XML 24 R13.htm IDEA: XBRL DOCUMENT

Note 7 - Acquisitions

3 Months Ended

Dec. 27, 2020

Business Combination Disclosure [Text Block]

7	ACQUISITIONS

On 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”).

The allocation of the purchase price is preliminary. The valuation of property and equipment, intangibles, deferred income taxes, and residual goodwill is not complete, pending completion of the final valuation report. These amounts are subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). 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 accounting for the Credit Agreement and the BH Lease are described in Notes 5 and 6.

The following table summarizes the preliminary determination of fair values of the assets and liabilities for the Transactions.

(in Thousands)	Estimated fair value as previously reported		Measurement period adjustments		Fair value as adjusted
Cash and Cash equivalents	22,293		—		22,293
Current assets	52,559		(1,199	)	51,361
Other assets	12,167		3,448		15,619
Property and equipment	42,952		33		42,985
Operating lease assets	7,445		101		7,546
Advertiser relationships	38,780		(10,820	)	27,960
Subscriber relationships	36,060		(7,860	)	28,200
Commercial print relationships	17,130		2,450		19,580
Mastheads	21,680		(1,290	)	20,390
Goodwill	63,559		14,984		78,539
Total assets	314,625		(152)		314,473
Current liabilities assumed	(73,451	)	1,074		(72,377	)
Operating lease liabilities	(6,625	)	(921	)	(7,546	)
Other liabilities assumed	(2,246	)	(1)		(2,247	)
Pension obligations	(43,503	)	—		(43,503	)
Postemployment benefit obligations	(36,800	)	—		(36,800	)
Total liabilities	(162,625	)	152		(162,474	)
Net assets	152,000		—		152,000
Less: acquired cash	(22,293	)	—		(22,293	)
Total consideration less acquired cash	129,707		—		129,707

The Company had one material measurement period adjustment since September 27, 2020, the last reported preliminary determination of fair values of the assets and liabilities. The significant adjustment included $403,000 net increase to Goodwill through adjustments to liabilities assumed as more information was obtained.

For the 13 weeks ended December 27, 2020, the revenue and net income included in the Consolidated Income Statement related to the acquirees was $109,061,000 and $23,132,000, respectively.

Pro Forma Information

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 September 30, 2019, the first day of fiscal year 2020.

	Unaudited
	13 Weeks Ended
		December 29,
(Thousands of Dollars, Except Per Share Data)		2019
Total revenues			237,618
Income (loss) attributable to Lee Enterprises, Incorporated			16,554
Earnings per share - diluted			0.29

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 adjustment made relates to the write-off of previously unamortized debt-issuance costs as of October 1, 2018 which resulted in a $897,000 increase to net income for the 13 weeks ended December 29, 2019.