Business Context and Reporting Period
Company: Lee Enterprises, Inc.
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year Ended September 28, 2025 (52 weeks)
Business Overview: Lee Enterprises is a digital-first subscription and marketing services company serving 72 mid-sized communities across 25 states. The company operates daily and weekly newspapers, digital platforms, and marketing services (including the Amplified Digital agency and BLOX Digital SaaS solutions). As of September 28, 2025, the company reported over 633,000 digital-only subscribers and approximately 890,000 total digital and print subscribers.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Operating Revenue | $562.3 million | $611.4 million | (8.0)% |
| Digital Revenue | $298.1 million | $298.1 million | 0.0% |
| Print Revenue | $264.2 million | $313.3 million | (15.0)% |
| Operating Income (Loss) | $(4.7) million | $4.5 million | NM |
| Net Loss | $(35.7) million | $(23.6) million | Worsened |
| Adjusted EBITDA | $45.4 million | $65.3 million | (30.5)% |
| Cash Costs (Non-GAAP) | $523.6 million | $553.3 million | (5.4)% |
| Cash and Cash Equivalents | $10.0 million | $9.6 million | 4.2% |
| Total Debt (Principal) | $455.5 million | $445.9 million | 2.1% |
| Net Debt (Debt less Cash) | $445.5 million | $436.3 million | 2.1% |
Note: "NM" indicates Not Meaningful due to sign change or zero base.
Material Changes vs. Prior Period
- Revenue Decline: Total operating revenue decreased 8.0% year-over-year. Print advertising revenue fell 15.1% and print subscription revenue declined 16.9%, driven by secular declines in print demand and the impact of a February 2025 cybersecurity incident. Digital-only subscription revenue grew 11.8%, partially offsetting print declines.
- Cybersecurity Incident Impact: A ransomware attack on February 3, 2025, disrupted IT systems and resulted in unauthorized data access. The incident caused a $10.5 million loss of cash flows in 2025, including $3.7 million in recognized expenses (classified under "Restructuring and Other") and $6.8 million in business interruption costs (subject to insurance claims).
- Operating Loss: The company shifted from an operating income of $4.5 million in 2024 to an operating loss of $4.7 million in 2025. This was driven by lower revenues, increased restructuring costs (up 34.3% to $25.9 million), and the absence of a $3.6 million pension curtailment gain recognized in 2024.
- Cost Reductions: Despite the cyber incident, total operating expenses decreased 6.6% and Cash Costs decreased 5.4%, reflecting successful cost-reduction initiatives, including reductions in full-time employees and lower newsprint volumes.
Guidance, Outlook, and Risks
- Proposed Rights Offering: On November 10, 2025, the company filed a registration statement for a proposed rights offering of up to $50.0 million. Proceeds are intended for general corporate purposes, capital expenditures, and technology investments. Successful completion could trigger an interest rate reduction on the company's term loan from 9% to 5% for five years, saving approximately $18 million annually.
- Liquidity and Debt: The company carries a 25-year term loan with BH Finance LLC (affiliated with Berkshire Hathaway) at a 9% interest rate. As of September 28, 2025, the company had $10.0 million in cash. Management states that liquidity is sufficient to fund operations and meet debt service requirements for at least the next twelve months, noting that all principal and interest payments since May 2025 have been satisfied through organic free cash flow.
- Key Risks:
- Cybersecurity: Ongoing legal and forensic investigations related to the February 2025 incident, including potential class-action lawsuits (e.g., Fetes et al. v. Lee Enterprises).
- Debt Covenants: The company is subject to restrictive covenants limiting additional indebtedness, dividends, and asset sales. Failure to meet debt obligations could lead to default and acceleration of debt.
- Intangible Asset Impairment: Goodwill ($323.9 million) and mastheads ($3.9 million) are subject to impairment testing. A 50-basis point decrease in royalty rates used in valuation models could result in an additional $1.5 million impairment charge.
- Executive Turnover: The Chief Financial Officer, Timothy R. Millage, announced his resignation effective February 28, 2026.
Investor Verification Checklist
- Cyber Incident Recovery: Verify the status of insurance claims for the $6.8 million in business interruption costs and the resolution of pending litigation related to the data breach.
- Capital Raise Execution: Monitor the progress of the proposed $50.0 million rights offering and the definitive agreement regarding the potential interest rate reduction on the term loan.
- Liquidity Runway: Confirm that the $10.0 million cash balance and operating cash flows remain sufficient to meet the $40.5 million annual interest obligation and mandatory principal prepayments.
- Print Decline Trajectory: Assess whether the 15% decline in print revenue stabilizes or accelerates, given the company's heavy reliance on digital transformation to offset print losses.
- Executive Succession: Track the appointment of a new Chief Financial Officer following the resignation of Mr. Millage.