Company Quick10K Filing
Price16.52 EPS7
Shares35 P/E2
MCap586 P/FCF-22
Net Debt-134 EBIT290
TTM 2018-09-30, in MM, except price, ratios
10-Q 2020-03-29 Filed 2020-06-08
10-Q 2019-09-29 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-30 Filed 2019-03-18
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-07-01 Filed 2018-08-10
10-Q 2018-04-01 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-16
10-Q 2017-09-24 Filed 2017-11-03
10-Q 2017-06-25 Filed 2017-08-03
10-Q 2017-03-26 Filed 2017-05-04
10-K 2016-12-25 Filed 2017-03-08
10-Q 2016-09-25 Filed 2016-11-02
10-Q 2016-06-26 Filed 2016-08-05
10-Q 2016-03-27 Filed 2016-05-05
10-K 2015-12-27 Filed 2016-03-14
10-Q 2015-09-27 Filed 2015-11-12
10-Q 2015-06-28 Filed 2015-08-12
10-Q 2015-03-29 Filed 2015-05-08
10-K 2014-12-28 Filed 2015-03-25
10-Q 2014-09-28 Filed 2014-11-10
10-Q 2014-06-29 Filed 2014-08-21
8-K 2020-05-21
8-K 2020-05-05
8-K 2019-12-01
8-K 2019-11-14
8-K 2019-11-07
8-K 2019-08-19
8-K 2019-08-07
8-K 2019-05-30
8-K 2019-05-15
8-K 2019-05-08
8-K 2019-05-08
8-K 2019-03-13
8-K 2019-01-16
8-K 2018-11-07
8-K 2018-10-09
8-K 2018-10-04
8-K 2018-08-09
8-K 2018-06-18
8-K 2018-05-28
8-K 2018-05-23
8-K 2018-05-18
8-K 2018-05-09
8-K 2018-03-18
8-K 2018-03-07
8-K 2018-02-07
8-K 2018-02-07
8-K 2018-01-19

TRNC 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 5: Related Party Transactions
Note 6: Inventories
Note 7: Long - Lived Assets
Note 8: Goodwill and Other Intangible Assets
Note 9: Income Taxes
Note 10: Pension and Other Postretirement Benefits
Note 11: Noncontrolling Interest
Note 12: Earnings per Share
Note 13: Stockholders' Equity
Note 14: Accumulated Other Comprehensive Income (Loss)
Note 15: Contingencies
Note 16: 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 a2020q1-10qexhibit311.htm
EX-31.2 a2020q1-10qexhibit312.htm
EX-32 a2020q1-10qexhibit32.htm

Tronc Earnings 2020-03-29

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin

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Washington, D.C. 20549

For the quarterly period ended March 29, 2020

Commission File No. 001-36230
(Exact name of registrant as specified in its charter) 
Delaware 38-3919441
(State or other jurisdiction
of incorporation or organization)
 (I.R.S. employer
identification no.)
160 N. Stetson Avenue
Chicago, Illinois60601
(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 share
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.
Class Outstanding at June 5, 2020
Common Stock, $0.01 par value

Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


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 effect of the novel coronavirus ("COVID-19") and related governmental and economic responses, changes in advertising demand, circulation levels and audience shares; 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 specific risks related to the COVID-19 pandemic refer to Item 1A. Risk Factors in this Quarterly Report on Form 10-Q. 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 11, 2020, 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.

The Company relied on the SEC’s Order under Section 36 of the Securities and Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) (“Order”) to delay the filing of its Quarterly Report on Form 10-Q for the period ended March 29, 2020, due to circumstances related to COVID-19. The original due date for filing of the Company’s Quarterly Report was May 8, 2020. On May 8, 2020, the Company filed a current report with the SEC which stated that it expected to file its Quarterly Report on Form 10-Q no later than 45 days after the original due date, in compliance with the provisions of the Order.
The Company required additional time to finalize the Form 10-Q because its operations and business have experienced significant disruptions due to the unprecedented conditions surrounding the ongoing COVID-19 pandemic along with the various measures that Federal, state, and local jurisdictions have taken in response to the crisis. In response to these measures, the Company has implemented widespread work-from-home arrangements for all of the Company’s employees who are not engaged in newspaper production and distribution. The Company is experiencing disruptions in its normal processes and with interactions between its accounting personnel, legal advisors and others required to assess the impacts of the COVID-19 pandemic on the Company and complete its accounting procedures in order to finalize the Quarterly Report on Form 10-Q. In addition, the Company required additional time to assess the valuation of certain assets and determine the impairment charge reflected in the accompanying consolidated financial statements and apply the applicable sections of the CARES Act, which had an impact on the complexity and timing of the Company’s first quarter tax provision.


Item 1. Financial Statements

(In thousands, except per share data)
Three months ended
March 29, 2020March 31, 2019
Operating revenues$216,485  $244,525  
Operating expenses:
Compensation96,828  97,709  
Newsprint and ink10,720  16,103  
Outside services75,042  83,813  
Other operating expenses35,418  42,218  
Depreciation and amortization9,473  12,084  
Total operating expenses278,530  251,927  
Loss from operations(62,045) (7,402) 
Interest income (expense), net(30) 220  
Loss on equity investments, net  (487) 
Other income, net387  73  
Loss from operations before income taxes(61,688) (7,596) 
Income tax benefit(17,682) (2,882) 
Net loss(44,006) (4,714) 
Less: Income (loss) attributable to noncontrolling interest1,330  (39) 
Net loss attributable to Tribune common stockholders$(45,336) $(4,675) 
Net loss available to Tribune common stockholders, per common share:
Basic$(1.26) $(0.13) 
Diluted$(1.26) $(0.13) 
Weighted average shares outstanding:

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


(In thousands)
Three months ended
March 29, 2020March 31, 2019
Net loss$(44,006) $(4,714) 
Comprehensive loss, net of taxes:
Amortization of items to periodic pension cost during the period, net of taxes of ($9) and ($23), respectively
(23) (59) 
Foreign currency translation  (2) 
Comprehensive income (loss)(44,029) (4,775) 
Less: Comprehensive income (loss) attributable to noncontrolling interest1,330  (39) 
Comprehensive income (loss) attributable to Tribune common stockholders$(45,359) $(4,736) 

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


In thousands, except per share data

March 29, 2020December 29, 2019
Current assets
Cash$48,791  $60,963  
Accounts receivable, (net of allowances of ($11,077 and $9,674)
94,265  112,754  
Inventories4,796  4,820  
Prepaid expenses and other current assets23,909  15,114  
Total current assets171,761  193,651  
Property, plant and equipment
Machinery, equipment and furniture104,623  119,859  
Buildings and leasehold improvements77,964  86,403  
182,587  206,262  
Accumulated depreciation(89,269) (84,530) 
93,318  121,732  
Advance payments on property, plant and equipment1,583  2,181  
Property, plant and equipment, net94,901  123,913  
Other assets
Goodwill115,197  117,675  
Intangible assets, net60,347  69,165  
Software, net20,500  20,736  
Lease right-of-use asset76,895  99,480  
Restricted cash37,290  37,290  
Deferred income taxes13,615  6,911  
Other long-term assets13,224  13,457  
Total other assets337,068  364,714  
Total assets$603,730  $682,278  
The accompanying notes are an integral part of these unaudited consolidated financial statements.


In thousands, except per share data
March 29, 2020December 29, 2019
Liabilities and stockholders’ equity
Current liabilities
Accounts payable$37,544  $46,482  
Employee compensation and benefits31,151  36,305  
Deferred revenue41,178  42,773  
Current portion of long-term lease liability25,546  25,380  
Current portion of long-term debt6,911  105  
Other current liabilities22,444  24,317  
Total current liabilities164,774  175,362  
Non-current liabilities
Long term lease liability92,748  98,847  
Workers’ compensation, general liability and auto insurance payable23,881  24,192  
Pension and postretirement benefits payable19,457  20,338  
Deferred revenue2,387  2,504  
Long-term debt55  6,857  
Other obligations9,576  5,851  
Total non-current liabilities148,104  158,589  
Noncontrolling interest  63,501  
Stockholders’ equity
Preferred stock, $0.01 par value. Authorized 30,000 shares; no shares issued or outstanding at March 29, 2020 and December 29, 2019
Common stock, $0.01 par value. Authorized 300,000 shares; 38,338 shares issued and 36,384 shares outstanding at March 29, 2020; 38,017 shares issued and 36,064 shares outstanding at December 29, 2019
383  380  
Additional paid-in capital179,013  177,957  
Retained earnings80,038  135,001  
Noncontrolling interest59,953    
Accumulated other comprehensive income (loss)(2,375) (2,352) 
Treasury stock, at cost - 1,954 shares at March 29, 2020 and December 29, 2019
(26,160) (26,160) 
Total stockholders’ equity290,852  284,826  
Total liabilities and stockholders’ equity$603,730  $682,278  

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


(In thousands)

Common StockAdditional Paid in CapitalRetained EarningsNon
controlling Interest
AOCITreasury StockTotal Equity
Balance at December 29, 201938,018  $380  $177,957  $135,001  $—  $(2,352) $(26,160) $284,826  
Reclassification of noncontrolling interest from temporary equity—  —  —  —  64,133  —  —  64,133  
Comprehensive income (loss)—  —  —  (45,336) 1,020  (23) —  (44,339) 
Dividends declared to common stockholders—  —  —  (9,305) —  —  —  (9,305) 
Dividends declared to noncontrolling interest—  —  —  —  (5,200) —  —  (5,200) 
Noncontrolling interest carrying value adjustment—  —  —  (322) —  —  —  (322) 
Issuance of stock from restricted stock and restricted stock unit conversions320  3  (3) —  —  —  —    
Stock-based compensation—  —  1,592  —  —  —  —  1,592  
Withholding for taxes on restricted stock unit 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.


(In thousands)

Common StockAdditional Paid in CapitalRetained Earnings (Deficit)AOCITreasury StockTotal Equity
Balance at December 30, 201837,551  $376  $166,668  $232,401  $27  $(26,160) $373,312  
Cumulative effect of adoption of leasing standard—  —  —  (1,787) —  —  (1,787) 
Adjusted balance at December 30, 201837,551  376  166,668  230,614  27  (26,160) 371,525  
Comprehensive loss attributable to controlling interests—  —  —  (4,675) (61) —  (4,736) 
Issuance of stock from restricted stock and restricted stock unit conversions67  —  —  —  —  —    
Stock-based compensation—  —  5,737  —  —  —  5,737  
Withholding for taxes on restricted stock unit conversions—  —  (13) —  —  —  (13) 
Balance at March 31, 201937,618  $376  $172,392  $225,939  $(34) $(26,160) $372,513  

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


(In thousands)
Three months ended
March 29, 2020March 31, 2019
Operating Activities
Net loss$(44,006) $(4,714) 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization9,473  12,084  
Stock compensation expense1,592  5,737  
Loss on equity investments, net  487  
Gain on sale of property(5,159)   
Deferred income taxes(6,704) (1,036) 
Pension contribution(555) (499) 
Postretirement benefits expense(326) (637) 
Changes in working capital items:
Accounts receivable, net20,776  35,529  
Prepaid expenses, inventories and other current assets(2,890) (11,226) 
Accounts payable, employee compensation and benefits, deferred revenue and other current liabilities(25,892) (29,738) 
Other, net(140) (1,243) 
Net cash provided by (used for) operating activities(2,782) 4,744  
Investing Activities
Capital expenditures(3,499) (3,911) 
Proceeds from the sale of property, plant and equipment8,983    
Other, net  (150) 
Net cash used for investing activities5,484  (4,061) 
Financing Activities From Operations
Repayments of capital lease obligations(50)   
Dividends paid to common stockholders(9,091)   
Dividends paid to noncontrolling interest(5,200)   
Withholding for taxes on restricted stock unit vesting(533) (13) 
Other  (24) 
Net cash used for financing activities(14,874) (37) 
Net increase (decrease) in cash(12,172) 646  
Cash, cash equivalents and restricted cash, beginning of period98,253  141,507  
Cash, cash equivalents and restricted cash, end of period$86,081  $142,153  

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



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, Orlando Sentinel, South Florida’s Sun Sentinel, Virginia’s Daily Press and The Virginian-Pilot, The Morning Call of Lehigh Valley, Pennsylvania, and the Hartford Courant. Tribune also operates Tribune Content Agency (“TCA”) and is the majority owner in BestReviews LLC (“BestReviews”).
Fiscal Periods—The Company’s fiscal year ends on the last Sunday in December. Fiscal year 2020 ends on December 27, 2020 and fiscal year 2019 ended on December 29, 2019. Fiscal year 2020 and 2019 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 29, 2020 and December 29, 2019 and the results of operations for the three months ended March 29, 2020 and March 31, 2019, respectively, and the cash flows for the three months ended March 29, 2020 and March 31, 2019, 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 assesses its operating segments in accordance with Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting.” In the three months ended March 29, 2020, the Company realigned its operations, combining the print and digital operations of its media groups together under the leadership of the Chief Executive Officer, who is also the chief operating decision maker for Tribune, as defined in ASC Topic 280. As a result of the realignment, beginning in the first quarter of 2020, the Company no longer reports separate segment results for its print and digital operations. Prior to the first quarter of fiscal 2020, Tribune was managed by its chief operating decision maker as two segments, segment M and segment X.
Accounting standards adopted in 2020—In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Topic 326, Financial Instruments – Credit Losses (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and requires the use of an “expected loss” model for instruments measured as amortized cost. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard effective the beginning of fiscal year 2020 and the adoption did not have a material effect on the Company’s consolidated financial statements. See Note 2 for additional information related to the expected credit losses.
In December 2019, the FASB issued ASU 2019-12, Topic 740, Income Taxes, which simplifies accounting for income taxes (“ASU-2019-12”). ASU 2019-12 eliminates certain exceptions related to intraperiod tax allocation, the interim period tax calculation and deferred tax liabilities. ASU 2019-12 is applied prospectively and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted the standard effective the beginning of fiscal year 2020. See Note 9 for additional information related to the Company’s income taxes.
Tribune holds financial assets in the form of accounts receivable that are primarily generated from advertising revenues, certain circulation-related revenues and commercial print and delivery revenues, and are grouped as such. The accounts receivable and allowance for doubtful accounts are analyzed under the expected credit losses method. Payment

terms vary by revenue stream. Classified advertising and home delivery circulation 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. For the first quarter 2020, the Company has identified the market effects of the COVID-19 pandemic as a forward-looking 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 doubtful accounts. Included in the allowance for doubtful accounts are amounts for sales adjustments not related to expected credit losses, such as rebates, billing adjustments, and returns. The credit loss expense was $3.0 million for the three months ended March 29, 2020 and is included in other operating expenses on the Consolidated Statements of Loss.
A summary of the activity with respect to the allowance for doubtful accounts for the three months ended March 29, 2020 is as follows (in thousands):
Accounts receivable allowance balance at December 29, 2019$9,674  
Current period provision2,979  
Write offs(1,506) 
Sales adjustments, net(70) 
Accounts receivable allowance balance at March 29, 2020$11,077  

Accounts receivable, net, at March 29, 2020 and December 29, 2019, consisted of the following (in thousands):
March 29, 2020December 29, 2019
Accounts receivable$105,342  $122,428  
Less: Allowance for doubtful accounts11,077  9,674  
Accounts receivable, net$94,265  $112,754  

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.
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 29, 2019, the Company had a contract liabilities balance of $45.3 million, of which $31.5 million has been recognized as revenue in the three months ended March 29, 2020.

The Company’s revenues disaggregated by type of revenue is as follows (in thousands):
Three months ended
March 29, 2020March 31, 2019
Print$57,914  $75,853  
Digital18,902  20,915  
Advertising76,816  96,768  
Print81,191  86,681  
Digital8,821  6,194  
Circulation90,012  92,875  
Commercial print & delivery21,916  24,459  
Direct mail7,610  8,638  
Content syndication and other20,131  21,785  
Other49,657  54,882  
Total operating revenues$216,485  $244,525  
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 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.
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 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 and executive separation 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 plans to fund 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 second 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.
During the three months ended March 31, 2019, the Company implemented reductions in staffing levels in its operations of 89 positions for which the Company recorded pretax charges related to these reductions and executive separations totaling $7.0 million. These reductions included 23 positions related to the voluntary severance incentive plan initiated in the fourth quarter of 2018. The related salary continuation payments began during the first quarter of 2019 and ended during the first quarter of 2020.
Included in the first quarter of 2019 severance charge was approximately $4.0 million related to the separation of the Company’s former CEO and two senior executives in the digital space. Each of these employees had employment contracts

which provided for immediate payout of any contractual compensation under the employment agreement in the event of separation. These employment agreements were amended to permit payment of the severance as salary continuation over the remainder of 2019, during which time equity-based awards continued to vest. The severance payments to these executives, including compensation and medical benefits, if any, were accrued in the first quarter of 2019. Additionally, as a result of the separation the Company recognized accelerated stock based compensation expense in the first quarter of 2019 of $1.5 million.
A summary of the activity with respect to the Company’s severance accrual for the three months ended March 29, 2020 is as follows (in thousands):
Balance at December 29, 2019$2,580  
Balance at March 29, 2020$12,809  
Charges for severance and related expenses are included in compensation expense in the accompanying Consolidated Statements of Loss.
Lease Abandonment
During the first quarter of 2020, the Company permanently vacated 21,952 square feet of office space in Chicago and 17,960 square feet of office space in Los Angeles. The abandonment of the office space is an indicator of impairment and the Company assessed the lease right-of-use (“ROU”) assets and leasehold improvements for impairment. Estimates of fair value include Level 3 inputs which are subjective in nature, involve uncertainties and matters of significant judgment and are made at a specific point in time. To calculate the fair value of the vacated space, the Company used the discounted cash flows from estimated sublease payments and compared the result to the sum of the carrying values of the lease ROU asset and the leasehold improvements. The discount rate used is a market place lessor's expected rate of return. During the three months ended March 29, 2020, the Company recorded non-cash impairment charges of $2.8 million related to the impairment of the lease ROU assets and $4.2 million related to the impairment of the leasehold improvements associated to the vacated office space.
Other Changes
On July 23, 2019, the Company entered into an agreement to sell real property located in Norfolk, Virginia for a cash sales price of $9.5 million. The sale closed on January 22, 2020. The Company received net proceeds of $9.0 million and recorded a pre-tax gain of $5.2 million related to the sale. The gain is included as a reduction in other operating expenses in the Company’s Consolidated Statements of Loss.
Transition Services Agreement with NantMedia Holdings, LLC
In connection with the closing of the sale of the Los Angeles Times, The San Diego Union-Tribune and various other titles of the Company’s California properties (“California Properties”) in June 2018, the Company entered into a transition services agreement (“TSA”) with NantMedia Holdings, LLC (“NantMedia”), providing for up to twelve months of transition services between the parties at negotiated rates approximating cost. On January 17, 2019, this agreement was amended to extend the date of transition services to June 30, 2020. Either party may discontinue all or a portion of the services being provided to such party by providing 60 days advance notice.
As the operational transition continues, there are certain costs that the Company paid on behalf of NantMedia due to commingled contracts and processes. Such costs include newsprint, rent, benefits, and other operating activities. The TSA provides for reimbursement to the Company for such charges until the contracts and processes can be separated. Additionally, the Company receives some revenue payments related to commingled revenue contracts that include the

California Properties. These payments are reimbursed to NantMedia. A summary of the activity with respect to the TSA is as follows (in thousands):
Three months ended
March 29, 2020March 31, 2019
Accounts receivable from Nant Capital beginning balance$6,118  $17,909  
Revenue for TSA services1,747  7,005  
Reimbursable costs14,999  16,346  
Amounts received for TSA services(1,672) (5,866) 
Amounts received for reimbursable costs(15,437) (25,237<