Company Quick10K Filing
Tribune Publishing
Price-0.00 EPS-0
Shares36 P/E0
MCap-0 P/FCF-0
Net Debt-87 EBIT-4
TEV-87 TEV/EBIT20
TTM 2019-09-29, in MM, except price, ratios
10-Q 2021-03-28 Filed 2021-05-06
10-K 2020-12-27 Filed 2021-03-08
10-K 2019-12-29 Filed 2020-03-11
8-K 2020-06-05
8-K 2020-03-04
8-K 2020-01-31

TPCO 10Q Quarterly Report

Part I.
Item 1. Financial Statements
Note 1: Description of Business and Basis of Presentation
Note 2: Expected Credit Losses
Note 3: Revenue Recognition
Note 4: Changes in Operations
Note 6: Inventories
Note 7: Goodwill and Other Intangible Assets
Note 8: Income Taxes
Note 9: Pension and Other Postretirement Benefits
Note 10: Earnings (Loss) per Share
Note 11: Stockholders' Equity
Note 12: Accumulated Other Comprehensive Income (Loss)
Note 13: Contingencies
Note 14: Supplemental Cash Flow Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II.
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 a2021q1-10qexhibit311.htm
EX-31.2 a2021q1-10qexhibit312.htm
EX-32 a2021q1-10qexhibit32.htm

Tribune Publishing Earnings 2021-03-28

Balance SheetIncome StatementCash Flow
79563647731815902018201820192020
Assets, Equity
28522616710849-102018201820192020
Rev, G Profit, Net Income
150-15-30-45-602018201820192020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 2021
 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
Commission File No. 001-36230
TRIBUNE PUBLISHING COMPANY
(Exact name of registrant as specified in its charter) 
Delaware38-3919441
(State or other jurisdiction
of incorporation or organization)
(I.R.S. employer
identification no.)
560 W. Grand Avenue
Chicago, Illinois
60654
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code: (312) 222-9100
Former name, former address and former fiscal year, if changed since last report.
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareTPCOThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” an “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at May 4, 2021
Common Stock, $0.01 par value36,874,348

1



TRIBUNE PUBLISHING COMPANY
FORM 10-Q
TABLE OF CONTENTS
Page
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

1


CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
The statements contained in this Quarterly Report on Form 10-Q, as well as the information contained in the notes to our Consolidated Financial Statements, include certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based largely on our current expectations and reflect various estimates and assumptions by us. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, include, without limitation, the acquisition of the Company by Alden Global Capital may not be completed in a timely manner or at all; the effect of the novel coronavirus (COVID-19) and related governmental and economic responses; circulation levels and audience shares; changes in advertising demand; competition and other economic conditions; our ability to develop and grow our online businesses; changes in newsprint price and availability; our ability to maintain data security and comply with privacy-related laws; economic and market conditions that could impact the level of our required contributions to the defined benefit pension plans to which we contribute; decisions by trustees under rehabilitation plans (if applicable) or other contributing employers with respect to multiemployer plans to which we contribute which could impact the level of our contributions; our ability to maintain effective internal control over financial reporting; concentration of stock ownership among our principal stockholders whose interest may differ from those of other stockholders; and other events beyond our control that may result in unexpected adverse operating results. For more information about these and other risks, see “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 8, 2021, and in our other filings with the SEC.
The words “believe,” “expect,” “anticipate,” “estimate,” “could,” “should,” “intend,” “may,” “will,” “plan,” “seek” and similar expressions generally identify forward-looking statements. However, such words are not the exclusive means for identifying forward-looking statements, and their absence does not mean that the statement is not forward looking. Whether or not any such forward-looking statements, in fact occur will depend on future events, some of which are beyond our control. Readers are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
2


PART I.
Item 1. Financial Statements
TRIBUNE PUBLISHING COMPANY
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)

Three months ended
March 28, 2021March 29, 2020
Operating revenues$173,554 $206,441 
Operating expenses:
Compensation61,759 96,268 
Newsprint and ink6,624 10,720 
Outside services63,200 74,585 
Other operating expenses28,284 30,154 
Depreciation and amortization5,242 8,813 
Impairment 51,049 
Total operating expenses165,109 271,589 
Income (loss) from operations8,445 (65,148)
Interest expense, net(144)(30)
Other income, net403 387 
Income (loss) from continuing operations before income taxes8,704 (64,791)
Income tax expense (benefit)2,582 (15,811)
Net income (loss) from continuing operations6,122 (48,980)
Plus: Income from discontinued operations, net of taxes20,500 4,974 
Net income (loss)26,622 (44,006)
Less: Income (loss) attributable to noncontrolling interest ("NCI")(413)1,330 
Net income (loss) attributable to Tribune common stockholders$27,035 $(45,336)
Net income (loss) from continuing operations, per common share:
Basic$0.17 $(1.35)
Diluted$0.17 $(1.35)
Net income (loss) available to Tribune common stockholders, per common share:
Basic$1.44 $(1.26)
Diluted$1.43 $(1.26)
Weighted average shares outstanding:
Basic36,687 36,294 
Diluted37,023 36,294 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

TRIBUNE PUBLISHING COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)

Three months ended
March 28, 2021March 29, 2020
Net income (loss)$26,622 $(44,006)
Comprehensive loss, net of taxes:
Amortization of items to periodic pension cost during the period, (net of taxes of $9 at March 29, 2020)
 (23)
Foreign currency translation(1) 
Other comprehensive loss recognized in continuing operations, net of taxes(1)(23)
Derecognition of noncontolling interest(35,284) 
Accumulated other comprehensive income related to foreign currency translation recognized in discontinued operations53  
Comprehensive loss(8,610)(44,029)
Less: Comprehensive income (loss) attributable to NCI(413)1,330 
Comprehensive loss attributable to Tribune common stockholders$(8,197)$(45,359)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

TRIBUNE PUBLISHING COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)

March 28, 2021December 27, 2020
Assets
Current assets
Cash$222,409 $98,862 
Accounts receivable, net59,548 73,866 
Inventories5,331 4,055 
Prepaid expenses and other current assets16,107 18,344 
Current assets related to discontinued operations234 111,239 
Total current assets303,629 306,366 
Property, plant and equipment
Machinery, equipment and furniture93,326 100,625 
Buildings and leasehold improvements42,410 42,361 
135,736 142,986 
Accumulated depreciation(92,027)(96,527)
43,709 46,459 
Advance payments on property, plant and equipment1,211 1,866 
Property, plant and equipment, net44,920 48,325 
Other assets
Goodwill28,146 28,146 
Intangible assets, net49,079 50,148 
Software, net16,471 17,503 
Lease right-of-use asset32,992 36,705 
Restricted cash28,270 29,925 
Deferred income taxes10,840 11,294 
Equity investments11,354 11,354 
Other long-term assets8,526 8,388 
Total other assets185,678 193,463 
Total assets$534,227 $548,154 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

TRIBUNE PUBLISHING COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS (continued)
(In thousands, except per share data)
(Unaudited)
March 28, 2021December 27, 2020
Liabilities and stockholders’ equity
Current liabilities
Accounts payable$34,018 $28,022 
Employee compensation and benefits23,906 33,495 
Deferred revenue33,688 34,620 
Current portion of long-term lease liability24,645 23,914 
Other current liabilities25,621 23,329 
Current liabilities associated with discontinued operations7,930 4,759 
Total current liabilities149,808 148,139 
Non-current liabilities
Long term lease liability44,786 49,182 
Workers’ compensation, general liability and auto insurance payable19,921 20,120 
Pension and postretirement benefits payable15,926 16,803 
Deferred revenue1,786 1,921 
Other obligations6,443 10,587 
Total non-current liabilities88,862 98,613 
Stockholders’ equity
Preferred stock, $0.01 par value. Authorized 30,000 shares; no shares issued or outstanding at March 28, 2021 and December 27, 2020
  
Common stock, $0.01 par value. Authorized 300,000 shares; 38,787 shares issued and 36,833 shares outstanding at March 28, 2021; 38,524 shares issued and 36,570 shares outstanding at December 27, 2020
388 385 
Additional paid-in capital184,549 181,839 
Retained earnings139,420 86,491 
Noncontrolling interest 61,539 
Accumulated other comprehensive income (loss)(2,640)(2,692)
Treasury stock, at cost - 1,954 shares at March 28, 2021 and December 27, 2020
(26,160)(26,160)
Total stockholders’ equity295,557 301,402 
Total liabilities and stockholders’ equity$534,227 $548,154 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

TRIBUNE PUBLISHING COMPANY
CONSOLIDATED STATEMENT OF EQUITY
(In thousands)
(Unaudited)

Common StockAdditional Paid in CapitalRetained EarningsNon
controlling Interest
AOCITreasury StockTotal Equity
SharesAmount
Balance at December 27, 202038,524 $385 $181,839 $86,491 $61,539 $(2,692)$(26,160)$301,402 
Comprehensive income (loss)— — — 27,035 (413)52 — 26,674 
Derecognition of NCI— — — — (35,284)— — (35,284)
Elimination of cumulative NCI carrying value adjustments— — — 25,842 (25,842)— —  
Dividends declared to common stockholders— — 52 — — — 52 
Issuance of stock from restricted stock and restricted stock unit ("RSU") conversions113 1 (1)— — — —  
Exercise of stock options150 2 2,223 — — — — 2,225 
Stock-based compensation— — 1,116 — — — — 1,116 
Withholding for taxes on RSU conversions— — (628)— — — — (628)
Balance at March 28, 202138,787 $388 $184,549 $139,420 $— $(2,640)$(26,160)$295,557 

Common StockAdditional Paid in CapitalRetained Earnings (Deficit)Non
controlling Interest
AOCITreasury StockTotal Equity
SharesAmount
Balance at December 29, 201938,018 $380 $177,957 $135,001 $ $(2,352)$(26,160)$284,826 
Reclassification of NCI from temporary equity— — — — 64,133 — — 64,133 
Comprehensive income (loss)— — — (45,336)1,020 (23)— (44,339)
NCI carrying value adjustment— — — (322)— — — (322)
Dividends declared to common stockholders— — — (9,305)— — — (9,305)
Dividends declared to noncontrolling interest— — — — (5,200)— — (5,200)
Issuance of stock from restricted stock and RSU conversions320 3 (3)— — — —  
Stock-based compensation— — 1,592 — — — — 1,592 
Withholding for taxes on RSU conversions— — (533)— — — — (533)
Balance at March 29, 202038,338 $383 $179,013 $80,038 $59,953 $(2,375)$(26,160)$290,852 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

TRIBUNE PUBLISHING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


Three months ended
March 28, 2021March 29, 2020
Operating Activities From Continuing Operations
Net income (loss) from continuing operations$6,122 $(48,980)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization5,242 8,813 
Impairment 51,049 
Stock compensation expense1,116 1,592 
Gain on sale of property (5,159)
Deferred income taxes453 (6,704)
Pension contribution(476)(555)
Postretirement benefits expense(401)(326)
Changes in working capital items:
Accounts receivable, net14,365 17,346 
Prepaid expenses, inventories and other current assets1,905 (2,864)
Accounts payable, employee compensation and benefits, deferred revenue and other current liabilities(6,846)(23,194)
Other, net1,261 (141)
Net cash provided by (used for) operating activities22,741 (9,123)
Investing Activities From Continuing Operations
Capital expenditures(2,271)(3,483)
Proceeds from the sale of property, plant and equipment 8,983 
Net cash provided by (used for) investing activities(2,271)5,500 
Financing Activities From Continuing Operations
Exercise of stock options2,225  
Repayments of capital lease obligations (50)
Dividends paid to common stockholders (9,091)
Withholding for taxes on restricted stock unit vesting(628)(533)
Net cash used for financing activities1,597 (9,674)
Increase (decrease) in cash attributable to continuing operations$22,067 $(13,297)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

8

TRIBUNE PUBLISHING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(Unaudited)
Three months ended
March 28, 2021March 29, 2020
Cash Flows From Discontinued Operations
Cash flows provided by operating activities from discontinued operations, net$442 $10,123 
Cash flows provided by (used for) investing activities from discontinued operations, net99,383 (16)
Cash flows used for financing activities from discontinued operations, net (5,200)
Increase in cash attributable to discontinued operations99,825 4,907 
Net increase (decrease) in cash121,892 (8,390)
Cash, cash equivalents and restricted cash, beginning of period128,787 92,130 
Cash, cash equivalents and restricted cash, end of period$250,679 $83,740 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

9

TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1: DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business—Tribune Publishing Company was formed as a Delaware corporation on November 21, 2013. Tribune Publishing Company together with its subsidiaries (collectively, the “Company” or “Tribune”) is a media company rooted in award-winning journalism. Headquartered in Chicago, the Company operates local media businesses in eight markets with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Hartford Courant, South Florida’s Sun Sentinel, Orlando Sentinel, Virginia’s Daily Press and The Virginian-Pilot, and The Morning Call of Lehigh Valley, Pennsylvania. Tribune also operates Tribune Content Agency (“TCA”).
On December 29, 2020, the Company completed the sale of its majority ownership of BestReviews Inc. (“BestReviews”). See Note 5 for additional information on the sale of BestReviews.
On February 16, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Tribune Enterprises, LLC, a Delaware limited liability company (“TELLC”), Tribune Merger Sub, Inc, a Delaware corporation and a direct, wholly owned subsidiary of TELLC (“Merger Sub”), and the Company, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC. TELLC is an affiliate of Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (collectively, “Alden Funds”), the Company’s largest shareholder. Upon completion of the transaction the Company will become a privately held company, and its common stock will no longer be listed on any public market. See Note 11 for additional information related to the Merger Agreement.
Fiscal Periods—The Company’s fiscal year ends on the last Sunday in December. Fiscal year 2021 ends on December 26, 2021, and fiscal year 2020 ended on December 27, 2020. Fiscal year 2021 and 2020 are 52-week years with 13 weeks in each quarter.
Basis of Presentation—The accompanying unaudited Consolidated Financial Statements and notes of the Company have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited Consolidated Financial Statements and accompanying notes. Actual results could differ from these estimates. In the opinion of management, the financial statements contain all adjustments necessary to present fairly the financial position of Tribune as of March 28, 2021, and December 27, 2020, and the results of operations for the three months ended March 28, 2021, and March 29, 2020, respectively, and the cash flows for the three months ended March 28, 2021, and March 29, 2020, respectively. This includes all normal and recurring adjustments and elimination of intercompany transactions. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The year-end Consolidated Balance Sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.
The Company has reported the results of BestReviews as discontinued operations for all periods presented in the accompanying Consolidated Statements of Income (Loss) and Consolidated Statements of Cash Flows. Additionally, assets and liabilities related to the divested properties are classified as such in all prior periods in the Consolidated Condensed Balance Sheets. Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate to continuing operations and exclude all discontinued operations. See Note 5 for additional information related to discontinued operations.
NOTE 2: EXPECTED CREDIT LOSSES
Tribune holds financial assets in the form of accounts receivable that are primarily generated from certain circulation-related revenues, advertising revenues and commercial print and delivery revenues, and are grouped as such. The accounts receivable and allowance for credit losses are analyzed under the expected credit losses method. Payment terms vary by revenue stream. Home delivery circulation and classified advertising terms are usually prepaid with advertising having terms of 30 to 60 days. Credit is extended based on an evaluation of each customer’s financial condition, and generally collateral is not required
For accounts receivable, Tribune uses an aging expected credit losses method that includes forward-looking qualitative factors when they arise. The Company has identified the market effects of the COVID-19 pandemic as a forward-looking
10


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


qualitative factor to be considered. The Company uses an analysis of 24-months of collection and write off history to calculate historical loss percentages by aging group, which are applied to all accounts within the aging group. Specific reserves are reviewed and handled on a case by case basis. Accounts receivable balances outstanding for a year are reserved at 100%. As customer balances are determined to be uncollectible, the balances are written off against the allowance for credit losses. Included in the allowance for credit losses are amounts for sales adjustments not related to expected credit losses; such as, rebates, billing adjustments, and returns. The credit loss expense was $0.9 million and $3.0 million for the three months ended March 28, 2021 and March 29, 2020, respectively, and is included in other operating expenses on the Consolidated Statements of Income (Loss).
A summary of the activity with respect to the allowance for credit losses for the three months ended March 28, 2021, is as follows (in thousands):
Balance at December 27, 2020$8,312 
Current period provision873 
Write offs(1,356)
Sales adjustments, net(19)
Balance at March 28, 2021$7,810 
Accounts receivable, net, at March 28, 2021, and December 27, 2020, consisted of the following (in thousands):
March 28, 2021December 27, 2020
Accounts receivable$67,358 $82,178 
Less: Allowance for credit losses7,810 8,312 
Accounts receivable, net$59,548 $73,866 

NOTE 3: REVENUE RECOGNITION
Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. Revenues are recognized as performance obligations are satisfied at either a point in time, such as when an advertisement is published, or over time, such as content licensing. No single customer represented 10% or more of the Company’s net revenue in any fiscal period presented.
The Company receives a significant portion of the payments from its subscribers in advance of the delivery of the content either in print or digitally. These up-front payments and fees are recorded as deferred revenue upon receipt and generally require deferral of revenue recognition to a future period until the Company performs its obligations under the subscription agreement. The deferred revenue is recognized as revenue as the content is delivered. The deferred revenue is considered a contract liability under ASC 606. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. Therefore, the Company has no contract assets as defined under ASC 606. As of December 27, 2020, the Company had a contract liabilities balance of $36.5 million, of which $27.0 million has been recognized as revenue in the three months ended March 28, 2021.
11


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


The Company’s revenues disaggregated by type of revenue is as follows (in thousands):
Three months ended
March 28, 2021March 29, 2020
Print$72,920 $81,191 
Digital14,622 8,821 
Circulation87,542 90,012 
Print41,056 57,914 
Digital15,475 18,902 
Advertising56,531 76,816 
Commercial print & delivery16,975 21,916 
Direct mail4,989 7,610 
Content syndication and other7,517 10,087 
Other29,481 39,613 
Total operating revenues$173,554 $206,441 
The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within compensation in the accompanying Consolidated Statements of Income (Loss). Additionally, the Company does not disclose the value of unsatisfied performance obligations because the vast majority of contracts have original expected lengths of one year or less and payment terms are generally short-term in nature unless a customer is in bankruptcy.
NOTE 4: CHANGES IN OPERATIONS
The Company continually assesses its operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. In the past these activities have included, and could include in the future, outsourcing of various functions or operations, abandonment of leased space and other activities which may result in changes to employee headcount.
Employee Reductions
During the three months ended March 28, 2021, the Company implemented reductions in staffing levels in its operations of 86 positions for which the Company recorded pretax charges related to these reductions and executive separation totaling $1.6 million. Charges for severance and related expenses are included in compensation expense on the Consolidated Statements of Income (Loss).
During the three months ended March 29, 2020, the Company implemented reductions in staffing levels in its operations of 276 positions for which the Company recorded pretax charges related to these reductions totaling $16.8 million.
The 2020 severance charge included reductions for 191 positions related to a Voluntary Severance Incentive Plan (“2020 VSIP”) initiated in the first quarter of 2020. The 2020 VSIP provided enhanced separation benefits to eligible employees with more than eight years of service. The Company is funding the 2020 VSIP ratably over the payout period through salary continuation. The related salary continuation payments began during the first quarter of 2020 and are expected to continue through the third quarter of 2021.
Additionally, included in the 2020 severance charge was approximately $0.6 million related to the separation of the Company’s former CEO which included continuation of his base salary for one year through February 2021, his bonus for 2019, and certain benefit continuation.
12


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


A summary of the activity with respect to the Company’s severance accrual for the three months ended March 28, 2021, is as follows (in thousands):
Balance at December 27, 2020$8,321 
Provision1,622 
Payments(5,570)
Balance at March 28, 2021$4,373 

NOTE 5: DISCONTINUED OPERATIONS
BestReviews
On December 11, 2020, the Company entered into the Membership Unit Purchase Agreement (the “BR Agreement”), by and among the Company and BR Holding Company, Inc. (collectively the “Sellers”), BestReviews and Nexstar Inc. (“Nexstar”), pursuant to which the Sellers agreed to sell 100% of BestReviews to Nexstar (the “BR Transaction”). The sale closed on December 29, 2020, for a cash sales price of $160.0 million plus a $9.8 million working capital adjustment. Under the terms of the BR Transaction, the Company received 60% of the proceeds, net of transaction fees, totaling $100.1 million including the final working capital adjustment of $0.2 million received subsequent to March 28, 2021, and recognized a pre-tax gain of $29.5 million.
With the sale of BestReviews, the Company is exiting that line of business. The sale of BestReviews represented a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, BestReviews is reflected as discontinued operations on the Consolidated Condensed Balance Sheets and the results of operations of BestReviews are presented as discontinued operations in the Consolidated Statements of Income (Loss) for all periods presented.
13


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Discontinued Operations
Earnings from discontinued operations through the respective transaction dates, included in the Consolidated Statements of Income (Loss), are comprised of the following (in thousands):
Three months ended
March 28, 2021March 29, 2020
Operating revenues$152 $10,044 
Operating expenses:
Compensation1,123 560 
Outside services66 460 
Other operating expenses73 5,261 
Depreciation and amortization6 660 
Operating expenses1,268 6,941 
Gain on sale29,546  
Income from operations before income taxes28,430 3,103 
Income tax expense (benefit)7,930 (1,871)
Income from discontinued operations, net of tax20,500 4,974 
Less: Income (loss) attributable to noncontrolling interest(413)1,330 
Income from discontinued operations, net of tax available to common stockholders$20,913 $3,644 
The following table presents the aggregate carrying amounts of assets and liabilities related to discontinued operations in the Consolidated Condensed Balance Sheets (in thousands):
March 28, 2021December 27, 2020
Carrying amount of assets related to discontinued operations:
Cash$ $1,159 
Accounts receivable, (net of allowances of $396 at March 29, 2020) (1)
234 17,888 
All other current assets 57 
Property, plant and equipment, net 16 
Goodwill 87,052 
Intangible assets, net 5,053 
Software, net 13 
Other long-term assets 1 
Total assets related to discontinued operations$234 $111,239 
Carrying amount of liabilities associated with discontinued operations:
Accounts payable and employee compensation and benefits$ $4,734 
Taxes payable7,930 25 
Total liabilities associated with discontinued operations$7,930 $4,759 
(1) - The March 28, 2021 balance is the working capital adjustment due from the sale of BestReviews.

14


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


NOTE 6: INVENTORIES
Inventories at March 28, 2021, and December 27, 2020, consisted of the following (in thousands):
March 28, 2021December 27, 2020
Newsprint$5,181 $3,914 
Supplies and other150 141 
Total inventories$5,331 $4,055 
Inventories are stated at the lower of cost or net realizable value determined using the first-in, first-out basis for all inventories.
NOTE 7: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets at March 28, 2021, and December 27, 2020, consisted of the following (in thousands):
March 28, 2021December 27, 2020
Gross AmountAccumulated
Amortization
Net AmountGross AmountAccumulated
Amortization
Net Amount
Goodwill$28,146 $28,146 $28,146 $28,146 
Newspaper mastheads (1)
$27,735 $— $27,735 $27,735 $— $27,735 
Subscribers (useful life of 2 to 10 years)
7,312 (6,497)815 7,312 (6,326)986 
Advertiser relationships (useful life of 2 to 13 years)
27,648 (18,143)9,505 27,648 (17,515)10,133 
Trade names (useful life of 20 years)
15,100 (5,036)10,064 15,100 (4,848)10,252 
Other (useful life of 1 to 20 years)
3,641 (2,681)960 3,641 (2,599)1,042 
Total intangible assets$81,436 $(32,357)$49,079 $81,436 $(31,288)$50,148 
Software (useful life of 2 to 10 years)
$142,937 $(126,466)$16,471 $141,720 $(124,217)$17,503 
(1) - Intangible assets not subject to amortization.
NOTE 8: INCOME TAXES
For the three months ended March 28, 2021, the Company recorded an income tax expense of $2.6 million. The effective tax rate on pretax income was 29.7%. The rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit, tax expense related to the vesting of stock compensation, and other nondeductible expenses.
For the three months ended March 29, 2020, the Company recorded an income tax benefit related to continuing operations of $15.8 million which included the impact of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted in 2020 and the early adoption in 2020 of ASU 2019-12. The effective tax rate on pretax income was 24.4% in the three months ended March 29, 2020. The rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit, impact of the CARES Act, tax expense related to the vesting of stock compensation, nondeductible goodwill impairment, and other nondeductible expenses.
NOTE 9: PENSION AND OTHER POSTRETIREMENT BENEFITS
Multiemployer Pension Plans
The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. During the three months ended March 28, 2021, the Company made contributions totaling $2.3 million to the Teamsters Local Union No. 727 Pension Fund (the “Teamsters
15


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Fund”), pursuant to its amended rehabilitation plan. The Company expects to contribute an additional $6.8 million during the remainder of 2021. These payments are expensed as the payments become due.
Defined Benefit Plans
The Company is the sponsor of a single-employer defined benefit plan, the Daily News Retirement Plan (the “NYDN Pension Plan”). The NYDN Pension Plan provides benefits to certain current and former employees of the New York Daily News. As of March 31, 2018, future benefits under the NYDN Pension Plan were frozen and no new participants are permitted after that time. On March 11, 2021, the President signed into law the American Rescue Plan Act (“ARPA”). The ARPA, among other things, provided that the interest rate stabilization was enhanced and extended, the existing deficit shortfall amortization basis were eliminated to establish a new base and all future bases would amortize over 15 years instead of 7 years. Company’s could choose which plan year to apply the changes. The Company elected to apply the changes to the 2021 plan year which reduced the required minimum contributions from $1.6 million to $1.0 million. The Company contributed $0.5 million to the NYDN Pension Plan in the three months ended March 28, 2021. The Company’s remaining required minimum contribution for 2021 is $0.5 million.
The components of net periodic benefit for the NYDN Pension Plan are as follows (in thousands):
Three months ended Affected Line Items in the Consolidated Statements of Income (Loss)
March 28, 2021March 29, 2020
Interest cost$293 $550 Other income, net
Expected return on assets(701)(946)Other income, net
Net periodic benefit$(408)$(396)

NOTE 10: EARNINGS (LOSS) PER SHARE
Basic earnings per common share is calculated by dividing net income (loss) attributable to Tribune common stockholders by the weighted average number of shares of common stock outstanding. Diluted earnings per common share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of common shares under equity-based compensation plans, except where the inclusion of such common shares would have an anti-dilutive impact. In accordance with ASC 260-10-55, net income (loss) from continuing operations is the control number in determining whether potential common shares are dilutive. If there is net loss from continuing operations, all potential common shares are considered anti-dilutive.
When the Company purchased a 60% controlling interest in BestReviews in February 2018, the Company and the seller entered into an agreement subject to which the seller had a right, beginning three years after the purchase date, to cause the Company to purchase all of the remaining 40% of the membership interests of BestReviews at a purchase price based on a predetermined multiple of BestReviews’ trailing 12-month EBITDA (“Put Option”). Each quarter, through January 2020 when the agreement was amended, the carrying value of the noncontrolling interest was adjusted to the amount the Company would have been required to pay the noncontrolling interest holders as if the Put Option had been exercised as of the balance sheet date, with an offsetting adjustment to stockholders’ equity. Adjustments to increase or decrease the carrying value of the noncontrolling interest also reduced or increased the amount of net income or loss attributable to Tribune common stockholders for purposes of determining both basic and diluted earnings per share. In January 2020, the agreement was amended to remove the Put Option. With the sale of BestReviews on December 29, 2020 the prior carrying value adjustments were eliminated. The elimination of the carrying value adjustments is reflected in the basic and diluted earnings per share calculation.
16


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Basic and diluted earnings per common share were as follows (in thousands, except per share amounts):
Three months ended
March 28, 2021March 29, 2020
Income (loss) - Numerator:
Net income (loss) available to Tribune common stockholders, before discontinued operations6,122 (48,980)
Income from discontinued operations, net of taxes20,500 4,974 
Less: Income (loss) attributable to NCI(413)1,330 
Less: NCI carrying value adjustment— 322 
Plus: Elimination of cumulative NCI carrying value adjustments25,842 — 
Income available to common shareholders from discontinued operations, net of taxes46,755 3,322 
Net income (loss) attributable to Tribune common stockholders$52,877 $(45,658)
Shares - Denominator:
Weighted average number of common shares outstanding (basic)36,687 36,294 
Dilutive effect of employee stock options and RSUs336  
Adjusted weighted average shares outstanding (diluted)37,023 36,294 
Basic net income (loss) attributable to Tribune per common share:
Income (loss) from continuing operations$0.17 $(1.35)
Income from discontinued operations$1.27 $0.09 
Basic net income (loss) attributable to Tribune per common share$1.44 $(1.26)
Diluted net income (loss) attributable to Tribune per common share:
Income (loss) from continuing operations$0.17 $(1.35)
Income from discontinued operations$1.26 $0.09 
Diluted net income (loss) attributable to Tribune per common share$1.43 $(1.26)
The number of stock options that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts was 14,000 for the three months ended March 28, 2021. The number of stock options that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts was 584,940 for the three months ended March 29, 2020.
The number of RSUs that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts was 654,561 for the three months ended March 29, 2020.
NOTE 11: STOCKHOLDERS’ EQUITY
The holders of common stock are entitled to one vote per share on all matters to be voted on by stockholders. Holders of common stock will share in any dividend declared by the Board of Directors of the Company (the “Board”). In the event of the Company’s liquidation, dissolution or winding up, all holders of common stock are entitled to share ratably in any assets available for distribution to holders of common stock.
Agreement and Plan of Merger
On February 16, 2021, the Company entered into a Merger Agreement pursuant to which the Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC (the “Merger”). TELLC is the acquirer and is an affiliate of Alden Funds, the Company’s largest shareholder.
Subject to the terms and conditions set forth in the Merger Agreement, at the closing of the Merger, each share of common stock, par value $0.01 per share (other than treasury stock or common stock held by TELLC or any of its affiliates)
17


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


issued and outstanding immediately as of the closing (other than dissenting shares) will be converted into the right to receive $17.25 in cash, without interest (the “Merger Consideration”).
The consummation of the Merger (the “Closing”) is subject to certain customary mutual conditions, including (i) the approval of the Company’s stockholders holding two-thirds of the outstanding shares of common stock not owned by TELLC and its affiliates, (ii) the expiration or termination of any waiting period applicable to the closing of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and (iii) the absence of any order of any U.S. court that prohibits, renders illegal or permanently enjoins the consummation of the Merger. The obligation of each party to consummate the Merger is also conditioned upon (i) the accuracy of the representations and warranties of the other party as of the date of the Merger Agreement and as of the Closing (subject to customary materiality qualifiers), (ii) compliance by the other party in all material respects with its pre-Closing obligations under the Merger Agreement and (iii) in TELLC’s case, the absence of a material adverse effect with respect to the Company.
The Company and TELLC have each made customary representations, warranties and covenants in the Merger Agreement. Subject to certain exceptions, the Company has agreed, among other things, to covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and the consummation of the Merger. The parties have also agreed to use their respective reasonable best efforts to obtain governmental and regulatory approvals. In addition, subject to certain exceptions, the Company has agreed to covenants relating to (i) the submission of the Merger Agreement to the Company’s stockholders at a special meeting thereof for approval, (ii) the recommendation by the Board in favor of the adoption by the Company’s stockholders of the Merger Agreement and (iii) non-solicitation obligations of the Company relating to alternative acquisition proposals.
Either the Company or TELLC may terminate the Merger Agreement if (i) TELLC, Merger Sub and the Company agree by mutual written consent to do so, (ii) the Merger has not been consummated on or before December 31, 2021 (the “End Date”), (iii) any court has issued an order permanently restraining, enjoining or otherwise prohibiting the Merger and such order or other action is, or has become, final and non-appealable, (iv) the approval of the Company’s stockholders is not obtained at a meeting of the Company’s stockholders called for the purpose of adopting the Merger Agreement or (v) the other party breaches any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances. In addition, the Company may, under certain circumstances, terminate the Merger Agreement in order for the Company to enter concurrently into a definitive written agreement with respect to an unsolicited superior acquisition proposal, subject to the Company having first complied with certain matching rights and other obligations set forth in the Merger Agreement. Additionally, TELLC may, under certain circumstances, terminate the Merger Agreement if (i) the Board changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (ii) the Company materially breaches its non-solicitation obligations and such breach results in an alternative transaction proposal.
If the Merger Agreement is terminated (i) by the Company in order for the Company to enter into a definitive written agreement with respect to an unsolicited superior acquisition proposal, (ii) by TELLC because (a) the Board changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (b) the Company materially breaches its non-solicitation obligations and such breach results in an alternative transaction proposal, or (iii) by (x) either party because the Merger was not consummated on or before the End Date (as it may be extended) or approval of the Company’s stockholders was not obtained or (y) by TELLC if the Company commits a breach of any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied (subject to a cure period in certain circumstances), but only if, in the case of this clause (iii), an alternative acquisition proposal was previously made and, within 12 months after termination of the Merger Agreement, the Company enters into an agreement for an alternative transaction or an acquisition transaction is consummated, then, in each case, the Company will be obligated to pay to TELLC a one-time fee equal to $20.0 million in cash.
If the Merger Agreement is terminated by the Company (i) if TELLC breaches any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances or (ii) if the conditions to TELLC’s obligations to consummate the Merger are satisfied or waived, and TELLC does not consummate the Merger when required by the Merger Agreement, then TELLC will be obligated to pay to the Company a one-time liquidated damages amount equal to $50.0 million in cash.
Pursuant to the Merger Agreement, TELLC agreed to vote all of its shares of common stock in favor of the adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger, so long as the Board
18


TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


has not changed or adversely modified its recommendation in favor of the Merger Agreement. The Merger Agreement also prohibits TELLC from transferring any of its shares of common stock, subject to certain exceptions.
Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (each, a “Guarantor”), have entered into a Limited Guarantee dated February 16, 2021 (the “Limited Guarantee”) with the Company to guarantee TELLC’s obligation to pay the liquidated damages amount to the Company and certain other specified payments to the Company, subject to the terms and obligations set forth in the Limited Guarantee.
The Guarantors have also entered into an equity commitment letter dated as of February 16, 2021 (the “Equity Commitment Letter”) with TELLC pursuant to which the Guarantors have made an equity commitment of $375.0 million to TELLC to fund the payment of the aggregate Merger Consideration. The Company is a third-party beneficiary of the Equity Commitment Letter and has the right to specifically enforce the Guarantors’ obligations thereunder, if the conditions to TELLC’s obligations to consummate the Merger are satisfied or waived, and the Merger is consummated substantially simultaneously.
Concurrent with the signing of the Merger Agreement, Alden Funds has signed a non-binding term sheet to sell The Baltimore Sun to Sunlight for All Institute, a public charity formed by Stewart Bainum Jr..
Significant Shareholders
Alden Funds
Alden Funds beneficially owned 11,554,306 shares of Tribune common stock, which represented 31.4% of the outstanding shares of Tribune common stock as of March 28, 2021. During November 2019, the Alden Funds acquired 11,544,213 shares of the Company’s common stock. Of those shares, 9,071,529 shares were purchased from Merrick Media and Michael W. Ferro, previously the Company’s non-executive Chairman of the Board, in a private transaction and the remaining shares were purchased on the open market.
On July 1, 2020, the Company entered into an Amended and Restated Cooperation Agreement (the “Amended and Restated Cooperation Agreement”) with the Alden Funds and Alden Global Capital LLC regarding the composition of the Board and related matters. The Amended and Restated Cooperation Agreement provides that the Board will increase the size of the Board to seven directors and appoint Randall D. Smith to fill the resulting vacancy. The Board had been reduced to six members at the 2020 annual shareholders meeting when two of the Board members retired.
The Amended and Restated Cooperation Agreement further provides, among other things, that:
Until the earlier of June 16, 2021 or the first business day following the Company’s 2021 annual meeting of stockholders, which will be held on or before June 15, 2021 (the “Amended Cooperation Period”), the size of the Board will not be increased above seven members.
During the Amended Cooperation Period, the Alden Funds and their affiliates will be subject to customary standstill restrictions, including (among others) refraining from (i) acquiring securities of the Company if it would result in their ownership of more than 33.0% of the Company’s outstanding shares of common stock, $0.01 par value (“Common Stock”); (ii) soliciting proxies to vote any securities of the Company; (iii) forming or participating in a “group” in connection with the Company’s voting securities or (iv) otherwise acting alone, or in concert with others, to seek to control or knowingly influence the management, Board or policies of the Company; provided that such prohibitions terminate if (a) a person or group that owns more than 10.0% of the issued and outstanding Common Stock (a “Related Party Investor”) (x) submits a valid stockholders proposal (other than a precatory proposal) at a meeting of the Company’s stockholders or (y) submits a valid notice of nomination to nominate on or more persons for election to the Board at a meeting of the Company’s stockholders; (b) the Company enters into a material agreement with any Related Party Investor, other than a Related Party Agreement or alters, amends or modifies in any way a Related Party Agreement, other than on terms no less favorable to the Company than would be obtainable through arms’-length negotiations with a hypothetically similarly situated bona fide third-party; (c) the Company amends, waives or fails to enforce, the terms of any voting agreement or standstill agreement between the Company and a Related Party Investor other than such amendments or waivers that, taken as a whole, make the agreement more restrictive on the Related Party Investor; (d) any of Ms. Dana Goldsmith Needleman, Mr. Christopher Minnetian, Mr.
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TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Randall D. Smith and their successors designated by the Alden Funds are not nominated for election at, or are not elected at, the Company’s 2021 annual stockholder meeting; or (e) on the date that (1) the Company executes a definitive agreement providing for the acquisition of a majority of the outstanding shares of common stock or a majority of the consolidated assets of the Company and its subsidiaries or (2) is 10 business days after commencement of a tender offer that, if consummated, would result in the offeror acquiring a majority of the outstanding shares of common stock and the Board has not recommended against acceptance of such tender offer. The prohibitions described in clause (i) of the Standstill Restrictions above will also terminate on the date that any person or group, other than the Alden Funds and their affiliates, acquires beneficial ownership of shares of common stock that results in such person or group beneficially owning 30.0% or more of the Company’s then-outstanding shar