Welcome to the Lee Enterprises Fiscal 2015 Second Quarterly Webcast and Conference Call. The call is being recorded and will be available for replay beginning later this morning at lee.net. This is a listen-only call. Several analysts have been invited to ask questions at the end of the planned remarks. If you are accessing this call by webcast, you may submit typed questions on your screen. Those questions will be answered during the call as time permits. Otherwise, you will receive a response later. Participants on the phone will not have the opportunity to ask questions. Now I will like to turn the call over to your host, Carl Schmidt, Vice President, Chief Financial Officer and Treasurer.

Good morning and thank you for joining us. With me on today’s call are Mary Junck, our Chairman and CEO; Kevin Mowbray, Executive Vice President and Chief Operating Officer; and Paul Farrell, Vice President, Digital Sales. Earlier today, we issued a news release with preliminary results for our March quarter and year to-day. It is available at lee.net as well as at major financial websites. As a reminder, our discussion today will include forward-looking statements that are based on our current expectations and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially. Such factors are described in our news release this morning and also in our SEC filings. Also during the call, we’ll reference certain non-GAAP financial measures. Reconciliations to the relevant GAAP measures are included in tables accompanying our news release. We’ll also report changes in comparable revenue and cash cost that exclude the impact of a change to fee-for-service arrangements with our carriers that requires a reclassification of delivery costs resulting in a grossing up of both revenue and cash costs. This reclassification has no impact on operating cash flow or operating income. Now, to lead our discussion, is our CEO, Mary Junck.

Thanks, Carl. And thank all of you for joining the conference call today to discuss our second quarter 2015 results. Quarter two was another solid quarter as we continued to see positive results from our many sales initiatives. March especially was a bright spot posting nearly flat revenue, out best month since April 2013. Total operating revenue was 155.5 million for the quarter, up 0.9% as reported compared to the same quarter last year. On a comparable basis, total revenue was down 1.8% improved from the trend in the first quarter. As noted in this morning’s earnings release, digital revenue continued to show excellent growth. Total digital revenue increased nearly 34% from the same quarter last year, our six consecutive quarter of double digit growth. For the quarter, digital advertising increased 8.3% and mobile advertising are component of our digital advertising revenue gained almost 38% from the prior year. Total advertising and marketing services revenue totaled nearly 98 million, down 4.9% versus last year. Our full access subscription model continues its positive impact as subscription revenue posted a 4.7% increase in the quarter after accounting for the subscription related expense reclassification. Note that this reclassification increases both print subscription revenue and other operating expense with no impact on operating cash flow or operating income. For the 2015 fiscal year, we expect subscription revenue on a comparable basis to increase 2.5% to 3%. Favorable results also have continued from our business transformation efforts as comparable cash cost decreased over 1% in the first six months of 2015. We are now in a position to improve our full year cost guidance as we now expect comparable cash cost to decrease up to 2.75% in 2015. Now here is Kevin to share some information on our digital performance and full access subscription initiative.

Thank you, Mary. As Mary mentioned, total digital revenue increased almost 34% in the second quarter and digital advertising revenue increased more than 8% over the prior year quarter. Mobile advertising revenue which is component of digital advertising revenue increased 38%. That success is driven by our focus on proving easy and effecting ways to meet the needs of our small and mid-size local advertisers as well as our ability to tailor programs to digital agencies for our larger and local advertisers. We’re also aggressively making digital and print big picture to our largest local advertisers enabling them to maximize their reach to our massive print and digital audiences. These pictures showcased full array of digital products we have to offer including banners, social media management, key words retargeting, website development and hosting. So far in 2015, it’s presented more than 650 big pictures. We began implementing our full access subscription initiative about a year ago and have rolled out to 43 markets so far. As a reminder, our full access program provides subscribers with full access to our unique content across every platform both print and digital. Currently about 2,000 to 50,000 subscribers have activated their access to our digital content. While accesses revenue result subscriber revenue excluding the subscription related expense reclassification increased 4.7% in the second quarter as Mary noted earlier. For the full year, we expect subscription revenue on a comparable basis to increase 2.5% to 3%. Now Carl will review our cost performance.

Thanks Kevin. For the March quarter, cash cost increased 3.3% as reported. However, on a comparable basis, excluding a subscription related expense reclassification, cash cost decreased modestly. For the full year, we expect our cash cost on a comparable basis to decrease 2.65% to 2.75%. To achieve this level of cost reduction, comparable cash cost for the reminder of the fiscal year will need to decrease by 3.3% to 4.3% which significantly exceeds the decrease of 1.2% for the first six months of fiscal 2015 and our previous guidance have down 0.5% to 1%. The acceleration of cost reduction in the latter half of 2015 may also have a favorable impact in 2016. Those cost reductions are of course net of the cost of investments we continue to rottenly make in the business. Operating cash flow totaled over $30 million in the quarter, down 7.7% from the prior year. Our operating cash flow margins remain strong totaling almost 20% in the quarter, down slightly from the prior year. Operating income totaled 20.2 million in the quarter, down from 23.7 million in the same quarter a year ago. The subscription expense reclassification has the impact of dampening our operating cash flow margin by 0.6% and our operating income margin by 0.4% in the quarter. We reported earnings of 40.03 per diluted common share in the March quarter, excluding unusual matters and those of a substantially nonrecurring nature, adjusted earnings per diluted common share totaled $0.02 in the quarter. That was reduced 20.3 million in the March quarter and including 32 million borrowed at the very beginning of the June quarter a year ago to pay 2014 refinancing costs that has since been repaid, debt has been reduced $80 million in the last 12 months. Our $19 million semiannual firstly note interest payment was also made in the March quarter. Our debt at the end of the quarter, net of cash on hand was 4.6 times adjusted EBITDA over the last 12 months. We remain committed to aggressive debt reduction and we expect to continue to use substantially all of our cash flow toward that end. That concludes our remarks. One fine note, we expect to final our - file rather our 10-K with the SEC tomorrow and as always it will include additional information on our results and expectations. Now we’re ready for questions. Operator, would you please open the line for questions.

Thank you, sir. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Please state your name and company prior to asking your question. Caller, you line is now open. Please go ahead.

Good morning. This is Andrew Galvan from Odeon Capital.

Good morning.

I wanted a couple of questions on the cost expense side. You gave guidance for increased cost reduction in the second half. And I wanted to know what bucket that’s coming from and how you plan on driving that.

All three buckets, compensation, newsprint and ink and other cash costs should all be favorably impacted in the second half of the year. We’re continuing to get results across the board not only from softening of the newsprint market, but also from our internal initiatives to reduce cost. And so we should see some favorable impact in all those areas.

Yeah. And then instead we have a newspaper ink side, there was a pretty significant decrease year-over-year on that side, even quarter-over-quarter, would the current or would the Q2 run rate be a good number to use for the rest of the year.

Well, pricing is softening and it seems like it has been softening more rapidly. I don’t know if we can go as far to say that we continue the run rate, but we definitely newsprint to continue to decline in the second half.

Got it. And then on the revenue side, it sounds like March in particular results strong but I imagine that benefited from Easter. I am just kind of think about how to lay out the holiday’s effects the current quarter Q3?

Well, I think you are right to say that the earlier Easter benefited March for sure. I think also related to our good results in this quarter on the revenue side is we are seeing a number of our sales initiatives really take hold especially in the digital side.

Got it. So all end, we should be too concerned about year-over-year comps for Q3 on the revenue side?

Ask that another - I am not sure what you are asking me. Can you ask me another way?

Sure. I mean…

I guess how I would answer that is this quarter is directionally better than our first quarter and we’re working hard to keep going in the right direction. I guess this how I would answer that.

I would just add to that, when Easter moves between periods or effects March and April differently as it seem to have done this. We tend to look at March and April together and I think the combination of March and April doesn’t really skew our results in any significant way compared to past.

Got it. So looking at March and April - over March and April last year, you’re still seeing the benefit of all your initiatives on the digital side, you know you are seeing the trends.

Correct, that’s right.

Okay.

Yeah, that’s right.

Terrific. Right, thank you so much.

Thank you.

And we’ll take our next question. Caller, please go ahead.

Hi guys, Avi Steiner from JPMorgan. A couple of quick ones here. One, can you talk about sub revenue, circle revenue kind of beyond 2015 and the full rollout to digital offering?

We have launched in 43 enterprises today as we noted earlier. And the markets that are coming up on their first year anniversary have strategic pricing initiative in place. And overall, we’ll have a vary in degree price increases and subscribers as their term renews.

And the other thing - the only other thing I would add to that is, we roll this out as you know over really in the final analysis, it will probably be a 15 month period. So we are anticipating some good flows just related to when the different enterprises came online.

And are the ability to increase prices, is there a way to think about the difference between the trend and your digital offering, so all offerings?

Well, really it’s - any price increase going forward will be a combined price increase. This last round full access was essentially a digital subscription price increase. But going forward, we really think about it as a combined product. You can buy - you can still by digital only I guess but otherwise it’s a unified subscription today.

Okay, great. And then just on going back to March - in the March, April comments, is there a way to think about the difference by silo as it continues to look like, generally small markets continue to outperform?

Are you asking about revenue or cash flow or?

Revenue primarily. You guys continued to outperform, you obviously have some very good smaller market exposure and I am trying to get a sense of I guess two things, one, comments on March; and two, ask now, how long do you think small markets going to continue to outperform?

You mean, are you comparing our markets to other company’s markets or within Lee, are you…?

Yes, I am comparing Lee versus everyone else that’s reported.

Well, okay.

In the newspaper space, you guys continued to outperform. I think you guys know that?

Well I think a couple of things and I am not sure to precisely answer your question, but one other things that we have talked about a lot is that we feel like we have a really good portfolio of operations. And as you know they tend to be good midsize market where we have a strong audience, so that’s one plus that we think we have. And the other is we have been over many years aggressive on the sales side and continued to try to do that both on the new digital offerings that we have as well as we continued to push print pretty hard. So the combination really both two things, I think is what’s helping us out. And I am not sure that answered your question but if didn’t I’ll try to clarify that.

You know and as I stated, if you are trying to differentiate between Lee Legacy and Pulitzer, don’t forget that the subscription reclassification disproportion that impacts to Lee Legacy side. And as a result of that if you factor that out and I think there is enough information and the release ultimately be able to do that. I think you see the revenue rates and the two sides of the business aren’t significantly different ones you factor out the reclassification.

I appreciate the time. Thank you.

Okay, thanks Avi.

And there are no further questions at this time.

Okay, I don’t believe that we have any questions that have come in over the web. So at that point, I think that will conclude the call.

Yeah, let me just wrap up quickly and say we are grateful that all of you have joined the call. We feel like we had another solid quarter and we appreciate your time and we really appreciate your interest in the company. Thanks a lot.

Ladies and gentlemen, this will conclude today’s conference. We thank you for your participation.