Welcome to the Lee Enterprises 2017 Fourth Quarter Webcast and Conference Call. The call is being recorded, and will be available for replay beginning later this morning at lee.net. At the close of the planned remarks, there will be an opportunity for questions. Several analysts have been invited to participate. Also participants accessing this call by webcast may submit written questions through the Web site, and they will be answered during the call as time permits. Otherwise, you will receive a response later. A link to the live webcast can be found at www.lee.net. Now, I will turn the call over to your host Charles Arms, Director of Corporate Communications.

Good morning and thank you for joining us. Speaking on this morning's call will be Mary Junck, Executive Chairman; Kevin Mowbray, President and Chief Executive Officer; and Ron Mayo, Vice President and Chief Financial Officer. Also with us on today's call and available for questions, are Paul Farrell, Vice President, Sales; James Green, Vice President, Digital; and Nathan Bekke, Vice President, Consumer Sales and Marketing. Earlier today, we issued a news release with preliminary results for our September quarter and our 2017 fiscal year. It is available at lee.net as well as at major financial Web sites. As a reminder, this morning's discussion will include forward-looking statements that are based on our current expectations. These statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially. Such factors are described in this morning's news release and also in our SEC filings. During the call, we will make reference to certain non-GAAP financial measures, which are defined in our news release. Reconciliations to the relevant GAAP measures are included in the tables accompanying the release. Finally, all revenue and cash comparisons discussed on today's call are same-property comparisons as described in our news release. Adjusted EBITDA reflects the impact of 2017 acquisitions and 2016 includes adjusted EBITDA associated with a disposition in 2016. And now to open the discussion is our Executive Chairman, Mary Junck.

Thank you, Charles, and good morning, everybody, and thank you for joining our conference call this morning. The September quarter was highlighted by an improved adjusted EBITDA trend. For the fourth quarter, adjusted EBITDA totaled $36.7 million, down just 1.1% from prior year. This is the best quarterly adjusted EBITDA performance as compared to prior year quarters in two years. We maintained our industry-leading margins in the quarter and in fiscal 2017. For the fiscal year, adjusted EBITDA was $144.6 million, a decline of 6% from the prior year. We believe, we will continue to report strong adjusted EBITDA in fiscal 2018. We are focused on driving cash flow performance, reducing debt and evaluating strategic and accretive acquisitions, as well as other opportunities to drive long-term shareholder value. A word on digital revenue. In 2017, we saw continued strong growth in digital revenue posting our best annual performance in digital advertising since 2014. Also in 2017 we closed on the previously announced acquisition of the Dispatch-Argus in Rock Island Moline, Illinois adjacent to our operation in Davenport Iowa. We purchased the Dispatch-Argus for $7.2 million plus an adjustment for working capital acquired in the acquisition was already accretive to earnings and free cash flow in our September quarter. Our leverage as of September 2017 was 3.72x and we continue to reduce our debt. Strong adjusted EBITDA has enabled us to act on strategic acquisitions such as the purchase of the Dispatch-Argus. Also we continue to routinely survey the landscape for properties that can be acquired at attractive multiples and be accretive to free cash flow, focusing on solid midsized markets where the operation is the dominant provider of local news information and advertising in both digital and print. Also with lower leverage in the first lien term loan amortizing quickly,…

Thank you, Mary. As Mary mentioned, we closed on the acquisition of the Dispatch-Argus in our fourth quarter. The Dispatch-Argus serves Moline, Rock Island and the surrounding communities on the Illinois side of the Mississippi River in the Quad Cities with circulation of 25,000. We are pleased with the purchase and the transition. We will begin consolidating the results of Dispatch-Argus in the September quarter and we expect its contributions to cash flow to steadily improve in 2018 once the transition into Lee's operation is completed. And we are well into the integration. We’ve completed the migration of the Dispatch-Argus to our digital content platforms, our design center and several other key business systems. We expect the transition to be completed and the Dispatch-Argus to be fully integrated by the end of the March quarter. Regarding the September quarter, the total revenue trend was similar to our improving trend in the June quarter with total revenue down 6.8%.The improvement was driven by revenue gains in both digital and subscription revenue. For the fiscal year, total revenue declined 7.1%. Digital advertising grew 6.1% in the September quarter including growth of 7.9% in digital retail advertising. Digital retail advertising accounts for 61% of total digital advertising. In the September quarter, digital advertising revenue represented 29.7% of total advertising revenue for the company. Total digital revenue grew 6.7% in fiscal 2017 and digital advertising grew 8% for the year. As Mary mentioned earlier, this is the best in performance in digital advertising since 2014. In 2017, digital advertising accounted for 27.8% of total advertising revenue. Our digital audiences and audience engagement continue to grow with monthly average page views up 11.6% in the September quarter, totaling $244.2 million. Page views per session, one metric we use to monitor audience engagement increased in the…

Thank you, Kevin. The company continues to produce solid adjusted EBITDA. In the September quarter, adjusted EBITDA totaled $36.7 million, a 1.1% decrease from the September quarter last year. As Mary said earlier, the September quarter cash costs, excluding workforce adjustments and other, decreased 8.8% compared to the prior year quarter. Compensation decreased 9.6%, primarily as a result of reduced staffing levels, and lower medical costs. The majority of the staffing decreases are associated with our ongoing business transformation and outsourcing. Newsprint and ink expense decreased 16.2% for the quarter primarily as a result of reduced volume from our unit reductions and a change to lower basis weight newsprint. In 2018, newsprint prices are expected to increase as suppliers have announced three price increases for a total of $60 per metric ton on 30 pound newsprint, which are being implemented in October 2017 through January 2018. Additional increases are possible later in the fiscal year depending on the outcome of the United States Department of Commerce decision on tariffs on newsprint imported from Canada. Other operating expenses decreased 6.9% in the quarter, primarily driven by lower delivery, postage and other print related costs, which were offset in part by continued investments to grow digital revenue. As a result of the changes implemented in our business, cash costs savings for 2017 fiscal year declined 7.7%, which exceeded the high-end of our previously announced cost guidance of 6.5%. In 2018, we expect the carryover impact of these cost reductions to have a positive impact as well as additional cost reductions we will make as part of our 2018 business transformation initiatives. Debt was reduced $20.1 million for the quarter and $68.8 million for the fiscal year. The principal amount of debt at the end of the quarter was $548.4 million. Interest expense…

Well, thank you, Ron and this includes the -- this concludes this morning's remarks. The team will stay on the line for any questions you may have. Following the question to ask by telephone, we will answer any submitted questions during the webcast. Operator, please open the line for questions.

Thank you. [Operator Instructions]

[Technical difficulty] to immediately deduct capital expenditures and you’ve noted, you’ve listened to our calls in the past we are not a big capital expenditure investor each year. We only have $4 million last year and expect $10 million and while that will be benefit us by taking immediate deduction, it's not hugely material to Lee, and those were the highlights of what will impact us from the tax [indiscernible]. And again, it will reduce our total overall taxes, but it's not as big as the headline numbers.

Our next question from the webcast, do you think the recent SEC rulings on cross-ownership will have an impact on Lee?

Well, this is Mary, and we [indiscernible] a recent SEC ruling on cross-ownership with great interest and we are studying here at Lee the possibilities of how that might impact us in a positive way, but at this point we’re unsure. But it looks at least I would think somewhat promising.

And our next question, when do you expect to pay off the first-lien term loan?

That will be somewhat dependent upon the $10 million of proceeds that I mentioned from the real estate, but it will be and billed [ph] later half of Q3 or in our fiscal Q4 is to when that happens. But some of that again will be based on the timing of one of the real estate transactions.

And our next question, can you repeat again the value of the real estate holdings currently on the market?

It is $16 million of real estate transactions that are currently on the market and $10 million of those are under contract to be sold, and we expect to close in the first two quarters of '18.

And lastly, will Lee be able to reduce its debt costs next year?

Lee will be able to reduce its debt cost primarily as a result of paying down its debt and to the extent that -- we paid down our highest cost of debt capital which is the second-lien term loan faster than, yes, our costs will continue to reduce. So I expect them to reduce in a manner similar to what we had in '17 or greater.

Thank you. Ladies and gentlemen, at this time we’ve reached the end of our question-and-answer session. This concludes our call.