1	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

March 16, 2020

Transactions, as defined and further described below, for approximately

two

weeks in the

weeks ended

March 29, 2020.

All significant intercompany accounts and transactions have been eliminated. In the opinion of management, these financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Lee Enterprises, Incorporated and its subsidiaries (the “Company”) as of

March 29, 2020

and our results of operations and cash flows for the periods presented. The Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's

2019

Annual Report on Form

-K.

Because of seasonal and other factors, the results of operations for the

and

weeks ended

March 29, 2020

are

not

necessarily indicative of the results to be expected for the full year.

References to “we”, “our”, “us” and the like throughout the Consolidated Financial Statements refer to the Company. References to “

2020

”, “

2019

” and the like refer to the fiscal years ended the last Sunday in

September.

The Consolidated Financial Statements include our accounts and those of our subsidiaries, all of which are wholly-owned, except for our

82.5%

interest in INN Partners, L.C. (“TownNews.com”),

50%

interest in TNI Partners (“TNI”) and

50%

interest in Madison Newspapers, Inc. (“MNI”).

Investments in TNI and MNI are accounted for using the equity method and are reported at cost, plus our share of undistributed earnings since acquisition less, for TNI, amortization of intangible assets.

COVID-

Pandemic

With the outbreak of COVID-

and the declaration of a pandemic by the World Health Organization on

March 11, 2020,

governments implemented a combination of shelter-in-place orders and other recommendations severely limiting or restricting economic activity in our local markets. Certain aspects of our operations have experienced lower revenue and profitability over the last several years and these trends are expected to continue in the future; however, the pandemic and government restrictions caused significant and immediate declines in demand for certain of our products and services, particularly in advertising revenue.

The Company currently expects that the COVID-

pandemic will have a significant negative near term impact on the Company’s business and operations. The long-term impact of the COVID-

pandemic will depend on the length, severity and recurrence of the pandemic, the availability of antiviral medications and vaccinations, the duration and extent of government actions designed to combat the pandemic, as well as changes in consumer behavior, all of which are highly uncertain.

As a result, the Company has implemented, and continues to implement, measures to solidify our relationship with our local advertisers, reduce our cost structure and preserve liquidity. The Company believes these initiatives will allow us to meet our commitments; however, they

may

not

be sufficient to fully offset the negative impact of the COVID-

pandemic on the Company’s business and results of operations.

Purchase Agreement with Berkshire Hathaway

March 16, 2020,

the Company completed the Asset and Stock Purchase Agreement dated as of

January 29, 2020

with Berkshire Hathaway Inc., a Delaware corporation (“Berkshire”) and BH Media Group, Inc., a Delaware corporation (“BHMG”) (“Purchase Agreement”). As part of the Purchase Agreement, the Company purchased certain assets and assumed certain liabilities of BHMG’s newspapers and related community publications business (“BH Media Newspaper Business”), excluding real estate and fixtures such as production equipment and all of the issued and outstanding capital stock of The Buffalo News, Inc., a Delaware corporation (“Buffalo News”) for a combined purchase price of

$140,000,000

(collectively, the “Transactions”). BHMG includes

daily newspapers and digital operations, in addition to

paid weekly newspapers with websites and

other print products. Buffalo News is a provider of local print and digital news to the Buffalo, NY area. The rationale for the acquisition was primarily the attractive nature of the various publications, businesses, and digital platforms as well as the revenue growth and operating expense synergy opportunities.

The Transactions were funded pursuant to a Credit Agreement dated as of

January 29, 2020

between the Company and BH Finance LLC, a Delaware limited liability company affiliated with Berkshire (“Credit Agreement”), as described further in Note

Our Consolidated Financial Statements show the combined results of the Company for the period of

March 16, 2020

through and as of

March 29, 2020

Between

July 2, 2018

and

March 16, 2020,

the Company managed the BHMG newspaper business pursuant to a Management Agreement between BHMG and the Company dated

June 26, 2018 (

“Management Agreement”).

In connection with the Transactions, the Management Agreement terminated on

March 16, 2020.

As part of the settlement of the preexisting relationship, the Company received

$5,425,000

at closing. This amount represents

$1,245,000

in fixed fees pro-rated under the contract and

$4,180,000

in variable fees based upon the pro-rated annual target. The amount we received settled our existing contract assets balance, which totaled

$3,589,000

as of

December 29, 2019,

and the remaining amount was reflected in Other Revenue for the

weeks ended

March 29, 2020.

The amount of variable fees was estimated based on expected BHMG financial performance through

March 16, 2020.

Actual financial performance through

March 16, 2020

did

not

vary materially from the estimated amount. As such, the Company did

not

recognize a gain or loss as a result of the settlement of this preexisting relationship.

In connection with the Transactions, the Company also entered into a

-year term lease with BHMG as described in Note

Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We evaluate these estimates and judgments on an ongoing basis.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are

not

readily apparent from other sources. Actual results

may

differ from these estimates under different assumptions or conditions.

Business Combinations

The Company accounts for acquisitions in accordance with the provisions of Accounting Standards Codification

805

“Business Combinations” (“ASC

805”

), which provides guidance for recognition and measurement of identifiable assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree at fair value. In a business combination, the assets acquired, liabilities assumed and non-controlling interest in the acquiree are recorded as of the date of acquisition at their respective fair values with limited exceptions. Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. Transaction costs are expensed as incurred. The operating results of the acquired business are reflected in the Company’s Consolidated Financial Statements from the date of the acquisition.

Recently Issued Accounting Standards - Standards Adopted in

2020

February 2016,

the FASB issued a new standard for the accounting treatment of leases, known as Accounting Standards Codification

842

(“ASC

842”

). The new standard is based on the principle that entities should recognize assets and liabilities arising from leases. The new standard's primary change is the requirement for entities to recognize a lease liability for payments and a right-of-use (“ROU”) asset representing the right to use the leased asset during the term on most operating lease arrangements. We adopted the standard effective

September 30, 2019,

the

first

day of fiscal year

2020.

We elected the package of practical expedients which permits the Company to

not

reassess under the new standard the prior conclusions about lease identification, lease classification, or initial direct costs. In addition, we did reassess whether existing land easements which were previously

not

accounted for as leases are or contain leases under the new guidance. We have elected to combine non-lease and lease components when accounting for leases. The Company has made a policy election to exclude short-term leases, those with an original term of less than

twelve

months, from recognition and measurement under ASC

842.

As such, we have

not

recognized an ROU asset or lease liability for these leases. Additional information and disclosures required by this new standard are contained in Note

Recently Issued Accounting Standards - Standards

Not

Yet Adopted

June 2016,

the FASB issued a new standard to replace the incurred loss impairment methodology under then current GAAP with a methodology that reflects expected credit losses and requires consideration of a wider array of reasonable and supportable information to inform and develop credit loss estimates. We will be required to use a forward-looking expected credit loss model for both accounts receivables and other financial instruments. The new standard will be adopted beginning

September 28, 2020

using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align our credit loss methodology with the new standard. We are currently evaluating the impact of this standard on our Consolidated Financial Statements.