 2015 related to the change in fair value of the warrants.Overall ResultsWe recognized income tax expense at 38.1% of income before income taxes in 2016 and 35.9% in 2015. See Note 10 of the Notes to theConsolidated Financial Statements, included herein, for a discussion of the difference between the expected federal income tax rate and the actualtax rates.As a result of the factors noted above, income attributable to Lee Enterprises, Incorporated totaled $34,961,000 in 2016 compared to $23,316,000in 2015. We recorded earnings per diluted common share of $0.64 in 2016 and $0.43 in 2015. Excluding the warrants fair value adjustment and thegain on the insurance settlement, as detailed in the table below, diluted earnings per common share, as adjusted, were $0.42 in 2016, compared to$0.31 in 2015. Per share amounts may not add due to rounding. 2016 2015 (Thousands of Dollars, Except Per Share Data)AmountPer ShareAmountPer Share Income attributable to Lee Enterprises, Incorporated, as reported34,9610.6423,3160.43Adjustments: Warrants fair value adjustment7,519 (6,568) Gain on insurance settlement(30,646) — (23,127) (6,568) Income tax effect of adjustments, net10,726 (12,401)(0.23)(6,568)(0.12)Income attributable to Lee Enterprises, Incorporated, as adjusted22,5600.4216,7480.3132LIQUIDITY AND CAPITAL RESOURCES Operating Activities Cash provided by operating activities totaled $72,281,000 in 2017 compared to $79,190,000 in 2016 due to a decline in net income to $28,605,000in 2017 from $36,019,000 in 2016. The decline in net income is primarily the result of continued softening of the print advertising environmentpartially offset by lower operating expenses and a decline in pension contributions.Cash provided by operating activities totaled $79,190,000 in 2016 compared to $74,476,000 in 2015. The increase in cash flows in 2016 is due toan increase in net income of $36,019,000 in 2016 from $24,318,000 in 2015 as well as changes in operating assets and liabilities.Pension liabilities, net of plan assets, totaled $43.5 million as of September 24, 2017. Contributions to pension plans are expected to total$4,940,000 in 2018.Investing Activities Cash required for investing activities totaled $9,455,000 in 2017 and cash provided by investing activities totaled $34,508,000 in 2016. The changein cash flows from investing activities is primarily related to a $30,646,000 insurance settlement in 2016. Proceeds from sales of assets totaled$2,582,000 and $9,878,000 in 2017 and 2016, respectively, and in 2017, $7,450,000 was used to acquire businesses. Capital spending totaled$4,078,000 and $7,091,000 in 2017 and 2016, respectively.Cash provided by investing activities totaled $34,508,000 in 2016 and cash required for investing activities totaled $208,000 in 2015. The changein cash flows from investing activities is mainly due to a $30,646,000 insurance settlement in 2016. Proceeds from sales of assets totaled$9,878,000 in 2016 and $8,871,000 in 2015, respectively. Capital spending totaled $7,091,000 and $9,707,000 in 2016 and 2015, respectively. We anticipate that funds necessary for capital expenditures, which are expected to total up to $10,000,000 in 2018, and other requirements, will beavailable from internally generated funds, or available under our Revolving Facility. Financing Activities Cash required for financing activities totaled $69,189,000 in 2017, $107,848,000 in 2016 and $79,838,000 in 2015. Debt reduction accounted for themajority of the usage of funds in all years.Debt is summarized as follows: Interest Rates (%)(Thousands of Dollars)September 24 2017September 25 2016September 24 2017 Revolving Facility——6.71st Lien Term Loan45,145101,3047.5Notes385,000385,0009.52nd Lien Term Loan118,240130,86312.0 548,385617,167 Less current maturities of long-term debt30,18225,070 Total long-term debt496,379565,826 At September 24, 2017, our weighted average cost of debt, excluding amortization of debt financing costs, is 9.9%.At September 24, 2017, aggregate minimum required maturities of debt excluding amounts required to be paid from future excess cash flowcomputations total $30,182,000 in 2018, $20,145,000 in 2019, zero in 2020, zero in 2021, $385,000,000 in 2022 and $113,058,000 thereafter.33In addition to mandatory paydowns, the 1st and 2nd lien term loans require excess cash flow payments based on calculations defined in the creditagreements. See Note 4 of the Notes to the Consolidated Financial Statements.Liquidity At September 24, 2017, after consideration of letters of credit, we have approximately $33,818,000 available for future use under our RevolvingFacility. Including cash, our liquidity at September 24, 2017 totals $44,439,000. 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 24, 2017, the principal amount of our outstanding debt totals $548,385,000. For the last twelve months ending September 24, 2017,the principal amount of our debt, net of cash, is 3.7 times our adjusted EBITDA, compared to a ratio of 3.9 times at September 25, 2016.The 2014 Refinancing significantly extended our debt maturity profile with final maturity of the majority of our debt in 2022. As a result, refinancingrisk 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, if an event of default, as defined, occursand is not remedied. Many of those consequences are beyond our control. The occurrence of one or more events of default would give rise to theright of the applicable lender(s) to exercise their remedies under the Notes, 1st Lien Credit Facility, 2nd Lien Term Loan, respectively, including,without limitation, the right to accelerate all outstanding debt and take actions authorized in such circumstances under applicable collateralsecurity documents.Our ability to operate as a going concern is dependent on our ability to remain in compliance with debt covenants and repay, refinance or amendour debt agreements as they become due, or earlier if liquidity is available. The Notes, 1st Lien Credit Facility and 2nd Lien Term Loan have onlylimited affirmative covenants with which we are required to maintain compliance. We are in compliance with our debt covenants at September 24,2017.In February 2017 our filing of a replacement Form S-3 registration statement ("Shelf") with the SEC, was declared effective and expires February2020, maintaining an effective shelf is required under our credit agreements. The Shelf registration gives us the flexibility to issue and publiclydistribute various types of securities, including preferred stock, common stock, warrants, secured or unsecured debt securities, purchasecontracts and units consisting of any combination of such securities, from time to time, in one or more offerings, up to an 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. Subject to maintenanceof the minimum level of equity market float and the conditions of our existing debt agreements, the Shelf may enable us to sell securities quicklyand efficiently when market conditions are favorable or financing needs arise. Under our existing debt agreements, net proceeds from the sale ofany securities may be used generally to reduce debt.Other Matters Cash and cash equivalents decreased $6,363,000 in 2017, increased $5,850,000 in 2016 and decreased $5,570,000 in 2015. 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 16 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.34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.We expect the requirements under the Affordable Care Act will continue to evolve. Our future health care costs are expected to increase based onanalysis published by the United States Department of Health and Human Services, input from independent advisors and our understanding of thecurrent provisions of the Affordable Care Act, such as: •Certain preventive services provided without additional 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.We do not expect the Affordable Care Act will have a significant impact on our postretirement medical benefit obligation liability.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 result in a near-term reduction in minimum funding requirements for our defined benefit pension plans. STEA will also result inan 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.Income TaxesCertain states in which we operate periodically consider changes to their corporate income tax rates. Until such changes are enacted, the impactof such changes cannot be determined.Wage LawsThe United States and various state and local governments are considering increasing their respective minimum wage rates. Most of ouremployees earn an amount in excess of the current United States or state minimum wage rates. However, until changes to such rates areenacted, the impact of the changes cannot be determined.35CONTRACTUAL OBLIGATIONS The following table summarizes our significant contractual obligations at September 24, 2017:(Thousands of Dollars)Payments (or Commitments) Due (Years) Nature of ObligationTotal LessThan 1 1-3 3-5 MoreThan 5 Debt (Principal Amount) (1)548,385 30,182 20,145 385,000 113,058Interest expense (2)(3)233,396 52,840 151,577 27,283 1,696Operating lease obligations10,304 2,976 2,607 1,223 3,498Capital expenditure commitments503 503 — — — 792,588 86,501 174,329 413,506 118,252(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 and the 2nd Lien Term Loan. While excess cash flow payments are based on actual performance, we expect to makevoluntary and excess cash flow payments on the 1st and 2nd lien term loans currently outstanding, in the next five years. See Note 5 of the Notes tothe Consolidated Financial Statements, included herein.(2)Interest expense includes an estimate of interest expense for the Notes, 1st Lien Credit Facility, and 2nd Lien Term Loan until their maturities in March2022, March 2019, and December 2022, respectively. Interest expense under the Notes is estimated using the 9.5% contractual rate applied to theoutstanding balance as reduced by future contractual maturities of such debt. Interest expense under the 1st Lien Term Loan is estimated based onthe one month LIBOR at September 24, 2017 of 1.24% as increased by our applicable margin of 6.25% applied to the outstanding balance, as reducedby future contractual maturities of such debt. Interest expense under the Revolving Facility is estimated based on the one month LIBOR at September24, 2017 of 1.24% as increased by our applicable margin of 5.5% applied to the outstanding balance, as reduced by future contractual maturities ofsuch debt. Interest expense under the 2nd Lien Term Loan is estimated using the 12.0% contractual rate applied to the outstanding balance duringeach period. Changes in interest rates in excess of current LIBOR levels, use of borrowing rates not based on LIBOR, use of interest rate hedginginstruments, and/or principal payments in excess of contractual maturities or based on other requirements of the Notes, 1st Lien Credit Facility or 2ndLien Term Loan could significantly change this estimate. See Note 5 of the Notes to Consolidated 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. See Notes 5 and 6 ofthe Notes to the Consolidated Financial Statements, included herein.The contractual obligations above exclude unrecognized tax benefits to be recorded in accordance with FASB ASC Topic 740, Income Taxes. Weare unable to reasonably estimate the ultimate amount or timing of cash settlements with the respective taxing authorities for such matters. Asubstantial amount of our deferred income tax liabilities will not result in future cash payments. See Note 10 of the Notes to the ConsolidatedFinancial Statements, included herein.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 financial impact of future increases in interest rates. AtSeptember 24, 2017, 8.2% of the principal amount of our debt is subject to floating interest rates. Our primary exposure is to LIBOR. A 100 basispoint increase to LIBOR would, in excess of LIBOR minimums discussed more fully below, decrease income before income taxes on anannualized basis by approximately $451,000 based on $45,145,000 of floating rate debt outstanding at September 24, 2017.Our debt under the 1st Lien Term Loan is subject to minimum LIBOR interest rate levels of 1.0%. Current LIBOR rates are in excess of theminimum and any future increases in LIBOR will affect our interest rates.We regularly evaluate alternatives to hedge our interest rate risk, but have no hedging instruments in place.36COMMODITIESContinuous declining demand for newsprint from printed publishing caused North American newsprint producers to permanently remove productioncapacity, approaching 1 million metric tonnes per year, in the second half of 2017 leading to tightening supply and price increases. Similarproduction capacity reductions have also taken place outside of North America. Currently, total U.S. based production capacity can only supplyapproximately one third of the current U.S. based newsprint demand with Canadian producers suppling the balance.In addition to the capacity reductions one U.S. based newsprint and specialty high bright groundwood producer has filed an uncoated groundwoodpaper anti-dumping complaint requesting countervailing duty rates be applied to Canadian producers' imports into the U.S. The trade case hasbeen reviewed by the U.S. International Trade Commission and has now moved to Department of Commerce to determine if antidumping andcountervailing duties should be applied to sales by Canadian newsprint and uncoated groundwood producers to U.S. customers. A decision, whichmay or may not include tariffs, is scheduled to be made before mid-year 2018.Capacity closures and a slightly weakening U.S. dollar have led to several price increases announcements with implementation across theDecember Quarter 2017 and into the beginning of 2018. Continued downward demand trends could stabilize upward price pressure on newsprint.However, the final decision on the anti-dumping and countervailing duty case has the potential to further increase prices, even with decliningnewsprint demand trends.Our long term supply strategy continues to align the Company with those cost effective suppliers most likely to continue producing and supplyingnewsprint to the North American market and geographically aligned with our print locations.A $10 per tonne price increase for 30 pound newsprint would result in an annualized reduction in income before taxes of approximately $365,000based on anticipated consumption in 2018, excluding consumption of TNI and MNI and the impact of LIFO accounting. Such prices may alsodecrease. We manage significant newsprint inventories, which will temporarily mitigate the impact of any future price increases or decreases.SENSITIVITY TO CHANGES IN VALUE At September 24, 2017, the fair value of floating rate debt, which consists primarily of our 1st Lien Term Loan, is $45,145,000, based on an averageof private market price quotations. Our fixed rate debt consists of $385,000,000 principal amount of the Notes and $118,240,000 principal amountunder the 2nd Lien Term Loan. At September 24, 2017, based on an average of private market price quotations, the fair values were $397,513,000and $121,787,000 for the Notes and 2nd Lien Term Loan, respectively.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 2017, 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 24, 2017, 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.37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 (2013) 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 24, 2017 that havematerially affected or are reasonably likely to materially affect our internal control over financial reporting.38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 24, 2017,based on criteria established in Internal Control - Integrated Framework (2013) 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 24, 2017, based on criteria establish in Internal Control - Integrated Framework (2013) 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 24, 2017 and September 25, 2016, and the related consolidatedstatements of income and comprehensive income, stockholders’ equity (deficit), and cash flows for each of the 52-week periods ended September24, 2017, September 25, 2016, and September 27, 2015, and our report dated December 8, 2017 expressed an unqualified opinion on thoseconsolidated financial statements./s/ KPMG LLPChicago, IllinoisDecember 8, 201739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 2018, 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 2018, 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 2018, 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 2018, 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 2018, which is incorporated herein by reference,under the caption “Relationship with Independent Registered Public Accounting Firm”. 40PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following documents are filed as part of this Annual Report: FINANCIAL STATEMENTS Consolidated Statements of Income and Comprehensive Income - Years ended September 24, 2017, September 25, 2016 and September 28,2015Consolidated Balance Sheets - September 24, 2017 and September 25, 2016Consolidated Statements of Stockholders' Equity (Deficit) - Years ended September 24, 2017, September 25, 2016 and September 28, 2015Consolidated Statements of Cash Flows - Years ended September 24, 2017, September 25, 2016 and September 28, 2015Notes 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. 41CONSOLIDATED FINANCIAL STATEMENTSPAGE Consolidated Statements of Income and Comprehensive Income43 Consolidated Balance Sheets44 Consolidated Statements of Stockholders' Equity (Deficit)46 Consolidated Statements of Cash Flows47 Notes to Consolidated Financial Statements48 Report of Independent Registered Public Accounting Firm77 42CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME(Thousands of Dollars, Except Per Common Share Data)2017 2016 2015 Operating revenue: Advertising and marketing services331,360 373,463 412,099Subscription191,922 194,002 194,474Other43,661 46,899 41,970Total operating revenue566,943 614,364 648,543Operating expenses: Compensation209,692 229,752 239,028Newsprint and ink24,904 26,110 30,263Other operating expenses199,754 218,726 229,165Depreciation16,026 17,291 18,418Amortization of intangible assets25,256 26,150 27,145Impairment of intangible and other assets2,517 2,185 —Loss (gain) on sales of assets and other, net(3,667) (3,139) 106Workforce adjustments and other7,523 1,825 3,304Total operating expenses482,005 518,900 547,429Equity in earnings of associated companies7,609 8,533 8,254Operating income92,547 103,997 109,368Non-operating income (expense): Gain on insurance settlement— 30,646 —Interest expense(57,573) (64,233) (72,409)Debt financing and administrative costs(4,818) (5,947) (5,433)Other, net10,060 (6,268) 6,386Total non-operating expense, net(52,331) (45,802) (71,456)Income before income taxes40,216 58,195 37,912Income tax expense11,611 22,176 13,594Net income28,605 36,019 24,318Net income attributable to non-controlling interests(1,124) (1,058) (1,002)Income attributable to Lee Enterprises, Incorporated27,481 34,961 23,316Other comprehensive income (loss), net of income taxes6,710 (6,503) (6,445)Comprehensive income attributable to Lee Enterprises, Incorporated34,191 28,458 16,871 Earnings per common share: Basic:0.51 0.66 0.44Diluted:0.50 0.64 0.43 The accompanying Notes are an integral part of the Consolidated Financial Statements.43CONSOLIDATED BALANCE SHEETS(Thousands of Dollars)September 24 2017 September 25 2016 ASSETS Current assets: Cash and cash equivalents10,621 16,984Accounts receivable, less allowance for doubtful accounts: 2017 $4,796; 2016 $4,32749,469 51,334Inventories3,616 4,252Other4,132 4,683Total current assets67,838 77,253Investments: Associated companies29,181 29,716Other9,949 9,488Total investments39,130 39,204Property and equipment: Land and improvements20,424 21,028Buildings and improvements172,138 174,164Equipment278,880 279,770Construction in process752 823 472,194 475,785Less accumulated depreciation357,998 347,223Property and equipment, net114,196 128,562Goodwill246,426 243,729Other intangible assets, net136,302 158,354Medical plan assets, net15,392 14,063Other1,566 1,690 Total assets620,850 662,855 The accompanying Notes are an integral part of the Consolidated Financial Statements.44(Thousands of Dollars and Shares, Except Per Share Data)September 24 2017 September 25 2016 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt30,182 25,070Accounts payable17,027 18,143Compensation and other accrued liabilities22,423 23,884Accrued interest1,512 2,895Income taxes payable183 665Unearned revenue26,881 28,361Total current liabilities98,208 99,018Long-term debt, net of current maturities496,379 565,826Pension obligations43,537 55,148Postretirement and postemployment benefit obligations5,004 10,717Deferred income taxes53,397 38,308Income taxes payable5,497 5,016Warrants and other10,041 16,363Total liabilities712,063 790,396Equity (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:567 558September 24, 2017; 56,712 shares; $0.01 par value September 25, 2016; 55,771 shares; $0.01 par value Class B Common Stock, $2 par value; authorized 30,000 shares; none issued— —Additional paid-in capital251,790 249,740Accumulated deficit(328,524) (356,005)Accumulated other comprehensive loss(16,068) (22,778) Total stockholders' deficit(92,235) (128,485) Non-controlling interests1,022 944Total deficit(91,213) (127,541)Total liabilities and deficit620,850 662,855 The accompanying Notes are an integral part of the Consolidated Financial Statements. 45CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) Amount Shares(Thousands of Dollars and Shares)2017 2016 2015 2017 2016 2015 Common Stock: Balance, beginning of year558 547 537 55,771 54,679 53,747Shares issued9 11 10 941 1,092 932Balance, end of year567 558 547 56,712 55,771 54,679Additional paid-in capital: Balance, beginning of year249,740 247,302 245,323 Stock compensation2,088 2,306 1,971 Shares issued (redeemed)(38) 132 8 Balance, end of year251,790 249,740 247,302 Accumulated deficit: Balance, beginning of year(356,005) (390,966) (414,282) Net income28,605 36,019 24,318 Net income attributable to non-controllinginterests(1,124) (1,058) (1,002) Balance, end of year(328,524) (356,005) (390,966) Accumulated other comprehensive income(loss): Balance, beginning of year(22,778) (16,276) (9,831) Change in pension and postretirementbenefits11,439 (11,001) (10,973) Deferred income taxes, net(4,729) 4,499 4,528 Balance, end of year(16,068) (22,778) (16,276) Total stockholders' deficit(92,235) (128,485) (159,393) 56,712 55,771 54,679 The accompanying Notes are an integral part of the Consolidated Financial Statements.46CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands of Dollars)2017 2016 2015 Cash provided by operating activities: Net income28,605 36,019 24,318Adjustments to reconcile income to net cash provided by operating activities: Depreciation and amortization41,282 43,441 45,563Net (gain) loss on sales of assets(3,667) (3,139) 106Insurance settlement— (30,646) —Impairment of intangible and other assets2,517 2,185 —Distributions greater than earnings of MNI546 3,777 2,084Stock compensation expense2,088 2,306 1,971Deferred income tax expense10,360 20,669 12,764Debt financing and administrative costs4,818 5,947 5,433Gain on extinguishment of debt— (1,250) —Pension contributions— (4,604) (3,577)Changes in operating assets and liabilities: Decrease in receivables2,854 6,933 3,444Decrease in inventories and other687 617 3,122Decrease in accounts payable, compensation and other accrued liabilities andunearned revenue(6,393) (8,327) (9,587)Decrease in pension, postretirement and postemployment benefit obligations(3,473) (4,757) (3,627)Change in income taxes receivable or payable(1) 1,238 (34)Other, net(7,942) 8,781 (7,504)Net cash provided by operating activities72,281 79,190 74,476Cash provided by (required for) investing activities: Purchases of property and equipment(4,078) (7,091) (9,707)Decrease in restricted cash— — 441Insurance settlement— 30,646 —Proceeds from sales of assets2,582 9,878 8,871Acquisitions(7,450) — —Distributions greater (less) than earnings of TNI(11) 1,575 637Other, net(498) (500) (450)Net cash provided by (required for) investing activities(9,455) 34,508 (208)Cash provided by (required for) financing activities: Proceeds from long-term debt5,000 5,000 5,000Payments on long-term debt(73,782) (112,455) (83,878)Debt financing and administrative costs paid(373) (422) (733)Common stock transactions, net(34) 29 (227)Net cash required for financing activities(69,189) (107,848) (79,838)Net increase (decrease) in cash and cash equivalents(6,363) 5,850 (5,570)Cash and cash equivalents: Beginning of year16,984 11,134 16,704End of year10,621 16,984 11,134 The accompanying Notes are an integral part of the Consolidated Financial Statements.47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 "2017", "2016", "2015" and the like refer to the fiscal years ended the last Sunday in September. Lee Enterprises, Incorporated is a leading provider of high quality, trusted, local news and information, and a major platform for advertising in themarkets we serve. We are located primarily in the Midwest, Mountain West and West regions of the United States, and our 50 markets (includingTNI Partners ("TNI") and Madison Newspapers ("MNI")), across 22 states are principally mid-sized or small. We currently operate in a singleoperating segment.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 TownNews.com. TNI and MNI are accounted for under the equity method. Results ofTownNews.com are consolidated.In August 2014, the Financial Accounting Standards Board ("FASB") issued a new going concern standard. The new standard provides guidanceon how management evaluates and discloses the Company's ability to continue as a going concern for a look-forward period of one year from thefinancial statement issuance date. We adopted the new standard in 2017, as required. The adoption of this standard did not impact ourConsolidated Financial Statements, taken as a whole.Fiscal Year All of our enterprises use period accounting with the fiscal year ending on the last Sunday in September.Subsequent Events We have evaluated subsequent events through December 8, 2017. No events have occurred subsequent to September 24, 2017 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. We evaluate our estimates on an on-going basis. 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 carryingvalues 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.48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 (FIFO) or last-in, first-out (LIFO)methods. Newsprint inventories at September 24, 2017 and September 25, 2016 are less than replacement cost by $1,608,000 and $1,900,000,respectively. The components of newsprint inventory by cost method are as follows:(Thousands of Dollars)September 242017 September 252016 FIFO method962 1,064LIFO method1,167 1,627 2,129 2,691 Other inventories consisting of ink, plates and film are priced at the lower of cost or market, with cost being determined by the FIFO method. 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. 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 - 17 We capitalize interest as a component of the cost of constructing major facilities. At September 24, 2017 and September 25, 2016, capitalizedinterest was 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 lists17 - 33 49In January 2017, the Financial Accounting Standards Board ("FASB") issued a new standard simplifying the assessment of goodwill forimpairment. The new standard maintains a qualitative and quantitative assessment but eliminates Step 2 of the quantitative assessment. Thenew standard also requires companies with reporting units with zero or negative carrying value to disclose the amount of goodwill for thosereporting units. The Company adopted the standard during Q2 2017. Lee Enterprises is a single reporting unit entity with negative carrying value,and as such all of the Company’s goodwill is attributed to the single reporting unit. In 2017, the Company applied provisions of the new standardto its annual impairment assessment. The annual assessment has historically been and will continue to be made on the first day of our fourthfiscal quarter, or more frequently if impairment triggers are noted. In 2016, the Company assessed the recoverability of goodwill and other non-amortized intangible assets, using qualitative factors affecting ourbusiness to determine if the probability of a goodwill impairment was more likely than not. Our assessment included reviewing internal and externalfactors affecting our business, such as cash flow projections, stock price and other industry or market considerations. In 2015, the Companyperformed its assessment using the quantitative assessment prescribed by accounting standards in effect prior to the adoption of the newstandard.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 and a market approach weighted equally.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 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 asset groups.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 impairment charges in the future. See Note 3.Non-controlling Interest Non-controlling interest in earnings of TownNews.com 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. 50Advertising Costs A substantial amount of our advertising and promotion consists of advertising placed in our own publications and digital platforms, using availablespace. The incremental cost of such advertising is not significant and is not measured separately by us. External advertising costs are notsignificant 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. 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.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.Investments measured at net asset value, as a practical expedient for fair value, are excluded from the fair value hierarchy.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. Treasury Inflation-Protected Securities ("TIPS") consist of low yield mutual funds and are valued by quoted market prices. Suchinvestments are classified as Level 1.51Equity securities are valued based on the closing market price in an active market and 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.Debt securities consist of government securities that are valued based upon quoted market prices in an active market. Such investmentsare classified as Level 1. Corporate bonds that are valued based on quoted market prices in an inactive market. Such investments areclassified as Level 2. 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 excluded from the fairvalue hierarchy.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 excluded from the fair value hierarchy. 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 four years.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 4, 8 and 11. Uninsured Risks We are self-insured for health care, workers compensation and certain long-term disability costs of our employees, subject to stop loss insurance,which limits our losses in the event of large claims. We accrue our estimated health care costs in the period in which such costs are incurred,including an estimate of incurred but not reported claims. Other risks are insured and carry deductible losses of varying amounts. Letters of creditand performance bonds totaling $4,790,000 at September 24, 2017 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.2 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.52Income or loss of TNI is allocated equally to Star Publishing and Citizen.Summarized financial information of TNI is as follows: (Thousands of Dollars)September 24 2017 September 25 2016 ASSETS Current assets4,457 5,107Investments and other assets12 12Total assets4,469 5,119 LIABILITIES AND MEMBERS' EQUITY Current liabilities5,485 6,484Members' equity(1,016) (1,365)Total liabilities and members' equity4,469 5,119Summarized results of TNI are as follows:(Thousands of Dollars)2017 2016 2015 Operating revenue48,297 52,761 55,926Operating expenses38,150 41,804 45,413Net income10,147 10,957 10,513 Company's 50% share5,073 5,478 5,256Less amortization of intangible assets418 418 418Equity in earnings of TNI4,655 5,060 4,838TNI makes weekly distributions of its earnings. We received $4,644,000, $6,636,000 and $5,475,000 in distributions in 2017, 2016 and 2015,respectively. At September 24, 2017, the carrying value of the Company's 50% investment in TNI is $15,943,000. 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 $4,136,000,certain of which are being amortized over their estimated useful lives through 2020. See Note 3. 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.53Summarized financial information of MNI is as follows: (Thousands of Dollars)September 24, 2017 September 25 2016 ASSETS Current assets11,297 12,320Investments and other assets32,530 33,364Total assets43,827 45,684 LIABILITIES AND MEMBERS' EQUITY Current liabilities7,852 8,391Other liabilities9,500 9,500Stockholders' equity26,475 27,793Total liabilities and stockholders' equity43,827 45,684Summarized results of MNI are as follows:(Thousands of Dollars)2017 2016 2015 Operating revenue61,396 65,172 67,264Operating expenses, excluding workforce adjustments, depreciation andamortization51,392 52,646 54,795Workforce adjustments296 39 459Depreciation and amortization1,295 1,684 1,630Operating income8,413 10,803 10,380Net income5,908 6,947 6,832Equity in earnings of MNI2,954 3,473 3,416MNI makes quarterly distributions of its earnings. We received $3,500,000, $7,250,000 and $7,050,000 in distributions in 2017, 2016 and 2015,respectively.We provide editorial services to MNI. Editorial service fees are included in other revenue in the Consolidated Statements of Income andComprehensive Income and totaled $7,021,000, $7,099,000 and $7,242,000, in 2017, 2016 and 2015, respectively.At September 24, 2017, the carrying value of the Company's 50% investment in MNI is $13,238,000. 3 GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the carrying amount of goodwill related to continuing operations are as follows:(Thousands of Dollars)2017 2016 Goodwill, gross amount1,532,458 1,532,458Accumulated impairment losses(1,288,729) (1,288,729)Goodwill, beginning of year243,729 243,729Goodwill acquired in business combinations2,697 —Goodwill, end of year246,426 243,72954Identified intangible assets related to continuing operations consist of the following:(Thousands of Dollars)September 24 2017 September 25 2016 Non-amortized intangible assets: Mastheads22,035 23,644Amortizable intangible assets: Customer and newspaper subscriber lists691,994 687,182Less accumulated amortization577,727 552,472 114,267 134,710Non-compete and consulting agreements28,524 28,524Less accumulated amortization28,524 28,524 — — 136,302 158,354 In January 2017, the FASB issued a new standard simplifying the assessment of a goodwill impairment. The new standard maintains a qualitativeand quantitative assessment but eliminates the Step 2 of the quantitative assessment. The new standard also changes the way a goodwillimpairment is calculated. For companies that have reporting units with zero or negative carrying value, the new standard requires disclosure of theamount of goodwill for those reporting units. The Company has elected to early adopt this standard for its 2017 goodwill impairment test.The Company is a single reporting unit entity with negative carrying value, and as such all of the Company’s goodwill is attributed to the singlereporting unit. During Q2 2017, the Company adopted ASU 2017-04. The Company performed its annual assessment on the first day of our fourthfiscal quarter, and determined the fair value of our single reporting unit was significantly in excess of carrying value and as such, there was noimpairment in 2017.In 2016, we performed a qualitative analysis to test our goodwill for impairment and concluded that the likelihood of an impairment was less than50%. In 2015, we performed additional quantitative analysis of the carrying value of our goodwill and concluded the implied fair value of goodwillwas significantly in excess of its carrying value. As a result no goodwill impairment was recorded.In 2017 and 2016, due to continuing revenue declines, we recorded non-cash charges to reduce the carrying value of non-amortized intangibleassets. We also recorded pretax charges to reduce the carrying value of other assets in 2017 and 2016 in Impairment of intangible and otherassets in the Consolidated Statements of Income and Comprehensive Income (Loss). We recorded deferred income tax benefits related to thesecharges.A summary of the pretax impairment charges is included in the table below:(Thousands of Dollars)2017 2016 2015 Continuing operations: Non-amortized intangible assets2,035 818 —Property, equipment and other assets482 1,367 — 2,517 2,185 —In June 2017, we purchased the assets of the Dispatch-Argus serving Moline and Rock Island, IL, (the "Dispatch-Argus"), for $7,150,000 plus anadjustment for working capital. The Dispatch-Argus is a media company with print and digital publishing operations. We financed the transactionwith available cash on hand. The purchase price, based on management's preliminary estimates, was allocated to the tangible assets and identified intangible assets acquiredand liabilities assumed based on their estimated fair values. As of the acquisition date, the purchase price assigned to the acquired assets andassumed liabilities were as follows: current assets $989,000, property, plant, and equipment of $100,000, intangible assets of $5,199,000, goodwillof $2,445,000, and current liabilities of $1,056,000.55Annual amortization of intangible assets for the years ending September 2018 to September 2022 is estimated to be $16,653,000, $15,972,000,$15,206,000, $14,042,000, and $11,863,000, respectively.4 DEBTOn March 31, 2014, we completed a comprehensive refinancing of our debt (the"2014 Refinancing"), which included 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”). •$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”).•$150,000,000 second lien term loan under a Second Lien Loan Agreement dated as of March 31, 2014 (the “2nd Lien Term Loan”).Debt is summarized as follows: Interest Rates (%)(Thousands of Dollars)September 24 2017September 26 2016September 24 2017 Revolving Facility——6.741st Lien Term Loan45,145101,3047.49Notes385,000385,0009.502nd Lien Term Loan118,240130,86312.00 548,385617,167 Unamortized debt issue costs(21,824)(26,271) Less current maturities of long-term debt30,18225,070 Total long-term debt496,379565,826 Our weighted average cost of debt, excluding amortization of debt financing costs at September 24, 2017, is 9.9%.At September 24, 2017, aggregate minimum required maturities of debt excluding amounts required to be paid from future excess cash flowcomputations total $30,182,000 in 2018, $20,145,000 in 2019, zero in 2020, zero in 2021, $385,000,000 in 2022 and $113,058,000 thereafter.NotesThe Notes are senior secured obligations of the Company and mature on March 15, 2022. At September 24, 2017, the principal balance of theNotes totaled $385,000,000.InterestThe Notes require payment of interest semiannually on March 15 and September 15 of each year, at a fixed annual rate of 9.5%. 56RedemptionWe may redeem some, or all, of the principal amount of the Notes at any time. Prior to March 15, 2018, we may redeem the Notes subject to amake whole provision for the interest through March 15, 2018. On or after March 15, 2018, we may redeem the Notes as follows:Period BeginningPercentage of Principal Amount March 15, 2018104.75March 15, 2019102.38March 15, 2020100.00If we sell certain of our assets or experience specific kinds of changes of control, we must, subject to certain exceptions, offer to purchase theNotes at 101% of the principal amount. Any redemption of the Notes must also satisfy any accrued and unpaid interest thereon.We may repurchase Notes in the open market at any time. In the 52 weeks ended September 25, 2016, we purchased $15,000,000 principalamount of Notes in privately negotiated transactions which resulted in a gain on extinguishment of debt totaling $1,250,000. The gain is recorded inOther, net in the Consolidated Statements of Income and Comprehensive Income.Covenants and Other MattersThe Indenture and the 1st Lien Credit Facility contains restrictive covenants as discussed more fully below. However, certain of these covenantswill cease to apply if the Notes are rated investment grade by either Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Group and thereis 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 24, 2017, afterconsideration of letters of credit, we have approximately $33,818,000 available for future use under the Revolving Facility.InterestInterest on the 1st Lien Term Loan, which has a principal balance of $45,145,000 at September 24, 2017, accrues, at our option, at either (A)LIBOR plus 6.25% (with a LIBOR floor of 1.0%) or (B) 5.25% plus the higher of (i) the prime rate at the time, (ii) the federal funds rate plus 0.5%,or (iii) one month LIBOR plus 1.0% (with a floor of 2.0%). Interest is payable quarterly.The 1st Lien Term Loan was funded with an original issue discount of 2.0%, or $5,000,000, which is being amortized as debt financing andadministration costs over the life of the 1st Lien Term Loan.Interest on the Revolving Facility, which has a principal balance of zero at September 24, 2017, accrues, at our option, at either (A) LIBOR plus5.5%, or (B) 4.5% plus the higher of (i) the prime rate at the time, (ii) the federal funds rate plus 0.5%, or (iii) one month LIBOR plus 1.0%.Principal PaymentsQuarterly principal payments of $6,250,000 are required under the 1st Lien Term Loan, with additional payments required to be made based on 90%of excess cash flow of Lee Legacy ("Lee Legacy Excess Cash Flow"), as defined, or from proceeds of asset sales from our subsidiaries otherthan Pulitzer Inc. ("Pulitzer") and its subsidiaries (collectively, the "Pulitzer Subsidiaries") which are not reinvested. For excess cash flowcalculation purposes Lee Legacy constitutes the business of the Company, including MNI, but excluding Pulitzer and TNI. We may voluntarilyprepay principal amounts outstanding or reduce commitments under the 1st Lien Credit Facility at any time without premium or penalty, upon propernotice and subject to certain limitations as to minimum amounts of prepayments.57Quarterly, the Company is required to prepare a Lee Legacy Excess Cash Flow calculation, which is generally determined as the cash earnings ofour subsidiaries other than the Pulitzer Subsidiaries and includes adjustments for changes in working capital, capital spending, pensioncontributions, debt principal payments and income tax payments or refunds. Any excess cash flow as calculated is required to be paid to the 1stLien lenders 45 days after the end of the quarter. Lee Legacy Excess Cash Flow for the 13 weeks ended September 24, 2017 and payable in the13 weeks ended December 24, 2017 was zero.2017 principal payments made for the year under the 1st Lien Term Loan are summarized as follows: 13 Weeks Ended(Thousands of Dollars)December 25 2016March 26 2017June 25 2017September 24 2017 Mandatory6,2506,2506,2506,250Voluntary11,0007,5005,0006,000Excess cash flow payment70——1,589 17,32013,75011,25013,839Covenants and Other MattersThe 1st Lien Credit Facility requires that we comply with certain affirmative and negative covenants customary for financing of this nature, includinga 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. This restriction no longer applies if Lee Legacy leverage isbelow 3.25x before and after such payments. Further, the 1st Lien Credit Facility restricts or limits, among other things, subject to certainexceptions, the ability of the Company and its subsidiaries to: (i) incur indebtedness, (ii) enter into mergers, acquisitions and asset sales, (iii) incuror create liens and (iv) enter into transactions with certain affiliates. The 1st Lien Credit Facility contains various representations and warranties andmay be terminated upon occurrence of certain events of default. The 1st Lien Credit Facility also contains cross-default provisions tied to the termsof each of the Indenture and 2nd Lien Term Loan.2nd Lien Term LoanThe 2nd Lien Term Loan, which has a balance of $118,240,000 at September 24, 2017, 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.Quarterly, we are required to prepare a calculation of excess cash flow of the Pulitzer Subsidiaries ("Pulitzer Excess Cash Flow"). Pulitzer ExcessCash Flow is generally determined as the cash earnings of the Pulitzer Subsidiaries including adjustments for changes in working capital, capitalspending, pension contributions, debt principal payments and income tax payments. Pulitzer Excess Cash Flow also includes a deduction forinterest costs incurred under the 2nd Lien Term Loan.Prior to March 31, 2017, we were required to offer the Pulitzer Excess Cash Flow to the 2nd Lien Lenders to prepay the 2nd Lien Term Loan at par,which payment the 2nd Lien Lenders could accept or reject. After March 31, 2017, the 2nd Lien Lenders can not reject, and Pulitzer Excess CashFlow is used to prepay the 2nd Lien Term Loan, at par. Pulitzer Excess Cash Flow payments are required to be paid 45 days after the end of thequarter.58Pulitzer Excess Cash Flow and the related payments on the 2nd Lien Term Loan for the previous four quarters are as follows:For the Period Ending(Thousands of Dollars)Pulitzer Excess Cash FlowPayment DatePayment Amount(not rejected) September 25, 2016—Q1 2017—December 25, 2016930Q2 2017174March 26, 20174,488Q3 20174,488June 25, 20175,549Q4 20175,549For the 13 weeks ended September 24, 2017, Pulitzer Excess Cash Flow totaled $5,182,000, and was paid in November 2017, at par.Subject to certain other conditions in the 2nd Lien Term Loan, the balance of the 2nd Lien Term Loan will be repaid at par from proceeds from assetsales by the Pulitzer Subsidiaries that are not reinvested. For the 52 weeks ended September 24, 2017 and September 25, 2016, we repaid$2,412,000 and $8,119,000, respectively, on the 2nd Lien Term Loan, at par, with net proceeds from the sale of Pulitzer assets.Voluntary payments under the 2nd Lien Term Loan are subject to call premiums as follows:Period BeginningPercentage of Principal Amount March 31, 2017106March 31, 2018103March 31, 2019100Covenants 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 and 1st Lien Credit Facility.In connection with the 2nd Lien Term Loan, we entered into a Warrant Agreement dated as of March 31, 2014 (the “Warrant Agreement”). Under theWarrant Agreement, certain affiliates or designees of the 2nd Lien Lenders received on March 31, 2014 their pro rata share of warrants to purchase,in cash, an initial aggregate of 6,000,000 shares of Common Stock, subject to adjustment pursuant to anti-dilution provisions (the “Warrants”). TheWarrants represent, when fully exercised, approximately 10.1% of shares of Common Stock outstanding at March 30, 2014 on a fully dilutedbasis. 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 to be measured at fair value and included in warrants and other liabilities in our Consolidated Balance Sheets. Weremeasure the fair value of the liability each reporting period, with changes reported in other, net non-operating income (expense). The initial fairvalue of the Warrants was $16,930,000. See Note 8 and Note 11.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.SecurityThe Notes and the 1st Lien Credit Facility are fully and unconditionally guaranteed on a joint and several first-priority basis by each of theCompany's material domestic subsidiaries, excluding MNI, the Pulitzer Subsidiaries and TNI (the59"Lee Legacy Assignors"), pursuant to a first lien guarantee and collateral agreement dated as of March 31, 2014 (the "1st Lien Guarantee andCollateral Agreement").The Notes, the 1st Lien Credit Facility and the subsidiary guarantees are secured, subject to certain exceptions, priorities and limitations, byperfected security interests in all property and assets, including certain real estate, of the Lee Legacy Assignors, other than the capital stock ofMNI and any property and assets of MNI (the “Lee Legacy Collateral”), on a first-priority basis, equally and ratably with all of the Lee LegacyAssignors' existing and future obligations. The Lee Legacy Collateral includes, among other things, equipment, inventory, accounts receivables,depository accounts, intellectual property and certain of their other tangible and intangible assets.Also, the Notes and the 1st Lien Credit Facility are secured, subject to certain exceptions, priorities and limitations in the various agreements, byfirst-priority security interests in the capital stock of, and other equity interests owned by, the Lee Legacy Assignors (excluding the capital stock ofMNI). The Notes and 1st Lien Credit Facility are subject to a Pari Passu Intercreditor Agreement dated March 31, 2014.The Notes, the 1st Lien Credit Facility and the subsidiary guarantees are also secured, subject to permitted liens, by a second-priority securityinterest in the property and assets of the Pulitzer Subsidiaries that become subsidiary guarantors (the "Pulitzer Assignors") other than assets of orused in the operations or business of TNI (collectively, the “Pulitzer Collateral”). In June 2015 the Pulitzer Assignors became a party to the 1st LienGuarantee and Collateral Agreement on a second lien basis.Also, the Notes and the 1st Lien Credit Facility are secured, subject to certain exceptions, priorities, and limitations in the various agreements, bysecond-priority security interests in the capital stock of, and other equity interests in, the Pulitzer Assignors and Star Publishing’s interest in TNI.The 2nd Lien Term Loan is fully and unconditionally guaranteed on a joint and several first-priority basis by the Pulitzer Assignors, pursuant to aSecond Lien Guarantee and Collateral Agreement dated as of March 31, 2014 (the “2nd Lien Guarantee and Collateral Agreement”) among thePulitzer Assignors and the 2nd Lien collateral agent.Under the 2nd Lien Guarantee and Collateral Agreement, the Pulitzer Assignors have granted (i) first-priority security interests, subject to certainpriorities and limitations in the various agreements, in the Pulitzer Collateral and (ii) have granted first-priority lien mortgages or deeds of trustcovering certain real estate, as collateral for the payment and performance of their obligations under the 2nd Lien Term Loan.Also, under the 2nd Lien Guarantee and Collateral Agreement, the Lee Legacy Assignors have granted (i) second-priority security interests, subjectto certain priorities and limitations in the various agreements, in the Lee Legacy Collateral, and (ii) have granted second-priority lien mortgages ordeeds of trust covering certain real estate, as collateral for the payment and performance of their obligations under the 2nd Lien Term Loan. Assetsof, or used in the operations or business of, MNI are excluded.The rights of each of the collateral agents with respect to the Lee Legacy Collateral and the Pulitzer Collateral are subject to customaryintercreditor and intercompany agreements.OtherIn connection with the 2014 Refinancing, we capitalized $37,819,000 of debt financing costs. Amortization of debt financing costs totaled$4,447,000, $5,541,000 and $4,693,000 in 2017, 2016 and 2015, respectively. Amortization of such costs is estimated to total $4,109,000 in 2018,$3,962,000 in 2019, $4,025,000 in 2020, $4,200,000 in 2021 and $4,390,000 in 2022. At September 24, 2017, we have $21,824,000 of unamortizeddebt financing costs recorded as a reduction of Long-term debt in our Consolidated Balance Sheets.In April 2015, the FASB issued a new standard for the presentation of debt issuance costs. The new standard streamlined the balance sheetpresentation of debt related valuations. Debt issuance costs were previously recognized as deferred charges and presented as an asset while debtdiscounts and premiums are treated as adjustments to the related debt. Under the new standard, debt issuance costs are now recognized asreductions to the related debt. The adoption of this standard reclassified certain amounts within our Consolidated Balance Sheets. We adopted thenew standard in 2017, as required, and adopted this standard retrospectively. As a result, we have reclassified $26,271,000 of Other long-termassets to a reduction of long-term debt, net of current maturities in the September 25, 2016 Consolidated Balance Sheet.60Liquidity At September 24, 2017, after consideration of letters of credit, we have approximately $33,818,000 available for future use under our RevolvingFacility. Including cash, our liquidity at September 24, 2017 totals $44,439,000. This liquidity amount excludes any future cash flows. We expectall interest and principal payments due in the next twelve months will be satisfied by existing cash and our cash flows, which will allow us tomaintain an adequate level of liquidity. The Warrants, if and when exercised, would provide additional liquidity in an amount up to $25,140,000subject to a reduction for any amounts the Company may elect to use to repay our 1st Lien Term Loan and/or the Notes.Final maturities of our debt range from December 2018 through December 2022.There are numerous potential consequences under the Notes, 1st Lien Credit Facility and 2nd Lien Term Loan, if an event of default, as defined,occurs and is not remedied. Many of those consequences are beyond our control. The occurrence of one or more events of default would give riseto the right of the applicable lender(s) to exercise their remedies under the Notes, 1st Lien Credit Facility and 2nd Lien Term Loan, respectively,including, without limitation, the right to accelerate all outstanding debt and take actions authorized in such circumstances under applicablecollateral security documents.Our ability to operate as a going concern is dependent on our ability to remain in compliance with debt covenants and to repay, refinance or amendour debt agreements as they become due. The Notes, 1st Lien Credit Facility and 2nd Lien Term Loan have only limited affirmative covenants withwhich we are required to maintain compliance. We are in compliance with our debt covenants at September 24, 2017.5 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 only a small amount of additional benefits arebeing accrued. Our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annualactuarial calculations. Plan funding strategies are influenced by government regulations. Plan assets consist primarily of domestic and foreigncorporate equity 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)2017 2016 2015 Service cost for benefits earned during the year84 197 232Interest cost on projected benefit obligation5,394 6,061 8,122Expected return on plan assets(7,878) (8,698) (9,863)Amortization of net loss2,947 2,397 1,682Amortization of prior service benefit(136) (136) (136)Net periodic pension cost (benefit)411 (179) 37 Net periodic pension benefit of $56,000 is allocated to TNI in 2017, 2016 and 2015. 61Changes in benefit obligations and plan assets are as follows:(Thousands of Dollars)2017 2016 Benefit obligation, beginning of year202,158 193,751Service cost84 197Interest cost5,394 6,061Actuarial loss (gain)(4,241) 13,630Benefits paid(11,750) (11,481)Benefit obligation, end of year191,645 202,158Fair value of plan assets, beginning of year:149,131 143,288Actual return on plan assets14,721 14,819Benefits paid(11,750) (11,481)Administrative expenses paid(2,340) (2,099)Employer contributions— 4,604Fair value of plan assets, end of year149,762 149,131Funded status (41,883) (53,027)Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:(Thousands of Dollars)September 24 2017 September 25 2016 Pension obligations(41,883) (53,027)Accumulated other comprehensive loss (before income taxes)(43,307) (54,862) Amounts recognized in accumulated other comprehensive income (loss) are as follows:(Thousands of Dollars)September 24 2017 September 25 2016 Unrecognized net actuarial loss(43,550) (55,241)Unrecognized prior service benefit243 379 (43,307) (54,862) We expect to recognize $2,025,000 and $137,000 of unrecognized net actuarial loss and unrecognized prior service benefit, respectively, in netperiodic pension cost in 2018. The accumulated benefit obligation for the plans total $191,645,000 at September 24, 2017 and $202,158,000 at September 25, 2016. 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 $191,645,000, $191,645,000 and $149,762,000, respectively, at September 24, 2017.Assumptions Weighted-average assumptions used to determine benefit obligations are as follows:(Percent)September 24 2017 September 25 2016 Discount rate3.7 3.562Weighted-average assumptions used to determine net periodic benefit cost are as follows:(Percent)2017 2016 2015 Discount rate3.5 4.2 4.2Expected long-term return on plan assets5.5 6.3 6.8 For 2018, the expected long-term return on plan assets is 5.5%. 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.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. Pension assets includedbelow include assets of plans described below under the heading Other Plans. 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 pension assets is as follows:(Percent)Policy AllocationActual AllocationAsset ClassSeptember 24, 2017September 24 2017September 25 2016 Equity securities505050Debt securities353333TIPS544Hedge fund investments101211Cash and cash equivalents—12 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. Fair Value Measurements The fair value hierarchy of pension assets at September 24, 2017 is as follows:(Thousands of Dollars)NAVLevel 1Level 2Level 3 Cash and cash equivalents—1,882——Domestic equity securities—10,48449,483—International equity securities—7,2908,047—TIPS—6,553——Debt securities14,71126,0158,266—Hedge fund investments19,067———63The fair value hierarchy of pension assets at September 25, 2016 is as follows:(Thousands of Dollars)NAVLevel 1Level 2Level 3 Cash and cash equivalents—2,757——Domestic equity securities—9,66949,809—International equity securities—6,7737,755—TIPS—6,883——Debt securities14,55825,6129,648—Hedge fund investments17,531———There were no purchases, sales or transfers of assets classified as Level 3 in 2017 or 2016.Cash Flows Based on our forecast at September 24, 2017, we expect to make contributions of $4,940,000 to our pension trust in 2018.We anticipate future benefit payments to be paid from the pension trust as follows:(Thousands of Dollars) 201812,500201911,873202011,809202111,782202211,7482023-202758,047 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 $1,766,000 and $2,232,000 at September 24, 2017 and September 25, 2016,respectively, of which $113,000 is included in compensation and other accrued liabilities in the Consolidated Balance Sheet at September 24, 2017and September 25, 2016, respectively.6 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, St. Louis Post Dispatch LLC provides postemployment disability benefitsto certain employee groups prior to retirement. Our liability and related expense for benefits under the postretirement plans are recorded over theservice period of active employees based upon annual actuarial calculations. We accrue postemployment disability benefits when it becomesprobable that such benefits will be paid and when sufficient information exists to make reasonable estimates of the amounts to be paid.64The net periodic postretirement benefit cost (benefit) components for our postretirement plans are as follows:(Thousands of Dollars)2017 2016 2015 Service cost for benefits earned during the year13 63 76Interest cost on projected benefit obligation412 623 922Expected return on plan assets(1,056) (1,322) (1,445)Amortization of net actuarial gain(987) (1,093) (1,386)Amortization of prior service benefit(1,459) (1,459) (1,459)Curtailment gains(3,741) — —Net periodic postretirement benefit(6,818) (3,188) (3,292) In March 2017, we notified certain participants in one of our post employment medical plans of changes to their plan, which included notice thatthe plan will terminate on December 31, 2017. These changes resulted in a non-cash curtailment gain of $3,741,000, which is recorded in gain onsales of assets and other, net in the Consolidated Statements of income and Comprehensive Income. These changes also reduced thepostemployment benefit obligation by $5,112,000 and reduced accumulated other comprehensive loss by $1,417,000.Changes in benefit obligations and plan assets are as follows:(Thousands of Dollars)2017 2016 Benefit obligation, beginning of year22,511 23,812Service cost13 63Interest cost412 623Actuarial loss (gain)(627) (773)Benefits paid, net of premiums received(1,527) (1,434)Curtailment(5,112) —Medicare Part D subsidies(3) 220Benefit obligation, end of year15,667 22,511Fair value of plan assets, beginning of year24,123 30,123Actual return on plan assets2,112 1,085Employer contributions755 563Benefits paid, net of premiums and Medicare Part D subsidies received(1,530) (1,213)Benefits paid for active employees(834) (1,510)Allocation to active medical plans— (4,925)Fair value of plan assets at measurement date24,626 24,123Funded status8,959 1,612 The accumulated benefit obligation for plans with benefit obligations in excess of plan assets included in the table above was $2,061,000 atSeptember 24, 2017. These plans are unfunded.Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:(Thousands of Dollars)September 24 2017 September 25 2016 Non-current assets11,020 9,138Postretirement benefit obligations(2,061) (7,527)Accumulated other comprehensive income (before income tax benefit)18,782 19,026 65Amounts recognized in accumulated other comprehensive income are as follows:(Thousands of Dollars)September 24 2017 September 25 2016 Unrecognized net actuarial gain12,304 11,089Unrecognized prior service benefit6,478 7,937 18,782 19,026 We expect to recognize $985,000 and $785,000 of unrecognized net actuarial gain and unrecognized prior service benefit, respectively, in netperiodic postretirement benefit in 2018.Assumptions Weighted-average assumptions used to determine post retirement benefit obligations are as follows:(Percent)September 24 2017 September 25 2016 Discount rate3.4 3.1Expected 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.Weighted-average assumptions used to determine net periodic benefit cost are as follows:(Percent)2017 2016 2015 Discount rate3.1 3.7 3.7Expected long-term return on plan assets4.5 4.5 4.5 For 2018, the expected long-term return on plan assets is 4.5%. 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.Assumed health care cost trend rates are as follows:(Percent)September 24 2017 September 25 2016 Health care cost trend rates9.7 9.0Rate to which the cost trend rate is assumed to decline (the “Ultimate Trend Rate”)4.5 4.5Year in which the rate reaches the Ultimate Trend Rate2026 2025 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 an effect on the amounts reported for the postretirement plans. A one percentage point change inassumed health care cost trend rates would have the following annualized effects on reported amounts for 2017: One Percentage Point (Thousands of Dollars)Increase Decrease Effect on net periodic postretirement benefit19 (17)Effect on postretirement benefit obligation578 (526) 66Plan Assets Assets of the retiree medical plan are invested in a master trust. The master trust also pays benefits of active employee medical plans for thesame union employees. In 2016, it was determined that the assets of the retiree medical plan should be allocated among all plans that it funds andas a result, we allocated $4,925,000 of the retiree medical plan assets to the active medical plans during the year. The fair value of master trustassets allocated to the active employee medical plans at September 25, 2017 is $4,372,000, which are included within the tables below.The primary objective of our investment strategy is to satisfy our postretirement obligations at a reasonable cost. Assets are actively invested 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 24 2017September 24 2017September 25 2016 Equity securities202122Debt securities706765Hedge fund investment101211Cash and cash equivalents——2 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.Fair Value Measurements The fair value hierarchy of postretirement assets at September 24, 2017 is as follows:(Thousands of Dollars)NAVLevel 1Level 2Level 3 Cash and cash equivalents————Domestic equity securities—3,479741—International equity securities—8001,051—Debt securities—19,548——Hedge fund investment3,343———The fair value hierarchy of postretirement assets at September 25, 2016 is as follows:(Thousands of Dollars)NAVLevel 1Level 2Level 3 Cash and cash equivalents—518——Domestic equity securities—3,3421,572—International equity securities—695898—Debt securities—18,840——Hedge fund investment3,182——— There were no purchases, sales or transfers of assets classified as Level 3 in 2017 or 2016.67Cash Flows Based on our forecast at September 24, 2017, we do not expect to contribute to our postretirement plans in 2018.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 20183,474 (167) 3,30720191,393 (168) 1,22520201,372 (168) 1,20420211,340 (166) 1,17420221,298 (162) 1,1362023-20275,582 (695) 4,887 Postemployment Plan Our postemployment benefit obligation, representing certain disability benefits, is $2,943,000 at September 24, 2017 and $3,190,000 atSeptember 25, 2016. 7 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.Retirement and compensation plan costs, including costs related to stock based compensation and the defined contribution retirement plan,charged to continuing operations are $4,396,000 in 2017, $4,616,000 in 2016 and $4,125,000 in 2015.Multiemployer Pension PlansWe contribute to three multiemployer defined benefit pension plans under the terms of collective-bargaining agreements ("CBAs"). The risks ofparticipating in these multiemployer plans are different from our company-sponsored plans in the following aspects:•We do not manage the plan investments or any other aspect of plan administration;•Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other 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 fund over time an amount based on theunfunded status of the plan at the time of withdrawal, referred to as "withdrawal liability".68Information related to these plans is outlined in the table below:(Thousands of Dollars)Zone StatusSeptember 30FundingImprovementPlan/RehabilitationPlan StatusContributions Pension Plan20172016Status201720162015SurchargeImposedExpirationDates of CBAs GCIU- Employer Retirement Fund91-6024903/001RedRedImplemented123138145No1/13/2018 CWA/ITU Negotiated Pension Plan13-6212879/001RedRedImplemented101108122No5/12/2019 12/31/2017 4/1/2018District No. 9, International Association ofMachinists and Aerospace Workers PensionTrust43-0736847/001GreenGreenN/A313134N/A8/01/2019Multiemployer plans in red zone status are generally less well funded than plans in green zone status.One of our enterprise's bargaining units withdrew from representation, and as a result we are subject to a claim from the multiemployer pensionplan for a withdrawal liability. The amount and timing of such liability will be dependent on actions taken, or not taken, by the Company and thepension plan, as well as the future investment performance and funding status of the pension plan. In 2017, we accrued a liability of $2,600,000related to this withdrawal. The withdrawal liability determined to be due under this plan will be funded over a period of 20 years.8 COMMON STOCK, CLASS B COMMON STOCK AND PREFERRED SHARE PURCHASE RIGHTS Common StockThe par value of our Common Stock was changed from $2.00 per share to $0.01 per share effective January 30, 2012. Holders of our previous 2ndlien agreement shared in the issuance of 6,743,640 shares of our Common Stock, an amount equal to 13% of outstanding shares on a pro formabasis as of January 30, 2012.In connection with the currently outstanding 2nd Lien Term Loan, we entered into the Warrant Agreement. Under the Warrant Agreement, certainaffiliates or designees of the 2nd Lien Lenders received on March 31, 2014 their pro rata share of Warrants to purchase, in cash, 6,000,000 sharesof Common Stock, subject to adjustment pursuant to anti-dilution provisions. The Warrants represent, when fully exercised, approximately 10.1%of shares of Common Stock outstanding at March 30, 2014 on a fully diluted basis. The exercise price of the Warrants 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 warrants and other liabilities in our Consolidated Balance Sheets. Weremeasure 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 24, 2017, the fair value of the Warrants is $1,580,000.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.69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 (other than Rights held by the acquiring person orgroup of affiliated persons) to be exchanged for one share of Common Stock or one one-thousandth of a share of Series A Preferred Stock. TheRights may be redeemed at a price of $0.001 per Right at any time prior to their expiration.9 STOCK OWNERSHIP PLANS Total non-cash stock compensation expense is $2,088,000, $2,306,000 and $1,971,000, in 2017, 2016 and 2015, respectively.At September 24, 2017, we have reserved 3,589,448 shares of Common Stock for issuance to employees under an incentive and nonstatutorystock option and restricted stock plan approved by stockholders of which 2,318,298 shares are available for granting of non-qualified stock optionsor 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)2017 2016 2015 Under option, beginning of year1,698 1,871 2,333Exercised(339) (74) (289)Canceled(88) (99) (173)Under option, end of year1,271 1,698 1,871Exercisable, end of year1,271 1,692 1,84070Weighted average prices of stock options are as follows:(Dollars)2017 2016 2015 Exercised1.53 1.17 1.27Cancelled14.02 8.78 5.02Under option, end of year1.86 2.42 2.71 A summary of stock options outstanding at September 24, 2017 is as follows:(Dollars)Options Outstanding Options Exercisable Range ofExercisePricesNumberOutstanding(Thousands)Weighted AverageRemaining ContractualLife (Years) WeightedAverageExercise Price NumberExercisable (Thousands) WeightedAverageExercise Price 1 - 25694.7 1.14 569 1.142 - 37022.8 2.44 702 2.44 1,2713.6 1.86 1,271 1.86 There is no unrecognized compensation expense for unvested stock options at September 24, 2017.The aggregate intrinsic value of stock options outstanding at September 24, 2017 is $631,000.Restricted Common Stock A summary of restricted Common Stock activity follows:(Thousands of Shares)2017 2016 2015 Outstanding, beginning of year2,462 1,546 1,291Granted837 1,018 786Vested(751) (63) (500)Forfeited(70) (39) (31)Outstanding, end of year2,478 2,462 1,546 Weighted average grant date fair values of restricted Common Stock are as follows:(Dollars)2017 2016 2015 Outstanding, beginning of year2.74 3.62 2.72Granted3.34 1.49 3.62Vested3.59 3.39 1.31Forfeited2.98 3.31 3.62Outstanding, end of year2.69 2.74 3.62 Total unrecognized compensation expense for unvested restricted Common Stock at September 24, 2017 is $2,788,000, which will be recognizedover a weighted average period of 1.3 years.In December 2017, we issued 375,000 shares of restricted Common Stock to employees. The grant date fair value was $2.30 per share. Allrestrictions with respect to these shares lapse in December 2021 with respect to these shares. 71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 in2017, 2016 or 2015.10 INCOME TAXES Income tax expense consists of the following:(Thousands of Dollars)2017 2016 2015 Current: Federal394 1,241 720State819 379 (92)Deferred10,398 20,556 12,966 11,611 22,176 13,594 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)2017 2016 2015 Computed “expected” income tax expense (benefit)35.0 35.0 35.0State income tax expense (benefit), net of federal tax impact2.3 3.8 (7.1)Net income of associated companies taxed at dividend rates(3.7) (2.6) (5.2)Resolution of tax matters2.2 3.2 0.5Non-deductible expenses1.5 1.0 2.8Valuation allowance2.6 (7.7) 15.9Warrant valuation(10.2) 5.0 (6.1)Other(0.8) 0.4 0.1 28.9 38.1 35.972Net deferred income tax liabilities consist of the following components:(Thousands of Dollars)September 24 2017 September 25 2016 Deferred income tax liabilities: Property and equipment(28,422) (33,549)Identified intangible assets(35,790) (43,745)Long-term debt(16,993) (16,158) (81,205) (93,452)Deferred income tax assets: Investments2,520 12,138Accrued compensation4,622 6,391Allowance for doubtful accounts and losses on loans1,487 1,273Pension and postretirement benefits4,593 6,505Net operating loss carryforwards37,997 52,604Accrued expenses601 577Other5,023 3,634 56,843 83,122Valuation allowance(29,035) (27,978)Net deferred income tax liabilities(53,397) (38,308) All deferred taxes are categorized as non-current. A reconciliation of 2017 and 2016 changes in gross unrecognized tax benefits is as follows:(Thousands of Dollars)2017 2016 Balance, beginning of year12,531 11,799Increases (decreases) in tax positions for prior years36 46Increases in tax positions for the current year2,150 1,600Lapse in statute of limitations(802) (914)Balance, end of year13,915 12,531 Approximately $9,010,000 and $8,025,000 of the gross unrecognized tax benefit balances for 2017 and 2016 respectively, relate to state netoperating losses which are netted against deferred taxes on our balance sheet. The total amount of unrecognized tax benefits that, if recognized,would impact the effective tax rate was $9,045,000 at September 24, 2017. We recognize interest and penalties related to unrecognized taxbenefits as a component of income tax expense. The amount of accrued interest related to unrecognized tax benefits was, net of tax, $367,000 atSeptember 24, 2017 and $317,000 at September 25, 2016. There were no amounts provided for penalties at September 24, 2017 or September 25,2016.No significant income tax audits are currently in progress and the Company has not received any notices of intent to audit. Certain of theCompany's state income tax returns for the year ended September 30, 2012 are open for examination. The Federal and remaining state returns areopen beginning with the September 29, 2014 year. At September 24, 2017, we have state tax benefits of approximately $57,856,000 in net operating loss ("NOL") carryforwards that expire between2018 and 2037. These NOL carryforwards result in a deferred income tax asset of $37,607,000 at September 24, 2017, a portion of which is offsetby a valuation allowance.We reported a Federal NOL of approximately $58,601,000 as of year-end September 25, 2016. We expect to report taxable income in 2017 whichwill further reduce the Federal NOL to $17,850,000 resulting in a deferred income tax asset balance of $6,247,000 as of September 24, 2017. Avaluation allowance is not required for the Federal NOL in the current year based on our projection of future earnings during the carryforward period.7311 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 $6,068,000, including our 17% ownership of the non-voting common stock of TCT and a private equityinvestment, are carried at cost. As of September 25, 2017, the approximate fair value of the private equity investment is $9,205,000, which is alevel 3 fair value measurement.The fair value of floating rate debt, which consists of our 1st Lien Term Loan, is $45,145,000, based on an average of private market pricequotations. Our fixed rate debt consists of $385,000,000 principal amount of the Notes and, $118,240,000 principal amount under the 2nd Lien TermLoan. At September 24, 2017, based on an average of private market price quotations, the fair values were $397,513,000 and $121,787,000 for theNotes and 2nd Lien Term Loan, respectively. These represent Level 2 fair value measurements.As discussed more fully in Notes 4 and 8, we recorded a liability for the Warrants issued in connection with the Warrant Agreement. The liabilitywas initially measured at its fair value and 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. The fair value of the Warrants at September 24, 2017,September 25, 2016 and September 27, 2015 are $1,580,000, $11,760,000 and $4,240,000, respectively. In other, net in the ConsolidatedStatements of Income and Comprehensive Income, we recognized income of $10,181,000 in 2017, expense of $7,519,000 in 2016 and income of$6,568,000 in 2015, for adjustments in the fair value of the Warrants.The following assumptions were used to estimate the fair value of the Warrants: 2017 2016 2015 Volatility (Percent)37 63 61Risk-free interest rate (Percent)1.81 1.25 1.75Expected term (Years)4.5 5.5 6.5Estimated fair value (Dollars)0.26 1.96 0.7112 EARNINGS 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)2017 2016 2015 Income attributable to Lee Enterprises, Incorporated:27,481 34,961 23,316 Weighted average Common Stock56,481 55,493 54,430Less non-vested restricted Common Stock(2,491) (2,295) (1,790)Basic average Common Stock53,990 53,198 52,640Dilutive stock options and restricted Common Stock1,402 1,026 1,291Diluted average Common Stock55,392 54,224 53,931Earnings per common share: Basic:0.51 0.66 0.44Diluted0.50 0.64 0.43 For 2017, 2016 and 2015, we had 7,206,000, 7,577,000 and 6,620,000 weighted average shares, respectively, not considered in the computation ofdiluted earnings per common share because the exercise prices of the related stock options and Warrants were in excess of the fair market valueof our Common Stock.7413 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)2017 2016 2015 Balance, beginning of year4,327 4,194 4,526Additions charged to expense1,696 1,195 1,307Deductions from reserves(1,227) (1,062) (1,639)Balance, end of year4,796 4,327 4,194 14 OTHER INFORMATION Compensation and other accrued liabilities consist of the following:(Thousands of Dollars)September 24 2017 September 25 2016 Compensation12,088 12,290Retirement plans3,374 4,135Other6,961 7,459 22,423 23,884Supplemental cash flow information includes the following cash payments:(Thousands of Dollars)2017 2016 2015 Interest58,844 65,410 72,937Debt financing and reorganization costs373 422 733Income tax payments, net1,214 269 485Accumulated other comprehensive income (loss), net of deferred income taxes at September 24, 2017 and September 25, 2016, is related topension and postretirement benefits.15 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 2022 andthereafter are $2,976,000, $1,581,000, $1,026,000, $784,000, $439,000 and $3,498,000, respectively. In 2017, 2016, and 2015 total operatinglease expense is $3,866,000, $3,792,000 and $3,415,000, respectively. Capital Expenditures At September 24, 2017, we had construction and equipment purchase commitments totaling approximately $503,000. 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 10. 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 our75positions taken regarding our filings are valid, and that adequate tax liabilities have been recorded to resolve such matters. However, the actualoutcome cannot be determined with certainty and the difference could be material, either positively or negatively, to the Consolidated Statementsof Income and Comprehensive Income (Loss) in the periods in which such matters are ultimately determined. We do not believe the final resolutionof such matters will be material to our consolidated financial position or cash flows. We have various income tax examinations ongoing and at various stages of completion, but generally our income tax returns have been audited orclosed to audit through 2011. Legal Proceedings We are involved in a variety of legal actions that arise in the normal course of business. Insurance coverage mitigates potential loss for certain ofthese matters. While we are unable to predict the ultimate outcome of these legal actions, it is our opinion that the disposition of these matters willnot have a material adverse effect on our Consolidated Financial Statements, taken as a whole.Multiemployer Pension PlansOne of our enterprise's bargaining units withdrew from representation, and as a result we are subject to a claim from the multiemployer pensionplan for a withdrawal liability. The amount and timing of such liability will be dependent on actions taken, or not taken, by the Company and thepension plan, as well as the future investment performance and funding status of the pension plan. In 2017, we accrued a liability of $2,600,000related to this withdrawal. The withdrawal liability determined to be due under this plan will be funded over a period of 20 years.16 QUARTERLY FINANCIAL DATA (UNAUDITED) Quarter Ended (Thousands of Dollars, Except Per Common Share Data)December March June September 2017 Operating revenue153,989 133,387 139,355 140,212 Net income12,440 6,377 6,287 3,501 Income attributable to Lee Enterprises, Incorporated12,173 6,128 5,995 3,185 Earnings per common share: Basic0.23 0.11 0.11 0.06Diluted0.22 0.11 0.11 0.06 2016 Operating revenue168,405 146,835 150,946 148,178 Net income11,508 19,483 4,367 661 Income attributable to Lee Enterprises, Incorporated11,237 19,228 4,092 404 Earnings (loss) per common share: Basic0.21 0.36 0.08 0.01 Diluted0.21 0.36 0.08 0.01 Results of operations for the September quarter of 2017 include pre-tax non-cash impairment charges of $2,517,000.76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 24, 2017 and September 25, 2016, and the related consolidated statements of income and comprehensive income, stockholders’equity (deficit), and cash flows for each of the 52-week periods ended September 24, 2017, September 25, 2016, and September 27, 2015. Theseconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits.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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LeeEnterprises, Incorporated and subsidiaries as of September 24, 2017 and September 25, 2016, and the results of their operations and their cashflows for each of the 52-week periods ended September 24, 2017, September 25, 2016, and September 27, 2015, in conformity with U.S. generallyaccepted 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 24, 2017, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report datedDecember 8, 2017 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting./s/ KPMG LLPChicago, IllinoisDecember 8, 201777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 8th day of December 2017.LEE ENTERPRISES, INCORPORATED/s/ Kevin D. Mowbray /s/ Ronald A. MayoKevin D. Mowbray Ronald A. MayoPresident 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 8th day of December 2017.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 Executive Chairman 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/ Kevin D. Mowbray President and Chief Executive Officer, and DirectorKevin D. Mowbray /s/ Gregory P. Schermer DirectorGregory P. Schermer /s/ Ronald A. Mayo Vice President, Chief Financial Officer and TreasurerRonald A. Mayo 78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 February 22, 2017 (Exhibit 3.1 to Form 8-K filedFebruary 27, 2017) 4.1 *The description of the Lee Enterprises, Incorporated’s (the “Company”) preferred stock purchase rights contained in its report onForm 8-K, filed on May 7, 1998, and related Rights Agreement, dated as of May 7, 1998 (“Rights Agreement”), between theCompany and The First Chicago Trust Company of New York (“First Chicago”), as amended by Amendment No. 1 to the RightsAgreement dated January 1, 2008 between the Company and Wells Fargo Bank, N.A. (as successor rights agent to FirstChicago) contained in the Company's report on Form 8-K filed on January 11, 2008 as Exhibit 4.2, and the related form ofCertificate of Designation of the Preferred Stock as Exhibit A, the form of Rights Certificate as Exhibit B and the Summary ofRights as Exhibit C, included as Exhibit 1.1 to the 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 *Joinder Agreement dated as of June 25, 2015, made by each Subsidiary Guarantor a party thereto in favor of U.S. Bank NationalAssociation, as Trustee and Deutsche Bank Trust Company Americas, as collateral agent (Exhibit 10.1 to Form 8-K filed on July1, 2015) 10.3 *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) 10.4 *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) 10.5 *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) 10.6 *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)79NumberDescription 10.7 *Joinder Agreement dated as of June 25, 2015, made by each Subsidiary Guarantor a party thereto in favor of JPMorgan ChaseBank, N.A., as collateral agent for the benefit of the Secured Creditors referred to in the First Lien Guarantee and CollateralAgreement dated as of March 31, 2014 referred to therein (Exhibit 10.2 to Form 8-K filed on July 1, 2015) 10.8 *Pulitzer Pari Passu Intercreditor Agreement dated as of June 25, 2015 among Lee Enterprises, Incorporated, the other Grantorsparty thereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association and Deutsche Bank Trust Company Americas(Exhibit 10.3 to Form 8-K filed on July 1, 2015) 10.9 *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) 10.10 *Pulitzer Junior Intercreditor Agreement dated as of June 25, 2015 among Lee Enterprises, Incorporated, the other Grantors partyhereto, JPMorgan Chase Bank, N.A., U.S. Bank National Association, Deutsche Bank Trust Company Americas and WilmingtonTrust, National Association (Exhibit 10.4 to Form 8-K filed on July 1, 2015) 10.11 *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) 10.12 *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) 10.13*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) 10.14 *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) 10.15 *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) 10.16 *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) 10.17*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) 10.18*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) 10.19*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) 10.20*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) 10.21*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) 10.22*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) 10.23 *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)80NumberDescription 10.24 *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) 10.25*Non-Confidentiality Agreement, dated as of May 1, 2000 (Exhibit 10.10 to Form 10-Q for the Fiscal Quarter Ended June 30, 2005) 10.26 +*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) 10.27.1 +*Amended and Restated Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (effective October 1, 1999, as amendedeffective February 17, 2016) (Exhibit 10.1 to Form 8-K filed on February 23, 2016) 10.27.2 +*Form of Restricted Stock Agreement related to Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (Effective October1, 1999, as amended effective February 17, 2016) (Exhibit 10.2 to Form 8-K filed on February 23, 2016) 10.27.3 +*Form of Incentive Stock Option Agreement related to Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (EffectiveOctober 1, 1999, as amended effective February 17, 2016) (Exhibit 10.3 to Form 8-K filed on February 23, 2016) 10.27.4 +*Form of Non-Qualified Stock Option Agreement related to Lee Enterprises, Incorporated 1990 Long-Term Incentive Plan (EffectiveOctober 1, 1999, as amended effective February 17, 2016) (Exhibit 10.4 to Form 8-K filed on February 23, 2016) 10.28 +*Amended and Restated Lee Enterprises, Incorporated 1996 Stock Plan for Non-Employee Directors Effective February 22, 2017(Appendix A to Schedule 14A Definitive Proxy Statement for 2017) 10.29 +*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) 10.30 +*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) 10.31.1 +*Form of Amended and Restated Employment Agreement between Lee Enterprises, Incorporated and its Executive Chairman(Exhibit 10.31.1 to Form 10-K for the Fiscal Year Ended September 25, 2016) 10.31.2 +*Form of Amended and Restated Employment Agreement between Lee Enterprises, Incorporated and its President and ChiefExecutive Officer (Exhibit 10.31.2 to Form 10-K for the Fiscal Year Ended September 25, 2016) 10.31.3 +*Form of Employment Agreement between Lee Enterprises, Incorporated and Certain of its Senior Executive Officers (Exhibit10.31.3 to Form 10-K for the Fiscal Year Ended September 25, 2016) 10.32 +Form of Indemnification Agreement for Lee Enterprises, Incorporated Directors and Executive Officers Group 10.33 +*Lee Enterprises, Incorporated Amended and Restated Incentive Compensation Program (Effective February 22, 2017) (AppendixB to Schedule 14A Definitive Proxy Statement for 2017) 21Subsidiaries and associated companies 23Consent of KPMG 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 200281[DIRECTOR/OFFICER] INDEMNIFICATION AGREEMENTAGREEMENT, by and between LEE ENTERPRISES, INCORPORATED, a Delaware corporation (the“Company”), and __________________ (the “Indemnitee”), dated as of ____________________.WHEREAS, Indemnitee is a(n) of the Company;WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims beingasserted against directors and officers of public companies in today’s environment;WHEREAS, basic protection against undue risk of personal liability of directors and officers heretofore has beenprovided through insurance coverage providing reasonable protection at reasonable cost; as a result of substantial changes in themarketplace for such insurance it has become increasingly more difficult to obtain such insurance on terms providing reasonableprotection at reasonable cost;WHEREAS, the By-laws of the Company require the Company to indemnify and advance expenses to its directors andofficers to the full extent permitted by law and Indemnitee will serve as a director or officer of the Company in part in reliance on suchBy-laws;WHEREAS, in recognition of Indemnitee’s need for substantial protection against personal liability in order to enhanceIndemnitee’s service to the Company in an effective manner, the inadequacy of the Company’s director and officer liability insurancecoverage, and Indemnitee’s reliance on the aforesaid By-laws, and in part to provide Indemnitee with specific contractual assurancethat the protection afforded by such By-laws will be available to Indemnitee (regardless of, among other things, any amendment to orrevocation of such By-laws or any change in the composition of the Company’s Board of Directors or acquisition transaction relatingto the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses toIndemnitee to the full extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extentinsurance is maintained, for the coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies;NOW, THEREFORE, in consideration of the premises and of Indemnitee’s service to the Company, directly orindirectly, and intending to be legally bound hereby, the parties hereto agree as follows:1. In the event Indemnitee becomes a party to or a witness or other participant in, or is threatened to be made a party toor a witness or other participant in, any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation,whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to any such action, suit orproceeding, whether civil, criminal, administrative,investigative or otherwise (a “Claim”) by reason of (or arising in part out of) the fact that Indemnitee is or was a director, officer,employee, manager, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer,employee, trustee, manager, agent or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan or otherenterprise, or by reason of anything done or not done by Indemnitee in any such capacity (an “Indemnifiable Event”), the Companyshall indemnify Indemnitee to the full extent permitted by law (the determination of which shall be made by the Reviewing Partyreferred to below) as soon as practicable but in any event no later than thirty days after written demand is presented to the Company,against any and all expenses (including attorneys’ fees and all other costs, expenses and obligations paid or incurred in connection withinvestigating, preparing for and defending or participating in the defense of (including on appeal) any Claim relating to anyIndemnifiable Event) (collectively “Expenses”), judgments, fines, penalties and amounts paid in settlement (including all interest,assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or amounts paid insettlement) of such Claim.If so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all suchExpenses to Indemnitee; provided, however, that (i) the foregoing obligation of the Company shall be subject to the condition that anappropriate person or body (the “Reviewing Party”) shall not have determined (in a written opinion in any case in which the special,independent counsel referred to in Section 2 hereof is involved) that Indemnitee would not be permitted to be so indemnified underapplicable law, and (ii) if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be soindemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse theCompany) for all such amounts theretofore paid (unless Indemnitee has commenced legal proceedings in a court of competentjurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, in which event Indemnitee shall notbe required to so reimburse the Company until a final judicial determination requiring such reimbursement is made with respect theretoas to which all rights of appeal therefrom have been exhausted or lapsed).The Company shall not be obligated to indemnify or advance any additional amounts to Indemnitee under thisAgreement (unless there has been a determination by a court of competent jurisdiction that the Indemnitee would be permitted to be soindemnified or entitled to such expense advances under applicable law).If there has not been a Change in Control of the Company (as hereinafter defined), the Reviewing Party (which can, butdoes not have to, be the disinterested members of the Board of Directors or a committee comprised of one or more disinterestedmembers of the Board of Directors) shall be selected by the Board of Directors by a majority vote of a quorum consisting of directorswho were not parties to such action, proceeding or suit, unless such a quorum is not obtainable in which case the Reviewing Partyshall be selected by the special, independent counsel referred to in Section 2 hereof. If there has been a Change in Control of theCompany, the Reviewing Party shall be the special, independent counsel referred to in Section 2 hereof.If Indemnitee has not been indemnified by the expiration of the foregoing thirty-day period or received expense advances or ifthe Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified or be entitled to expenseadvances in whole or in part under applicable law, Indemnitee shall have the right to commence litigation seeking from the court afinding that Indemnitee is entitled to indemnification and expense advances or enforcement of Indemnitee’s entitlement toindemnification and expense advances or challenging any determination by the Reviewing Party or any aspect thereof that Indemniteeis not entitled to be indemnified or receive expense advances; any determination by the Reviewing Party otherwise shall be conclusiveand binding on the Company and Indemnitee. Indemnitee agrees to bring any such litigation in any court in the states of Iowa orDelaware having subject matter jurisdiction thereof and in which venue is proper, and the Company hereby consents to service ofprocess and to appear in any such proceeding.2. The Company agrees that if there is a Change in Control of the Company (as hereinafter defined), then with respectto all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and expense advances under this Agreementor any other agreement or By-laws now or hereafter in effect relating to Claims for Indemnifiable Events, the Company shall seek legaladvice only from special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not beunreasonably withheld), and who has not otherwise performed services for the Company (other than in connection with such matters)or Indemnitee. Unless Indemnitee has theretofore selected counsel pursuant to this Section 2 and such counsel has been approved bythe Company, the firms in the attached Exhibit A shall be deemed to satisfy the requirements set forth above, and neither the Companynor Indemnitee shall engage such firm for any purpose (other than in the case of the Company, with respect to matters concerning therights of Indemnitee [or of other indemnitees under similar indemnity agreements] to indemnity payments and expense advances). Suchcounsel, among other things, shall determine whether and to what extent Indemnitee is permitted to be indemnified or is entitled toexpense advances under applicable law and shall render its written opinion to the Company and Indemnitee to such effect.For purposes of this Agreement, a “Change in Control of the Company” shall be deemed to have occurred if: (1) theacquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated underthe Exchange Act) of 15% or more of the shares of the Company’s Common Stock occurs; provided, however, that for purposes ofthis subsection (1), the following acquisitions shall not be deemed to result in a Change of Control: (A) any acquisition directly fromthe Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored ormaintained by the Company or any corporation controlled by the Company, (D) any acquisition by a Person of Beneficial Ownershipof less than 25% of the Common Shares if such Person reports, or is required to report such Beneficial Ownership on Schedule 13Gunder the Exchange Act or Schedule 13D of the Exchange Act (or any comparable or successor report), which Schedule 13D does notstate any present intention to (or reserve the right to) hold such Common Shares with the purpose or effect of changing orinfluencing the control of the Company, nor in connection with or as a participant in any transaction having such purpose or effect, or(E) any acquisition pursuant to a transaction that complies with clauses (A), (B) and (C) of subsection (3) below; or (2) individualswho, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of theBoard; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination forelection by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the IncumbentBoard shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any suchindividual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election orremoval of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or(3) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of theCompany or the acquisition of assets of another corporation (a “Business Combination”) occurs unless, following such BusinessCombination, (A) all or substantially all of the individuals and entities who were the beneficial owners of the Common Stockimmediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the Common Stock or, withrespect to an entity other than the Company, the combined voting power of the then outstanding voting securities entitled to votegenerally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, acorporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly orthrough one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such BusinessCombination of the Common Stock, (B) no Person (excluding any corporation resulting from such Business Combination or anyemployee benefit plan (or related trust) of the Company or any corporation resulting from such Business Combination) beneficiallyowns, directly or indirectly, 15% or more of the Common Stock or, with respect to an entity other than the Company, the combinedvoting power of the then outstanding voting securities of such corporation, except to the extent that such ownership existed prior to theBusiness Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from suchBusiness Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of theaction of the Board, providing for such Business Combination; or (4) approval by the shareholders of the Company of a completeliquidation or dissolution of the Company occurs.The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fullyindemnify such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of orrelating to this Agreement or its engagement pursuant hereto except for willful misconduct or gross negligence.3. The Company shall indemnify Indemnitee against any and all expenses (including attorneys’ fees) and, if requestedby Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred byIndemnitee in connection with any claim asserted or action brought by Indemnitee for (i) indemnification or advance payment ofExpenses by the Company under this Agreement or any other agreement or Company By-laws now or hereafter in effect relating toClaims for Indemnifiable Events and/or(ii) recovery under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whetherIndemnitee ultimately is determined to be entitled to such indemnification, advance payment of Expenses or insurance recovery, as thecase may be.4. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or aportion of the Expenses, judgments, fines, penalties and amounts paid in settlement of such action, suit or proceeding but not, however,for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee isentitled. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits orotherwise in the defense of any claim relating in whole or in part to any Indemnifiable Event or in defense of any issue or mattertherein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.5. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with orwithout court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption thatIndemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that Indemniteeis not entitled to indemnification or expense advance or that indemnification or expense advance is not permitted by applicable law.6. The parties recognize that several of the Company’s By-law provisions on indemnification substantially reflect thecurrent provisions of Section 145 of the General Corporation Law of Delaware; that directors’ and officers’ liability insurance providesbenefits beyond those specified in said Section 145; and that Section 145(f) provides that the benefits of the statute are not to bedeemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under anyagreement or otherwise. It is the intent of the parties that the benefits to be derived by Indemnitee hereunder shall not be limited tothose provided by said Section 145 (as presently enacted or as it may in the future be changed or interpreted, by statute or judicialdecision) or any By-laws of the Company based thereon; but shall extend to the full extent permitted by law now or hereafter in effect(including giving full effect to Section 145(f), and this Agreement shall be so interpreted by the Reviewing Party herein.7. Indemnitee shall notify the Company in writing of the institution of any action, suit, proceeding, inquiry orinvestigation that is or may be subject to this Agreement; provided, that the failure to give such notice shall not affect Indemnitee’srights hereunder.8. To the extent the Company maintains an insurance policy or policies providing directors’ and officers’ liabilityinsurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of thecoverage available for any Company director or officer.9. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or anyaffiliate of the Company against Indemnitee, his spouse, heirs, executors or personal or legal representatives after the expiration of twoyears from thedate of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished anddeemed released unless asserted by the timely filing of a legal action within such two- year period; provided, however, that if anyshorter period of limitation is otherwise applicable to any such cause of action, such shorter period shall govern.10. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by bothof the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any otherprovisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.11. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment toall of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary tosecure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforcesuch rights.12. The Company shall not be liable under this Agreement to make any payment in connection with any claim madeagainst Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law orotherwise) of the amounts otherwise indemnifiable hereunder.13. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and theirrespective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all orsubstantially all of the business and/or assets of the Company, spouses, heirs, executors, and personal and legal representatives. ThisAgreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or ofany other enterprise at the Company’s request.14. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including anyprovision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwiseunenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law.15. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State ofDelaware applicable to contracts made and to be performed in such state, but excluding any conflicts-of-law rule or principle whichmight refer such governance, construction or enforcement to the laws of another state or country.Executed as of the date first above written. LEE ENTERPRISES, INCORPORATED________________________ By: _________________________- Indemnitee Exhibit Ato Indemnification AgreementMorris, Nichols, Arsht & TunnellTwelfth & Market StreetsP.O. Box 1347Wilmington, DE 19899-1347(302) 658-9200Young Conaway Stargett & Taylor, LLPRodney Square1000 North King StreetWilmington, DE 19801(302) 571-6600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%Madison Newspapers, Inc. d/b/a Capital NewspapersWisconsin50%TNI PartnersArizona50%EXHIBIT 23 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, 333-218355, and No. 333-204985) onForm S-8 and ( No.333-215651, Amendment No. 1 to No. 333-21561, No. 333-197450, and Amendment No. 1 to No. 333-197450) on Form S-3 ofLee Enterprises, Incorporated and subsidiaries of our reports dated December 8, 2017, with respect to the consolidated balance sheets of LeeEnterprises, Incorporated as of September 24, 2017 and September 25, 2016, and the related consolidated statements of income andcomprehensive income, stockholders’ equity (deficit), and cash flows for each of the 52 week periods ended September 24, 2017, September 25,2016, and September 27, 2015, and the effectiveness of internal control over financial reporting as of September 24, 2017, which reports appear inthe September 24, 2017 annual report on Form 10‑K of Lee Enterprises, Incorporated./s/ KPMG LLPChicago, IllinoisDecember 8, 2017EXHIBIT 24POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned directors of Lee Enterprises, Incorporated, aDelaware corporation (the “Company”), hereby severally constitute and appoint each of Kevin D. Mowbray and Ronald A.Mayo, and each of them, to be our true and lawful attorneys-in-fact and agents, with full power of substitution andresubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Company’s AnnualReport on Form 10-K for the fiscal year ended September 24, 2017 (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 necessaryto be done, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming allthat such attorneys-in-fact and agents, or his or her substitute or substitutes, shall lawfully do or cause to be done by virtuehereof.Dated: December 8, 2017/s/ Kevin D. Mowbray /s/ Ronald A. MayoKevin D. Mowbray Ronald A. MayoPresident and Chief Executive Officer Vice President, Chief Financial Officer and(Principal Executive Officer) TreasurerDirector (Principal Financial and Accounting Officer) /s/ Richard R. Cole /s/ Nancy S. Donovan Richard R. Cole Nancy S. DonovanDirector Director /s/ Leonard J. Elmore /s/ Mary E. JunckLeonard J. Elmore Mary E. JunckDirector Director /s/ Brent Magid /s/ William E. Mayer Brent Magid William E. MayerDirector Director /s/ Herbert W. Moloney III /s/ Gregory P. Schermer Herbert W. Moloney III Gregory P. SchermerDirector DirectorExhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Kevin D. Mowbray, 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 8, 2017 /s/ Kevin D. Mowbray Kevin D. Mowbray President and Chief Executive Officer Exhibit 31.2CERTIFICATION OF CHIEF FINANCIAL OFFICERI, Ronald A. Mayo, 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 8, 2017 /s/ Ronald A. Mayo Ronald A. Mayo 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 24, 2017 ("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 8, 2017 /s/ Kevin D. Mowbray /s/ Ronald A. MayoKevin D. Mowbray Ronald A. MayoPresident and Chief Executive Officer Vice President, Chief Financial 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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