Company Quick10K Filing
Tronc
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 36 $593
10-Q 2019-11-07 Quarter: 2019-09-29
10-Q 2019-08-07 Quarter: 2019-06-30
10-Q 2019-05-08 Quarter: 2019-03-31
10-K 2019-03-18 Annual: 2018-12-30
10-Q 2018-11-08 Quarter: 2018-09-30
10-Q 2018-08-10 Quarter: 2018-07-01
10-Q 2018-05-10 Quarter: 2018-04-01
10-K 2018-03-16 Annual: 2017-12-31
10-Q 2017-11-03 Quarter: 2017-09-24
10-Q 2017-08-03 Quarter: 2017-06-25
10-Q 2017-05-04 Quarter: 2017-03-26
10-K 2017-03-08 Annual: 2016-12-25
10-Q 2016-11-02 Quarter: 2016-09-25
10-Q 2016-08-05 Quarter: 2016-06-26
10-Q 2016-05-05 Quarter: 2016-03-27
10-K 2016-03-14 Annual: 2015-12-27
10-Q 2015-11-12 Quarter: 2015-09-27
10-Q 2015-08-12 Quarter: 2015-06-28
10-Q 2015-05-08 Quarter: 2015-03-29
10-K 2015-03-25 Annual: 2014-12-28
10-Q 2014-11-10 Quarter: 2014-09-28
10-Q 2014-08-21 Quarter: 2014-06-29
8-K 2019-12-01 Enter Agreement, Officers, Exhibits
8-K 2019-11-14 Other Events, Exhibits
8-K 2019-11-07 Earnings, Exhibits
8-K 2019-08-19 Other Events
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-05-30 Other Events, Exhibits
8-K 2019-05-15 Shareholder Vote
8-K 2019-05-08 Earnings, Exhibits
8-K 2019-05-08 Earnings, Exhibits
8-K 2019-03-13 Earnings, Other Events, Exhibits
8-K 2019-01-16 Officers, Regulation FD, Exhibits
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-10-09 Amend Bylaw, Exhibits
8-K 2018-10-04 Regulation FD, Exhibits
8-K 2018-08-09 Earnings, Exhibits
8-K 2018-06-18 Leave Agreement, M&A, Other Events, Exhibits
8-K 2018-05-28 Enter Agreement, Regulation FD, Exhibits
8-K 2018-05-23 M&A, Exhibits
8-K 2018-05-18 Officers, Shareholder Vote
8-K 2018-05-09 Earnings, Exhibits
8-K 2018-03-18 Officers
8-K 2018-03-07 Earnings, Exhibits
8-K 2018-02-07 Enter Agreement, Officers, Regulation FD, Exhibits
8-K 2018-02-07 Enter Agreement, M&A, Sale of Shares, Regulation FD, Exhibits
8-K 2018-01-19 Officers, Regulation FD
TRNC 2019-09-29
Part I.
Item 1. Financial Statements
Note 1: Description of Business and Basis of Presentation
Note 2: Leases
Note 3: Revenue Recognition
Note 4: Changes in Operations
Note 5: Related Party Transactions
Note 6: Acquisition
Note 8: Inventories
Note 9: Goodwill and Other Intangible Assets
Note 10: Income Taxes
Note 11: Pension and Other Postretirement Benefits
Note 12: Noncontrolling Interest
Note 13: Earnings per Share
Note 14: Stockholders' Equity
Note 15: Accumulated Other Comprehensive Income (Loss)
Note 16: Contingencies
Note 17: Segment Information
Note 18: 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 a2019q3-10qexhibit311.htm
EX-31.2 a2019q3-10qexhibit312.htm
EX-32 a2019q3-10qexhibit32.htm

Tronc Earnings 2019-09-29

TRNC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
FRHC 626 429 303 106 0 22 40 441 0% 11.2 5%
HOFD 605 610 155 114 0 -12 -11 630 0% -56.1 -2%
INDU 594 865 525 175 76 -13 37 996 44% 26.6 -2%
ADPT 593 601 324 22 16 -16 -16 544 74% -34.8 -3%
TRNC 593 761 400 1,034 0 -1 52 459 0% 8.8 -0%
TMDX 591 121 50 12 6 -16 -13 529 51% -39.7 -13%
WTRE 590 3,469 2,286 381 0 71 86 521 0% 6.0 2%
PPLT 582 584 0 0 0 41 41 582 14.2 7%
ABCD 565 185 185 161 121 43 24 582 76% 24.4 23%
RMP 561 0 0 0 0 0 0 561

10-Q 1 a2019q3-10q.htm 10-Q Document





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

FORM 10-Q
[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 2019
 
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) 
Delaware
 
38-3919441
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. employer
identification no.)
 
 
 
160 N. Stetson Avenue
 
 
Chicago Illinois
 
60601
(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 class
Trading Symbol
Name of each exchange on which registered
Common Stock, par value $.01 per share
TPCO
The 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  X   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  X   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   X   
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  X

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 November 5, 2019
Common Stock, $0.01 par value
 
36,023,145






 
 
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, changes in advertising demand, circulation levels and audience shares; competition and other economic conditions; 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 develop and grow our online businesses; changes in newsprint price; our ability to maintain effective internal control over financial reporting; concentration of stock ownership among our principal stockholders whose interests 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 18, 2019, 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
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
 
September 29, 2019
 
September 30, 2018
Operating revenues
 
$
236,027

 
$
255,770

 
$
730,879

 
$
747,173

Operating expenses:
 
 
 
 
 
 
 
 
Compensation
 
83,066

 
107,762

 
276,583

 
324,982

Newsprint and ink
 
12,613

 
16,980

 
43,834

 
48,348

Outside services
 
77,549

 
81,572

 
241,787

 
262,372

Other operating expenses
 
42,163

 
47,270

 
123,604

 
116,220

Depreciation and amortization
 
11,261

 
12,179

 
34,993

 
37,567

Total operating expenses
 
226,652

 
265,763

 
720,801

 
789,489

Income (loss) from operations
 
9,375

 
(9,993
)
 
10,078

 
(42,316
)
Interest income (expense), net
 
(57
)
 
303

 
478

 
(11,673
)
Loss on early extinguishment of debt
 

 

 

 
(7,666
)
Loss on equity investments, net
 
(2,213
)
 
(434
)
 
(3,255
)
 
(1,828
)
Other income (expense), net
 
248

 
3,640

 
265

 
10,943

Income (loss) from continuing operations before income taxes
 
7,353

 
(6,484
)
 
7,566

 
(52,540
)
Income tax expense (benefit)
 
480

 
(5,835
)
 
63

 
(8,719
)
Net income (loss) from continuing operations
 
6,873

 
(649
)
 
7,503

 
(43,821
)
Plus: Earnings (loss) from discontinued operations, net of taxes
 
(12,848
)
 
(3,586
)
 
(13,570
)
 
290,665

Net income (loss)
 
(5,975
)
 
(4,235
)
 
(6,067
)
 
246,844

Less: Income (loss) attributable to noncontrolling interest
 
1,150

 
(239
)
 
3,037

 
471

Net income (loss) attributable to Tribune common stockholders
 
$
(7,125
)
 
$
(3,996
)
 
$
(9,104
)
 
$
246,373

 
 
 
 
 
 
 
 
 
Net income (loss) from continuing operations available to Tribune common stockholders, per common share:
 
 
 
 
 
 
 
 
Basic
 
$
(0.25
)
 
$
(0.01
)
 
$
(0.29
)
 
$
(1.26
)
Diluted
 
$
(0.25
)
 
$
(0.01
)
 
$
(0.29
)
 
$
(1.26
)
Net income (loss) available to Tribune common stockholders, per common share:
 
 
 
 
 
 
 
 
Basic
 
$
(0.61
)
 
$
(0.11
)
 
$
(0.67
)
 
$
7.01

Diluted
 
$
(0.61
)
 
$
(0.11
)
 
$
(0.67
)
 
$
7.01

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
35,863

 
35,409

 
35,734

 
35,166

Diluted
 
35,863

 
35,409

 
35,734

 
35,166

 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
3




TRIBUNE PUBLISHING COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
 
September 29, 2019
 
September 30, 2018
Net income (loss)
 
$
(5,975
)
 
$
(4,235
)
 
$
(6,067
)
 
$
246,844

Comprehensive income (loss), net of taxes:
 
 
 
 
 
 
 
 
Amortization of items to periodic pension cost during the period, net of taxes of ($22), ($916), ($68) and ($2,746), respectively
 
(60
)
 
(2,376
)
 
(178
)
 
(7,128
)
Foreign currency translation
 
(4
)
 
(6
)
 
(16
)
 
(11
)
Comprehensive loss recognized in continuing operations, net of taxes
 
(64
)
 
(2,382
)
 
(194
)
 
(7,139
)
Accumulated other comprehensive income recognized in discontinued operations, net of taxes of $9,702
 

 

 

 
25,397

Comprehensive income (loss)
 
(6,039
)
 
(6,617
)
 
(6,261
)
 
265,102

Less: Comprehensive income (loss) attributable to noncontrolling interest
 
1,150

 
(239
)
 
3,037

 
471

Comprehensive income (loss) attributable to Tribune common stockholders
 
$
(7,189
)
 
$
(6,378
)
 
$
(9,298
)
 
$
264,631




The accompanying notes are an integral part of these unaudited consolidated financial statements.
4



TRIBUNE PUBLISHING COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)

 
 
September 29, 2019
 
December 30, 2018
Assets
 
 
 
 
Current assets
 
 
 
 
Cash
 
$
56,526

 
$
97,560

Accounts receivable, (net of allowances of $9,872 and $11,458)
 
103,713

 
145,463

Inventories
 
5,682

 
9,587

Prepaid expenses and other current assets
 
21,535

 
18,197

Total current assets
 
187,456

 
270,807


 
 
 
 
Property, plant and equipment
 
 
 
 
Machinery, equipment and furniture
 
127,874

 
124,243

Buildings and leasehold improvements
 
86,396

 
82,399

 
 
214,270

 
206,642

Accumulated depreciation
 
(89,504
)
 
(74,013
)
 
 
124,766

 
132,629

Advance payments on property, plant and equipment
 
2,186

 
12,334

Property, plant and equipment, net
 
126,952

 
144,963

 
 
 
 
 
Other assets
 
 
 
 
Goodwill
 
132,172

 
132,146

Intangible assets, net
 
70,960

 
77,229

Software, net
 
23,066

 
27,117

Lease right-of-use asset
 
102,071

 

Restricted cash
 
37,290

 
43,947

Deferred income taxes
 
7,105

 
2,414

Other long-term assets
 
14,604

 
28,004

Total other assets
 
387,268

 
310,857

 
 
 
 
 
Total assets
 
$
701,676

 
$
726,627

 
 
 
 
 

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)


 
 
September 29, 2019
 
December 30, 2018
Liabilities and stockholders’ equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
40,962

 
$
70,555

Employee compensation and benefits
 
32,954

 
61,001

Deferred revenue
 
44,438

 
51,114

Current portion of long-term lease liability
 
25,120

 

Current portion of long-term debt
 
100

 
405

Other current liabilities
 
41,293

 
21,203

Liabilities associated with discontinued operations
 

 
6,249

Total current liabilities
 
184,867

 
210,527

 
 
 
 
 
Non-current liabilities
 
 
 
 
Long term lease liability
 
102,430

 

Workers’ compensation, general liability and auto insurance payable
 
26,895

 
30,606

Pension and postretirement benefits payable
 
17,419

 
20,150

Deferred rent
 

 
25,424

Long-term debt
 
6,777

 
6,799

Other obligations
 
7,861

 
20,053

Total non-current liabilities
 
161,382

 
103,032

 
 
 
 
 
Noncontrolling interest
 
54,246

 
39,756

 
 
 
 
 
Stockholders’ equity
 
 
 
 
Preferred stock, $.01 par value. Authorized 30,000 shares; no shares issued or outstanding at September 29, 2019 and December 30, 2018
 

 

Common stock, $.01 par value. Authorized 300,000 shares, 37,907 shares issued and 35,953 shares outstanding at September 29, 2019; 37,551 shares issued and 35,597 shares outstanding at December 30, 2018
 
379

 
376

Additional paid-in capital
 
176,227

 
166,668

Retained earnings
 
150,902

 
232,401

Accumulated other comprehensive income (loss)
 
(167
)
 
27

Treasury stock, at cost - 1,954 shares at September 29, 2019 and December 30, 2018
 
(26,160
)
 
(26,160
)
Total stockholders’ equity
 
301,181

 
373,312

 
 
 
 
 
Total liabilities and stockholders’ equity
 
$
701,676

 
$
726,627



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 Stock
 
Additional Paid in Capital
 
Retained Earnings
 
AOCI
 
Treasury Stock
 
Total Equity
 
 
Shares
 
Amount
 
 
 
 
 
Balance at December 30, 2018
 
37,551

 
$
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, 2018
 
37,551

 
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 (“RSU”) conversions
 
67

 

 

 

 

 

 

Stock-based compensation
 

 

 
5,737

 

 

 

 
5,737

Withholding for taxes on RSU conversions
 

 

 
(13
)
 

 

 

 
(13
)
Balance at March 31, 2019
 
37,618

 
376

 
172,392

 
225,939

 
(34
)
 
(26,160
)
 
372,513

Comprehensive income (loss) attributable to controlling interests
 

 

 

 
2,696

 
(69
)
 

 
2,627

Dividends to common stockholders
 

 

 

 
(55,755
)
 

 

 
(55,755
)
Issuance of stock from restricted stock and RSU conversions
 
68

 
1

 
(1
)
 

 

 

 

Stock-based compensation
 

 

 
2,914

 

 

 

 
2,914

Balance at June 30, 2019
 
37,686

 
377

 
175,305

 
172,880

 
(103
)
 
(26,160
)
 
322,299

Comprehensive loss attributable to controlling interests
 

 

 

 
(7,125
)
 
(64
)
 

 
(7,189
)
Issuance of stock from restricted stock and RSU conversions
 
220

 
2

 
(2
)
 

 

 

 

Stock-based compensation
 

 

 
2,449

 

 

 

 
2,449

Withholding for taxes on restricted stock unit conversions
 

 

 
(1,525
)
 

 

 

 
(1,525
)
Noncontrolling interest carrying value adjustment
 

 

 

 
(14,853
)
 

 

 
(14,853
)
Balance at September 29, 2019
 
37,906

 
$
379

 
$
176,227

 
$
150,902

 
$
(167
)
 
$
(26,160
)
 
$
301,181


The accompanying notes are an integral part of these unaudited consolidated financial statements.
7




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

 
 
Common Stock
 
Additional Paid in Capital
 
Retained Earnings (Deficit)
 
AOCI
 
Treasury Stock
 
Total Equity
 
 
Shares
 
Amount
 
 
 
 
 
Balance at December 31, 2017
 
37,551

 
$
376

 
$
150,229

 
$
(16,390
)
 
$
(13,527
)
 
$
(51,526
)
 
$
69,162

Comprehensive loss attributable to controlling interests
 

 

 

 
(14,627
)
 
(2,377
)
 

 
(17,004
)
AOCI recognized in discontinued operations
 

 

 

 

 
108

 

 
108

Issuance of stock from treasury for acquisition
 

 

 
9,229

 

 

 
25,366

 
34,595

Issuance of stock from restricted stock and RSU conversions
 
122

 
1

 
(1
)
 

 

 

 

Exercise of stock options
 
7

 

 
133

 

 

 

 
133

Stock-based compensation
 

 

 
2,447

 

 

 

 
2,447

Withholding for taxes on RSU conversions
 

 

 
(943
)
 

 

 

 
(943
)
Forfeited restricted stock
 
(450
)
 
(5
)
 
5

 

 

 

 

Balance at April 1, 2018
 
37,230

 
372

 
161,099

 
(31,017
)
 
(15,796
)
 
(26,160
)
 
88,498

Comprehensive income (loss) attributable to controlling interests
 

 

 

 
264,849

 
(2,380
)
 

 
262,469

AOCI recognized in discontinued operations
 

 

 

 

 
25,289

 

 
25,289

Issuance of stock from restricted stock and RSU conversions
 
12

 

 

 

 

 

 

Exercise of stock options
 

 

 
1

 

 

 

 
1

Stock-based compensation
 

 

 
2,748

 

 

 

 
2,748

Withholding for taxes on RSU conversions
 

 

 
(119
)
 

 

 

 
(119
)
Balance at July 1, 2018
 
37,242

 
372

 
163,729

 
233,832

 
7,113

 
(26,160
)
 
378,886

Comprehensive loss attributable to controlling interests
 

 

 

 
(3,849
)
 
(2,382
)
 

 
(6,231
)
Issuance of stock from restricted stock and RSU conversions
 
205

 
2

 
(2
)
 

 

 

 

Stock-based compensation
 

 

 
2,982

 

 

 

 
2,982

Withholding for taxes on RSU conversions
 

 

 
(2,044
)
 

 

 

 
(2,044
)
Balance at September 30, 2018
 
37,447

 
$
374

 
$
164,665

 
$
229,983

 
$
4,731

 
$
(26,160
)
 
$
373,593



The accompanying notes are an integral part of these unaudited consolidated financial statements.
8




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

 
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
Operating Activities From Continuing Operations
 
 
 
 
Net income (loss) from continuing operations
 
$
7,503

 
$
(43,821
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
34,993

 
37,567

Stock compensation expense
 
11,100

 
7,513

Loss on equity investments, net
 
3,255

 
1,828

Loss on early extinguishment of debt
 

 
7,666

Deferred income taxes
 
(3,896
)
 
3,818

Defined benefit plan contribution
 
(1,929
)
 
(3,419
)
Postretirement medical, life and other benefits
 
(1,047
)
 
(12,615
)
Changes in working capital items, excluding effects from acquisitions:
 
 
 
 
Accounts receivable, net
 
41,601

 
2,045

Prepaid expenses, inventories and other current assets
 
(12,808
)
 
14,084

Accounts payable, employee compensation and benefits, deferred revenue and other current liabilities
 
(46,289
)
 
(22,700
)
Other, net
 
(530
)
 
742

Net cash provided by (used for) operating activities
 
31,953

 
(7,292
)
 
 
 
 
 
Investing Activities From Continuing Operations
 
 
 
 
Capital expenditures
 
(13,866
)
 
(48,956
)
Acquisition of businesses, net of cash acquired
 

 
(70,999
)
Other, net
 
(718
)
 
(2,207
)
Net cash used for investing activities
 
(14,584
)
 
(122,162
)
 
 
 
 
 
Financing Activities From Continuing Operations
 
 
 
 
Dividends paid to Tribune common stockholders
 
(53,846
)
 

Repayments of capital lease obligations
 
(305
)
 

Repayments of long-term debt
 

 
(353,253
)
Dividends paid to noncontrolling interest
 
(3,400
)
 
(2,000
)
Withholding for taxes on RSU vesting
 
(1,538
)
 
(3,106
)
Other
 

 
(151
)
Net cash used for financing activities
 
(59,089
)
 
(358,510
)
 
 
 
 
 
Decrease in cash attributable to continuing operations
 
$
(41,720
)
 
$
(487,964
)

The accompanying notes are an integral part of these unaudited consolidated financial statements.
9




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

 
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
 
 
 
 
 
Cash flows used for operating activities from discontinued operations, net
 
$
(5,971
)
 
$
(47,071
)
Cash flows provided by investing activities from discontinued operations, net
 

 
491,504

Cash flows used for financing activities from discontinued operations, net
 

 
(291
)
Increase (decrease) in cash attributable to discontinued operations
 
(5,971
)
 
444,142

 
 
 
 
 
Net decrease in cash
 
(47,691
)
 
(43,822
)
Cash, cash equivalents and restricted cash, beginning of period
 
141,507

 
185,351

Cash, cash equivalents and restricted cash, end of period
 
$
93,816

 
$
141,529


The accompanying notes are an integral part of these unaudited consolidated financial statements.
10


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, formerly tronc. Inc., 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 a majority owner in BestReviews LLC (“BestReviews”). On May 28, 2018, the Company acquired Virginian-Pilot Media Companies, LLC, owner of The Virginian-Pilot, a daily newspaper based in Norfolk, Virginia, and associated businesses (“Virginian-Pilot”). See Note 6 for further information on this acquisition.
On May 23, 2018, the Company completed the sale of substantially all of the assets of forsalebyowner.com and on June 18, 2018, the Company completed the sale of the Los Angeles Times, The San Diego Union-Tribune and various other titles of the Company’s California properties (“California Properties”). See Note 7 for more information on the dispositions and related discontinued operations.
Tribune’s continuing legacy of brands, including The Virginian-Pilot, have earned a combined 61 Pulitzer Prizes and are committed to informing, inspiring and engaging local communities. Tribune’s brands create and distribute content across its media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities.
Fiscal Periods—The Company’s fiscal year ends on the last Sunday in December. Fiscal year 2019 ends on December 29, 2019 and fiscal year 2018 ended on December 30, 2018. Fiscal year 2019 and 2018 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 September 29, 2019 and December 30, 2018 and the results of operations for the three and nine months ended September 29, 2019 and September 30, 2018, respectively, and the cash flows for the nine months ended September 29, 2019 and September 30, 2018, 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.
Effective as of the sale dates, the operations of the California Properties and forsalebyowner.com qualify as discontinued operations. Accordingly, results of these operations for all periods presented have been reflected as discontinued operations in the accompanying Consolidated Financial Statements. Additionally, assets and liabilities related to the divested properties are classified as such in all 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 related to the California Properties and forsalebyowner.com.
Accounting standards adopted in 2019—In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Subtopic 350-40, Intangibles-Goodwill and Other-Internal-Use Software; Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). ASU 2018-15 can be applied either retrospectively or prospectively. ASU 2018-15 is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. The Company adopted this

11


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



standard effective the beginning of fiscal year 2019 and will apply the provisions of the standard prospectively. The adoption had no material effect on the Company’s consolidated financial statements.
In February 2018, the FASB issued ASU 2018-02, Topic 220, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). ASU 2018-02 amends ASC 220, Income Statement — Reporting Comprehensive Income, to “allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.” In addition, under the ASU, an entity will be required to provide certain disclosures regarding stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company adopted this standard effective the beginning of fiscal year 2019 and adoption had no material effect on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Topic 842, Leases (“ASC 842”), which requires lessees to recognize lease assets and lease liabilities for operating leases. The Company adopted this standard effective December 31, 2018 using the modified retrospective transition method whereby the Company applied the new standard at the adoption date and recognized a cumulative-effect adjustment of $1.8 million, net of tax of $0.7 million, to reduce the opening balance of retained earnings in the first quarter of 2019, primarily due to lease impairments determined during the adoption. The Company has elected the practical expedients which allow the Company to forgo reassessing whether existing contracts are or contain leases, forgo reassessing the classification of existing leases, forgo reassessing initial direct costs of existing leases at the initial application date and to combine lease and nonlease components. Additionally, the Company did not consider any leases with original lease terms less than one year. See Note 2 for additional disclosures related to the Company’s leases.
Accounting standards not yet adopted—In June 2016, the FASB issued ASU 2016-13, Topic 326, Financial Instruments – Credit Losses (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and will require 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 expects to adopt the standard effective December 30, 2019. The Company is assessing the impact of this new standard on the Company’s future reported results and operating and accounting processes and systems.
NOTE 2: LEASES
Tribune’s leased facilities total approximately 4.0 million square feet in the aggregate. The Company currently has leased newspaper production facilities in Connecticut, Florida, Illinois, Maryland, New Jersey, and Pennsylvania, however Tribune owns substantially all of the production equipment. For printing plants, the initial lease term is 10 years with two options to renew for additional 10 year terms. For distribution facilities, the initial lease term is generally five years, with options to renew either two or three additional five year terms. Our corporate headquarters are located at 160 N. Stetson Avenue, Chicago, Illinois. The lease is for approximately 137,000 square feet with a 10 year and 11 month term for one floor and a 12 year term for four floors, expiring in 2028 and 2030, respectively. The Company has rent escalations, rent holidays and leasehold improvement incentives which are included in the determination of the right-of-use asset (“ROU”) and the lease liabilities.
Tribune subleases certain facilities that total approximately 0.1 million square feet in aggregate. The terms of these subleases are from five to seven years and expire between 2019 and 2023.
Tribune determines if an arrangement is a lease at inception. Operating leases are included in lease ROU assets, current portion of long-term lease liabilities, and long-term lease liabilities on the consolidated balance sheets. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt on the consolidated balance sheets. Amortization of the operating leases ROU assets is included in other operating expenses. Amortization of finance leases is included in depreciation expense. Sublease income is included as an offset to lease expense in other operating expenses.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, Tribune uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The recorded operating lease ROU asset on the balance sheet reflects lease

12


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



payments made to date and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Certain lease agreements have lease and non-lease components, which are generally accounted for together.
Below is a summary of information related to the Company’s leases for the three and nine months ended September 29, 2019 (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29, 2019
 
September 29, 2019
Lease cost:
 
 
 
 
Finance lease cost
 
 
 
 
Amortization of right-of-use assets
 
$
78

 
$
235

Interest on lease liabilities
 
26

 
78

Operating lease cost
 
7,314

 
21,560

Short-term lease cost
 
113

 
692

Variable lease cost
 
1,833

 
5,403

Sublease income
 
(864
)
 
(2,436
)
Total lease cost
 
$
8,500

 
$
25,532

Below is a summary of the supplemental cash flow information related to leases for the nine months ended September 29, 2019 (in thousands):
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows used for operating leases
 
$
22,289

Operating cash flows used for finance leases
 
$
109

Financing cash flows used for finance leases
 
$
305

Right-of-use assets obtained in exchange for new operating lease liabilities
 
$
2,930

Weighted average remaining lease term - finance leases (in years)
 
2.1

Weighted average remaining lease term - operating leases (in years)
 
6.1

Weighted average discount rate - finance leases
 
5.75
%
Weighted average discount rate - operating leases
 
4.75
%
Future minimum lease payments under noncancelable operating lease arrangements having initial terms of one year or more as of September 29, 2019 are as follows (in thousands):
 
 
Operating Leases
 
Finance Leases
 
Subleases
9/30/2019 - 9/27/2020
 
$
30,656

 
$
100

 
$
2,873

9/28/2020 - 9/26/2021
 
28,199

 
6,942

 
2,300

9/27/2021 - 9/25/2022
 
25,767

 

 
1,645

9/26/2022 - 9/24/2023
 
19,796

 

 
1,625

9/25/2023 - 9/29/2024
 
9,480

 

 
391

Thereafter
 
34,804

 

 

Total future lease payments
 
148,702

 
7,042

 
8,834

Less imputed interest
 
21,152

 
165

 

Net future minimum lease payments
 
$
127,550

 
$
6,877

 
$
8,834


13


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



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.
The Company receives a significant portion of the payments from its subscribers in advance of the delivery of the content both 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 30, 2018, the Company had a contract liabilities balance of $54.0 million, of which $44.0 million has been recognized as revenue in the nine months ended September 29, 2019. As of the adoption of ASC 606 on January 1, 2018, the Company had a contract liabilities balance of $55.1 million, of which $45.6 million was recognized as revenue in the nine months ended September 30, 2018.
The Company’s revenues disaggregated by type of revenue and segment are presented in Note 17.
The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within cost of sales. 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. The discussion and amounts below represent activity in the Company’s continuing operations and exclude any amounts in the Company’s assets, liabilities or operations from discontinued operations.
During the nine months ended September 29, 2019, the Company implemented reductions in staffing levels in its operations of 118 positions for which the Company recorded pretax charges related to these reductions and executive separations totaling $7.6 million. The pretax charges related to the reductions during the three months ended September 29, 2019 totaled $0.9 million. The reductions for the nine months ended September 29, 2019, include 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 are expected to continue through the first quarter of 2020.
Included in the 2019 severance charge is approximately $4.0 million related to the separation of the Company’s CEO and two senior executives in the digital operations in the first quarter of 2019. 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 would continue 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.
In July 2018, the Company implemented reductions in staffing levels of 178 positions of which approximately 50% were at the New York Daily News. The Company recorded pretax charges related to these reductions totaling $4.6 million.
In addition to the initiatives in July 2018, the Company implemented additional reductions of 52 and 339 positions during the three and nine months ended September 30, 2018, respectively, and recorded pretax charges related to these reductions of $3.5 million and $14.3 million, respectively.

14


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 nine months ended September 29, 2019 is as follows (in thousands):
Balance at December 30, 2018
 
$
28,845

Provision
 
7,574

Payments
 
(31,261
)
Balance at September 29, 2019
 
$
5,158

Charges for severance and related expenses are included in compensation expense in the accompanying Consolidated Statements of Income (Loss).
On July 23, 2019, the Company entered into an agreement to sell real property located in Norfolk, Virginia for a sales price of $9.5 million. The sale is dependent on the purchaser obtaining the required certificates and the purchaser’s determination of feasibility. Such determination must be made by March 5, 2020. Should the certificates not be acquired or the property not be feasible for the purchaser’s purposes, the purchaser can elect to terminate the agreement.
NOTE 5: RELATED PARTY TRANSACTIONS
Transition Services Agreement with NantMedia Holdings, LLC
In connection with the closing of the sale of the California Properties, 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. See Note 7 for additional information on the sale of the California Properties.
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 for the three and nine months ended September 29, 2019 is as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
 
September 29, 2019
 
September 30, 2018
Accounts receivable from NantMedia beginning balance
 
$
8,967

 
$
12,521

 
$
17,909

 
$

Revenue for TSA services
 
4,061

 
8,618

 
17,014

 
9,799

Reimbursable costs
 
9,123

 
23,495

 
38,801

 
35,523

Amounts received for TSA services
 
(5,467
)
 
(5,189
)
 
(17,870
)
 
(5,189
)
Amounts received for reimbursable costs
 
(9,694
)
 
(8,339
)
 
(49,706
)
 
(8,339
)
Amounts reimbursed to Nant for amounts collected from third parties under commingled revenue contracts
 
4,104

 
2,898

 
17,180

 
2,898

Amounts collected from third parties under commingled revenue contracts
 
(3,307
)
 
(5,093
)
 
(15,541
)
 
(5,781
)
Accounts receivable from NantMedia balance as of September 29, 2019(1)
 
$
7,787

 
$
28,911

 
$
7,787

 
$
28,911

(1)The accounts receivable from NantMedia balance as of September 29, 2019 consists of $7.3 million of charges which had been billed and $0.5 million of charges which had not been billed as of that date.

15


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



Merrick Consulting Agreement
On December 20, 2017, the Company entered into a Consulting Agreement with Merrick Ventures LLC (“Merrick Ventures”) and solely for certain sections thereof, Michael W. Ferro, Jr. and Merrick Media, LLC (“Merrick Media”). At the time the agreement was signed, Mr. Ferro was also Chairman of Tribune’s Board of Directors and, together with Merrick Ventures and Merrick Media, a significant stockholder. The Consulting Agreement provided for the engagement of Merrick Ventures on a non-exclusive basis to provide certain management expertise and technical services for an annual fee of $5.0 million in cash, payable in advance on the first business day of each calendar year. The Consulting Agreement provided for a rolling three-year term, with the initial term continuing through December 31, 2020. The Company made the initial $5.0 million payment in early January 2018. On March 18, 2018, Mr. Ferro retired from the Company’s Board. As Mr. Ferro was no longer actively engaged in the business and the Company remained contractually committed for the future payments due under the Consulting Agreement, the Company recognized expense for the full $15.0 million due under the Consulting Agreement in outside services in the first quarter of 2018. In the second quarter of fiscal year 2018, the Company amended the Consulting Agreement. The amendment reduced the total fees due under the Consulting Agreement by $2.5 million (from $15.0 million to $12.5 million) and allows the Company to engage Merrick Ventures as its advisor, if it so chooses, but at no additional cost to the Company. If so engaged, the Company would indemnify Merrick Ventures if the Company requests it to meet with third parties. In June 2018, the Company paid the remaining $7.5 million in fees due under the amended Consulting Agreement in connection with the execution of the amendment. The Company recognized a credit of $2.5 million for the reduction in fees due under the Consulting Agreement in outside services in the second quarter of 2018. The non-compete covenants and amended Securities Purchase Agreement terms contained in the Consulting Agreement were not altered by the amendment and remain in place through December 31, 2020.
NOTE 6: ACQUISITION
Virginian-Pilot
On May 28, 2018, the Company acquired Virginian-Pilot Media Companies, LLC (“Virginian-Pilot”), the owner of The Virginian-Pilot daily newspaper based in Norfolk, Virginia, pursuant to a Securities Purchase Agreement, for a cash purchase price of $34.0 million less a post-close working capital adjustment of $0.1 million from the seller.
During the first quarter of 2019, the Company completed the determination of the fair value of the assets acquired, including intangible assets and liabilities assumed. There were no adjustments to the allocation of the purchase price which is as follows (in thousands):
Consideration
 
 
Cash consideration for acquisition
 
$
33,912

Total consideration
 
33,912

 
 
 
Allocated Fair Value of acquired Assets and Assumed Liabilities
 
 
Accounts receivable and other current assets
 
8,257

Property, plant and equipment
 
29,843

Mastheads
 
4,700

Intangible assets subject to amortization
 
1,300

Accounts payable and other current liabilities
 
(10,749
)
Other long-term obligations
 
(68
)
Total identifiable assets, net
 
33,283

Goodwill
 
629

Total net assets acquired
 
$
33,912


16


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



NOTE 7: DISPOSITIONS AND DISCONTINUED OPERATIONS
On February 7, 2018, the Company entered into a Membership Interest Purchase Agreement (“MIPA”) by and between the Company and Nant Capital, LLC (“Nant Capital”) pursuant to which the Company agreed to sell the California Properties to Nant Capital for an aggregate purchase price of $500.0 million in cash, plus the assumption of unfunded pension liabilities related to the San Diego Pension Plan, less a post-closing working capital adjustment to the buyer of $9.7 million (the "Nant Transaction"). The Nant Transaction closed on June 18, 2018 and resulted in a pre-tax gain of $404.8 million.
As part of the Nant Transaction, the Company provided Nant Capital indemnification with respect to certain legal matters which were at various states of adjudication at the date of the sale. On August 19, 2019, the Los Angeles Times received an unfavorable jury verdict of $15.5 million in an indemnified employment litigation matter. Included in other operating expenses within discontinued operations for the three and nine months ended September 29, 2019, the Company recorded litigation reserves of $17.0 million and $18.0 million, respectively, associated with the verdict, legal fees and other indemnified legal matters. The Company plans to appeal the verdict. As of September 29, 2019, the Company has fully reserved for the unfavorable verdict.
On May 23, 2018, the Company sold substantially all of the assets of forsalebyowner.com in an asset sale for $2.5 million, less a post-closing working capital payment to the buyer of $0.1 million, plus an advertising sales commitment of $4.5 million over a term of two years. The forsalebyowner.com balances are reflected as related to discontinued operations on the consolidated balance sheets for all periods presented and the results of operations are included in discontinued operations for all periods presented.
Discontinued Operations
Earnings (loss) from discontinued operations for the respective transaction dates, included in the Consolidated Statements of Income (Loss) are comprised of the following (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
 
September 29, 2019
 
September 30, 2018
Operating revenues
 
$

 
$
11

 
$

 
$
211,511

Operating expenses:
 
 
 
 
 
 
 
 
Compensation
 

 
3

 

 
58,839

Newsprint and ink
 

 
3

 

 
14,376

Outside services
 
845

 
57

 
845

 
61,711

Other operating expenses
 
16,950

 
474

 
17,950

 
57,224

Depreciation and amortization
 

 

 

 
3,530

Total operating expenses
 
17,795

 
537

 
18,795

 
195,680

Income (loss) from operations
 
(17,795
)
 
(526
)
 
(18,795
)
 
15,831

Gain (loss) on sale
 

 
(3,151
)
 

 
406,183

Interest expense, net
 

 

 

 
(52
)
Other income, net
 

 

 

 
1,338

Income tax (expense) benefit
 
4,947

 
91

 
5,225

 
(132,635
)
Income (loss) from discontinued operations, net of tax
 
$
(12,848
)
 
$
(3,586
)
 
$
(13,570
)
 
$
290,665


17


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



Discontinued operations by segment are presented below (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
 
September 29, 2019
 
September 30, 2018
Operating revenues
 
 
 
 
 
 
 
 
M
 
$

 
$
(25
)
 
$

 
$
185,811

X
 

 
36

 

 
25,638

Corporate and Eliminations
 

 

 

 
62

 
 
$

 
$
11

 
$

 
$
211,511

Income (loss) from operations
 
 
 
 
 
 
 
 
M
 
$
(17,795
)
 
$
(350
)
 
$
(18,795
)
 
$
9,997

X
 

 
(171
)
 

 
5,795

Corporate and Eliminations
 

 
(5
)
 

 
39

 
 
$
(17,795
)
 
$
(526
)
 
$
(18,795
)
 
$
15,831

Depreciation and amortization
 
 
 
 
 
 
 
 
M
 
$

 
$

 
$

 
$
3,426

X
 

 

 

 
104

 
 
$

 
$

 
$

 
$
3,530


The following table presents the aggregate carrying amounts of assets and liabilities related to discontinued operations in the Consolidated Condensed Balance Sheets (in thousands):
 
 
September 29, 2019
 
December 30, 2018
Carrying amount of liabilities associated with discontinued operations:
 
 
 
 
Income tax payable
 

 
6,249

Total liabilities associated with discontinued operations
 
$

 
$
6,249

NOTE 8: INVENTORIES
Inventories consisted of the following (in thousands):
 
 
September 29, 2019
 
December 30, 2018
Newsprint
 
$
5,329

 
$
9,273

Supplies and other
 
353

 
314

Total inventories
 
$
5,682

 
$
9,587

Inventories are stated at the lower of cost or net realizable value determined using the first-in, first-out basis for all inventories.

18


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



NOTE 9: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets at September 29, 2019 and December 30, 2018, consisted of the following (in thousands):
 
 
September 29, 2019
 
December 30, 2018
 
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
 
Gross Amount
 
Accumulated Amortization
 
Net Amount
Intangible assets subject to amortization:
 
 
 
 
 
 
 
 
 
 
 
 
Subscribers (useful life of 2 to 10 years)
 
$
7,312

 
$
(5,409
)
 
$
1,903

 
$
7,312

 
$
(4,730
)
 
$
2,582

Advertiser relationships (useful life of 2 to 13 years)
 
27,648

 
(14,374
)
 
13,274

 
27,648

 
(12,497
)
 
15,151

Trade names (useful life of 20 years)
 
15,100

 
(3,904
)
 
11,196

 
15,100

 
(3,343
)
 
11,757

Other (useful life of 1 to 20 years)
 
16,181

 
(6,420
)
 
9,761

 
17,744

 
(4,831
)
 
12,913

Total intangible assets subject to amortization
 
$
66,241

 
$
(30,107
)
 
36,134

 
$
67,804

 
$
(25,401
)
 
42,403

 
 
 
 
 
 
 
 
 
 
 
 
 
Software (useful life 2 to 10 years)
 
$
143,689

 
$
(120,623
)
 
23,066

 
$
136,005

 
$
(108,888
)
 
27,117

 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill and other intangible assets not subject to amortization
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
 
 
 
 
 
132,172

 
 
 
 
 
132,146

Newspaper mastheads and other
 
 
 
 
 
34,826

 
 
 
 
 
34,826

Total goodwill and other intangible assets
 
 
 
 
 
$
226,198

 
 
 
 
 
$
236,492

NOTE 10: INCOME TAXES
For the three and nine months ended September 29, 2019, the Company recorded income tax expense related to continuing operations of $0.5 million and $0.1 million, respectively. The effective tax rate on pretax income was 6.5% and 0.8% in the three and nine months ended September 29, 2019, respectively. During the three months ended September 29, 2019, the Company recorded a discrete item which resulted in a tax benefit of $1.5 million relating to an adjustment in state tax expense for the treatment of the Nant Transaction gain for state apportionment in selected states. For the three and nine months ended September 29, 2019, the rate also differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit, income from noncontrolling interest, tax expense related to vesting of stock compensation, and nondeductible expenses.
For the three and nine months ended September 30, 2018, the Company recorded an income tax benefit related to continuing operations of $5.8 million and $8.7 million, respectively. The effective tax rate on pretax income from continuing operations was 90.0% and 16.6% in the three and nine months ended September 30, 2018, respectively. For the three and nine months ended September 30, 2018, the rate differs from the U.S. federal statutory rate of 21% primarily due to a year-to-date true-up that increased the income tax benefit for the quarter by $4.3 million to the estimated annual tax provision. The rate also differs due to state income taxes, net of federal benefit, and nondeductible expenses. For the nine months ended September 30, 2018, the rate differs from the U.S. federal tax rate of 21% primarily due to state income taxes, net of federal benefit, and nondeductible expenses. In the case of a pretax loss, the unfavorable permanent differences, such as non-deductible meals and entertainment expense, have the effect of decreasing the tax benefit which, in turn, decreases the effective tax rate. Also, in periods in which income (loss) before income taxes is close to break-even, permanent differences and changes in estimate tend to have a greater impact on the effective tax rate.
NOTE 11: 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 nine months ended September 29, 2019, the

19


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



Company made contributions totaling $11.0 million to the Chicago Newspaper Publishers Drivers’ Union Pension Plan (the “Drivers’ Plan”), pursuant to its amended rehabilitation plan. The Company expects to contribute an additional $0.7 million during the remainder of 2019. These payments are expensed when due to be paid.
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. The Company contributed $1.9 million to the NYDN Pension Plan in the nine months ended September 29, 2019. The Company expects to contribute $0.6 million to the NYDN Pension Plan during the remainder of 2019. The components of net periodic benefit for the NYDN Pension Plan are as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
Affected Line Items in the Consolidated Statements of Income (Loss)
 
 
September 29, 2019
 
September 30, 2018
 
September 29, 2019