UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, ~~2022~~2023

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file no. 1-33741

DallasNews CORPORATION

(Exact name of registrant as specified in its charter)


Texas		38-3765318
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

P. O. Box 224866, Dallas, Texas 75222-4866		(214) ~~977-7342~~977-8869
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)
Former name, former address and former fiscal year, if changed since last report.
None

Securities registered pursuant to Section 12(b) of the Act:




Title of each class	Trading Symbol	Name of each exchange on which registered
Series A Common Stock, $0.01 par value	DALN	The Nasdaq Stock Market LLC

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 þ 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 þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large Accelerated Filer: ¨

Accelerated Filer: ¨

Non-Accelerated Filer: þ

Smaller Reporting Company: þ

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 Act). Yes ¨ No þ

Shares of Common Stock outstanding at April ~~21, 2022:~~20, 2023: 5,352,490 shares (consisting of ~~4,737,605~~4,737,792 shares of Series A Common Stock and ~~614,885~~614,698 shares of Series B Common Stock).

Table of Contents

DALLASNEWS CORPORATION

FORM 10-Q

TABLE OF CONTENTS




		Page
PART I
Item 1.	Financial Information		PAGE 3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		PAGE 1716
Item 4.	Controls and Procedures		PAGE 2322

PART II
Item 1.	Legal Proceedings		PAGE 2423
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		PAGE 2423
Item 3.	Defaults Upon Senior Securities		PAGE 2423
Item 4.	Mine Safety Disclosures		PAGE 2423
Item 5.	Other Information		PAGE 2423
Item 6.	Exhibits		PAGE 2524
Signatures			PAGE 2827
Exhibit Index			PAGE 2928

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q

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PART I

Item 1. Financial Information

DallasNews Corporation and Subsidiaries

Consolidated Statements of Operations



	Three Months Ended March 31,				Three Months Ended March 31,
In thousands, except share and per share amounts (unaudited)	2022		2021		2023		2022
Net Operating Revenue:
Advertising and marketing services	$	16,264	$	16,769	$	15,309	$	16,264
Circulation		16,096		16,022		16,011		16,096
Printing, distribution and other		3,927		4,024		3,882		3,927
Total net operating revenue		36,287		36,815		35,202		36,287
Operating Costs and Expense:
Employee compensation and benefits		16,410		17,947		17,373		16,410
Other production, distribution and operating costs		19,249		19,090		18,028		19,249
Newsprint, ink and other supplies		2,394		2,341		2,184		2,394
Depreciation		712		1,074		373		712
Amortization		—		64
Gain on sale/disposal of assets, net		—		(1)
Total operating costs and expense		38,765		40,515		37,958		38,765
Operating loss		(2,478)		(3,700)		(2,756)		(2,478)
Other income, net		18		1,254		362		18
Loss Before Income Taxes		(2,460)		(2,446)		(2,394)		(2,460)
Income tax provision		184		319		232		184
Net Loss	$	(2,644)	$	(2,765)	$	(2,626)	$	(2,644)

Per Share Basis
Net loss
Basic and diluted ⁽¹⁾	$	(0.49)	$	(0.52)
Basic					$	(0.49)	$	(0.49)
Number of common shares used in the per share calculation:
Basic and diluted ⁽¹⁾		5,352,490		5,352,490
Basic						5,352,490		5,352,490

~~(1)Share and per share amounts have been retroactively adjusted to reflect the~~ ~~one-for-four~~ ~~reverse stock split effective June 8, 2021. See~~ ~~Note 1 – Basis of Presentation and Recently Issued Accounting Standards~~ ~~for additional information.~~

See the accompanying Notes to the Consolidated Financial Statements.

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DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 3

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DallasNews Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)



	Three Months Ended March 31,				Three Months Ended March 31,
In thousands (unaudited)	2022		2021		2023		2022
Net Loss	$	(2,644)	$	(2,765)	$	(2,626)	$	(2,644)
Other Comprehensive Income (Loss), Net of Tax:
Amortization of actuarial losses		130		360
Total other comprehensive income, net of tax		130		360
Amortization of actuarial (gains) losses						(10)		130
Total other comprehensive income (loss), net of tax						(10)		130
Total Comprehensive Loss	$	(2,514)	$	(2,405)	$	(2,636)	$	(2,514)

See the accompanying Notes to the Consolidated Financial Statements.

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DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 4

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DallasNews Corporation and Subsidiaries

Consolidated Balance Sheets



	March 31,		December 31,		March 31,		December 31,
In thousands, except share amounts (unaudited)	2022		2021		2023		2022
Assets
Current assets:
Cash and cash equivalents	$	30,892	$	32,439	$	15,258	$	27,825
Accounts receivable (net of allowance of $512 and $551 at March 31, 2022 and December 31, 2021, respectively)		12,758		16,012
Notes receivable		22,400		22,400
Short-term investments						10,500		—
Accounts receivable (net of allowance of $396 and $490 at March 31, 2023 ‎and December 31, 2022, respectively)						11,604		14,023
Inventories		1,781		2,192		2,537		2,725
Prepaids and other current assets		4,733		3,485		5,176		3,352
Total current assets		72,564		76,528		45,075		47,925
Property, plant and equipment, at cost		312,959		312,979		313,676		313,440
Less accumulated depreciation		(304,868)		(304,157)		(306,375)		(306,002)
Property, plant and equipment, net		8,091		8,822		7,301		7,438
Operating lease right-of-use assets		16,982		17,648		14,991		14,811
Deferred income taxes, net		232		257		293		282
Other assets		2,194		2,197		1,805		1,809
Total assets	$	100,063	$	105,452	$	69,465	$	72,265
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	5,832	$	7,821	$	4,318	$	5,041
Accrued compensation and benefits		5,049		4,932		4,552		4,154
Other accrued expense		4,937		4,573		3,621		4,060
Contract liabilities		10,652		10,592		10,932		9,504
Total current liabilities		26,470		27,918		23,423		22,759
Long-term pension liabilities		14,365		14,275		19,229		19,455
Long-term operating lease liabilities		18,529		19,181		16,802		16,546
Other post-employment benefits		1,337		1,349		978		982
Other liabilities		155		152		162		160
Total liabilities		60,856		62,875		60,594		59,902
Shareholders’ equity:
Preferred stock, $0.01 par value; Authorized 2,000,000 shares; NaN issued		—		—
Preferred stock, $0.01 par value; Authorized 2,000,000 shares; none issued						—		—
Common stock, $0.01 par value; Authorized 31,250,000 shares
Series A: issued 5,216,045 shares at March 31, 2022 and December 31, 2021		52		52
Series B: issued 614,910 shares at March 31, 2022 and December 31, 2021		6		6
Treasury stock, Series A, at cost; 478,465 shares held at March 31, 2022 and December 31, 2021		(13,443)		(13,443)
Series A: issued 5,216,237 shares at March 31, 2023 and December 31, 2022						52		52
Series B: issued 614,718 shares at March 31, 2023 and December 31, 2022						6		6
Treasury stock, Series A, at cost; 478,465 shares held at March 31, 2023 and December 31, 2022						(13,443)		(13,443)
Additional paid-in capital		494,563		494,563		494,563		494,563
Accumulated other comprehensive loss		(32,276)		(32,406)		(41,390)		(41,380)
Accumulated deficit		(409,695)		(406,195)		(430,917)		(427,435)
Total shareholders’ equity		39,207		42,577		8,871		12,363
Total liabilities and shareholders’ equity	$	100,063	$	105,452	$	69,465	$	72,265

See the accompanying Notes to the Consolidated Financial Statements.

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 5

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DallasNews Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity



	Three Months Ended March 31, 2022 and 2021															Three Months Ended March 31, 2023 and 2022
	Common Stock						Treasury Stock									Common Stock						Treasury Stock
In thousands, except share and per share amounts (unaudited)	Shares ‎ Series A	Shares ‎ Series B	Amount		Additional ‎Paid-in ‎Capital		Shares ‎Series A	Amount		Accumulated ‎Other ‎Comprehensive ‎Loss		Accumulated ‎Deficit		Total		Shares Series A	Shares Series B	Amount		Additional ‎Paid-in ‎Capital		Shares ‎Series A	Amount		Accumulated ‎Other ‎Comprehensive ‎Loss		Accumulated ‎Deficit		Total
Balance at December 31, 2020	5,213,710	617,245	$	233	$	494,389	(478,465)	$	(13,443)	$	(32,468)	$	(402,303)	$	46,408
Net loss	—	—		—		—	—		—		—		(2,765)		(2,765)
Other comprehensive income	—	—		—		—	—		—		360		—		360
Conversion of Series B to Series A ⁽¹⁾	20	(20)		—		—	—		—		—		—		—
Dividends declared ($0.16 per share) ⁽¹⁾	—	—		—		—	—		—		—		(856)		(856)
Balance at March 31, 2021 ⁽¹⁾	5,213,730	617,225	$	233	$	494,389	(478,465)	$	(13,443)	$	(32,108)	$	(405,924)	$	43,147
Balance at December 31, 2021	5,216,045	614,910	$	58	$	494,563	(478,465)	$	(13,443)	$	(32,406)	$	(406,195)	$	42,577	5,216,045	614,910	$	58	$	494,563	(478,465)	$	(13,443)	$	(32,406)	$	(406,195)	$	42,577
Net loss	—	—		—		—	—		—		—		(2,644)		(2,644)	—	—		—		—	—		—		—		(2,644)		(2,644)
Other comprehensive income	—	—		—		—	—		—		130		—		130	—	—		—		—	—		—		130		—		130
Dividends declared ($0.16 per share)	—	—		—		—	—		—		—		(856)		(856)	—	—		—		—	—		—		—		(856)		(856)
Balance at March 31, 2022	5,216,045	614,910	$	58	$	494,563	(478,465)	$	(13,443)	$	(32,276)	$	(409,695)	$	39,207	5,216,045	614,910	$	58	$	494,563	(478,465)	$	(13,443)	$	(32,276)	$	(409,695)	$	39,207
Balance at December 31, 2022																5,216,237	614,718	$	58	$	494,563	(478,465)	$	(13,443)	$	(41,380)	$	(427,435)	$	12,363
Net loss																—	—		—		—	—		—		—		(2,626)		(2,626)
Other comprehensive loss																—	—		—		—	—		—		(10)		—		(10)
Dividends declared ($0.16 per share)																—	—		—		—	—		—		—		(856)		(856)
Balance at March 31, 2023																5,216,237	614,718	$	58	$	494,563	(478,465)	$	(13,443)	$	(41,390)	$	(430,917)	$	8,871

See the accompanying Notes to the Consolidated Financial Statements.

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DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 6

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DallasNews Corporation and Subsidiaries

Consolidated Statements of Cash Flows



	Three Months Ended March 31,				Three Months Ended March 31,
In thousands (unaudited)	2022		2021		2023		2022
Operating Activities
Net loss	$	(2,644)	$	(2,765)	$	(2,626)	$	(2,644)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		712		1,138
Depreciation						373		712
Net periodic pension and other post-employment expense (benefit)		227		(1,035)		(225)		227
Bad debt expense		31		211		8		31
Deferred income taxes		25		(15)		(11)		25
Gain on sale/disposal of assets, net		—		(1)
Provision, interest and penalties for uncertain tax positions						2		2
Changes in working capital and other operating assets and liabilities:
Accounts receivable		3,223		848		2,411		3,223
Inventories, prepaids and other current assets		(837)		(1,924)		(1,636)		(837)
Other assets		3		391		4		3
Accounts payable		(1,989)		(378)		(723)		(1,989)
Compensation and benefit obligations		117		(197)		398		117
Other accrued expenses		627		16		(363)		625
Contract liabilities		60		864		1,428		60
Other post-employment benefits		(19)		(18)		(15)		(19)
Net cash used for operating activities		(464)		(2,865)		(975)		(464)
Investing Activities
Purchases of assets		(227)		(163)		(236)		(227)
Sales of assets		—		1
Purchases of short-term investments						(10,500)		—
Net cash used for investing activities		(227)		(162)		(10,736)		(227)
Financing Activities
Dividends paid		(856)		(856)		(856)		(856)
Net cash used for financing activities		(856)		(856)		(856)		(856)
Net decrease in cash and cash equivalents		(1,547)		(3,883)		(12,567)		(1,547)
Cash and cash equivalents, beginning of period		32,439		42,015		27,825		32,439
Cash and cash equivalents, end of period	$	30,892	$	38,132	$	15,258	$	30,892

Supplemental Disclosures
Income tax paid, net (refund)	$	(32)	$	8	$	2	$	(32)
Noncash investing and financing activities:
Dividends payable		856		856		856		856

See the accompanying Notes to the Consolidated Financial Statements.

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 7

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DallasNews Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

Note 1: Basis of Presentation and Recently Issued Accounting Standards

Description of Business. DallasNews Corporation, formerly A. H. Belo Corporation, and its subsidiaries are referred to collectively herein as “DallasNews” or the “Company.” DallasNews was formed in February 2008 through a spin-off from its former parent company and is registered on The Nasdaq Stock Market LLC (Nasdaq trading symbol: DALN). DallasNews is the Dallas-based holding company of The Dallas Morning News and Medium Giant.

The Company operates The Dallas Morning News (dallasnews.com), Texas’ leading newspaper and winner of nine Pulitzer Prizes, and various niche publications targeting specific audiences. These operations generate revenue from sales of advertising within the Company’s newspaper and digital platforms, subscriptions and retail sales of its newspapers, commercial printing and distribution services primarily related to national newspapers, and preprint advertising.

In addition, the Company has a full-service agency, Medium Giant, with capabilities including strategy, creative and media management with a focus on strategic and digital marketing, and data intelligence that provide a measurable return on investment to its clients.

~~Name Change and Stock Exchange Listing.~~ The Company transferred its stock exchange listing from the New York Stock Exchange (“NYSE”) to The Nasdaq Stock Market LLC (“Nasdaq”) and changed its corporate name to DallasNews Corporation. The listing and trading of the Company’s Series A common stock on the NYSE ceased trading at market close on June 28, 2021, and began trading on Nasdaq at market open on June 29, 2021, under the ticker symbol “DALN.”

~~Reverse Stock Split.~~ ~~On May 13, 2021, at the Company’s 2021 annual meeting of shareholders, its shareholders approved a reverse stock split at a ratio of not less than~~ ~~one-for-three~~ ~~and not more than~~ ~~one-for-five, with the exact ratio to be determined by the Company’s board of directors. Following the annual meeting, the Company’s board of directors approved a~~ ~~one-for-four~~ reverse stock split of its issued, outstanding and treasury shares of common stock, par value $0.01 per share, which became effective June 8, 2021. As a result, every 4 shares of the Company’s issued and outstanding Series A common stock and Series B common stock (and any such shares held in treasury) were converted into one share of Series A common stock and Series B common stock, respectively. No fractional shares were issued in connection with the reverse stock split. The par value of the Series A and Series B common stock was not adjusted as a result of the reverse stock split and the Company reclassified an amount equal to the reduction in the number of Company shares at par value to additional paid-in capital. All issued and outstanding Series A and Series B common stock and per share amounts in the interim consolidated financial statements and footnotes included herein have been retroactively adjusted to reflect this reverse stock split for all periods presented. Share amounts retroactively adjusted to reflect the reverse stock split exclude 90 fractional shares of Series A common stock and 26 fractional shares of Series B common stock, which were settled in cash on June 9, 2021.

COVID-19 Pandemic. Beginning in early 2020, the COVID-19 pandemic impacted, and may continue to impact, the Company’s customers, distribution partners, advertisers, production facilities, and third parties, and could result in additional loss of advertising revenue or supply chain disruption. Media was designated an essential business, therefore the Company’s operations have continued throughout the pandemic. The Company has been following the recommendations of local government and health authorities to minimize exposure risk for employees. Employees, including financial reporting staff, worked remotely since March 2020. Beginning in June 2021, the Company allowed its employees to return to the office on a voluntary basis and all employees returned to the office in the first quarter of 2022. If the pandemic were to affect a significant number of the workforce employed in printing operations, the Company may experience delays or be unable to produce, print and deliver its publications and other third-party print publications on a timely basis. The Company continues to evaluate for any future material impacts on its consolidated financial statements.

Basis of Presentation. The interim consolidated financial statements included herein are unaudited; however, they include adjustments of a normal recurring nature which, in the Company’s opinion, are necessary to present fairly the consolidated financial information as of and for the periods indicated in conformity with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim periods. All intercompany balances and transactions have been eliminated in consolidation. The Company consolidates its majority owned subsidiaries over which the Company exercises control. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. All dollar amounts presented herein, except share and per share amounts, are in thousands, unless the context indicates otherwise.

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~~DallasNews Corporation First Quarter 2022 on Form 10-Q~~ 8

~~Table of Contents~~

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net operating revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.

~~The COVID-19 pandemic has caused increased uncertainty in management’s estimates and assumptions affecting these interim consolidated financial statements.~~ Areas where ~~significant~~ estimates are used include valuation allowances for doubtful accounts, fair value measurements, pension plan assets, pension and other post-employment benefit obligation assumptions, income taxes, leases, self-insured liabilities, and assumptions related to long-lived assets impairment review.

Segment Presentation. Based on the Company’s structure and organizational chart, the Company’s chief operating decision-maker (the “CODM”) is its Chief Executive Officer, ~~Robert W. Decherd.~~Grant S. Moise. Based on how the Company’s CODM makes decisions about allocating resources and assessing performance, the Company determined it has one reportable segment.

~~New~~Recently Adopted Accounting Pronouncements. ~~The Financial Accounting Standards Board (“FASB”) issued the following accounting pronouncements and guidance, which may be applicable to the Company but have not yet become effective.~~

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance ~~will be~~is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal ~~years. Early~~years, with early adoption is permitted. The Company ~~is currently evaluating~~adopted this ASU on January 1, 2023, using the ~~requirements~~ ~~of this update~~modified retrospective approach and ~~has~~it did not ~~yet determined its~~have a material impact on ~~the Company’s~~its consolidated financial ~~statements.~~statements; see Note 3 – Financial Instruments and Accounts Receivable, Netfor additional information.

DallasNews Corporation First Quarter 2023 on Form 10-Q 8

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Note 2: Revenue

Revenue Recognition

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied. This occurs when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services, typically at contract price or determined by stand-alone selling price. The Company has an estimated allowance for credits, refunds and similar obligations. Sales tax collected concurrent with revenue-producing activities are excluded from revenue.

Accounts receivable are reported net of a valuation reserve that represents an estimate of amounts considered uncollectible. The Company estimates the allowance for doubtful accounts based on historical write-off experience and the Company’s knowledge of the customers’ ability to pay amounts due. Accounts are written-off after all collection efforts fail; generally, after one year has expired. Expense for such uncollectible amounts is included in other production, distribution and operating costs. Credit terms are customary.

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~~DallasNews Corporation First Quarter 2022 on Form 10-Q~~ 9

~~Table of Contents~~

The table below sets forth revenue disaggregated by revenue source.



		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Advertising and Marketing Services
Print advertising		$	10,597	$	11,226		$	9,296	$	10,597
Digital advertising and marketing services			5,667		5,543			6,013		5,667
Total	Total	$	16,264	$	16,769	Total	$	15,309	$	16,264

Circulation
Print circulation		$	13,119	$	13,976		$	12,381	$	13,119
Digital circulation			2,977		2,046			3,630		2,977
Total	Total	$	16,096	$	16,022	Total	$	16,011	$	16,096

Printing, Distribution and Other		$	3,927	$	4,024		$	3,882	$	3,927

Total Revenue		$	36,287	$	36,815		$	35,202	$	36,287

Advertising and Marketing Services

Print advertising is comprised of display, classified and preprint advertising revenue. Display revenue results from sales of advertising space within the Company’s core newspapers and niche publications to local, regional or national businesses with local operations, affiliates or resellers. Classified revenue, which includes automotive, real estate, employment, obituaries and other, results from sales of advertising space in the classified and other sections of the Company’s newspapers. Preprint revenue results from sales of preprinted advertisements or circulars inserted into the Company’s core newspapers, niche publications, and distributed to publications in other markets, or distributed by mail or through third-party distributors to households in targeted areas in order to provide total market coverage for advertisers. The Company’s capabilities allow its advertisers to target preprint distribution selectively at the sub-zip code level in order to optimize coverage for the advertisers’ locations. Preprint advertising also includes other services revenue related to the Company’s niche publications.

Digital advertising and marketing services revenue consists of strategic marketing services, consulting, branding, paid media strategy and management, ~~consulting,~~ creative services, ~~targeted~~search optimization, direct mail and the sale of promotional materials, as well as providing multi-channel ~~(programmatic) advertising placed on third-party websites,~~marketing solutions through subscription sales of the Company’s cloud-based software. In addition, it includes digital sales of banner, classified and native advertisements on the Company’s news and entertainment-related websites and mobile apps, ~~social media management, search optimization, direct mail~~as well as targeted and ~~the sale of promotional materials.~~multi-channel (programmatic) advertising placed on third-party websites.

Advertising and marketing services revenue is primarily recognized at a point in time when the ad or service is complete and delivered, based on the customers’ contract price. Barter advertising transactions are recognized at estimated fair value based on the negotiated contract price and the range of prices for similar advertising from customers unrelated to the barter transaction. The Company expenses barter costs as incurred, which is independent from the timing of revenue recognition. In addition, certain digital advertising revenue related to website access is recognized over time, based on the customers’ monthly rate. The Company typically extends credit to advertising and marketing services customers, although for certain advertising campaigns the customer may pay in advance.

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DallasNews Corporation First Quarter 2023 on Form 10-Q 9

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For ads placed on certain third-party websites, the Company must evaluate and use judgment to determine whether it is acting as the principal, where revenue is reported on a gross basis, or acting as the agent, where revenue is reported on a net basis. Generally, the Company reports advertising revenue for ads placed on third-party websites on a net basis, meaning the amount recorded to revenue is the amount billed to the customer net of amounts paid to the publisher of the third-party website. The Company is acting as the agent because the publisher controls the advertising inventory. The Company will record certain arrangements gross when it has latitude in establishing price or it determines the placement of the ads as a value added service to the customer.

Circulation

Print circulation revenue is generated primarily by selling home delivery subscriptions, including premium publications, and from single copy sales to non-subscribers. Home delivery revenue is recognized over the subscription period based on the days of actual delivery over the total subscription days and single copy revenue is recognized at a point in time when the paper is purchased. Revenue is directly reduced for any non-payment for the grace period of home delivery subscriptions where the Company recorded revenue for newspapers delivered after a subscription expired.

~~DallasNews Corporation First Quarter 2022 on Form 10-Q~~ 10

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Digital circulation revenue is generated by digital-only subscriptions and is recognized over the subscription period based on daily or monthly access to the content in the subscription period.

Payment of circulation fees is typically received in advance and deferred over the subscription period. There is little judgment required for valuation or timing of circulation revenue recognition.

Printing, Distribution and Other

Printing, distribution and other revenue is primarily generated from printing and distribution of other newspapers, as well as production of preprinted advertisements for other newspapers. Printing, distribution and other revenue is recognized at a point in time when the product or service is delivered, which requires little judgment to determine. The Company typically extends credit to printing and distribution customers.

Deferred Revenue

Deferred revenue is recorded when cash payments are received in advance of the Company’s performance, including amounts which are refundable. The Company’s primary sources of deferred revenue are from circulation subscriptions and advertising paid in advance of the service provided. These up-front payments are recorded upon receipt as contract liabilities in the Consolidated Balance Sheets and the revenue is recognized when the Company’s obligations under the terms of the contract are satisfied. In the three months ended March 31, ~~2022,~~2023, the Company recognized ~~$7,151~~$6,621 of revenue that was included in the contract liabilities balance as of December 31, ~~2021.~~2022. The Company typically recognizes deferred revenue within 1 to 12 months.

Practical Expedients and Exemptions

The Company generally expenses sales commissions and circulation acquisition costs when incurred because the amortization period would have been one year or less. These costs are recorded within employee compensation and benefits expense and other production, distribution and operating costs expense, respectively.

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less and contracts for which revenue is recognized at the amount invoiced for services performed.

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DallasNews Corporation First Quarter 2023 on Form 10-Q 10

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Note 3: Financial Instruments and Accounts Receivable, Net

Short-Term Investments.In the first quarter of 2023, the Company invested $10,500 in Certificates of Deposit with original maturities of more than 90 days but one year or less, included in short-term investments in the Consolidated Balance Sheet. These investments are classified as held-to-maturity and are valued at amortized cost, which approximates fair value. These investments are considered Level 2 investments.

Accounts Receivable, Net.Accounts receivable are reported net of the allowance for credit losses calculated based on customer category. For example, trade receivables for advertising customers are evaluated separately from trade receivables from single copy sales. For all trade receivables, the reserve percentage considers the Company’s historical loss experience and is applied to each customer category based on aging. In addition, each category has specific reserves for at risk accounts that vary based on the nature of the underlying trade receivables. The calculation of the allowance considers current economic, industry and customer-specific conditions such as high-risk accounts, bankruptcies and other aging specific reserves. The collectability of trade receivables depends on a variety of factors, including trends in local, regional or national economic conditions that affect our customers’ ability to pay. Accounts are written-off after all collection efforts fail; generally, after one year has expired. Expense for such uncollectible amounts is included in other production, distribution and operating costs. Credit terms are customary.

The table below sets forth changes in the allowance for credit losses for the three months ended March 31, 2023.



Beginning balance	$	490
Current period provision		8
Write-offs charged against the allowance		(105)
Recoveries of amounts previously written-off		3
Ending balance	$	396

For the three months ended March 31, 2023 and 2022, the Company recorded $8 and $31 in bad debt expense, respectively, which is included in other production, distribution and operating costs in the Consolidated Statements of Operations. The reduction in required reserves was primarily due to a lower volume of accounts receivable in the three month ended March 31, 2023, compared to the corresponding prior year period. We did not record any one-time adjustments as a result of adopting the new guidance on credit losses.

Note 3:4: Leases

Lease Accounting

The Company has various operating leases primarily for office space and other distribution centers, some of which include escalating lease payments and options to extend or terminate the lease. The Company’s leases have remaining terms of less than 1 year to 1211 years. The Company determines if a contract is a lease at the inception of the arrangement.

Operating lease right-of-use assets and liabilities are recognized at commencement date of lease agreements greater than one year based on the present value of lease payments over the lease term. In determining the present value of lease payments, the implicit rate was not readily determinable in the Company’s lease agreements. Therefore, the Company used an estimated secured incremental borrowing rate, based on the Company’s credit rating, adjusted for the weighted average term of each lease. Lease expense is recognized on a straight-line basis over the lease term and variable lease costs are expensed as incurred. For leases with terms of 12 months or less, 0no asset or liability is recorded and lease expense is recognized on a straight-line basis over the lease term. The exercise of lease renewal options are at the Company’s sole discretion and options are recognized when it is reasonably certain the Company will exercise the option. The recognized right-of-use assets and lease liabilities as calculated do not assume renewal options. The Company does not have lease agreements with residual value guarantees, sale leaseback terms or material restrictive covenants. Additionally, the Company does not separately identify lease and nonlease components, such as maintenance costs.

The Company subleases office space ~~to the Denton Publishing Company and additional office space~~ in Dallas, Texas, ~~both~~ with a remaining lease term of ~~approximately two years.~~less than one year. Additionally, the Company has various subleases with distributors, for distribution center space, with varying remaining lease terms of less than one year to two years and are cancellable with notice by either party. Sublease income is included in printing, distribution and other revenue in the Consolidated Statements of Operations. As of March 31, ~~2022,~~2023, sublease income is expected to approximate ~~$840~~$460 for the remainder of ~~2022, $600 in~~ 2023 and $5 in 2024.

~~As of March 31, 2022, the Company did not have any significant operating leases that have not yet commenced.~~

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DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 11

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As of March 31, 2023, the Company renewed an operating lease with a lease term of three years, which will result in a right-of-use asset and lease liability of approximately $1,861 upon commencement in the second quarter of 2023. In addition, the Company renewed an operating lease with a lease term of two years, which will result in a right-of-use asset and lease liability of approximately $183 upon commencement in the second quarter of 2023.

The table below sets forth supplemental Consolidated Balance Sheet information for the Company’s leases.



	Classification		March 31, 2022		December 31, 2021	Classification		March 31, 2023		December 31, 2022
Assets
Operating	Operating lease right-of-use assets	$	16,982	$	17,648	Operating lease right-of-use assets	$	14,991	$	14,811

Liabilities
Operating
Current	Other accrued expense	$	2,385	$	2,430	Other accrued expense	$	1,445	$	1,547
Noncurrent	Long-term operating lease liabilities		18,529		19,181	Long-term operating lease liabilities		16,802		16,546
Total lease liabilities		$	20,914	$	21,611		$	18,247	$	18,093

Lease Term and Discount Rate
Operating leases
Weighted average remaining lease term (years)			10.1		10.2			9.8		10.1
Weighted average discount rate (%)			7.5		7.5			7.8		7.7

The table below sets forth components of lease cost and supplemental cash flow information for the Company’s leases.



	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Lease Cost
Operating lease cost	$	1,062	$	1,075	$	985	$	1,062
Short-term lease cost		8		4		6		8
Variable lease cost		177		179		189		177
Sublease income		(337)		(237)		(257)		(337)
Total lease cost	$	910	$	1,021	$	923	$	910

Supplemental Cash Flow Information
Cash paid for operating leases included in operating activities	$	1,090	$	1,075	$	1,019	$	1,090
Right-of-use assets obtained in exchange for operating lease liabilities						810		—

The table below sets forth the remaining maturities of the Company’s lease liabilities as of March 31, ~~2022.~~2023.



Years Ending December 31,	Operating Leases		Operating Leases
2022	$	2,862
2023		3,325	$	2,127
2024		2,467		2,649
2025		2,430		2,627
2026		2,476		2,398
2027				2,377
Thereafter		17,215		14,342
Total lease payments		30,775		26,520
Less: imputed interest		9,861		8,273
Total lease liabilities	$	20,914	$	18,247

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DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 12

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Note 4:5: Income Taxes

TheThe Company calculated the income tax provision for the ~~2022~~2023 and ~~2021~~2022 interim periods using an estimated annual effective tax rate based on its expected annual loss before income taxes, adjusted for permanent differences, which it applied to the year-to-date loss before income taxes and specific events that are discretely recognized as they occur.

The Company recognized an income tax provision of ~~$184~~$232 and ~~$319~~$184 for the three months ended March 31, 2023 and 2022, ~~and 2021, respectively.~~ ~~The income tax provision for the three months ended March 31, 2022 and 2021, was~~respectively, due to the effect of the Texas franchise tax. Effective income tax rates were ~~(7.5)~~(9.7) percent and ~~(13.0)~~(7.5) percent for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

~~The Consolidated Appropriations~~On August 16, 2022, the Inflation Reduction Act ~~2021, which includes the COVID-related Tax Relief Act of 2020 and the Taxpayer Certainty and Disaster Tax Relief Act of 2020,~~(the “Act”) was ~~passed~~enacted and signed into law. The Act is a budget reconciliation package that includes significant law changes relating to tax, climate change, energy, and health care. The tax provisions include, among other items, a corporate alternative minimum tax of 15 percent, an excise tax of 1 percent on corporate stock buy-backs, energy-related tax credits, and additional IRS funding. Certain provisions, including the ~~last week of 2020. Among others, the provisions in this act included items such as guidance~~corporate alternative minimum tax and excise tax on ~~expenses associated with forgiven Paycheck Protection Program loans, business meals deductions, individual~~corporate stock buy-backs, became effective for tax ~~rebates and unemployment benefits.~~years beginning after December 31, 2022. The ~~Company did not avail itself of any~~U.S. Department of the ~~items contained in this act.~~

In addition, the American Rescue Plan Act of 2021 (the “ARP Act”), was passed and signed into law on March 11, 2021, and was designed to speed up the United States’ economic recovery. The ARP Act contains many provisions, including direct cash payments to eligible taxpayers below specified income limits, extended unemployment insurance benefits, additional relief designed to prevent layoffs and business closures at small businesses, and pension relief provisions. The pension relief provisions include extending the interest rate relief passed in previous years, permanently adding a floor to funding interest rates, and permanently changing the amortization period for pension underfunding from 7 to 15 years. All provisions are required to be effective for plan years beginning in 2022, but plan sponsors can elect certain provisions to apply to plan years beginning as early as 2019. The Company benefited from the shortfall amortization relief provisionsTreasury and the ~~segment interest rate relief provisions~~IRS are expected to release further regulations and interpretive guidance implementing the legislation contained in the ~~ARP~~ Act, ~~effective for~~but the ~~2020 plan year.~~details and timing of such regulations are subject to uncertainty at this time. The Company continues to evaluate the impacts of this legislation as additional guidance is released; however, it does not expect a material impact on its consolidated financial statements.

Note 5:6: Pension and Other Retirement Plans

Defined Benefit Plans. The Company sponsors the DallasNews ~~Corporation~~ Pension Plans (the “Pension Plans”), formerly the A. H. Belo Pension Plans, which provide benefits to approximately 1,350 current and former employees of the Company. DallasNews Pension Plan I provides benefits to certain current and former employees primarily employed with The Dallas Morning News or the DallasNews corporate offices. DallasNews Pension Plan II provides benefits to certain former employees of The Providence Journal Company. This obligation was retained by the Company upon the sale of the newspaper operations of The Providence Journal. ~~NaN~~No additional benefits are accruing under the DallasNews Pension Plans, as future benefits were frozen.

No contributions are required to the DallasNews Pension Plans in ~~2022~~2023 under the applicable tax and labor laws governing pension plan funding. In August 2022, the Company made a board approved voluntary contribution of $5,000 to the Pension Plans, reflected in long-term pension liabilities in the Consolidated Balance Sheets. The Company will continue to evaluate the feasibility of de-risking strategies based on the economic benefits to the Company.

Net Periodic Pension Expense (Benefit)

The Company’s estimates of net periodic pension expense or benefit are based on the expected return on plan assets, interest on the projected benefit obligations and the amortization of actuarial gains and losses that are deferred in accumulated other comprehensive loss. Participation in and accrual of new benefits to participants has been frozen since 2007 and, accordingly, on-going service costs are not a component of net periodic pension expense (benefit). For 2023, there are no unrecognized gains (losses) to amortize due to the total unrecognized gain (loss) falling below the amortization threshold. For 2022, based on the re-allocation of the Pension Plans’ assets, the Company assumed a lower rate of return on the assets resulting in net periodic pension expense.

The table below sets forth components of net periodic pension expense (benefit), which are included in other income, net in the Consolidated Statements of Operations.



	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Interest cost	$	1,328	$	1,174	$	1,993	$	1,328
Expected return on plans' assets		(1,237)		(2,574)		(2,219)		(1,237)
Amortization of actuarial loss		131		361		—		131
Net periodic pension expense (benefit)	$	222	$	(1,039)	$	(226)	$	222

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~~DallasNews Corporation First Quarter 2022 on Form 10-Q~~ 13

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Defined Contribution Plans. The DallasNews Savings Plan (the “Savings Plan”), a defined contribution 401(k) plan, covers substantially all employees of DallasNews. Participants may elect to contribute a portion of their pretax compensation as provided by the Savings Plan and the Internal Revenue Code. Employees can contribute up to 100 percent of their annual eligible compensation less required withholdings and deductions up to statutory limits. The Company provides an ongoing dollar-for-dollar match of eligible employee contributions, up to 1.5 percent of the employees’ compensation. Aggregate expense for matching contributions to the Savings Plan was ~~$212~~$201 and ~~$220~~$212 for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

DallasNews Corporation First Quarter 2023 on Form 10-Q 13

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Note 6:7: Shareholders’ Equity

~~Reverse Stock Split.~~ ~~The Company’s board of directors approved a~~ ~~one-for-four~~ reverse stock split of its issued, outstanding and treasury shares of common stock, par value $0.01 per share, which became effective June 8, 2021. All share and per share amounts have been retroactively adjusted to reflect the ~~one-for-four~~ ~~reverse stock split effective June 8, 2021. See~~ ~~Note 1 – Basis of Presentation and Recently Issued Accounting Standards~~ ~~for additional information.~~

Dividends. On March ~~3, 2022,~~9, 2023, the Company’s board of directors declared a $0.16 per share dividend to shareholders of record as of the close of business on May ~~13, 2022,~~12, 2023, which is payable on June ~~3, 2022.~~2, 2023.

Outstanding Shares. The Company had Series A and Series B common stock outstanding of ~~4,737,580~~4,737,772 and ~~614,910,~~614,718, respectively, net of treasury shares at March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

Accumulated Other Comprehensive Loss. Accumulated other comprehensive loss consists of actuarial gains and losses attributable to the DallasNews Pension Plans, gains and losses resulting from Pension Plans’ amendments and other actuarial experience attributable to other post-employment benefit (“OPEB”) plans. The Company records amortization of the components of accumulated other comprehensive loss in other income, net in its Consolidated Statements of Operations. Gains and losses are amortized over the weighted average remaining life expectancy of the OPEB plans and Pension Plans’ participants.

The table below sets forth the changes in accumulated other comprehensive loss, net of tax, as presented in the Company’s consolidated financial statements.

Three Months Ended March 31,
2022
2021
Total
Defined
‎benefit pension
‎plans
Other post-
‎ employment
‎benefit plans
Total
Defined
‎benefit pension
‎plans
Other post-
‎ employment
‎benefit plans
Balance, beginning of period
$
(32,406)
$
(32,485)
$
79
$
(32,468)
$
(32,571)
$
103
Amortization
130
131
(1)
360
361
(1)
Balance, end of period
$
(32,276)
$
(32,354)
$
78
$
(32,108)
$
(32,210)
$
102

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	Three Months Ended March 31,
	2023						2022
	Total		Defined ‎benefit pension ‎plans		Other post- ‎ employment ‎benefit plans		Total		Defined ‎benefit pension ‎plans		Other post- ‎ employment ‎benefit plans
Balance, beginning of period	$	(41,380)	$	(41,777)	$	397	$	(32,406)	$	(32,485)	$	79
Amortization		(10)		—		(10)		130		131		(1)
Balance, end of period	$	(41,390)	$	(41,777)	$	387	$	(32,276)	$	(32,354)	$	78

~~DallasNews Corporation First Quarter 2022 on Form 10-Q~~ 14

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Note 7:8: Earnings Per Share

The table below sets forth the net loss available to common shareholders and weighted average shares used for calculating basic ~~and diluted~~ earnings per share (“EPS”). The Company’s Series A and Series B common stock equally share in the distributed and undistributed earnings.



	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Earnings (Numerator)
Net loss available to common shareholders	$	(2,644)	$	(2,765)	$	(2,626)	$	(2,644)

Shares (Denominator)
Weighted average common shares outstanding (basic and diluted) ⁽¹⁾		5,352,490		5,352,490
Weighted average common shares outstanding (basic)						5,352,490		5,352,490

Loss Per Share
Basic and diluted ⁽¹⁾	$	(0.49)	$	(0.52)
Basic					$	(0.49)	$	(0.49)

There were 0no options or RSUs outstanding as of March 31, ~~2022~~2023 and ~~2021,~~2022, that would result in dilution of shares or the calculation of EPS under the two-class method as prescribed under ASC 260 – Earnings Per Share.

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DallasNews Corporation First Quarter 2023 on Form 10-Q 14

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Note 8:9: Contingencies

Legal proceedings. From time to time, the Company is involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. Management routinely assesses the likelihood of adverse judgments or outcomes in these matters, as well as the ranges of probable losses to the extent losses are reasonably estimable. Accruals for contingencies are recorded when, in the judgment of management, adverse judgments or outcomes are probable and the financial impact, should an adverse outcome occur, is reasonably estimable. The determination of likely outcomes of litigation matters relates to factors that include, but are not limited to, past experience and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. Predicting the outcome of claims and litigation and estimating related costs and financial exposure involves substantial uncertainties that could cause actual results to vary materially from estimates and accruals. In the opinion of management, liabilities, if any, arising from other currently existing claims against the Company would not have a material adverse effect on DallasNews’ results of operations, liquidity or financial condition.

Note 9:10: Disposal of Assets

In May 2019, the Company finalized a Purchase and Sale Agreement with Charter DMN Holdings, LP (the “Purchaser”) for the sale of the real estate assets in downtown Dallas, Texas, previously used as the Company’s headquarters for a sale price of $28,000 and a pretax gain of $25,908. The sale price consisted of $4,597 cash received, after selling costs of approximately $1,000, and a two year seller-financed promissory note of $22,400 (the “Promissory Note”)~~, included in current notes receivable in the Consolidated Balance Sheets. The sale provided~~. On July 29, 2022, the Company ~~an additional $1,000 contingency payment if certain conditions were met. The contingency expired in June 2020, with no payment made by~~received cash proceeds of $22,516 from the ~~Purchaser related to the contingency.~~

The Promissory Note is secured by a first lien deed of trust covering the property and bears interest payable in quarterly installments that began on July 1, 2019, continuing through its maturity on June 30, 2021, and includes a pre-payment feature. Interest will be accrued at 3.5 percent during the first year and at 4.5 percent during the second year.

~~As a direct result of COVID-19 uncertainties, o~~P~~n April 3, 2020, the Company and the Purchaser entered into an amendment to~~urchaser, paying the Promissory Note deferring the Purchaser’s interest payment of $195 that was due April 1, 2020, and adding it to a second promissory note (the “Second Promissory Note”). In addition, the Second Promissory Note included a 2019 real property tax reconciliation payment due from the Purchaser under the Purchase and Sale Agreement in ~~the amount of $180. The Second Promissory Note, in the principal amount of $375, was~~ ~~secured by a second lien deed of trust covering the property~~full ~~and was due June 30, 2021.~~

‎including interest.

~~DallasNews Corporation First Quarter 2022 on Form 10-Q~~ 15

~~Table of Contents~~

On June 29, 2021, the Company’s board of directors approved a second amendment and extension of the maturity date of the Promissory Note to June 30, 2022 (the “Second Modification Agreement”), effective June 30, 2021. ~~In connection with the Second Modification Agreement, the Purchaser paid the Second Promissory Note in full.~~ The unpaid, original principal balance of the Promissory Note will continue to bear interest at the rate of 4.5 percent, with interest payable quarterly through June 30, 2022, the maturity date of the Promissory Note. The Promissory Note continues to be secured by a first priority lien on the property.

~~In the three months ended March 31, 2022 and 2021, the~~ Company recorded $249 of interest income related to the ~~promissory notes,~~Promissory Note, included in other income, net in the Consolidated ~~Statements~~Statement of ~~Operations.~~

~~The Company evaluated~~Operations for the ~~collectability of the note as a result of the Purchaser’s request to extend the maturity date of the Promissory Note and the continuation of the pandemic. Management believes as of~~three months ended March 31, 2022, the Promissory Note is recoverable since the Purchaser is in compliance with the terms, is publicly indicating its intent to develop the property, and management believes that the value of the collateral has not decreased from the sale date. In addition, on April 1, 2022, the Purchaser paid the first quarter 2022 interest payment of $249 due under the Second Modification Agreement.

The timing in general of commercial development may have been impacted by the pandemic, and thus capital constraints in commercial real estate markets may exist. Management continues to closely monitor the collectability of the Promissory Note and the value of the underlying collateral. Continued economic and other effects of the pandemic could impact the timing of payment or realization of the note.2022.

Notes receivable are recorded net of an allowance for ~~doubtful accounts.~~credit losses. Interest income is accrued on the unpaid principal balance, included in accounts receivable in the Consolidated Balance Sheets. The Company puts notes receivable on non-accrual status and provides an allowance against accrued interest if it is determined the likelihood of collecting substantially all of the note and accrued interest is not probable. Notes are written-off against the allowance when all possible means of collection have been exhausted and the potential for recovery is considered remote. ~~As of March 31, 2022 and December 31, 2021, there was 0 allowance recorded for the notes receivable or accrued interest receivable.~~

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DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 1615

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

DallasNews Corporation (“DallasNews” or the “Company”) intends for the discussion of its financial condition and results of operations that follows to provide information that will assist in understanding its financial statements, the changes in certain key items in those statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect its financial statements. The following information should be read in conjunction with the Company’s consolidated financial statements and related notes filed as part of this report. All dollar amounts presented herein, except share and per share amounts, are in thousands, unless the context indicates otherwise.

This section and other parts of this Quarterly Report on Form 10-Q contain certain forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. See Forward-Looking Statements of this Quarterly Report for further discussion.

OVERVIEW

DallasNews Corporation, formerly A. H. Belo Corporation, and its subsidiaries are referred to collectively herein as “DallasNews” or the “Company.” DallasNews was formed in February 2008 through a spin-off from its former parent company and is registered on The Nasdaq Stock Market LLC (Nasdaq trading symbol: DALN). DallasNews is the Dallas-based holding company of The Dallas Morning News and Medium Giant.

The Company ~~transferred~~and its ~~stock exchange listing from the New York Stock Exchange (“NYSE”)~~business partners are subject to risks and uncertainties caused by factors beyond its control, including macroeconomic factors such as inflation. The Nasdaq Stock Market LLC (“Nasdaq”) and changed its corporate name to DallasNews Corporation. The listing and trading of the Company’s Series A common stock on the NYSE ceased trading at market close on June 28, 2021, and began trading on Nasdaq at market open on June 29, 2021, under the ticker symbol “DALN.”

On May 13, 2021, at the Company’s 2021 annual meeting of shareholders, its shareholders approved a reverse stock split at a ratio of not less than one-for-three and not more than one-for-five, with the exact ratio to be determined by the Company’s board of directors. Following the annual meeting, the Company’s board of directors approved a one-for-four reverse stock split of its issued, outstanding and treasury shares of common stock, par value $0.01 per share, which became effective June 8, 2021. As a result, every four shares of the Company’s issued and outstanding Series A common stock and Series B common stock (and any such shares held in treasury) were converted into one share of Series A common stock and Series B common stock, respectively. All fractional shares were settled in cash in connection with the reverse stock split on June 9, 2021. The par value of the Series A and Series B common stock were not adjusted as a result of the reverse stock split and the Company ~~reclassified~~has experienced an ~~amount equal to the reduction~~increase in the ~~number~~cost of ~~Company shares~~raw materials for newsprint and fuel prices to distribute the newspaper. If inflation remains at par value to additional paid-in capital. All issued and outstanding Series A and Series B common stock and per share amounts in the interim consolidated financial statements and footnotes included herein have been retroactively adjusted to reflect this reverse stock splitcurrent levels, or increases, for ~~all periods presented.~~

an extended period, certain operating costs could increase or advertiser spending could be impacted. Beginning in early 2020, the COVID-19 pandemic impacted, and may continue to impact, the Company’s customers, distribution partners, advertisers, production facilities, and third parties, and could result in additional loss of advertising revenue or supply chain disruption. Media was designated an essential business, therefore the Company’s operations have continued throughout the pandemic. The Company has been following the recommendations of local government and health authorities to minimize exposure risk for employees. Employees, including financial reporting staff, worked remotely since March 2020. Beginning in June 2021, the Company allowed its employees to return to the office on a voluntary basis and all employees returned to the office in the first quarter of 2022. If the pandemic were to affect a significant number of the workforce employed in printing operations, the Company may experience delays or be unable to produce, print and deliver its publications and other third-party print publications on a timely basis. The Company continues to evaluate for any future material impacts on its consolidated financial statements.

In the first quarter of 2023, the Company invested $10,500 in Certificates of Deposit with original maturities of one year or less; see Note 3 – Financial Instruments and Accounts Receivable, Net for additional information.

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DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 1716

Table of Contents

RESULTS OF OPERATIONS

Consolidated Results of Operations (unaudited)

This section contains discussion and analysis of net operating revenue, operating costs and expense and other information relevant to an understanding of results of operations for the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022. Based on how the Company’s chief operating decision-maker makes decisions about allocating resources and assessing performance, the Company determined it has one reportable segment.

The table below sets forth the components of the Company’s operating loss.



	Three Months Ended March 31,						Three Months Ended March 31,
	2022		Percentage ‎Change		2021			2023	Percentage ‎Change		2022
Advertising and marketing services	$	16,264	(3.0)	%	$	16,769	$	15,309	(5.9)	%	$	16,264
Circulation		16,096	0.5	%		16,022		16,011	(0.5)	%		16,096
Printing, distribution and other		3,927	(2.4)	%		4,024		3,882	(1.1)	%		3,927
Total Net Operating Revenue		36,287	(1.4)	%		36,815		35,202	(3.0)	%		36,287

Total Operating Costs and Expense		38,765	(4.3)	%		40,515		37,958	(2.1)	%		38,765

Operating Loss	$	(2,478)	33.0	%	$	(3,700)	$	(2,756)	(11.2)	%	$	(2,478)

Traditionally, the Company’s primary revenues are generated from advertising within its core newspapers, niche publications and related websites and from subscription and single copy sales of its printed newspapers. As a result of competitive and economic conditions, the newspaper industry has faced a significant revenue decline over the past decade. Therefore, the Company has sought to diversify its revenues through development and investment in new product offerings, increased circulation rates and leveraging of its existing assets to offer cost efficient commercial printing and distribution services. The Company continually evaluates the overall performance of its core products to ensure existing assets are deployed adequately to maximize return.

The Company’s advertising revenue from its core newspapers continues to be adversely affected by the shift of advertiser spending to other forms of media and the increased accessibility of free online news content, as well as news content from other sources, which resulted in declines in advertising and paid print circulation volumes and revenue. Decreases in print display and classified categories are indicative of continuing trends by advertisers towards digital platforms, which are widely available from many sources. In the current environment, companies are allocating more of their advertising spending towards programmatic channels that provide digital advertising on multiple platforms with enhanced technology for targeted delivery and measurement.In addition, the Company did experience declines resulting from the COVID-19 pandemic beginning late in the first quarter of 2020 and continuing into early 2021; however, the Company is beginning to see improvement in certain advertising revenue streams as discussed below, despite recent supply chain issues impacting advertisers.

In response to the decline in print revenue, the Company has developed agency capabilities, including strategy, creative and media management with a focus on strategic and digital marketing, and data intelligence that provide a measurable return on investment to its clients. The Company leverages its news content to improve engagement on the Company’s digital platforms that results in increased digital subscriptions and associated revenue. The Company also continues to diversify its revenue base by leveraging the available capacity of its existing assets to provide print and distribution services for newspapers and other customers requiring these services, by introducing new advertising and marketing services products, and by increasing circulation prices.

Because of declining print circulation, the Company has developed broad digital strategies designed to provide readers with multiple platforms for obtaining online access to local news. The Company continues to obtain additional key demographic data from readers, which allows the Company to provide content desired by readers and to modify marketing and distribution strategies to target and reach audiences valued by advertisers. The Company has access to programmatic digital advertising platforms that provide digital ad placement and targeting efficiencies and increases utilization of digital inventory within the Company’s websites. Additionally, in order to optimize owned and operated digital advertising revenue, the Company has adopted a holistic yield management approach powered by real-time bidding technologies and data analysis to ensure the optimal mix of direct sales and programmatic ad sales is achieved.

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 1817

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Advertising and marketing services revenue

Advertising and marketing services revenue was ~~44.8~~43.5 percent and ~~45.5~~44.8 percent of total revenue for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.



		Three Months Ended March 31,						Three Months Ended March 31,
		2022		Percentage ‎Change		2021			2023	Percentage ‎Change		2022
Print advertising		$	10,597	(5.6)	%	$	11,226	$	9,296	(12.3)	%	$	10,597
Digital advertising and marketing services			5,667	2.2	%		5,543		6,013	6.1	%		5,667
Advertising and Marketing Services	Advertising and Marketing Services	$	16,264	(3.0)	%	$	16,769	$	15,309	(5.9)	%	$	16,264

Print advertising

Print advertising is comprised of display, classified and preprint advertising revenue.

Display and classified print revenue primarily represents sales of advertising space within the Company’s core and niche newspapers. Display and classified print revenue increased ~~$266~~$143 in the three months ended March 31, ~~2022,~~2023, primarily due to a volume increase in ~~employment classified~~display advertisements.

Preprint revenue primarily reflects preprinted advertisements inserted into the Company’s core newspapers, niche publications, and distributed to publications in other markets, or distributed to non-subscribers through the ~~mail.~~mail or through third-party distributors to households in targeted areas in order to provide total market coverage for advertisers. Preprint advertising also includes other services revenue related to the Company’s niche publications. While most print advertising streams have softened, preprint advertising continues to experience a much greater secular decline across the industry. Revenue decreased ~~$895~~$1,444 in the three months ended March 31, ~~2022,~~2023, primarily due to a volume decline in home delivery mail advertisements and ~~supply chain issues impacting advertisers.~~in preprint newspaper inserts distributed to publications in other markets.

Digital advertising and marketing services

Circulation revenue

Circulation revenue was ~~44.4~~45.5 percent and ~~43.5~~44.4 percent of total revenue for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.



	Three Months Ended March 31,						Three Months Ended March 31,
	2022		Percentage ‎Change		2021			2023	Percentage ‎Change		2022
Print circulation	$	13,119	(6.1)	%	$	13,976	$	12,381	(5.6)	%	$	13,119
Digital circulation		2,977	45.5	%		2,046		3,630	21.9	%		2,977
Circulation	$	16,096	0.5	%	$	16,022	$	16,011	(0.5)	%	$	16,096

Print circulation

Revenue decreased primarily driven by ~~volume declines,~~a decline in print subscriptions of 10,442 or 12.0 percent when compared to March 31, 2022, partially offset by ~~rate increases. Home delivery revenue decreased $684 or 5.4 percent in~~rates increasing approximately 7.8 percent. In the three months ended March 31, ~~2022. Single~~2023, home delivery revenue decreased $592 or 4.9 percent and single copy revenue decreased ~~$172~~$146 or ~~13.9 percent in the three months ended March 31, 2022.~~13.7 percent.

‎

~~Digital circulation~~

Revenue increased in the three months ended March 31, 2022, due to an increase in digital-only subscriptions of approximately 11,500 or 22.6 percent when compared to March 31, 2021, reflecting the Company’s continued focus on growing its paid digital memberships and improving the member experience.

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 1918

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Digital circulation

Revenue increased $653 or 21.9 percent in the three months ended March 31, 2023, due to an increase in digital-only subscriptions of 6,694 or 10.7 percent when compared to March 31, 2022, reflecting the Company’s continued focus on growing its paid digital subscriptions and revenue.

Printing, distribution and other revenue

Printing, distribution and other revenue was ~~10.8~~11.0 percent and ~~11.0~~10.8 percent of total revenue for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Three Months Ended March 31,
2022
Percentage
‎Change
2021
Printing, Distribution and Other
$
3,927
(2.4)
%
$
4,024



	Three Months Ended March 31,
		2023	Percentage ‎Change		2022
Printing, Distribution and Other	$	3,882	(1.1)	%	$	3,927

Revenue ~~decreased~~was flat in the three months ended March 31, ~~2022, primarily due to a decline in commercial printing and distribution revenue.~~2023.

Operating Costs and Expense

The table below sets forth the components of the Company’s operating costs and expense.



	Three Months Ended March 31,						Three Months Ended March 31,
	2022		Percentage ‎Change		2021		2023		Percentage ‎Change		2022
Employee compensation and benefits	$	16,410	(8.6)	%	$	17,947	$	17,373	5.9	%	$	16,410
Other production, distribution and operating costs		19,249	0.8	%		19,090		18,028	(6.3)	%		19,249
Newsprint, ink and other supplies		2,394	2.3	%		2,341		2,184	(8.8)	%		2,394
Depreciation		712	(33.7)	%		1,074		373	(47.6)	%		712
Amortization		—	(100.0)	%		64
Gain on sale/disposal of assets, net		—	100.0	%		(1)
Total Operating Costs and Expense	$	38,765	(4.3)	%	$	40,515	$	37,958	(2.1)	%	$	38,765

Employee compensation and benefits – The Company continues to implement measures to optimize its workforce and evaluate strategies to reduce risk associated with future obligations for employee benefit plans. Employee compensation and benefits ~~decreased $1,537~~increased $963 in the three months ended March 31, ~~2022,~~2023, primarily due to ~~headcount reductions~~an increase in compensation related to the hiring of ~~51 since March 31, 2021.~~key positions.

Other production, distribution and operating costs – – Expense ~~increased $159~~decreased $1,221 in the three months ended March 31, ~~2022,~~2023, primarily due to ~~an increase in revenue-related~~ ~~outside services expense, partially offset by a decrease~~savings in distribution ~~expense.~~expense associated with lower circulation and fewer preprint newspaper inserts being distributed to publications in other markets.

Newsprint, ink and other supplies – Expense ~~increased $53~~decreased $210 in the three months ended March 31, ~~2022.~~2023. Competitive pricing is available under the Company’s paper supply agreement; however, the price of newsprint increased, ~~partially~~ offset by savings from reduced newsprint costs associated with lower circulation ~~volumes.~~and preprinted advertisements. Newsprint consumption for the three months ended March 31, 2023 and 2022, approximated 1,774 and ~~2021, approximated~~ 1,888 ~~and 2,059~~ metric tons, respectively, at an average cost per metric ton of $824 and $658, respectively.

Depreciation – Expense decreased ~~$362~~$339 in the three months ended March 31, ~~2022,~~2023, due to a lower depreciable asset base as a higher level of in-service assets are now fully ~~depreciated and the Company has reduced capital spending.~~depreciated.

~~Amortization~~ – ~~Expense decreased due to all intangible assets being fully amortized in the first quarter of 2021.~~

~~Gain on sale/disposal of assets, net~~ ~~– The Company disposed assets that were no longer in use and from time to time, the Company will sell disposed assets.~~

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 2019

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Other

The table below sets forth the other components of the Company’s results of operations.



	Three Months Ended March 31,						Three Months Ended March 31,
	2022		Percentage ‎Change		2021		2023		Percentage ‎Change		2022
Other income, net	$	18	(98.6)	%	$	1,254	$	362	N/M		$	18

Income tax provision	$	184	(42.3)	%	$	319	$	232	26.1	%	$	184

N/M – not meaningful

Other income, net – Other income, net includes net periodic pension and other post-employment expense (benefit) of, interest income (expense) and gain (loss) from investments.

Net periodic pension and other post-employment expense (benefit) was $(225) and $227 ~~and $(1,035)~~ for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Interest income (expense) and gain (loss) from investments and are also included in other income, net.~~

In the three months ended March 31, 2022, ~~and 2021,~~ the Company recorded $249 of interest income related to the promissory ~~notes~~note from the sale of its former headquarters, which was paid in full, including interest, in the ~~Company’s former headquarters.~~third quarter of 2022.

Income tax provision – The Company recognized an income tax provision of ~~$184~~$232 and ~~$319~~$184 for the three months ended March 31, 2023 and 2022, ~~and 2021, respectively.~~ ~~The income tax provision for the three months ended March 31, 2022 and 2021, was~~respectively, due to the effect of the Texas franchise tax. Effective income tax rates were ~~(7.5)~~(9.7) percent and ~~(13.0)~~(7.5) percent for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Legal proceedings – From time to time, the Company is involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. Management routinely assesses the likelihood of adverse judgments or outcomes in these matters, as well as the ranges of probable losses to the extent losses are reasonably estimable. Accruals for contingencies are recorded when, in the judgment of management, adverse judgments or outcomes are probable and the financial impact, should an adverse outcome occur, is reasonably estimable. The determination of likely outcomes of litigation matters relates to factors that include, but are not limited to, past experience and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. Predicting the outcome of claims and litigation and estimating related costs and financial exposure involves substantial uncertainties that could cause actual results to vary materially from estimates and accruals. In the opinion of management, liabilities, if any, arising from other currently existing claims against the Company would not have a material adverse effect on DallasNews’ results of operations, liquidity or financial condition.

‎

DallasNews Corporation First Quarter 2023 on Form 10-Q 20

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Liquidity and Capital Resources

The Company’s cash ~~balances~~and cash equivalents as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, were ~~$30,892~~$15,258 and ~~$32,439,~~$27,825, respectively. In the first quarter, the Company invested $10,500 in Certificates of Deposit, as discussed below, included in short-term investments in the Consolidated Balance Sheet and Statement of Cash flow.

The Company intends to hold the majority of existing cash for purposes of future investment opportunities, potential return of capital to shareholders and for contingency purposes. Although revenue is expected to continue to decline in future periods, cash flows and other expense reduction measures are expected to be sufficient to fund operating activities and capital spending.

The future approval of dividends is dependent upon available cash after considering future operating and investing requirements and cannot be guaranteed. The Company continues to have a board-authorized repurchase authority. However, the agreement to repurchase the Company’s stock expired and was not renewed.

The Consolidated Appropriations Act, 2021, which includes the COVID-related Tax Relief Act of 2020 and the Taxpayer Certainty and Disaster Tax Relief Act of 2020, was passed and signed into law the last week of 2020. Among others, the provisions in this act included items such as guidance on expenses associated with forgiven Paycheck Protection Program loans, business meals deductions, individual tax rebates and unemployment benefits. The Company did not avail itself of any of the items contained in this act.

In addition, the ARP Act was passed and signed into law on March 11, 2021, and was designed to speed up the United States’ economic recovery. The ARP Act contains many provisions, including direct cash payments to eligible taxpayers below specified income limits, extended unemployment insurance benefits, additional relief designed to prevent layoffs and business closures at small businesses, and pension relief provisions. The pension relief provisions include extending the interest rate relief passed in previous years, permanently adding a floor to funding interest rates, and permanently changing the amortization period for pension underfunding from 7 to 15 years. All provisions are required to be effective for plan years beginning in 2022, but plan sponsors can elect certain provisions to apply to plan years beginning as early as 2019. The Company benefited from the shortfall amortization relief provisions and the segment interest rate relief provisions contained in the ARP Act effective for the 2020 plan year.

~~DallasNews Corporation First Quarter 2022 on Form 10-Q~~ 21

~~Table of Contents~~

~~As a direct result of COVID-19 uncertainties, on April 3, 2020, the Company and~~ ~~Charter DMN Holdings, LP (the “Purchaser”)~~ ~~entered into an amendment to the two-year seller-financed promissory note of $22,400~~ ~~(the “Promissory Note”)~~, for the sale of the real estate assets previously used as the Company’s headquarters. The amendment (the “Second Promissory Note”), in the principal amount of $375, included a deferred interest payment of $195 that was due April 1, 2020, and a 2019 real property tax reconciliation payment due from the Purchaser. Subsequently, on June 29, 2021, the Company’s board of directors approved a second amendment and extension of the maturity date of the Promissory Note to June 30, 2022 (the “Second Modification Agreement”), effective June 30, 2021. In connection with the Second Modification Agreement, the Purchaser paid the Second Promissory Note in full. The unpaid, original principal balance of the Promissory Note will continue to bear interest at the rate of 4.5 percent, with interest payable quarterly through June 30, 2022, the maturity date of the Promissory Note. The Promissory Note continues to be secured by a first priority lien on the property.

The Company evaluated the collectability of the note as a result of the Purchaser’s request to extend the maturity date of the Promissory Note and the continuation of the pandemic. Management believes as of March 31, 2022, the Promissory Note is recoverable since the Purchaser is in compliance with the terms, is publicly indicating its intent to develop the property, and management believes that the value of the collateral has not decreased from the sale date. In addition, on April 1, 2022, the Purchaser paid the first quarter 2022 interest payment of $249 due under the Second Modification Agreement.

~~The~~ following discusses the changes in cash flows by operating, investing and financing activities.

Operating Cash Flows

Net cash used for operating activities for the three months ended March 31, 2023 and 2022, was $975 and ~~2021, was~~ $464, ~~and $2,865,~~ respectively. Cash flows used for operating activities ~~decreased~~increased by ~~$2,401~~$511 during the three months ended March 31, ~~2022,~~2023, when compared to the prior year period, primarily due to ~~changes~~the increase in ~~working capital and other~~ operating ~~assets and liabilities, and an improvement in net~~ loss.

Investing Cash Flows

Net ~~cash~~ used for investing activities was ~~$227~~$10,736 and ~~$162~~$227 for the three months ended March 31, 2023 and 2022, respectively. In the first quarter of 2023, the Company invested $10,500 in Certificates of Deposit with original maturities of one year or less. Cash flows used for investing activities also included $236 and ~~2021, respectively, primarily attributable to~~$227 of capital ~~spending.~~spending in 2023 and 2022, respectively.

Financing Cash Flows

Net cash used for financing activities was $856 for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, all attributable to dividend payments.

Financing Arrangements

None.

Contractual Obligations

The Company has contractual obligations for operating leases, primarily for office space and other distribution centers, some of which include escalating lease payments. See Note 34 – Leases for future lease payments by year.

Under the applicable tax and labor laws governing pension plan funding, no contributions to the DallasNews Pension Plans are required in ~~2022.~~2023.

On March ~~3, 2022,~~9, 2023, the Company’s board of directors declared a $0.16 per share dividend to shareholders of record as of the close of business on May ~~13, 2022,~~12, 2023, which is payable on June ~~3, 2022.~~2, 2023.

Additional information related to the Company’s contractual obligations is available in Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed on March ~~7, 2022,~~9, 2023, with the Securities and Exchange Commission (“SEC”).

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 2221

Table of Contents

Critical Accounting Policies and Estimates

No material changes were made to the Company’s critical accounting policies as set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, ~~2021.~~2022.

Forward-Looking Statements

Statements in this ~~communication~~Quarterly Report on Form 10-Q concerning DallasNews Corporation’s business outlook or future economic performance, revenues, expenses, cash balance, capital expenditures, investments, impairments, business initiatives, pension plan contributions and obligations, working capital and other financial and non-financial items that are not historical facts are “forward-looking statements” as the term is defined under applicable federal securities laws. Words such as “anticipate,” “assume,” “believe,” “can,” “could,” “estimate,” “forecast,” “intend,” “expect,” “may,” “project,” “plan,” “seek,” “should,” “target,” “will,” “would” and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. Such risks, trends and uncertainties are, in most instances, beyond the Company’s control, and include the current and future impacts of the COVID-19 pandemic on the Company’s financial reporting capabilities and its operations generally and the potential impact of the pandemic on the Company’s customers, distribution partners, advertisers, production facilities, and third parties, as well as changes in advertising demand and other economic conditions; consumers’ tastes; newsprint and distribution prices; program costs; the success of the Company’s digital strategy; labor relations; cybersecurity incidents; and technological ~~obsolescence;~~obsolescence. Among other risks, there can be no guarantee that the board of directors will approve a quarterly dividend in future quarters or that our financial projections are accurate, as well as other risks described in the Company’s Annual Report on Form 10-K and in the Company’s other public disclosures and filings with the Securities and Exchange Commission. ~~Among other risks, there can be no guarantee that the board of directors will approve a quarterly dividend in future quarters.~~ Forward-looking statements, which are as of the date of this filing, are not updated to reflect events or circumstances after the date of the statement.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are controls that are designed to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, management is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

The Company’s management, with the participation of its Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, as of March 31, ~~2022,~~2023, management concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the first fiscal quarter ended March 31, ~~2022,~~2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 2322

Table of Contents

PART II

Item 1. Legal Proceedings

A number of legal proceedings are pending against DallasNews. In the opinion of management, liabilities, if any, arising from these legal proceedings would not have a material adverse effect on DallasNews’ results of operations, liquidity or financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of the Company’s equity securities during the period covered by this report.

Issuer Purchases of Equity Securities

The Company continues to have a board-authorized repurchase authority. However, the agreement to repurchase the Company’s stock expired and was not renewed.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 2423

Table of Contents

Item 6. Exhibits

Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by the Company with the SEC, as indicated. In accordance with Regulation S-T, the XBRL-related information marked with a double asterisk (**) in Exhibit No. 101 to this Quarterly Report on Form 10-Q is deemed filed. All other documents are filed with this report. Exhibits marked with a tilde (~) are management contracts, compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

Exhibit Number

Description

~~2.1~~

Agreement and Plan of Merger dated April 23, 2018 by and between A. H. Belo Corporation and A. H. Belo Texas, Inc. (Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 23, 2018 (Securities and Exchange Commission File No. 001-33741) (the “April 23, 2018 Form 8-K”))

3.1

Certificate of Formation of A. H. Belo Corporation (successor to A. H. Belo Texas, Inc.)(Exhibit 3.1 to the April 23, 2018 Form 8-K)

3.2

Certificate of Merger (Delaware) of A. H. Belo Corporation with and into A. H. Belo Texas, Inc. (Exhibit 3.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 2, 2018 (Securities and Exchange Commission File No. 001-33741) (the “July 2, 2018 Form 8-K”))

3.3

Certificate of Merger (Texas) of A. H. Belo Corporation with and into A. H. Belo Texas, Inc. (Exhibit 3.4 to the July 2, 2018 Form 8-K)

3.4

Certificate of Amendment to Certificate of Formation effective June 8, 2021 (Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 8, 2021 (Securities and Exchange Commission File No. 001-33741))

3.5

Certificate of Amendment to Certificate of Formation (changing Company name to DallasNews Corporation) effective June 29, 2021 (Exhibit 3.1 to the Company’s Current Report of Form 8-K filed with the Securities and Exchange Commission on June 30, 2021 (Securities and Exchange Commission File No. 001-33741) (the “June 30, 2021 Form 8-K”))

3.6

Certificate of Correction to Certificate of Amendment (Exhibit 3.2 to the June 30, 2021 Form 8-K)

3.7

Amended and Restated Bylaws of DallasNews Corporation (Exhibit 3.3 to the June 30, 2021 Form 8-K)

~~4.1(a)~~

~~Certain rights of the holders of the Company’s Common Stock set forth in Exhibits 3.1~~-~~3.4 above~~

~~4.1(b)~~4.1

Description of Capital Stock (Exhibit 4.1 to the July 2, 2018 Form 8-K)

~~4.2~~

Specimen Form of Certificate representing shares of the Company’s Series A Common Stock (Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 26, 2021 (Securities and Exchange Commission File No. 001-33741) (the “2^nd ~~Quarter 2021 Form 10-Q”))~~

~~4.3~~

~~Specimen Form of Certificate representing shares of the Company’s Series B Common Stock (Exhibit 4.3 to the 2~~^nd ~~Quarter 2021 Form 10-Q)~~

10.1

Material Contracts

(1)

Sublease Agreement for Old Dallas Library Building dated December 30, 2016 (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 3, 2017 (Securities and Exchange Commission File No. 001-33741) (the “January 3, 2017 Form 8-K”))

(2)

Guaranty of Lease dated December 30, 2016 (Exhibit 10.2 to the January 3, 2017 Form 8-K)

(3)

Paper Supply Agreement effective as of August 5, 2019, by and between The Dallas Morning News, Inc. and Gannett Supply Corporation (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2019 (Securities and Exchange Commission File No. 001-33741))

~~(4)~~

Purchase and Sale Agreement effective as of May 17, 2019, by and between The Dallas Morning News, Inc. and Charter DMN Holdings, LP, together with related Promissory Note dated May 17, 2019, in the original principal amount of $22.4 million made by Charter DMN Holdings, LP, payable to The Dallas Morning News, Inc. (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2019 (Securities and Exchange Commission File No. 001-33741))

~~(a)~~

~~Modification Agreement effective April 1, 2020 to Promissory Note dated May 17, 2020 (Exhibit 10.1 to the April 6, 2020 Form 8-K)~~

~~(b)~~

~~Promissory Note (Interest and Property Tax Reconciliation) effective April 1, 2020 (Exhibit 10.2 to the April 6, 2020 Form 8-K)~~

~~(c)~~

~~Second Modification Agreement effective June 30, 2021 (Exhibit 10.1 to the June 30, 2021 Form 8-K)~~

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 2524

Table of Contents

Exhibit Number

Description

10.2

Compensatory plans and arrangements:

~(1)

~~A. H. Belo~~DallasNews Savings Plan as Amended and Restated Effective January 1, ~~2015~~2022 (Exhibit 10.2(1) ~~to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2015 (Securities and Exchange Commission File No. 001-33741))~~

~~(a)~~

~~First Amendment to the A. H. Belo Savings Plan effective January 1, 2016 (Exhibit 10.2(1)(a) to the Company’s Quarterly Report on Form 10~~-~~Q filed with the Securities and Exchange Commission on November 1, 2016 (Securities and Exchange Commission File No. 001-33741))~~

~~(b)~~

~~Second Amendment to the A. H. Belo Savings Plan effective September 8, 2016 (Exhibit 10.2(1)(b) to the Company’s Quarterly Report on Form 10~~-~~Q filed with the Securities and Exchange Commission on November 1, 2016 (Securities and Exchange Commission File No. 001-33741))~~

~~(c)~~

Third Amendment to the A. H. Belo Savings Plan dated September 7, 2017 (Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 8, 2017 (Securities and Exchange Commission File No. 001-33741)(the “September 8, 2017 Form 8-K”))

~~(d)~~

~~Fourth Amendment to the A. H. Belo Savings Plan (Exhibit 10.2 to the July 2, 2018 Form 8-K)~~

~~(e)~~

Fifth Amendment to the A. H. Belo Savings Plan dated November 27, 2018 (Exhibit 10.2(1)(E) to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 29, 2019 (Securities and Exchange Commission File No. 001-33741)(the “1^st ~~Quarter 2019 Form 10-Q”))~~

~~(f)~~

~~Sixth Amendment to the A. H. Belo Savings Plan dated April 1, 2019 (Exhibit 10.2(1)(F) to the 1~~^st ~~Quarter 2019 Form 10-Q)~~

~~(g)~~

Seventh Amendment to the A. H. Belo Savings Plan dated December 1, 2019 (Exhibit 10.2(1)(G) to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 14, 2020 (Securities and Exchange Commission File No. 001-33741))

~~(h)~~

~~Eighth Amendment to the A. H. Belo Savings Plan dated July 23, 2020 (Exhibit 10.2(1)(H)~~ to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July ~~28, 2020~~29, 2022 (Securities and Exchange Commission File No. 001-33741))

~~(i)~~

~~Ninth Amendment to the A. H. Belo Savings Plan (changing plan name to DallasNews Savings Plan) effective June 29, 2021 (Exhibit 10.2(1)(i) to the 2~~^nd ~~Quarter 2021 Form 10-Q)~~

~(2)

A. H. Belo 2017 Incentive Compensation Plan (Exhibit I to A. H. Belo Corporation’s Schedule 14A Proxy Statement filed with the Securities and Exchange Commission on March 28, 2017)

(a)

Form of A. H. Belo 2017 Incentive Compensation Plan Evidence of Grant (for Non-Employee Directors) (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2017 (Securities and Exchange Commission File No. 001-33741) (the “May 12, 2017 Form 8-K”))

(b)

Form of A. H. Belo 2017 Incentive Compensation Plan Evidence of Grant (for Employee Awards) (Exhibit 10.2 to the May 12, 2017 Form 8-K)

(c)

First Amendment to the A. H. Belo 2017 Incentive Compensation Plan (Exhibit 10.1 to the July 2, 2018 Form 8-K)

(d)

Second Amendment to the A. H. Belo 2017 Incentive Compensation Plan (Exhibit 10.3 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 11, 2018 (Securities and Exchange Commission File No. 001-33741))

(e)

Third Amendment to the A. H. Belo 2017 Incentive Compensation Plan (changing name of plan to the DallasNews 2017 Incentive Compensation Plan) (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2021 (Securities and Exchange Commission File No. 001-33741))

~(3)

Form of A. H. Belo Cash Long-Term Incentive Compensation Evidence of Grant (for Employee Awards) (Exhibit 10.1 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2019 (Securities and Exchange Commission File No. 001-33741))

~~DallasNews Corporation First Quarter 2022 on Form 10-Q~~ 26

~~Table of Contents~~

~~Exhibit Number~~

~~Description~~

~(4)

~~A. H. Belo Corporation Change in Control Severance Plan~~Robert W. Decherd Compensation Agreement dated May 12, 2022 (Exhibit ~~10.7~~10.1 to the ~~February~~Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, ~~2008~~2022 (Securities and Exchange Commission File No. 001-33741) (the “May 12, 2022 Form ~~8-K)~~

~~(a)~~

~~Amendment to the A. H. Belo Change in Control Severance Plan dated March 31, 2009 (Exhibit 10.3 to the April 2, 2009 Form 8-K)~~

~~(b)~~

~~Second Amendment to the A. H. Belo Change in Control Severance Plan (changing plan name to DallasNews Change in Control Severance Plan) effective June 29, 2021 (Exhibit 10.2(4)(b) to the 2~~^nd ~~Quarter 2021 Form 10-Q)~~8-K”))

~(5)

~~Robert W. Decherd~~Grant S. Moise Compensation ~~Arrangements~~Agreement dated ~~June 19, 2013~~May 12, 2022 (Exhibit ~~10.1~~10.2 to the ~~Company’s Current Report on~~May 12, 2022 Form ~~8-K filed with~~8-K)

~(6)

Katy Murray Compensation Agreement dated May 12, 2022 (Exhibit 10.3 to the ~~Securities and Exchange Commission on June 19, 2013)~~May 12, 2022 Form 8-K)

10.3

Agreements relating to the separation of A. H. Belo from its former parent company:

(1)

Pension Plan Transfer Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of October 6, 2010 (Exhibit 10.1 to the Company’s current Report on Form 8-K filed with the Securities and Exchange Commission on October 8, 2010 (Securities and Exchange Commission File No. 001-33741))

(2)

Agreement among the Company, Belo Corp., and The Pension Benefit Guaranty Corporation, effective March 9, 2011 (Exhibit 10.3(6) to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 11, 2011 (Securities and Exchange Commission File No. 001-33741))

31.1

Certification of ~~Chief~~Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of ~~principal financial officer~~Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certifications of ~~Chief~~Principal Executive Officer and ~~principal financial officer~~Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

‎

DallasNews Corporation First Quarter 2023 on Form 10-Q 25

Table of Contents

Exhibit Number	Description
101.INS		**	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		**	Inline XBRL Taxonomy Extension Schema Document
101.CAL		**	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		**	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		**	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		**	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		**	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 2726

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




DALLASNEWS CORPORATION

By:	/s/	Katy Murray
		Katy Murray
		~~Executive Vice President/~~President and Chief Financial Officer
		(Principal Financial Officer)

Dated:	April ~~22, 2022~~24, 2023

‎

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 2827

Table of Contents

EXHIBIT INDEX



Exhibit Number		Description
31.1		Certification of ~~Chief~~Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of ~~Chief~~Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certifications of ~~Chief~~Principal Executive Officer and ~~Chief~~Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	**	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	**	Inline XBRL Taxonomy Extension Schema Document
101.CAL	**	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	**	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	**	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	**	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	**	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

In accordance with Regulation S-T, the XBRL-related information marked with a double asterisk (**) in Exhibit No. 101 to this Quarterly Report on Form 10-Q is deemed filed.

DallasNews Corporation First Quarter ~~2022~~2023 on Form 10-Q 2928