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Note 2 - Acquisitions | 12 Months Ended
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Sep. 26, 2021
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | 2 ACQUISITIONS On March 16, 2020, the Company completed the Purchase Agreement. As part of the Purchase Agreement, the Company agreed to purchase certain assets and assume certain liabilities of BH Media's newspapers and related 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 Buffalo News for a combined purchase price of $140,000,000. BH Media includes 30 daily newspapers and digital operations, in addition to 49 paid weekly newspapers with websites and 32 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 Nebraska limited liability company affiliated with Berkshire (the "Credit Agreement"), as described further in Note 6. Between July 2, 2018 and March 16, 2020, the Company managed the BH Media Newspaper Business pursuant to a Management Agreement between BH Media 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 asset balance, which totaled $3,589,000 as of December 29, 2019, and the remaining amount was reflected in Other Revenue for the 13 weeks ended March 29, 2020. The amount of variable fees was estimated based on BH Media 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 entered into a lease agreement between BH Media, as Landlord, and the Company, as Tenant, providing for the leasing of 68 properties and related fixtures (including production equipment) used in the BH Media Newspaper Business ("BH Lease"). The BH Lease commenced on March 16, 2020. The BH Lease requires the Company to pay annual rent of $8,000,000, payable in equal payments, as well as all operating costs relating to the properties (including maintenance, repairs, property taxes and insurance). Rent payments are subject to a Rent Credit (as defined in the Lease) equal to 8.00% of the net consideration for any leased real estate sold by BH Media during the term of the Lease. As of September 26, 2021, the Company has earned monthly rent credits of $40,000, making current annual rent of $7,522,000. In connection with the BH Lease, the Company recognized $56,226,000 and $56,226,000 in ROU assets and offsetting lease liabilities as of March 16, 2020. The allocation of the purchase price is final. As part of the Transactions, the Company also entered into the Credit Agreement and the BH Lease, as described above. The Company concluded that these agreements were not separate from the Transactions and evaluated these agreements for off-market terms and no such terms were identified. As such, the consideration for the acquisitions was limited to cash consideration, as shown below. The following table summarizes the final determination of fair values of the assets and liabilities for the Transactions.
(Thousands of Dollars) |  | Estimated fair value as previously reported (a) |  |  | Measurement period adjustments |  |  | Fair value as adjusted |
Cash and cash equivalents |  |  | 22,293 |  |  |  | — |  |  |  | 22,293 |
Current assets |  |  | 52,559 |  |  |  | (855 | ) |  |  | 51,704 |
Other assets |  |  | 12,167 |  |  |  | 4,343 |  |  |  | 16,510 |
Property and equipment |  |  | 42,952 |  |  |  | 33 |  |  |  | 42,985 |
Operating lease assets |  |  | 7,445 |  |  |  | 101 |  |  |  | 7,546 |
Advertiser relationships |  |  | 38,780 |  |  |  | (11,160 | ) |  |  | 27,620 |
Subscriber relationships |  |  | 36,060 |  |  |  | (8,210 | ) |  |  | 27,850 |
Commercial print relationships |  |  | 17,130 |  |  |  | 2,430 |  |  |  | 19,560 |
Mastheads |  |  | 21,680 |  |  |  | (1,290 | ) |  |  | 20,390 |
Goodwill |  |  | 63,559 |  |  |  | 16,337 |  |  |  | 79,896 |
Total assets |  |  | 314,625 |  |  |  | 1,729 |  |  |  | 316,354 |
Current liabilities assumed |  |  | (73,451 | ) |  |  | 1,074 |  |  |  | (72,377 | )
Operating lease liabilities |  |  | (6.625 | ) |  |  | (921 | ) |  |  | (7,546 | )
Other liabilities assumed |  |  | (2,246 | ) |  |  | (1,882 | ) |  |  | (4,128 | )
Pension obligations |  |  | (43,503 | ) |  |  | — |  |  |  | (43,503 | )
Postemployment benefit obligations |  |  | (36,800 | ) |  |  | — |  |  |  | (36,800 | )
Total liabilities |  |  | (162,625 | ) |  |  | (1,729 | ) |  |  | (164,354 | )
Net assets |  |  | 152,000 |  |  |  | — |  |  |  | 152,000 |
Less: acquired cash |  |  | (22,293 | ) |  |  | — |  |  |  | (22,293 | )
Total consideration less acquired cash |  |  | 129,707 |  |  |  | — |  |  |  | 129,707 |
(a) As previously reported in the Company's Quarterly Report on Form 10-Q for the period ended March 29, 2020. The Company had various measurement period adjustments due to additional knowledge gained since March 29, 2020. The significant adjustments included $11,160,000 decrease to Advertiser relationships, $8,210,000 decrease to Subscriber relationships, and $2,430,000 increase to Commercial print relationships due to updates in assumptions related to the forecast and attrition rates, and changes were offset in Goodwill. Other adjustments included adjustments to accrued liabilities of $634,000, uncertain tax position allowance of $138,000, and a $3,600,000 reclassification involving working compensation and medical reserves that was identified during management's review. Pro Forma Information (Unaudited) The following table sets forth unaudited pro forma results of operations assuming the Transactions, along with the credit arrangements necessary to finance the Transactions, occurred on the first day of fiscal year 2020 and 2019.
|  | Unaudited Unaudited |
|  | September 27, |  |  |  |  |  |  | September 29, |
(Thousands of Dollars, Except Per Share Data) |  | 2020 |  |  |  |  |  |  | 2019 |
Total revenues |  |  | 821,793 |  |  |  |  |  |  |  | 973,143 |
Income attributable to Lee Enterprises, Incorporated |  |  | 17,632 |  |  |  |  |  |  |  | 20,715 |
Earnings per share - diluted |  |  | 3.10 |  |  |  |  |  |  |  | 3.60 |
Prior period results have been adjusted to reflect the Reverse Stock Split. This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments. This pro forma information is not necessarily indicative of what our results would have been had we operated the businesses since the beginning of the periods presented. The pro forma adjustments reflect the income statement effects of depreciation expense and amortization of intangibles related to the fair value adjustments of the assets acquired, acquisition-related costs, incremental interest expense related to the financing of the Transactions and 2020 Refinancing, the BH Lease entered into as part of the Transactions, the elimination of certain intercompany activity and the related tax effects of the adjustments. The only material, nonrecurring adjustments relate to the write-off of previously unamortized debt-issuance costs as of October 1, 2018, related to the refinanced debt resulted in a $7,693,000 decrease to net income for 2019 and a $8,973,000 increase to net income for 2020. No other periods were affected by the adjustments.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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