References to “we”, “our”, “us” and the like throughout the Consolidated Financial Statements refer to the Company. References to “2018”“2019”, “2017”“2018” and the like refer to the fiscal years ended the last Sunday in September.

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.

The preparation of the Consolidated Financial Statements in conformity with 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.

In February 2018,Between 2014 and 2017, the Financial Accounting Standards Board ("FASB")FASB issued aseveral new standard that gives entities the option to reclassify the tax effectsstandards related to items in accumulated other comprehensive income as a result of tax reform to retained earnings.revenue recognition ("the New Revenue Standard"). The new standardNew Revenue Standard supersedes existing revenue recognition requirements and is effective forin fiscal years beginning after December 15, 2017. The New Revenue Standard provides a five-step model in determining when and how revenue is recognized and requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The New Revenue Standard also requires new

We adopted the New Revenue Standard on October 1, 2018, using the modified retrospective method applied to those contracts which were not completed as of that date. We completed our assessment and interim periods within those fiscal years.did not identify

In March 2017, the FASB issued a new standard to improve the presentation of pension and postretirement benefit expense. The new standard requires that the service cost component of pension and postretirement benefits expense is recognized as compensation expense, while the remaining components of the expense (benefit) are presented outsideas non-operating income in other, net. This new standard was adopted for the quarter ended December 30, 2018 and has been retrospectively applied to the Statement of operating income. The current presentation includesOperations for all componentscomparative periods presented. We recorded benefits of $711,000 and $1,422,000 in other, net in non-operating income (expense) for the expense (benefit) as Compensation13 and the 26 weeks ended March 31, 2019, respectively. We reclassified benefits of $708,000 and $1,416,000 from compensation to other, net in our Consolidated Statements of Incomenon-operating income (expense) for the 13 weeks and Comprehensive Incomethe 26 weeks ended March 25, 2018, respectively.

In February 2018, FASB issued new guidance to allow a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects resulting from what is commonly referred to as the periods presented. The adoptionTax Cuts and Jobs Act (the "2017 Tax Act"). In the first quarter of the new standard is required in fiscal 2019. If adopted in fiscal year 2018, compensation expense would increase $2,776,000we remeasured our deferred taxes related to unrealized gains on an annual basis.

In February 2016, the FASB issued a new standard for the accounting treatment of leases. UnderThe new standard is based on the principle that entities should recognize assets and liabilities arising from leases. The new guidance, lessees will be requiredstandard does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standard. Leases are classified as finance or operating. The new standard's primary change is the requirement for entities to recognize a lease liability for payments and a right-of-useright of use asset representing the right to use the leased asset during the term on most operating lease arrangements. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for all leases with terms greater than 12 months. Leases will be classified as either financea term of twelve months or operating, with classification affectingless. In addition, the patternnew standard expands the disclosure requirements of expense recognitionlease arrangements. Lessees have the option to use a modified retrospective transition approach, which includes a number of practical expedients. We are currently in the statementprocess of income. We currently anticipate adoptingevaluating the impact of this guidance on our Consolidated Financial Statements.

In July 2018, the FASB issued a new standard which provides for an optional transition method that allows issuers to initially apply the new lease standard into all leases that exist as of the first quarteradoption date, with the cumulative effect of ourinitially applying the new lease standard recognized as an adjustment to retained earnings as of the adoption date. We intend to adopt the optional transition approach in fiscal year 2020. To date we have made progress in our assessment of the new lease standard. We are currently compiling an inventory of leases,

evaluating the provisions of the updated guidance and assessing the impact on our Consolidated Financial Statements.

On October 1, 2018, we adopted the FASB issued a new revenue recognition standardaccounting pronouncement, using the modified retrospective method applied to those contracts which prescribes a single comprehensive modelwere not completed as of the adoption date. Results for entities to use to account for revenue arising from contracts with customers. Thereporting periods beginning after October 1, 2018 are presented under the new guidance will supersede virtually all existing revenue guidancewhile prior period amounts are not adjusted and continue to be reported in accordance with legacy accounting under U.S. GAAP andthe old guidance. We did not record any adjustments to beginning retained earnings at October 1, 2018 as a result of adopting the new guidance.

Advertising and cash flows arisingmarketing services contract transaction prices consist of fixed consideration. We recognize revenue when control of the related performance obligation transfers to the customer.

Payments for advertising revenues are due upon completion of our performance obligations at previously agreed upon rates. In instances where the timing of revenue recognition differs from the timing of invoicing, such timing differences are not large. As a result, we have determined that our contracts with customersdo not include a significant financing component.

NoContract asset balances relate to our Management Agreement revenues and were $3,461,000 as of March 31, 2019 and $0 as of September 30, 2018 and consisted solely of the variable portion of the contract. These contract asset balances are included in accounts receivable and contract assets, net. There are no other new accounting pronouncement issuedcontract assets recorded. Accounts receivable, excluding allowance for doubtful accounts and contract assets, was $45,689,000 and $48,517,000 as of March 31, 2019 and September 30, 2018, respectively. Allowance for doubtful accounts was $5,473,000 and $4,806,000 as of March 31, 2019 and September 30, 2018, respectively.

Income or loss of TNI (before income taxes) is allocated equally to Star Publishing and Citizen.

TNI makes weekly distributions of its earnings and for the 13 weeks ended March 31, 2019 and March 25, 2018 and March 26, 2017 we received $1,631,000$1,957,000 and $1,437,000$1,631,000 in distributions, respectively. In the 26 weeks ended March 31, 2019 and March 25, 2018 and March 26, 2017 we received $3,198,000$2,506,000 and $2,420,000$3,198,000 in distributions, respectively.

Summarized results of MNI are as follows:

MNI makes quarterly distributions of its earnings and in the 13 weeks ended March 25, 201831, 2019 and March 26, 201725, 2018 we received dividends of $1,250,000$750,000 and $1,000,000,$1,250,000, respectively. In the 26 weeks ended March 25, 201831, 2019 and March 26, 201725, 2018 we received dividends of $2,000,000$1,500,000 and $2,250,000,$2,000,000, respectively.

Changes in the carrying amount of goodwill are as follows:

Annual amortization of intangible assets for the 52 or 53 weeks endedyears ending March 20192020 to March 20232024 is estimated to be $16,992,000, $15,827,000, $15,564,000, $12,924,000$16,192,000, $15,929,000, $13,289,000, $12,384,000 and $12,019,000,$11,704,000, respectively.

On March 31, 2014, we completed a comprehensive refinancing of our debt (the"2014(the "2014 Refinancing"), which included the following:

Our weighted average cost of debt, excluding amortization of debt financing costs at March 25, 2018,31, 2019, is 9.9%10.0%.

At March 25, 2018,31, 2019, aggregate minimum required maturities of debt excluding amounts required to be paid from future excess cash flow computations total $18,759,000$7,318,000 for the remainder of 2018, $12,145,000 in 2019, $0 in 2020, $0 in 2021, $385,000,000 in 2022 and $100,417,000 thereafter.$84,137,000 in 2023.

The Notes are senior secured obligations of the Company and mature on March 15, 2022.

At March 25, 2018,31, 2019, the principal balance of the Notes totaled $385,000,000.

We may redeem some, or all, of the principal amount of the Notes at any time. On or after March 15, 2018, we may redeem the Notestime as follows:

If we sell certain of our assets or experience specific kinds of changes of control, we must, subject to certain exceptions, offer to purchase the Notes at 101% of the principal amount. Any redemption of the Notes must also satisfy any accrued and unpaid interest thereon.

The Revolving Facility may

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, Pulitzer Excess Cash Flow is used to prepay the 2nd Lien Term Loan, at par. Pulitzer Excess Cash Flow payments arepar, and is required to be paid 45 days after the end of the quarter.

The Warrant Agreement contains provisions requiring the Warrants to be measured at fair value and included in other liabilities in our Consolidated Balance Sheets. We re-measure the fair value of the liability each reporting period, with changes reported in other, net non-operating income (expense). The initial fair value of the Warrants was $16,930,000. See Note 9.10.

In connection with the issuance of the Warrants, we entered into a Registration Rights Agreement dated as of March 31, 2014 (the “Registration Rights Agreement”). The Registration Rights Agreement requires, among other matters, that we use our commercially reasonable efforts to maintain the effectiveness for certain specified periods of a shelf registration statement related to the shares of Common Stock to be issued upon exercise of the Warrants.

The rights of each of the collateral agents with respect to the Lee Legacy Collateral and the Pulitzer Collateral are subject to customary intercreditor and intercompany agreements.

 

FinalExcluding our Revolving Facility, which is undrawn as of March 2019, final maturities of our debt range from December 2018March 2022 through December 2022.

We have several noncontributory defined benefit pension plans that together cover selected employees. Benefits under the plans were generally based on salary and years of service. Effective in 2012, substantially all benefits are frozen and only a small amount of additional benefits are being accrued. Our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annual actuarial calculations. Plan funding strategies are influenced by government regulations. Plan assets consist primarily of domestic and foreign corporate equity securities, government and corporate bonds, hedge fund investments and cash.

 

In addition, we provide retiree medical and life insurance benefits under postretirement plans at several of our operating locations. The level and adjustment of participant contributions vary depending on the specific plan. In addition, St. Louis Post-Dispatch LLC, provides postemployment disability benefits to certain employee groups prior to retirement. Our liability and related expense for benefits under the postretirement plans are recorded over the service period of active employees based upon annual actuarial calculations. We accrue postemployment disability benefits when it becomes probable that such benefits will be paid and when sufficient information exists to make reasonable estimates of the amounts to be paid.

We use a fiscal year end measurement date for all of our pension and postretirement medical plan obligations.

 

AmortizationAt the beginning of net gains (losses)fiscal year 2019, we adopted the new accounting standard to improve the presentation of pension and priorpostretirement benefit expenses. As a result, the service cost for benefits are recordedearned during the period continue to be included as compensation in the Consolidated StatementsStatement of Income and Comprehensive Income.income, while the other components of the pension benefit are recorded as non-operating income in other, net. Prior period amounts have been reclassified to conform to current period presentation.

In the 26 weeks ended March 31, 2019 we contributed $650,000 to our pension plans. Based on our forecast at March 25, 2018,31, 2019, we do not expect to make contributions of $4,940,000 to our pension trust during the remainder of fiscal 2018.2019.

In March 2017, we notified certain participants in one of our post employment medical plans of changes to their plan and in December 2017 our fiscal second quarter, the plan was terminated. These changes resulted in a non-cash curtailment gain of $2,031,000 in the 13 weekssecond quarter ended March 25, 2018 and $3,741,000 in the 13 weeks ended March 26, 2017.2018. Curtailment gains are recorded in gainloss (gain) on sales of assets and other, net in the Consolidated Statements of IncomeOperations and Comprehensive income.

On December 22, 2017, comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “2017 Tax Act”) was signed into law. Among other provisions, the 2017 Tax Act reduces the federal statutory corporateWe recorded income tax rate from 35%expense of $156,000 related to 21%. The reductionloss before taxes of $2,171,000 for the corporate13 weeks ended March 31, 2019, and income tax rate caused usexpenses of $4,670,000 related to re-measure our deferredincome before taxes of $13,062,000 for the 26 weeks ended March 31, 2019. Including the transactional impact of revaluing tax assets and liabilities, we recorded income tax expense of $927,000 related to income of $3,460,000 for the lower federal base rate13 weeks ended March 25, 2018 and, including the transactional impact of 21%. The discrete adjustment from revaluing our deferred tax assets and liabilities, resulted in a provisional net decrease inwe recorded income tax expensebenefit of $24,872,000$18,763,000 related to income of $19,097,000 for the 26 weeks ended March 25, 2018.

The changes resulting from the 2017 Tax Act are complex and the final transitional impact of the 2017 Tax Act may differ from the above estimate, possibly materially, due to, among other things, changes in interpretations of the 2017 Tax Act, any legislative action to address questions that arise because of the 2017 Tax Act, changes in accounting standards for income taxes or related interpretations in response to the 2017 Tax Act and updates or changes to estimates the Company has used to calculate the transition impacts, including impacts from changes to current year earnings estimates and changes in the timing of reversals of deferredeffective income tax assets and liabilities. The Securities Exchange Commission has issued rules that allow for a measurement period of up to one year after the enactment date of the 2017 Tax Act to finalize the recording of the related transitional impact. We did not make any adjustments to the provisional amount recorded and currently anticipate finalizing the transitional impact of the 2017 Tax Act in the fourth quarter of 2018.

The effective income tax rate for the 13 and 26 weeks ended March 26, 2017 was 15.2% and 28.3%, respectively. The majority of theprimary differences between the effective taxthese rates and the U.S. federal statutory tax rates wererate of 21% are due to the transitionaleffect of state taxes, non-deductible expenses, adjustments fromto reserves for uncertain tax positions, including any related interest, and mark-to-market adjustments to value the 2017 Tax Act as well as the nontaxable income and nondeductible expenses related to the fair value adjustment of the warrants.Warrants.

We file a consolidated federal tax return, as well as combined and separate tax returns in approximately 27 state and local jurisdictions. We do not currently have variousany federal or state income tax examinations ongoing which are at different stages of completion, but generally ourin progress. Our income tax returns have generally been audited or closed to audit through 2009.2012. See Note 1011 for a discussion of our tax audits.

At September 25, 2017,2018, we had approximately $57,856,000$63,048,000 of state net operating loss tax benefits and abenefits. The Company consumed its federal net operating loss carryforward of approximately $6,247,000.losses in the year ended September 30, 2018.

The following table sets forth the computation of basic and diluted earnings per common share:

Total unrecognized compensation expense for unvested restricted Common Stock at March 25, 201831, 2019 is $3,003,892,$2,602,633, which will be recognized over a weighted average period of 1.51.7 years.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate value.

The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of those instruments. Investments totaling $6,318,000,$6,068,000, including our 17% ownership of the nonvoting common stock of TCT and a private equity investment, are carried at cost. As of September 30, 2017,March 31, 2019, based on the most recent data available, the approximate fair value of the private equity

As discussed more fully in Note 4,5, we recorded a liability for the Warrants issued in connection with the Warrant Agreement. The liability was initially measured at its fair value and we 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 Warrants at September 2017,March 2019 and December 2017 and March 2018 is $1,580,000, $2,011,000 and $1,456,000,are $4,479,000, 1,726,000, respectively. Fair value is determined using the Black-Scholes option pricing model. These represent level 2 fair value measurements.

We file income tax returns with the Internal Revenue Service ("IRS") and various state tax jurisdictions. From time to time, we are subject to routine audits by those agencies and those audits may result in proposed adjustments. We have considered the alternative interpretations that may be assumed by the various taxing agencies, believe our positions taken regarding our filings are valid, and that adequate tax liabilities have been 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 Operations and Comprehensive Income (Loss) in the periods in which such matters are ultimately determined. We do not believe the final resolution of 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 or closed to audit through 2009.

We are involved in a variety of legal actions that arise in the normal course of business. Insurance coverage mitigates potential loss for certain of these matters. While we are unable to predict the ultimate outcome of these legal actions, it is our opinion that the disposition of these matters will not have a material adverse effect on our Consolidated Financial Statements, taken as a whole.

The Company contributes to three multiemployer pension plans. In June 2017, a union contract covering certain of our employees under a multiemployer pension plan expired resulting in a partial withdrawal from one of the multiemployer plans. In 2017, the Company recorded an estimate of the partial withdrawal liability totaling $2,600,000. Once the multiemployer pension plan's administrators finalize the partial withdrawal liability, it will be paid in equal installments over a twenty year period.