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

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JuneMarch 28, 20202021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 

Commission File No. 001-36230
TRIBUNE PUBLISHING COMPANY
(Exact name of registrant as specified in its charter) 
Delaware38-3919441
(State or other jurisdiction
of incorporation or organization)
(I.R.S. employer
identification no.)
160 N. Stetson560 W. Grand Avenue
Chicago, Illinois6060160654
(Address of principal executive offices)(Zip code)
Registrant’s telephone number, including area code: (312) 222-9100
Former name, former address and former fiscal year, if changed since last report.
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.01 per shareTPCOThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” an “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at August 3, 2020May 4, 2021
Common Stock, $0.01 par value36,522,26936,874,348

1




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

1



CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
The statements contained in this Quarterly Report on Form 10-Q, as well as the information contained in the notes to our Consolidated Financial Statements, include certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based largely on our current expectations and reflect various estimates and assumptions by us. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, include, without limitation, the acquisition of the Company by Alden Global Capital may not be completed in a timely manner or at all; the effect of the novel coronavirus (COVID-19) and related governmental and economic responses; changes in advertising demand, circulation levels and audience shares; changes in advertising demand; competition and other economic conditions; our ability to develop and grow our online businesses; changes in newsprint price and availability; our ability to maintain data security and comply with privacy-related laws; economic and market conditions that could impact the level of our required contributions to the defined benefit pension plans to which we contribute; decisions by trustees under rehabilitation plans (if applicable) or other contributing employers with respect to multiemployer plans to which we contribute which could impact the level of our contributions; our ability to maintain effective internal control over financial reporting; concentration of stock ownership among our principal stockholders whose interest may differ from those of other stockholders; and other events beyond our control that may result in unexpected adverse operating results. For specific risks related to the COVID-19 pandemic, refer to Item 1A. Risk Factors in this Quarterly Report on Form 10-Q. For more information about these and other risks, see “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 11, 2020,8, 2021, and in our other filings with the SEC.
The words “believe,” “expect,” “anticipate,” “estimate,” “could,” “should,” “intend,” “may,” “will,” “plan,” “seek” and similar expressions generally identify forward-looking statements. However, such words are not the exclusive means for identifying forward-looking statements, and their absence does not mean that the statement is not forward looking. Whether or not any such forward-looking statements, in fact occur will depend on future events, some of which are beyond our control. Readers are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
2



PART I.
Item 1. Financial Statements
TRIBUNE PUBLISHING COMPANY
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
Three months endedSix months ended
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Operating revenues$183,100  $250,327  $399,585  $494,852  
Operating expenses:
Compensation70,265  95,808  167,093  193,517  
Newsprint and ink7,399  15,118  18,119  31,221  
Outside services66,169  80,425  141,211  164,238  
Other operating expenses30,073  39,223  65,491  81,441  
Depreciation and amortization9,869  11,648  19,342  23,732  
Impairment—  —  51,049  —  
Total operating expenses183,775  242,222  462,305  494,149  
Income (loss) from operations(675) 8,105  (62,720) 703  
Interest income (expense), net(185) 315  (215) 535  
Loss on equity investments, net(117) (555) (117) (1,042) 
Other income (expense), net449  (56) 836  17  
Income (loss) from continuing operations before income taxes(528) 7,809  (62,216) 213  
Income tax expense (benefit)(2,084) 2,465  (19,766) (417) 
Net income (loss) from continuing operations1,556  5,344  (42,450) 630  
Plus: Loss from discontinued operations, net of taxes—  (722) —  (722) 
Net income (loss)1,556  4,622  (42,450) (92) 
Less: Income attributable to noncontrolling interest2,162  1,926  3,492  1,887  
Net income (loss) attributable to Tribune common stockholders$(606) $2,696  $(45,942) $(1,979) 
Net income (loss) from continuing operations available to Tribune common stockholders, per common share:
Basic$(0.02) $0.10  $(1.27) $(0.04) 
Diluted$(0.02) $0.10  $(1.27) $(0.04) 
Net income (loss) available to Tribune common stockholders, per common share:
Basic$(0.02) $0.08  $(1.27) $(0.06) 
Diluted$(0.02) $0.08  $(1.27) $(0.06) 
Weighted average shares outstanding:
Basic36,462  35,711  36,37835,669
Diluted36,462  35,866  36,37835,669

Three months ended
March 28, 2021March 29, 2020
Operating revenues$173,554 $206,441 
Operating expenses:
Compensation61,759 96,268 
Newsprint and ink6,624 10,720 
Outside services63,200 74,585 
Other operating expenses28,284 30,154 
Depreciation and amortization5,242 8,813 
Impairment51,049 
Total operating expenses165,109 271,589 
Income (loss) from operations8,445 (65,148)
Interest expense, net(144)(30)
Other income, net403 387 
Income (loss) from continuing operations before income taxes8,704 (64,791)
Income tax expense (benefit)2,582 (15,811)
Net income (loss) from continuing operations6,122 (48,980)
Plus: Income from discontinued operations, net of taxes20,500 4,974 
Net income (loss)26,622 (44,006)
Less: Income (loss) attributable to noncontrolling interest ("NCI")(413)1,330 
Net income (loss) attributable to Tribune common stockholders$27,035 $(45,336)
Net income (loss) from continuing operations, per common share:
Basic$0.17 $(1.35)
Diluted$0.17 $(1.35)
Net income (loss) available to Tribune common stockholders, per common share:
Basic$1.44 $(1.26)
Diluted$1.43 $(1.26)
Weighted average shares outstanding:
Basic36,687 36,294 
Diluted37,023 36,294 

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

3

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

Three months endedSix months ended
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Net income (loss)$1,556  $4,622  $(42,450) $(92) 
Comprehensive income (loss), net of taxes:
Amortization of items to periodic pension cost during the period, net of taxes of ($8), ($23), ($17) and ($46), respectively(21) (59) (44) (118) 
Foreign currency translation(7) (10) (7) (12) 
Comprehensive income (loss)1,528  4,553  (42,501) (222) 
Less: Comprehensive income attributable to noncontrolling interest2,162  1,926  3,492  1,887  
Comprehensive income (loss) attributable to Tribune common stockholders$(634) $2,627  $(45,993) $(2,109) 

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

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

4

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

June 28, 2020December 29, 2019March 28, 2021December 27, 2020
AssetsAssetsAssets
Current assetsCurrent assetsCurrent assets
CashCash$80,515  $60,963  Cash$222,409 $98,862 
Accounts receivable, netAccounts receivable, net77,771  112,754  Accounts receivable, net59,548 73,866 
InventoriesInventories3,724  4,820  Inventories5,331 4,055 
Prepaid expenses and other current assetsPrepaid expenses and other current assets23,424  15,114  Prepaid expenses and other current assets16,107 18,344 
Current assets related to discontinued operationsCurrent assets related to discontinued operations234 111,239 
Total current assetsTotal current assets185,434  193,651  Total current assets303,629 306,366 
Property, plant and equipmentProperty, plant and equipmentProperty, plant and equipment
Machinery, equipment and furnitureMachinery, equipment and furniture105,186  119,859  Machinery, equipment and furniture93,326 100,625 
Buildings and leasehold improvementsBuildings and leasehold improvements77,635  86,403  Buildings and leasehold improvements42,410 42,361 
182,821  206,262  135,736 142,986 
Accumulated depreciationAccumulated depreciation(94,687) (84,530) Accumulated depreciation(92,027)(96,527)
88,134  121,732  43,709 46,459 
Advance payments on property, plant and equipmentAdvance payments on property, plant and equipment1,952  2,181  Advance payments on property, plant and equipment1,211 1,866 
Property, plant and equipment, netProperty, plant and equipment, net90,086  123,913  Property, plant and equipment, net44,920 48,325 
Other assetsOther assetsOther assets
GoodwillGoodwill115,197  117,675  Goodwill28,146 28,146 
Intangible assets, netIntangible assets, net58,632  69,165  Intangible assets, net49,079 50,148 
Software, netSoftware, net20,101  20,736  Software, net16,471 17,503 
Lease right-of-use assetLease right-of-use asset71,920  99,480  Lease right-of-use asset32,992 36,705 
Restricted cashRestricted cash33,449  37,290  Restricted cash28,270 29,925 
Deferred income taxesDeferred income taxes11,569  6,911  Deferred income taxes10,840 11,294 
Equity investmentsEquity investments11,354 11,354 
Other long-term assetsOther long-term assets13,172  13,457  Other long-term assets8,526 8,388 
Total other assetsTotal other assets324,040  364,714  Total other assets185,678 193,463 
Total assetsTotal assets$599,560  $682,278  Total assets$534,227 $548,154 

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

5

TRIBUNE PUBLISHING COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS (continued)
(In thousands, except per share data)
(Unaudited)
TRIBUNE PUBLISHING COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS (continued)
(In thousands, except per share data)
(Unaudited)
June 28, 2020December 29, 2019March 28, 2021December 27, 2020
Liabilities and stockholders’ equityLiabilities and stockholders’ equityLiabilities and stockholders’ equity
Current liabilitiesCurrent liabilitiesCurrent liabilities
Accounts payableAccounts payable$36,035  $46,482  Accounts payable$34,018 $28,022 
Employee compensation and benefitsEmployee compensation and benefits32,343  36,305  Employee compensation and benefits23,906 33,495 
Deferred revenueDeferred revenue40,397  42,773  Deferred revenue33,688 34,620 
Current portion of long-term lease liabilityCurrent portion of long-term lease liability28,559  25,380  Current portion of long-term lease liability24,645 23,914 
Current portion of long-term debt6,995  105  
Other current liabilitiesOther current liabilities23,123  24,317  Other current liabilities25,621 23,329 
Current liabilities associated with discontinued operationsCurrent liabilities associated with discontinued operations7,930 4,759 
Total current liabilitiesTotal current liabilities167,452  175,362  Total current liabilities149,808 148,139 
Non-current liabilitiesNon-current liabilitiesNon-current liabilities
Long term lease liabilityLong term lease liability87,247  98,847  Long term lease liability44,786 49,182 
Workers’ compensation, general liability and auto insurance payableWorkers’ compensation, general liability and auto insurance payable22,862  24,192  Workers’ compensation, general liability and auto insurance payable19,921 20,120 
Pension and postretirement benefits payablePension and postretirement benefits payable17,072  20,338  Pension and postretirement benefits payable15,926 16,803 
Deferred revenueDeferred revenue2,332  2,504  Deferred revenue1,786 1,921 
Long-term debt56  6,857  
Other obligationsOther obligations11,248  5,851  Other obligations6,443 10,587 
Total non-current liabilitiesTotal non-current liabilities140,817  158,589  Total non-current liabilities88,862 98,613 
Noncontrolling interest—  63,501  
Stockholders’ equityStockholders’ equityStockholders’ equity
Preferred stock, $0.01 par value. Authorized 30,000 shares; 0 shares issued or outstanding at June 28, 2020 and December 29, 2019—  —  
Common stock, $0.01 par value. Authorized 300,000 shares; 38,455 shares issued and 36,501 shares outstanding at June 28, 2020; 38,017 shares issued and 36,064 shares outstanding at December 29, 2019384  380  
Preferred stock, $0.01 par value. Authorized 30,000 shares; 0 shares issued or outstanding at March 28, 2021 and December 27, 2020Preferred stock, $0.01 par value. Authorized 30,000 shares; 0 shares issued or outstanding at March 28, 2021 and December 27, 2020
Common stock, $0.01 par value. Authorized 300,000 shares; 38,787 shares issued and 36,833 shares outstanding at March 28, 2021; 38,524 shares issued and 36,570 shares outstanding at December 27, 2020Common stock, $0.01 par value. Authorized 300,000 shares; 38,787 shares issued and 36,833 shares outstanding at March 28, 2021; 38,524 shares issued and 36,570 shares outstanding at December 27, 2020388 385 
Additional paid-in capitalAdditional paid-in capital180,323  177,957  Additional paid-in capital184,549 181,839 
Retained earningsRetained earnings79,432  135,001  Retained earnings139,420 86,491 
Noncontrolling interestNoncontrolling interest59,715  —  Noncontrolling interest61,539 
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(2,403) (2,352) Accumulated other comprehensive income (loss)(2,640)(2,692)
Treasury stock, at cost - 1,954 shares at June 28, 2020 and December 29, 2019(26,160) (26,160) 
Treasury stock, at cost - 1,954 shares at March 28, 2021 and December 27, 2020Treasury stock, at cost - 1,954 shares at March 28, 2021 and December 27, 2020(26,160)(26,160)
Total stockholders’ equityTotal stockholders’ equity291,291  284,826  Total stockholders’ equity295,557 301,402 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$599,560  $682,278  Total liabilities and stockholders’ equity$534,227 $548,154 

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

6

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

Common StockAdditional Paid in CapitalRetained EarningsNon
controlling Interest
AOCITreasury StockTotal EquityCommon StockAdditional Paid in CapitalRetained EarningsNon
controlling Interest
AOCITreasury StockTotal Equity
SharesAmountTreasury StockTotal Equity
Balance at December 29, 201938,018  $380  $177,957  $135,001  $—  $(2,352) $(26,160) $284,826  
Reclassification of noncontrolling interest ("NCI") from temporary equity—  —  —  —  64,133  —  —  64,133  
Balance at December 27, 2020Balance at December 27, 202038,524 $385 $181,839 $86,491 $61,539 $(2,692)$(26,160)$301,402 
Comprehensive income (loss)Comprehensive income (loss)—  —  —  (45,336) 1,020  (23) —  (44,339) Comprehensive income (loss)— — — 27,035 (413)52 — 26,674 
Derecognition of NCIDerecognition of NCI— — — — (35,284)— — (35,284)
Elimination of cumulative NCI carrying value adjustmentsElimination of cumulative NCI carrying value adjustments— — — 25,842 (25,842)— — 
Dividends declared to common stockholdersDividends declared to common stockholders—  —  —  (9,305) —  —  —  (9,305) Dividends declared to common stockholders— — 52 — — — 52 
Dividends declared to NCI—  —  —  —  (5,200) —  —  (5,200) 
NCI carrying value adjustment—  —  —  (322) —  —  —  (322) 
Issuance of stock from restricted stock and restricted stock unit ("RSU") conversionsIssuance of stock from restricted stock and restricted stock unit ("RSU") conversions320   (3) —  —  —  —  —  Issuance of stock from restricted stock and restricted stock unit ("RSU") conversions113 (1)— — — — 
Exercise of stock optionsExercise of stock options150 2,223 — — — — 2,225 
Stock-based compensationStock-based compensation—  —  1,592  —  —  —  —  1,592  Stock-based compensation— — 1,116 — — — — 1,116 
Withholding for taxes on RSU conversionsWithholding for taxes on RSU conversions—  —  (533) —  —  —  —  (533) Withholding for taxes on RSU conversions— — (628)— — — — (628)
Balance at March 29, 202038,338  383  179,013  80,038  59,953  (2,375) (26,160) 290,852  
Comprehensive income (loss)—  —  —  (606) 2,162  (28) —  1,528  
Dividends declared to NCI—  —  —  —  (2,400) —  —  (2,400) 
Issuance of stock from restricted stock and RSU conversions117   (1) —  —  —  —  —  
Stock-based compensation—  —  1,540  —  —  —  —  1,540  
Withholding for taxes on RSU conversions—  —  (229) —  —  —  —  (229) 
Balance at March 28, 2021Balance at March 28, 202138,787 $388 $184,549 $139,420 $— $(2,640)$(26,160)$295,557 
Balance at June 28, 202038,455  $384  $180,323  $79,432  $59,715  $(2,403) $(26,160) $291,291  

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

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

7

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

Common StockAdditional Paid in CapitalRetained Earnings (Deficit)AOCITreasury StockTotal Equity
SharesAmount
Balance at December 30, 201837,551  $376  $166,668  $232,401  $27  $(26,160) $373,312  
Cumulative effect of adoption of leasing standard
—  —  —  (1,787) —  —  (1,787) 
Adjusted balance at December 30, 201837,551  376  166,668  230,614  27  (26,160) 371,525  
Comprehensive loss attributable to controlling interests—  —  —  (4,675) (61) —  (4,736) 
Issuance of stock from restricted stock and RSU conversions67  —  —  —  —  —  —  
Stock-based compensation—  —  5,737  —  —  —  5,737  
Withholding for taxes on RSU conversions—  —  (13) —  —  —  (13) 
Balance at March 31, 201937,618  376  172,392  225,939  (34) (26,160) 372,513  
Comprehensive income (loss) attributable to controlling interests—  —  —  2,696  (69) —  2,627  
Dividends to common stockholders—  —  —  (55,755) —  —  (55,755) 
Issuance of stock from restricted stock and RSU conversions68   (1) —  —  —  —  
Stock-based compensation—  —  2,914  —  —  —  2,914  
Balance at June 30, 201937,686  $377  $175,305  $172,880  $(103) $(26,160) $322,299  

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

8

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


Six months endedThree months ended
June 28, 2020June 30, 2019March 28, 2021March 29, 2020
Operating Activities From Continuing OperationsOperating Activities From Continuing OperationsOperating Activities From Continuing Operations
Net income (loss) from continuing operationsNet income (loss) from continuing operations$(42,450) $630  Net income (loss) from continuing operations$6,122 $(48,980)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:Adjustments to reconcile net income (loss) to net cash provided by operating activities:Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization19,342  23,732  Depreciation and amortization5,242 8,813 
ImpairmentImpairment51,049  —  Impairment51,049 
Stock compensation expenseStock compensation expense3,132  8,651  Stock compensation expense1,116 1,592 
Loss on equity investments, net117  1,042  
Gain on sale of propertyGain on sale of property(5,069) —  Gain on sale of property(5,159)
Deferred income taxesDeferred income taxes(4,658) 1,822  Deferred income taxes453 (6,704)
Pension contributionPension contribution(2,501) (1,054) Pension contribution(476)(555)
Postretirement benefits expensePostretirement benefits expense(765) (782) Postretirement benefits expense(401)(326)
Changes in working capital items:Changes in working capital items:Changes in working capital items:
Accounts receivable, netAccounts receivable, net37,236  33,417  Accounts receivable, net14,365 17,346 
Prepaid expenses, inventories and other current assetsPrepaid expenses, inventories and other current assets(2,407) (7,088) Prepaid expenses, inventories and other current assets1,905 (2,864)
Accounts payable, employee compensation and benefits, deferred revenue and other current liabilitiesAccounts payable, employee compensation and benefits, deferred revenue and other current liabilities(22,514) (42,527) Accounts payable, employee compensation and benefits, deferred revenue and other current liabilities(6,846)(23,194)
Other, netOther, net(200) (274) Other, net1,261 (141)
Net cash provided by operating activities30,312  17,569  
Net cash provided by (used for) operating activitiesNet cash provided by (used for) operating activities22,741 (9,123)
Investing Activities From Continuing OperationsInvesting Activities From Continuing OperationsInvesting Activities From Continuing Operations
Capital expendituresCapital expenditures(6,549) (9,288) Capital expenditures(2,271)(3,483)
Proceeds from the sale of property, plant and equipmentProceeds from the sale of property, plant and equipment9,451  —  Proceeds from the sale of property, plant and equipment8,983 
Other, net—  (179) 
Net cash provided by (used for) investing activitiesNet cash provided by (used for) investing activities2,902  (9,467) Net cash provided by (used for) investing activities(2,271)5,500 
Financing Activities From Continuing OperationsFinancing Activities From Continuing OperationsFinancing Activities From Continuing Operations
Exercise of stock optionsExercise of stock options2,225 
Repayments of capital lease obligationsRepayments of capital lease obligations(50) (303) Repayments of capital lease obligations(50)
Dividends paid to common stockholdersDividends paid to common stockholders(9,091) —  Dividends paid to common stockholders(9,091)
Dividends paid to noncontrolling interest(7,600) (3,400) 
Withholding for taxes on restricted stock unit vestingWithholding for taxes on restricted stock unit vesting(762) (13) Withholding for taxes on restricted stock unit vesting(628)(533)
Net cash used for financing activitiesNet cash used for financing activities(17,503) (3,716) Net cash used for financing activities1,597 (9,674)
Increase in cash attributable to continuing operations$15,711  $4,386  
Increase (decrease) in cash attributable to continuing operationsIncrease (decrease) in cash attributable to continuing operations$22,067 $(13,297)

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

98

TRIBUNE PUBLISHING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
(Unaudited)
Six months endedThree months ended
June 28, 2020June 30, 2019March 28, 2021March 29, 2020
Cash flows used for operating activities from discontinued operations, net$—  $(5,971) 
Cash flows provided by investing activities from discontinued operations, net—  —  
Cash Flows From Discontinued OperationsCash Flows From Discontinued Operations
Cash flows provided by operating activities from discontinued operations, netCash flows provided by operating activities from discontinued operations, net$442 $10,123 
Cash flows provided by (used for) investing activities from discontinued operations, netCash flows provided by (used for) investing activities from discontinued operations, net99,383 (16)
Cash flows used for financing activities from discontinued operations, netCash flows used for financing activities from discontinued operations, net—  —  Cash flows used for financing activities from discontinued operations, net(5,200)
Decrease in cash attributable to discontinued operations—  (5,971) 
Increase in cash attributable to discontinued operationsIncrease in cash attributable to discontinued operations99,825 4,907 
Net increase (decrease) in cashNet increase (decrease) in cash15,711  (1,585) Net increase (decrease) in cash121,892 (8,390)
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period98,253  141,507  Cash, cash equivalents and restricted cash, beginning of period128,787 92,130 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$113,964  $139,922  Cash, cash equivalents and restricted cash, end of period$250,679 $83,740 

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

109


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


NOTE 1: DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business—Tribune Publishing Company was formed as a Delaware corporation on November 21, 2013. Tribune Publishing Company together with its subsidiaries (collectively, the “Company” or “Tribune”) is a media company rooted in award-winning journalism. Headquartered in Chicago, the Company operates local media businesses in 8 markets with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Hartford Courant, South Florida’s Sun Sentinel, Orlando Sentinel, Virginia’s Daily Press and The Virginian-Pilot, and The Morning Call of Lehigh Valley, Pennsylvania. Tribune also operates Tribune Content Agency (“TCA”) and is.
On December 29, 2020, the Company completed the sale of its majority owner inownership of BestReviews LLCInc. (“BestReviews”). See Note 5 for additional information on the sale of BestReviews.
On February 16, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Tribune Enterprises, LLC, a Delaware limited liability company (“TELLC”), Tribune Merger Sub, Inc, a Delaware corporation and a direct, wholly owned subsidiary of TELLC (“Merger Sub”), and the Company, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC. TELLC is an affiliate of Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (collectively, “Alden Funds”), the Company’s largest shareholder. Upon completion of the transaction the Company will become a privately held company, and its common stock will no longer be listed on any public market. See Note 11 for additional information related to the Merger Agreement.
Fiscal Periods—The Company’s fiscal year ends on the last Sunday in December. Fiscal year 20202021 ends on December 27, 202026, 2021, and fiscal year 20192020 ended on December 29, 2019.27, 2020. Fiscal year 20202021 and 20192020 are 52-week years with 13 weeks in each quarter.
Basis of Presentation—The accompanying unaudited Consolidated Financial Statements and notes of the Company have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited Consolidated Financial Statements and accompanying notes. Actual results could differ from these estimates. In the opinion of management, the financial statements contain all adjustments necessary to present fairly the financial position of Tribune as of JuneMarch 28, 20202021, and December 29, 201927, 2020, and the results of operations for the three and six months ended JuneMarch 28, 20202021, and June 30, 2019,March 29, 2020, respectively, and the cash flows for the three and six months ended March 28, 2021,June 28, and March 29, 2020, and June 30, 2019, respectively. This includes all normal and recurring adjustments and elimination of intercompany transactions. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The year-end Consolidated Balance Sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.
The Company assesses its operating segments in accordance with Accounting Standards Codification (“ASC”) Topic 280, “Segment ReportingCompany.” In has reported the first quarterresults of 2020, the Company realigned itsBestReviews as discontinued operations combining the print and digital operations of its media groups together under the leadership of the Chief Executive Officer, who is also the chief operating decision maker for Tribune, as defined in ASC Topic 280. As a result of the realignment, beginningall periods presented in the first quarteraccompanying Consolidated Statements of 2020, the Company no longer reports separate segment results for its printIncome (Loss) and digital operations. PriorConsolidated Statements of Cash Flows. Additionally, assets and liabilities related to the first quarter of fiscal 2020, Tribune was managed by its chief operating decision makerdivested properties are classified as 2 segments, segment Msuch in all prior periods in the Consolidated Condensed Balance Sheets. Unless otherwise noted, amounts and segment X.
Accounting standards adopted in 2020—In June 2016, thedisclosures throughout these Notes to Consolidated Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Topic 326, Financial Instruments – Credit Losses (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assetsStatements relate to continuing operations and requires the use of an “expected loss” model for instruments measured at amortized cost. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard effective the beginning of fiscal year 2020 and the adoption did not have a material effect on the Company’s consolidated financial statements.exclude all discontinued operations. See Note 25 for additional information related to the expected credit losses.
In December 2019, the FASB issued ASU 2019-12, Topic 740, Income Taxes, which simplifies accounting for income taxes (“ASU 2019-12”). ASU 2019-12 eliminates certain exceptions related to intraperiod tax allocation, the interim period tax calculation and deferred tax liabilities. ASU 2019-12 is applied prospectively and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted the standard effective the beginning of fiscal year 2020. See Note 11 for additional information related to the Company’s income taxes.discontinued operations.
NOTE 2: EXPECTED CREDIT LOSSES
Tribune holds financial assets in the form of accounts receivable that are primarily generated from advertisingcertain circulation-related revenues, certain circulation-relatedadvertising revenues and commercial print and delivery revenues, and are grouped as such. The accounts receivable and allowance for doubtful accountscredit losses are analyzed under the expected credit losses method. Payment
11


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


terms vary by revenue stream. Classified advertising and homeHome delivery circulation and classified advertising terms are usually prepaid with advertising having terms of 30 to 60 days. Credit is extended based on an evaluation of each customer’s financial condition, and generally collateral is not required
For accounts receivable, Tribune uses an aging expected credit losses method that includes forward-looking qualitative factors when they arise. The Company has identified the market effects of the COVID-19 pandemic as a forward-looking
10


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


qualitative factor to be considered. The Company uses an analysis of 24-months of collection and write off history to calculate historical loss percentages by aging group, which are applied to all accounts within the aging group. Specific reserves are reviewed and handled on a case by case basis. Accounts receivable balances outstanding for a year are reserved at 100%. As customer balances are determined to be uncollectible, the balances are written off against the allowance for doubtful accounts.credit losses. Included in the allowance for doubtful accountscredit losses are amounts for sales adjustments not related to expected credit losses; such as, rebates, billing adjustments, and returns. The credit loss expense was $1.2$0.9 million and $4.2$3.0 million for the three and six months ended JuneMarch 28, 2021 and March 29, 2020, respectively, and is included in other operating expenses on the Consolidated Statements of Income (Loss).
A summary of the activity with respect to the allowance for doubtful accountscredit losses for the sixthree months ended JuneMarch 28, 20202021, is as follows (in thousands):
Accounts receivable allowance balanceBalance at December 29, 201927, 2020$9,6748,312 
Current period provision4,205873 
Write offs(3,631)(1,356)
Sales adjustments, net117 (19)
Accounts receivable allowance balanceBalance at JuneMarch 28, 20202021$10,3657,810 
Accounts receivable, net, at JuneMarch 28, 20202021, and December 29, 201927, 2020, consisted of the following (in thousands):
June 28, 2020December 29, 2019March 28, 2021December 27, 2020
Accounts receivableAccounts receivable$88,136  $122,428  Accounts receivable$67,358 $82,178 
Less: Allowance for doubtful accounts10,365  9,674  
Less: Allowance for credit lossesLess: Allowance for credit losses7,810 8,312 
Accounts receivable, netAccounts receivable, net$77,771  $112,754  Accounts receivable, net$59,548 $73,866 

NOTE 3: LEASES
Tribune’s leased facilities total approximately 4.2 million square feet in the aggregate. The Company currently has leased newspaper production facilities in Connecticut, Florida, Illinois, Maryland and New Jersey, however Tribune owns substantially all of the production equipment. For printing plants, the initial lease term is ten years with 2 options to renew for additional ten year terms. For distribution facilities, the initial lease term is generally five years, with options to renew either 2 or 3 additional five year terms. For office space, lease terms range from two to thirteen years. The Company has rent escalations, rent holidays and leasehold improvement incentives which are included in the determination of the right-of-use (“ROU”) and the lease liabilities.
Tribune subleases certain facilities that total approximately 0.1 million square feet in aggregate. The terms of these subleases are from two to ten years and expire between 2020 and 2023.
Lease Restructuring, Abatements and Deferrals
Effective April 1, 2020, and in light of the COVID-19 pandemic, the Company withheld payment of April, May and June rent related to a majority of its facilities and requested rent relief from the lessors in various forms, including lease restructuring, rent abatement, deferrals or lease terminations. The terms of the Company’s facility leases generally provide the lessors a number of remedies for late payment, including late fees, interest on amounts past due, the right to draw on any letter of credit supporting the lease, the right to terminate the lease with termination payments, including acceleration of certain future rents net of landlord mitigation amounts, or the right to terminate our possession of the facility, among others.
12


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


The Company has been notified by a number of lessors that it is in default and certain of such lessors have formally filed complaints in their local jurisdictions. The Company is negotiating with such lessors on terms of the rent relief and the lessors’ remedies and is responding timely to all filed complaints.
Lease Abatements and Deferrals
In April 2020, the FASB staff issued interpretive guidance on the accounting for lease concessions that are related to the effects of the COVID-19 pandemic. Tribune has elected to apply the guidance to the lease concessions that have been secured. As of April 2020, the Company began recognizing rent abatements or deferrals received from landlords as reductions in variable lease payments. This election will continue while these abatements or deferrals are in effect. Through June 28, 2020, the Company has secured rent abatements and deferrals for approximately 11 leases.
Lease Restructuring
In the three months ended June 28, 2020, the Company completed modifications for 13 leases. These modifications included various changes to the terms of the leases including deferrals and abatements in exchange for term extensions for periods of 3 months to 22 months. The impact of these modifications is not material.
Lease Terminations
The Company has negotiated lease terminations with lessors on 4 leases. Some of the lease termination agreements required forfeiture of the security deposit as well as various payments, such as past due rents, repair fees, and termination fees. For the three and six months ended June 28, 2020 the Company has recorded termination-related expenses, such as forfeiture of deposits, past due rents, repairs, and early termination fees of $0.4 million that are included in other operating expense on the Consolidated Statements of Income (Loss).
Below is a summary of information related to the Company’s leases (in thousands):
Three months endedSix months ended
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Lease Cost:
Finance lease cost:
Amortization of ROU assets$53  $79  $131  $157  
Interest on lease liabilities29  26  57  52  
Operating lease cost5,930  7,112  13,191  14,247  
Short-term lease costs153  217  343  578  
Variable lease costs1,469  1,945  3,183  3,570  
Sublease income(687) (443) (1,430) (1,572) 
Total lease cost$6,947  $8,936  $15,475  $17,032  
Below is a summary of the supplemental cash flow information related to leases (in thousands):
Six months ended
June 28, 2020June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases$12,370  $20,431  
Operating cash flows used for finance leases—  60  
Financing cash flows used for finance leases$50  $303  
ROU assets obtained in exchange for new operating lease liabilities$2,032  $2,159  
13


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


Below is a summary of the weighted average remaining lease terms and weighted average discount rates related to leases for the six months ended June 28, 2020:
Weighted average remaining lease term - finance leases (in years)0.6 years
Weighted average remaining lease term - operating leases (in years)5.7 years
Weighted average discount rate - finance leases5.75 %
Weighted average discount rate - operating leases4.74 %
Future minimum lease payments under noncancelable operating lease arrangements having initial terms of one year or more as of the six months ended June 28, 2020, are as follows (in thousands):
Operating LeasesFinance LeasesSubleases
2020, remaining$18,690  $50  $1,375  
202128,745  6,949  2,163  
202226,638  —  1,620  
202317,084  —  1,579  
20249,560  —  —  
Thereafter33,051  —  —  
Total future lease payments133,768  6,999  6,737  
Less: Imputed interest17,244  65  —  
Net future minimum lease payments$116,524  $6,934  $6,737  
Lease Abandonment
During the first quarter of 2020, the Company permanently vacated 21,952 square feet of office space in Chicago and 17,960 square feet of office space in Los Angeles. The abandonment of the office space is an indicator of impairment and the Company assessed the lease ROU assets and leasehold improvements for impairment. Estimates of fair value include Level 3 inputs which are subjective in nature, involve uncertainties and matters of significant judgment and are made at a specific point in time. To calculate the fair value of the vacated space, the Company used the discounted cash flows from estimated sublease payments and compared the result to the sum of the carrying values of the lease ROU asset and the leasehold improvements. The discount rate used is a market place lessor's expected rate of return. During the six months ended June 28, 2020, the Company recorded non-cash impairment charges of $2.8 million related to the impairment of the lease ROU assets and $4.2 million related to the impairment of the leasehold improvements associated to the vacated office space.
Subsequent to June 28, 2020, the Company reached agreements to terminate an additional 4 leases with additional leases still in negotiations. Leased space in Los Angeles permanently vacated and discussed above was terminated effective on July 1, 2020 upon agreement with the lessor. The termination agreement includes a termination fee of $1.3 million, comprised of the forfeited deposit and cash of $1.2 million that was paid upon termination. The termination resulted in a gain of $0.3 million that will be recognized in the third quarter of 2020.
NOTE 4:3: REVENUE RECOGNITION
Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. Revenues are recognized as performance obligations are satisfied at either a point in time, such as when an advertisement is published, or over time, such as content licensing.
14


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


No single customer represented 10% or more of the Company’s net revenue in any fiscal period presented.
The Company receives a significant portion of the payments from its subscribers in advance of the delivery of the content either in print or digitally. These up-front payments and fees are recorded as deferred revenue upon receipt and generally require deferral of revenue recognition to a future period until the Company performs its obligations under the subscription agreement. The deferred revenue is recognized as revenue as the content is delivered. The deferred revenue is considered a contract liability under ASC 606. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. Therefore, the Company has no contract assets as defined under ASC 606. As of December 29, 2019,27, 2020, the Company had a contract liabilities balance of $45.3$36.5 million, of which $37.7$27.0 million has been recognized as revenue in the sixthree months ended JuneMarch 28, 2020.2021.
11


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


The Company’s revenues disaggregated by type of revenue is as follows (in thousands):
Three months endedSix months endedThree months ended
June 28, 2020June 30, 2019June 28, 2020June 30, 2019March 28, 2021March 29, 2020
PrintPrint$38,082  $79,814  $95,996  $155,667  Print$72,920 $81,191 
DigitalDigital15,679  23,738  34,581  44,653  Digital14,622 8,821 
Advertising53,761  103,552  130,577  200,320  
CirculationCirculation87,542 90,012 
PrintPrint77,122  84,809  158,313  171,490  Print41,056 57,914 
DigitalDigital10,133  6,762  18,954  12,956  Digital15,475 18,902 
Circulation87,255  91,571  177,267  184,446  
AdvertisingAdvertising56,531 76,816 
Commercial print & deliveryCommercial print & delivery17,098  23,902  39,014  48,361  Commercial print & delivery16,975 21,916 
Direct mailDirect mail5,056  8,940  12,666  17,578  Direct mail4,989 7,610 
Content syndication and otherContent syndication and other19,930  22,362  40,061  44,147  Content syndication and other7,517 10,087 
OtherOther42,084  55,204  91,741  110,086  Other29,481 39,613 
Total operating revenuesTotal operating revenues$183,100  $250,327  $399,585  $494,852  Total operating revenues$173,554 $206,441 
The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within compensation in the accompanying Consolidated Statements of Income (Loss). Additionally, the Company does not disclose the value of unsatisfied performance obligations because the vast majority of contracts have original expected lengths of one year or less and payment terms are generally short-term in nature unless a customer is in bankruptcy.
NOTE 5:4: CHANGES IN OPERATIONS
The Company continually assesses its operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. In the past these activities have included, and could include in the future, outsourcing of various functions or operations, abandonment of leased space and other activities which may result in changes to employee headcount.
Employee Reductions
During the sixthree months ended JuneMarch 28, 2020,2021, the Company implemented reductions in staffing levels in its operations of 86 568 positions for which the Company recorded pretax charges related to these reductions and executive separation totaling $23.0$1.6 million. Charges for severance and related expenses are included in compensation expense on the Consolidated Statements of Income (Loss).
During the three months ended March 29, 2020, the Company implemented reductions in staffing levels in its operations of 276 positions for which the Company recorded pretax charges related to these reductions totaling $16.8 million.
The 2020 severance charge included reductions for 199191 positions related to a Voluntary Severance Incentive Plan (“2020 VSIP”) initiated in the first quarter of 2020. The 2020 VSIP provided enhanced separation benefits to eligible employees with more than eight years of service. The Company plans to fundis funding the 2020 VSIP ratably over the payout period through salary continuation. The related salary continuation payments began during the first quarter of 2020 and are expected to continue through the third quarter of 2021.
The 2020 severance charge also included reductions for 141 positions related to the Company’s decision during the second quarter of 2020 to contract with a third party to outsource the printing and packaging of The Virginian-Pilot. The
15


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


services will be fully transitioned to the third party by the end of the third quarter. The related salary continuation payments began during the second quarter of 2020 and are expected to continue through the third quarter of 2021.
Additionally, included in the 2020 severance charge was approximately $0.6 million related to the separation of the Company’s former CEO which included continuation of his base salary for one year through February 2021, his bonus for 2019, and certain benefit continuation.
During the six months ended June 30, 2019, the Company implemented reductions in staffing levels in its operations of 105 positions for which the Company recorded pretax charges related to these reductions and executive separations totaling $6.7 million. These reductions included 23 positions related to the voluntary severance incentive plan initiated in the fourth quarter of 2018. The related salary continuation payments began during the first quarter of 2019 and ended during the first quarter of 2020.
12


Included in the 2019 severance charge was approximately $4.0 million related to the separation of the Company’s former CEO and 2 senior executives in the digital space. Each of these employees had employment contracts which provided for immediate payout of any contractual compensation under the employment agreement in the event of separation. These employment agreements were amended to permit payment of the severance as salary continuation over the remainder of 2019, during which time equity-based awards continued to vest. The severance payments to these executives, including compensation and medical benefits, if any, were accrued in the first quarter of 2019. Additionally, as a result of the separation the Company recognized accelerated stockbased compensation expense during the six months ended June 30, 2019 of $1.5 million.TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


A summary of the activity with respect to the Company’s severance accrual for the sixthree months ended JuneMarch 28, 20202021, is as follows (in thousands):
Balance at December 29, 201927, 2020$2,5808,321 
Provision23,0291,622 
Payments(12,588)(5,570)
Balance at JuneMarch 28, 20202021$13,0214,373 
Charges for severance and related expenses are included in compensation expense in the accompanying Consolidated Statements of Income (Loss).
Other Changes
On July 23, 2019, the Company entered into an agreement to sell real property located in Norfolk, Virginia for a cash sales price of $9.5 million. The sale closed on January 22, 2020. The Company received net proceeds of $9.0 million and recorded a pre-tax gain during the six months ended June 28, 2020 of $5.2 million related to the sale. The gain is included as a reduction in other operating expenses in the Company’s Consolidated Statements of Income (Loss).
As a result of the printing and packaging outsourcing at The Virginian-Pilot discussed above, certain assets required to print and package the The Virginian-Pilot will no longer be used as of the transition date, therefore the Company is recognizing accelerated depreciation on the equipment. As a result, the Company recognized $2.3 million in accelerated depreciation in the three and six months ended June 28, 2020. These charges are included in depreciation and amortization expenses in the accompanying Consolidated Statements of Income (Loss).
NOTE 6:5: DISCONTINUED OPERATIONS
BestReviews
On June 18, 2018,December 11, 2020, the Company completedentered into the Membership Unit Purchase Agreement (the “BR Agreement”), by and among the Company and BR Holding Company, Inc. (collectively the “Sellers”), BestReviews and Nexstar Inc. (“Nexstar”), pursuant to which the Sellers agreed to sell 100% of BestReviews to Nexstar (the “BR Transaction”). The sale closed on December 29, 2020, for a cash sales price of $160.0 million plus a $9.8 million working capital adjustment. Under the terms of the BR Transaction, the Company received 60% of the proceeds, net of transaction fees, totaling $100.1 million including the final working capital adjustment of $0.2 million received subsequent to March 28, 2021, and recognized a pre-tax gain of $29.5 million.
With the sale of BestReviews, the Los Angeles Times, Company is exiting that line of business. The San Diego Union-Tribune and various other titlessale of BestReviews represented a strategic shift that will have a major effect on the Company’s California properties (“California Properties”) to Nant Capital, LLC (“Nant Capital”)operations and financial results. As a result, BestReviews is reflected as discontinued operations on the Consolidated Condensed Balance Sheets and the results of operations of BestReviews are presented as discontinued operations in the Consolidated Statements of Income (Loss) for an aggregate purchase price of $500.0 million in cash, plus the assumption of unfunded pension liabilities related to the San Diego Pension Plan, less a post-closing working capital adjustment to the buyer of $9.7 million (the "Nant Transaction").all periods presented.
1613


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


As part of the Nant Transaction, the Company provided Nant Capital indemnification with respect to certain legal matters which were at various states of adjudication at the date of the sale. On August 19, 2019, the Los Angeles Times received an unfavorable jury verdict in an indemnified employment litigation matter. The Company successfully challenged the jury verdict by post-trial motions, and as a result, the verdict has been set aside and a new trial has been ordered.Discontinued Operations
During the three and six months ended June 30, 2019, the Company made adjustments to certain reserves related to indemnified liabilities of $1.0 million and recorded $0.3 million in a tax benefit. There were noEarnings from discontinued operations through the respective transaction dates, included in the six months ended June 28, 2020.
NOTE 7: RELATED PARTY TRANSACTIONS
Transition Services Agreement with NantMedia Holdings, LLC
In connection with the closingConsolidated Statements of the Nant Transaction, the Company entered into a transition services agreement (“TSA”) with NantMedia Holdings, LLC (“NantMedia”)Income (Loss), providing for up to twelve months of transition services between the parties at negotiated rates approximating cost. On January 17, 2019, this agreement was amended to extend the date of the TSA to June 30, 2020. Either party could discontinue all or a portion of the services being provided to such party by providing 60 days advance notice.
As the operational transition winds-down, there are certain costs that the Company paid on behalf of NantMedia due to commingled contracts and processes. Such costs include newsprint, rent, benefits, and other operating activities. The TSA provides for reimbursement to the Company for such charges until the contracts and processes can be separated. Additionally, the Company receives some revenue payments related to commingled revenue contracts that include the California Properties. These payments are reimbursed to NantMedia. A summary of the activity with respect to the TSA is as follows (in thousands):
Three months endedSix months ended
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Accounts receivable from Nant Capital beginning balance$6,015  $10,775  $6,118  $17,909  
Revenue for TSA services932  5,948  2,679  12,954  
Reimbursable costs12,283  13,332  27,282  29,677  
Amounts received for TSA services(1,281) (6,537) (2,953) (12,403) 
Amounts received for reimbursable costs(12,861) (14,775) (28,298) (40,013) 
Amounts reimbursed to Nant for amounts collected from third parties under commingled revenue contracts153  7,011  971  13,076  
Amounts collected from third parties under commingled revenue contracts—  (6,787) (558) (12,233) 
Accounts receivable balance from NantMedia at quarter end (1)
$5,241  $8,967  $5,241  $8,967  
(1) - The accounts receivable from NantMedia balance as of June 28, 2020 consists of $3.4 million of charges which had been billed and $1.9 million of charges which had not been billed as of that date.
NOTE 8: INVENTORIES
Inventories at June 28, 2020 and December 29, 2019 consistedcomprised of the following (in thousands):
June 28, 2020December 29, 2019
Newsprint$3,367  $4,510  
Supplies and other357  310  
Total inventories$3,724  $4,820  
Three months ended
March 28, 2021March 29, 2020
Operating revenues$152 $10,044 
Operating expenses:
Compensation1,123 560 
Outside services66 460 
Other operating expenses73 5,261 
Depreciation and amortization660 
Operating expenses1,268 6,941 
Gain on sale29,546 
Income from operations before income taxes28,430 3,103 
Income tax expense (benefit)7,930 (1,871)
Income from discontinued operations, net of tax20,500 4,974 
Less: Income (loss) attributable to noncontrolling interest(413)1,330 
Income from discontinued operations, net of tax available to common stockholders$20,913 $3,644 
Inventories are stated atThe following table presents the loweraggregate carrying amounts of cost or net realizable value determined usingassets and liabilities related to discontinued operations in the first-in, first-out basis for all inventories.Consolidated Condensed Balance Sheets (in thousands):
March 28, 2021December 27, 2020
Carrying amount of assets related to discontinued operations:
Cash$$1,159 
Accounts receivable, (net of allowances of $396 at March 29, 2020) (1)
234 17,888 
All other current assets57 
Property, plant and equipment, net16 
Goodwill87,052 
Intangible assets, net5,053 
Software, net13 
Other long-term assets
Total assets related to discontinued operations$234 $111,239 
Carrying amount of liabilities associated with discontinued operations:
Accounts payable and employee compensation and benefits$$4,734 
Taxes payable7,930 25 
Total liabilities associated with discontinued operations$7,930 $4,759 
(1) - The March 28, 2021 balance is the working capital adjustment due from the sale of BestReviews.

1714


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


NOTE 9: LONG-LIVED ASSETS6: INVENTORIES
Tribune reviews long-lived assets, such as property, plantInventories at March 28, 2021, and equipment, and lease ROU assets for impairment annually on the first dayDecember 27, 2020, consisted of the fourth quarter,following (in thousands):
March 28, 2021December 27, 2020
Newsprint$5,181 $3,914 
Supplies and other150 141 
Total inventories$5,331 $4,055 
Inventories are stated at the lower of cost or more frequently if events or changes in circumstances indicate that an asset may be impaired, in accordance with ASC Topic 360, “Property, Plant and Equipment.” For the first quarter of 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator that an interim evaluation was required for certain asset groups. Under ASC Topic 360, an impairment exists if the carryingnet realizable value of an asset group exceeds its fair value and is considered not recoverable.
As a result of the Company’s evaluation, the Company determined the carrying value for the long-lived assets for the New York Daily News Media Group were impaired. To determine the fair value of the long-lived assets for the New York Daily News, the Company valued the production assets and real estate using the market approach. The remaining assets were valued under an income approach. Estimates of fair value include Level 3 inputs as they are subjective in nature, involve uncertainties and matters of significant judgment and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimates of fair value. During the six months ended June 28, 2020, the Company recorded non-cash impairment charges of $16.1 million related to property, plant and equipment, $14.5 million related to lease ROU assets and $4.0 million related to other long-lived assets. The impairment charges resulted primarily from a decline in the fair value due to lower projected cash flows versus historical estimates.first-in, first-out basis for all inventories.
NOTE 10:7: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets at JuneMarch 28, 20202021, and December 29, 2019,27, 2020, consisted of the following (in thousands):
June 28, 2020December 29, 2019March 28, 2021December 27, 2020
Gross AmountAccumulated
Amortization
Net AmountGross AmountAccumulated
Amortization
Net AmountGross AmountAccumulated
Amortization
Net AmountGross AmountAccumulated
Amortization
Net Amount
GoodwillGoodwill$115,197  $115,197  $117,675  $117,675  Goodwill$28,146 $28,146 $28,146 $28,146 
Newspaper mastheads (1)
Newspaper mastheads (1)
$27,735  $—  $27,735  $34,826  $—  $34,826  
Newspaper mastheads (1)
$27,735 $— $27,735 $27,735 $— $27,735 
Subscribers (useful life of 2 to 10 years)Subscribers (useful life of 2 to 10 years)7,312  (5,985) 1,327  7,312  (5,642) 1,670  Subscribers (useful life of 2 to 10 years)7,312 (6,497)815 7,312 (6,326)986 
Advertiser relationships (useful life of 2 to 13 years)Advertiser relationships (useful life of 2 to 13 years)27,648  (16,258) 11,390  27,648  (15,002) 12,646  Advertiser relationships (useful life of 2 to 13 years)27,648 (18,143)9,505 27,648 (17,515)10,133 
Trade names (useful life of 20 years)Trade names (useful life of 20 years)15,100  (4,470) 10,630  15,100  (4,093) 11,007  Trade names (useful life of 20 years)15,100 (5,036)10,064 15,100 (4,848)10,252 
Other (useful life of 1 to 20 years)Other (useful life of 1 to 20 years)16,181  (8,631) 7,550  16,181  (7,165) 9,016  Other (useful life of 1 to 20 years)3,641 (2,681)960 3,641 (2,599)1,042 
Total intangible assetsTotal intangible assets$93,976  $(35,344) $58,632  $101,067  $(31,902) $69,165  Total intangible assets$81,436 $(32,357)$49,079 $81,436 $(31,288)$50,148 
Software (useful life of 2 to 10 years)Software (useful life of 2 to 10 years)$145,094  $(124,993) $20,101  $140,727  $(119,991) $20,736  Software (useful life of 2 to 10 years)$142,937 $(126,466)$16,471 $141,720 $(124,217)$17,503 
(1) - Intangible assets not subject to amortization.

Tribune reviews goodwill and other indefinite-lived intangible assets for impairment annually on the first day of the fourth quarter, or more frequently if events or changes in circumstances indicate that an asset may be impaired, in accordance with ASC Topic 350, “Intangibles-Goodwill and Other.” For the first quarter of 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator that an interim evaluation was required. Under ASC Topic 350, the impairment review of goodwill and other intangible assets not subject to amortization must be based on estimated fair values. Impairment would occur when the carrying amount of a reporting unit with recorded goodwill or an individual masthead is greater than its fair value. The Company has determined that the reporting units at which goodwill will be evaluated are the 8 newspaper media groups, TCA and BestReviews.
Estimates of fair value include Level 3 inputs as they are subjective in nature, involve uncertainties and matters of significant judgment and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimates of fair value. Significant assumptions used in the fair value estimates include projected revenues and related growth rates over time (for the first quarter 2020 impairment test, the perpetuity growth (decline) rates used ranged from (22.1)% to 2.4%), forecasted revenue growth rates (for the first quarter 2020 impairment test, forecasted revenue growth (decline) ranged from (29.0)% to 17.9%), projected operating cash flow margins, estimated tax rates,
18


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


depreciation expense, capital expenditures, required working capital needs, and an appropriate risk-adjusted weighted-average cost of capital (for the first quarter 2020, the weighted average cost of capital used was 10.0% for print and ranged from 12.3% to 13.3% for digital properties). As ofMarch 29, 2020, the Orlando Sentinel Media Group and the Sun Sentinel Media Group’s carrying values exceeded their fair values and the Company recorded non-cash impairment charges of $1.3 million and $1.1 million, respectively, during the six months ended June 28, 2020. The impairment charges resulted primarily from a decline in the fair value due to lower projected cash flows versus historical estimates. After these impairment charges, the calculated fair value of the Company’s reporting units with remaining goodwill balances exceeded their carrying values by at least 85.0%, except for the New York Daily News Media Group, which has a negative carrying value and goodwill of $1.4 million. As of June 28, 2020, the accumulated goodwill impairment charges to date are $18.8 million.
For mastheads, the calculated fair value includes Level 3 inputs and was determined using the royalty savings method. The key assumptions used in the fair value estimates under the royalty savings method are revenue and market growth, royalty rates for newspaper mastheads (for first quarter 2020, the royalty rate used ranged from 0.8% to 4.9%), estimated tax rates, an appropriate risk-adjusted weighted-average cost of capital (for the first quarter 2020, the weighted average cost of capital used was 10.0% for print and ranged from 12.3% to 13.3% for digital properties). These assumptions reflect Tribune’s best estimates, but these items involve inherent uncertainties based on market conditions generally outside of Tribune’s control. For mastheads as of the measurement date, the calculated fair value exceeded the carrying value by more than 100% in all instances, except for the Sun Sentinel Media Group and the New York Daily News Media Group. As ofMarch 29, 2020, the Sun Sentinel Media Group and the New York Daily News Media Group masthead carrying values exceeded their fair values and the Company recorded non-cash impairment charges of $6.3 million and $0.8 million, respectively, during the six months ended June 28, 2020.
The changes in the carrying amounts of goodwill and newspaper mastheads during the six months ended June 28, 2020 is as follows (in thousands):
GoodwillNewspaper mastheads
Balance at December 29, 2019$117,675  $34,826  
Impairment(2,478) (7,091) 
Balance at June 28, 2020$115,197  $27,735  

NOTE 11:8: INCOME TAXES
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act permits deferral of the payment of certain taxes due in 2020 including employer portion of social security tax. The Company elected to defer payment of the employer portion of social security tax. The CARES Act also included tax law changes such as net operating loss carryback changes and changes in depreciation of qualified improvement property that impact the Company. The Company will continue to assess the effect of the CARES Act and ongoing other government legislation related to COVID-19 that may be issued.

The Company has early adopted ASU 2019-12 which eliminates the rule that limited the interim tax benefit to the tax benefit expected for the year. The adoption has no effect on the Company’s consolidated financial statements with the exception of the change in the interim period tax calculation, which resulted in the Company recording an additional interim tax benefit of $8.3 million during the six months ended June 28, 2020, respectively. Additionally, the three and six months ended June 28, 2020 includes a benefit from the CARES Act relating to the carryback of a loss to a period with a higher tax rate of $0.2 million and $1.0 million, respectively.
For the three and six months ended JuneMarch 28, 2020,2021, the Company recorded an income tax benefitexpense of $2.1 million and $19.8 million, respectively, which includes the impact of the CARES Act and the early adoption of ASU 2019-12.$2.6 million. The effective tax rate on pretax income was 394.7% and 31.8% in the three and six months ended June 28, 2020, respectively. For the three and six months ended June 28, 2020, the29.7%. The rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit, income from noncontrolling interest, tax expense related to the vesting of stock compensation, non-deductible goodwill impairment and other nondeductible expenses.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


For the three and six months ended June 30, 2019,March 29, 2020, the Company recorded an income tax expense relatingbenefit related to continuing operations of $2.5$15.8 million which included the impact of the Coronavirus Aid, Relief, and an income tax benefit relating to continuing operationsEconomic Security Act (the “CARES Act”) enacted in 2020 and the early adoption in 2020 of $0.4 million, respectively.ASU 2019-12. The effective tax rate on pretax income was 31.6% and (195.8)%24.4% in the three and six months ended June 30, 2019, respectively. For the three and six months ended June 30, 2019, theMarch 29, 2020. The rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit, income from non-controlling interest,impact of the CARES Act, tax expense related to the vesting of stock compensation, nondeductible goodwill impairment, and other nondeductible expenses.
NOTE 12:9: PENSION AND OTHER POSTRETIREMENT BENEFITS
Multiemployer Pension Plans
The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. During the sixthree months ended JuneMarch 28, 2020,2021, the Company made contributions totaling $3.4$2.3 million to the Teamsters Local Union No. 727 Pension Fund (the “Teamsters
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Fund”), pursuant to its amended rehabilitation plan. The Company expects to contribute an additional $3.96.8 million during the remainder of 2020.2021. These payments are expensed as the payments become due.
Defined Benefit Plans
The Company is the sponsor of a single-employer defined benefit plan, the Daily News Retirement Plan (the “NYDN Pension Plan”). The NYDN Pension Plan provides benefits to certain current and former employees of the New York Daily News. As of March 31, 2018, future benefits under the NYDN Pension Plan were frozen and no new participants are permitted after that time. On March 11, 2021, the President signed into law the American Rescue Plan Act (“ARPA”). The ARPA, among other things, provided that the interest rate stabilization was enhanced and extended, the existing deficit shortfall amortization basis were eliminated to establish a new base and all future bases would amortize over 15 years instead of 7 years. Company’s could choose which plan year to apply the changes. The Company elected to apply the changes to the 2021 plan year which reduced the required minimum contributions from $1.6 million to $1.0 million. The Company contributed $2.50.5 million to the NYDN Pension Plan in the sixthree months ended JuneMarch 28, 2020.2021. The Company’s remaining required minimum contribution for 20202021 is not material. The CARES Act allows companies to defer making the required minimum contributions until January 1, 2021. Should companies defer making contributions, such deferred contributions accrue interest from the original due date through the payment date. The Company has not deferred any contributions as permitted by the CARES Act.$0.5 million.
The components of net periodic benefit for the NYDN Pension Plan are as follows (in thousands):
Three months endedSix months endedAffected Line Items in the Consolidated Statements of Income (Loss)
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Service Cost$—  $(80) $—  $—  Compensation
Interest cost557  947  1,107  1,759  Other income (expense), net
Expected return on assets(946) (938) (1,892) (2,107) Other income (expense), net
Net periodic benefit$(389) $(71) $(785) $(348) 
Postretirement Benefits Other Than Pensions
The Company provides postretirement health care to retirees pursuant to a number of benefit plans. The plans are frozen for new non-union employees. There is some variation in the provisions of these plans, including different provisions for lifetime maximums, prescription drug coverage and certain other benefits. The components of net periodic benefit credit for the Company’s postretirement health care and life insurance plans are as follows (in thousands):
Three months endedSix months endedAffected Line Items in the Consolidated Statements of Income (Loss)
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Service Cost$ $ $ $ Compensation
Interest cost  13  19  Other income (expense), net
Amortization of prior service credits(31) (82) (66) (164) Other income (expense), net
Amortization of actuarial gains —   —  Other income (expense), net
Net periodic benefit$(18) $(69) $(41) $(137) 
Three months endedAffected Line Items in the Consolidated Statements of Income (Loss)
March 28, 2021March 29, 2020
Interest cost$293 $550 Other income, net
Expected return on assets(701)(946)Other income, net
Net periodic benefit$(408)$(396)

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


NOTE 13: NONCONTROLLING INTEREST
The noncontrolling interest represents the 40% membership interest in BestReviews not owned by the Company. In connection with acquisition of BestReviews, the Company and the seller entered into an amended and restated limited liability company agreement of BestReviews (the “LLC Agreement”). Subject to the terms of the LLC Agreement, the Company had the right to purchase all (but not less than all) of the remaining 40% of the membership interests of BestReviews (the “Call Option”). In addition, the Company was entitled to exercise a one-time right to purchase 25% of the units of membership interest of BestReviews retained by the seller with terms identical to those applicable to the Call Option.
The seller also had the right, beginning three years after closing date of the acquisition, to cause the Company to purchase all (but not less than all) of the remaining 40% of the membership interests of BestReviews (the “Put Option”) at a purchase price to be determined in the same manner as if the Call Option was exercised.
In prior periods, the noncontrolling interest was presented between liabilities and stockholders’ equity within the Company’s Consolidated Condensed Balance Sheets because the Put Option described above could, upon exercise, have required the Company, under certain circumstances, to pay cash to purchase the noncontrolling interest. Each quarter, the carrying value of noncontrolling interest was adjusted to the amount the Company would have been required to pay the noncontrolling interest holders as if the Put Option had been exercised as of the balance sheet date, with an offsetting adjustment to stockholders’ equity. Adjustments to increase or decrease the carrying value of the noncontrolling interest also reduced or increased the amount of net income or loss attributable to Tribune common stockholders for purposes of determining both basic and diluted earnings per share.
On February 3, 2020, the Company and the seller amended the LLC Agreement to, among other things, remove the Put Option and Call Option sections of the LLC Agreement. This amendment eliminated the requirement as of that date in fiscal 2020 and in future periods to adjust the carrying value of the noncontrolling interest to the amount the Company would be required to pay to acquire the noncontrolling interest. Additionally, due to elimination of the Put Option, the noncontrolling interest has been reclassified to the Stockholders’ Equity section of the consolidated balance sheet. During the six months ended June 28, 2020, the Company recorded a carrying value adjustment of $0.3 million related to the period prior to the amendment of the LLC Agreement.
A summary of the activity with respect to noncontrolling interest for the six months ended June 28, 2020 is as follows (in thousands):
Balance at December 29, 2019$63,501 
Carrying value adjustment322 
Income attributable to noncontrolling interest310 
Reclassification of noncontrolling interest ("NCI") from temporary equity(64,133)
Balance at June 28, 2020$— 
The income attributable to the noncontrolling interest for the six months ended June 28, 2020 was $3.5 million with $0.3 million attributed to the noncontrolling interest before the February 3, 2020 amendment as presented above and $3.2 million attributed to the noncontrolling interest after the February 3, 2020 amendment as presented in the Consolidated Statement of Equity.
Subsequent to the February 3, 2020 amendment BestReviews declared and paid dividends in the first quarter of 2020 of $13.0 million to its stockholders. The Company’s portion of these dividends was $7.8 million and the noncontrolling stockholders’ portion was $5.2 million. In June 2020, BestReviews declared and paid dividends of $6.0 million to its stockholders. The Company’s portion of these dividends was $3.6 million and the noncontrolling interest’s portion was $2.4 million. These dividends are presented in the Consolidated Statement of Equity.
21


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


NOTE 14:10: EARNINGS (LOSS) PER SHARE
Basic earnings per common share is calculated by dividing net income (loss) attributable to Tribune common stockholders by the weighted average number of shares of common stock outstanding. Diluted earnings per common share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of common shares under equity-based compensation plans, except where the inclusion of such common shares would have an anti-dilutive impact. In accordance with ASC 260-10-55, net income (loss) from continuing operations is the control number in determining whether potential common shares are dilutive. If there is net loss from continuing operations, all potential common shares are considered anti-dilutive.
When the Company purchased a 60% controlling interest in BestReviews in February 2018, the Company and the seller entered into an agreement subject to which the seller had a right, beginning three years after the purchase date, to cause the Company to purchase all of the remaining 40% of the membership interests of BestReviews at a purchase price based on a predetermined multiple of BestReviews’ trailing 12-month EBITDA (“Put Option”). Each quarter, through January 2020 when the agreement was amended, the carrying value of the noncontrolling interest was adjusted to the amount the Company would have been required to pay the noncontrolling interest holders as if the Put Option had been exercised as of the balance sheet date, with an offsetting adjustment to stockholders’ equity. Adjustments to increase or decrease the carrying value of the noncontrolling interest also reduced or increased the amount of net income or loss attributable to Tribune common stockholders for purposes of determining both basic and diluted earnings per share. In January 2020, the agreement was amended to remove the Put Option. With the sale of BestReviews on December 29, 2020 the prior carrying value adjustments were eliminated. The elimination of the carrying value adjustments is reflected in the basic and diluted earnings per share calculation.
16


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


Basic and diluted earnings per common share were as follows (in thousands, except per share amounts):
Three months endedSix months endedThree months ended
June 28, 2020June 30, 2019June 28, 2020June 30, 2019March 28, 2021March 29, 2020
Income (loss) - Numerator:Income (loss) - Numerator:Income (loss) - Numerator:
Net income (loss) from continuing operations$1,556  $5,344  $(42,450) $630  
Less: Income attributable to noncontrolling interest2,162  1,926  3,492  1,887  
Less: Noncontrolling interest carrying value adjustment—  —  322  —  
Net income (loss) available to Tribune common stockholders, before discontinued operationsNet income (loss) available to Tribune common stockholders, before discontinued operations(606) 3,418  (46,264) (1,257) Net income (loss) available to Tribune common stockholders, before discontinued operations6,122 (48,980)
Plus: Loss from discontinued operations, net of taxes—  (722) —  (722) 
Income from discontinued operations, net of taxesIncome from discontinued operations, net of taxes20,500 4,974 
Less: Income (loss) attributable to NCILess: Income (loss) attributable to NCI(413)1,330 
Less: NCI carrying value adjustmentLess: NCI carrying value adjustment— 322 
Plus: Elimination of cumulative NCI carrying value adjustmentsPlus: Elimination of cumulative NCI carrying value adjustments25,842 — 
Income available to common shareholders from discontinued operations, net of taxesIncome available to common shareholders from discontinued operations, net of taxes46,755 3,322 
Net income (loss) attributable to Tribune common stockholdersNet income (loss) attributable to Tribune common stockholders$(606) $2,696  $(46,264) $(1,979) Net income (loss) attributable to Tribune common stockholders$52,877 $(45,658)
Shares - Denominator:Shares - Denominator:Shares - Denominator:
Weighted average number of common shares outstanding (basic)Weighted average number of common shares outstanding (basic)36,462  35,711  36,378  35,669  Weighted average number of common shares outstanding (basic)36,687 36,294 
Dilutive effect of employee stock options and RSUsDilutive effect of employee stock options and RSUs—  155  —  —  Dilutive effect of employee stock options and RSUs336 
Adjusted weighted average shares outstanding (diluted)Adjusted weighted average shares outstanding (diluted)36,462  35,866  36,378  35,669  Adjusted weighted average shares outstanding (diluted)37,023 36,294 
Basic net income (loss) attributable to Tribune per common share:Basic net income (loss) attributable to Tribune per common share:Basic net income (loss) attributable to Tribune per common share:
Income (loss) from continuing operationsIncome (loss) from continuing operations$(0.02) $0.10  $(1.27) $(0.04) Income (loss) from continuing operations$0.17 $(1.35)
Income (loss) from discontinued operations$—  $(0.02) $—  $(0.02) 
Income from discontinued operationsIncome from discontinued operations$1.27 $0.09 
Basic net income (loss) attributable to Tribune per common shareBasic net income (loss) attributable to Tribune per common share$(0.02) $0.08  $(1.27) $(0.06) Basic net income (loss) attributable to Tribune per common share$1.44 $(1.26)
Diluted net income (loss) attributable to Tribune per common share:Diluted net income (loss) attributable to Tribune per common share:Diluted net income (loss) attributable to Tribune per common share:
Income (loss) from continuing operationsIncome (loss) from continuing operations$(0.02) $0.10  $(1.27) $(0.04) Income (loss) from continuing operations$0.17 $(1.35)
Income (loss) from discontinued operations$—  $(0.02) $—  $(0.02) 
Income from discontinued operationsIncome from discontinued operations$1.26 $0.09 
Diluted net income (loss) attributable to Tribune per common shareDiluted net income (loss) attributable to Tribune per common share$(0.02) $0.08  $(1.27) $(0.06) Diluted net income (loss) attributable to Tribune per common share$1.43 $(1.26)
The number of stock options that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts was 361,608 and 473,27414,000 for the three and six months ended JuneMarch 28, 2020, respectively.2021. The number of stock options that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts was 924,887584,940 for the three and six months ended June 30, 2019, respectively.March 29, 2020.
The number of RSUs that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts was 666,003 and 660,282654,561 for the three and six months ended
22


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


June 28, 2020, respectively. The number of RSUs that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts was 1,341,464 and 1,282,973 for the three and six months ended June 30, 2019, respectively.March 29, 2020.
NOTE 15:11: STOCKHOLDERS’ EQUITY
Dividends
On February 19, 2020, the Board of Directors declared a cash dividend of $0.25 per shareThe holders of common stock outstanding. The cashare entitled to 1 vote per share on all matters to be voted on by stockholders. Holders of common stock will share in any dividend of $9.1 million was paid on March 16, 2020, to shareholders of record as of March 2, 2020. Additionally,declared by the Company accrued dividend equivalents of $0.2 million for RSUs outstanding as of the record date.
On May 8, 2020, the Board of Directors of the Company suspended(the “Board”). In the Company's quarterlyevent of the Company’s liquidation, dissolution or winding up, all holders of common stock are entitled to share ratably in any assets available for distribution to holders of common stock.
Agreement and Plan of Merger
On February 16, 2021, the Company entered into a Merger Agreement pursuant to which the Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC (the “Merger”). TELLC is the acquirer and is an affiliate of Alden Funds, the Company’s largest shareholder.
Subject to the terms and conditions set forth in the Merger Agreement, at the closing of the Merger, each share of common stock, par value $0.01 per share (other than treasury stock or common stock held by TELLC or any of its affiliates)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


issued and outstanding immediately as of the closing (other than dissenting shares) will be converted into the right to receive $17.25 in cash, dividend program until further notice givenwithout interest (the “Merger Consideration”).
The consummation of the unprecedented economic disruption causedMerger (the “Closing”) is subject to certain customary mutual conditions, including (i) the approval of the Company’s stockholders holding two-thirds of the outstanding shares of common stock not owned by COVID-19. ThisTELLC and its affiliates, (ii) the expiration or termination of any waiting period applicable to the closing of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and (iii) the absence of any order of any U.S. court that prohibits, renders illegal or permanently enjoins the consummation of the Merger. The obligation of each party to consummate the Merger is also conditioned upon (i) the accuracy of the representations and warranties of the other party as of the date of the Merger Agreement and as of the Closing (subject to customary materiality qualifiers), (ii) compliance by the other party in all material respects with its pre-Closing obligations under the Merger Agreement and (iii) in TELLC’s case, the absence of a material adverse effect with respect to the Company.
The Company and TELLC have each made customary representations, warranties and covenants in the Merger Agreement. Subject to certain exceptions, the Company has agreed, among other things, to covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and the consummation of the Merger. The parties have also agreed to use their respective reasonable best efforts to obtain governmental and regulatory approvals. In addition, subject to certain exceptions, the Company has agreed to covenants relating to (i) the submission of the Merger Agreement to the Company’s stockholders at a special meeting thereof for approval, (ii) the recommendation by the Board in favor of the adoption by the Company’s stockholders of the Merger Agreement and (iii) non-solicitation obligations of the Company relating to alternative acquisition proposals.
Either the Company or TELLC may terminate the Merger Agreement if (i) TELLC, Merger Sub and the Company agree by mutual written consent to do so, (ii) the Merger has not been consummated on or before December 31, 2021 (the “End Date”), (iii) any court has issued an order permanently restraining, enjoining or otherwise prohibiting the Merger and such order or other action alongis, or has become, final and non-appealable, (iv) the approval of the Company’s stockholders is not obtained at a meeting of the Company’s stockholders called for the purpose of adopting the Merger Agreement or (v) the other party breaches any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances. In addition, the Company may, under certain circumstances, terminate the Merger Agreement in order for the Company to enter concurrently into a definitive written agreement with manyrespect to an unsolicited superior acquisition proposal, subject to the Company having first complied with certain matching rights and other operational actions taken atobligations set forth in the Merger Agreement. Additionally, TELLC may, under certain circumstances, terminate the Merger Agreement if (i) the Board changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (ii) the Company materially breaches its non-solicitation obligations and such breach results in an alternative transaction proposal.
If the Merger Agreement is terminated (i) by the Company in order for the Company to enter into a definitive written agreement with respect to an unsolicited superior acquisition proposal, (ii) by TELLC because (a) the Board changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (b) the Company materially breaches its non-solicitation obligations and such breach results in an alternative transaction proposal, or (iii) by (x) either party because the Merger was not consummated on or before the End Date (as it may be extended) or approval of the Company’s stockholders was not obtained or (y) by TELLC if the Company commits a breach of any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied (subject to a cure period in certain circumstances), but only if, in the case of this clause (iii), an alternative acquisition proposal was previously made and, within 12 months after termination of the Merger Agreement, the Company enters into an agreement for an alternative transaction or an acquisition transaction is consummated, then, in each case, the Company will help preserve liquidity. The Board of Directors will continuebe obligated to monitor liquidity needs and capital allocationpay to TELLC a one-time fee equal to $20.0 million in cash.
If the Merger Agreement is terminated by the Company (i) if TELLC breaches any representation, warranty or covenant that results in the future.failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances or (ii) if the conditions to TELLC’s obligations to consummate the Merger are satisfied or waived, and TELLC does not consummate the Merger when required by the Merger Agreement, then TELLC will be obligated to pay to the Company a one-time liquidated damages amount equal to $50.0 million in cash.
Stock Repurchases
On March 13, 2019,Pursuant to the Merger Agreement, TELLC agreed to vote all of its shares of common stock in favor of the adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger, so long as the Board
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TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


has not changed or adversely modified its recommendation in favor of Directors authorized $25.0 millionthe Merger Agreement. The Merger Agreement also prohibits TELLC from transferring any of its shares of common stock, subject to be used for stock repurchases for 24 months from the date of authorization. NaN repurchases were made in the six months ended June 28, 2020.
Significant Shareholders
Alden Fundscertain exceptions.
Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (together,(each, a “Guarantor”), have entered into a Limited Guarantee dated February 16, 2021 (the “Limited Guarantee”) with the “Alden Funds”Company to guarantee TELLC’s obligation to pay the liquidated damages amount to the Company and certain other specified payments to the Company, subject to the terms and obligations set forth in the Limited Guarantee.
The Guarantors have also entered into an equity commitment letter dated as of February 16, 2021 (the “Equity Commitment Letter”) with TELLC pursuant to which the Guarantors have made an equity commitment of $375.0 million to TELLC to fund the payment of the aggregate Merger Consideration. The Company is a third-party beneficiary of the Equity Commitment Letter and has the right to specifically enforce the Guarantors’ obligations thereunder, if the conditions to TELLC’s obligations to consummate the Merger are satisfied or waived, and the Merger is consummated substantially simultaneously.
Concurrent with the signing of the Merger Agreement, Alden Funds has signed a non-binding term sheet to sell The Baltimore Sun to Sunlight for All Institute, a public charity formed by Stewart Bainum Jr..
Significant Shareholders
Alden Funds
Alden Funds beneficially own 11,544,213owned 11,554,306 shares of Tribune common stock, which represented 31.6%31.4% of the outstanding shares of Tribune common stock as of JuneMarch 28, 2020.2021. During November 2019, the Alden Funds acquired 11,544,213 shares of the Company’s common stock. Of those shares, 9,071,529 shares were purchased from Merrick Media and Michael W. Ferro, previously the Company’s non-executive Chairman of the Board, in a private transaction and the remaining shares were purchased on the open market.
On December 1, 2019, the Company entered into a Cooperation Agreement (“Cooperation Agreement”) with the Alden Funds pursuant to which the Board of Directors of the Company (the “Board”) agreed to increase the size of the Board to 8 directors and promptly appoint two designees from the Alden Funds (“Alden Designees”) as directors of the Company. Additionally, until June 30, 2020 (“Cooperation Period”), the size of the Board of Directors would not be increased above 8 members. Among other provisions, the Cooperation Agreement further provides that during the Cooperation Period, the Alden Funds and their affiliates would be subject to customary standstill restrictions, including (among others) refraining from (i) acquiring securities of the Company if it would result in their ownership of more than 33.0% of the Company’s outstanding shares of common stock, $0.01 par value; (ii) soliciting proxies to vote any securities of the Company; (iii) forming or participating in a “group” in connection with the Company’s voting securities or (iv) otherwise acting alone, or in concert with others, to seek to control or knowingly influence the management, the Board or policies of the Company (the “Standstill Restrictions”); provided that such prohibitions terminate if (a) a person or group that owns more than 15.0% of the issued and outstanding common stock (a “Related Party Investor”) (x) makes any proposal (other than a precatory proposal) at a meeting of the Company’s stockholders or otherwise acts alone, or in concert with others, to seek to control or knowingly influence the management, the Board or policies of the Company, (y) cooperates or otherwise acts in concert with the Board to nominate or elect a director that is proposed by, or is an employee or affiliate of, such Related Party Investor, or (z) acquires beneficial ownership of shares of common stock representing an additional 5.0% or more of the issued and outstanding common stock; (b) the Company enters into a material agreement with any Related Party Investor, other than on arms’ length terms (a “Related Party Agreement”) or alters, amends or modifies in any way a Related Party Agreement, other than on terms no less favorable to the Company than would be obtainable through arms’-length negotiations with a hypothetically similarly situated bona fide third-party; (c) the Company amends, waives or fails to enforce, the terms of any voting agreement or standstill agreement between the Company and a Related Party Investor other than such amendments or waivers that, taken as a whole, make the agreement more restrictive on the Related Party Investor
23


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


or (d) the Alden Designees are not nominated for election at, or are not elected at, the Company’s 2020 annual stockholder meeting. During the Cooperation Period, the Alden Funds and their respective affiliates will vote their shares of common stock in favor of any of the Board’s director nominees and against the removal of any such directors. The Cooperation Agreement expired on June 30, 2020.
On July 1, 2020, the Company entered into an Amended and Restated Cooperation Agreement (the “Amended and Restated Cooperation Agreement”) with the Alden Funds and Alden Global Capital LLC regarding the composition of the Board and related matters. The Amended and Restated Cooperation Agreement provides that the Board of Directors of the Company will increase the size of the Board to 7 directors and appoint Randall D. Smith to fill the resulting vacancy. The Board had been reduced to 6 members at the 2020 annual shareholders meeting when 2 of the Board members retired. Additionally, until
The Amended and Restated Cooperation Agreement further provides, among other things, that:
Until the earlier of June 16, 2021 or the first business day following the Company’s 2021 annual meeting of stockholders, which will be held on or before June 15, 2021 (the “Amended Cooperation Period”), the size of the Board of Directors will not be increased above 7 members. The
During the Amended and Restate Cooperation Agreement carried forward fromPeriod, the Cooperation Agreement the Standstill Restrictions, with certain changes to the termination provisions.Alden Funds and their affiliates will be subject to customary standstill restrictions, including (among others) refraining from (i) acquiring securities of the Company if it would result in their ownership of more than 33.0% of the Company’s outstanding shares of common stock, $0.01 par value (“Common Stock”); (ii) soliciting proxies to vote any securities of the Company; (iii) forming or participating in a “group” in connection with the Company’s voting securities or (iv) otherwise acting alone, or in concert with others, to seek to control or knowingly influence the management, The threshold forBoard or policies of the Company; provided that such prohibitions terminate if (a) a person or group to become a Related Party Investor was lowered to ownership ofthat owns more than 10.0% of the Company’s issued and outstanding common stock, and the Standstill Restrictions will terminate only if (a) a RelatedCommon Stock (a “Related Party InvestorInvestor”) (x) submits a valid stockholders proposal (other than a precatory proposal) at a meeting of the Company’s stockholders or (y) submits a valid notice of nomination to nominate on or more persons for election to the Board at a meeting of the Company’s stockholders; (b) the Company enters into a material agreement with any Related Party Investor, other than a Related Party Agreement or alters, amends or modifies in any way a Related Party Agreement, other than on terms no less favorable to the Company than would be obtainable through arms’-length negotiations with a hypothetically similarly situated bona fide third-party; (c) the Company amends, waives or fails to enforce, the terms of any voting agreement or standstill agreement between the Company and a Related Party Investor other than such amendments or waivers that, taken as a whole, make the agreement more restrictive on the Related Party Investor; (d) any of Ms. Dana Goldsmith Needleman, Mr. Christopher Minnetian, Mr.
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TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Randall D. Smith and their successors designated by the Alden Funds are not nominated for election at, or are not elected at, the Company’s 2021 annual stockholder meeting; or (e) on the date that (1) the Company executes a definitive agreement providing for the acquisition of a majority of the outstanding shares of common stock or a majority of the consolidated assets of the Company and its subsidiaries or (2) is 10 business days after commencement of a tender offer that, if consummated, would result in the offeror acquiring a majority of the outstanding shares of common stock and the Board has not recommended against acceptance of such tender offer. The prohibitions described in clause (i) of the Standstill Restrictions above will also terminate on the date that any person or group, other than the Alden Funds and their affiliates, acquires beneficial ownership of shares of common stock that results in such person or group beneficially owning 30.0% or more of the Company’s then-outstanding shares of common stock.
During the Amended Cooperation Period, the Alden Funds will (a) vote their shares of common stock in favor of any Company director or any nominee designated by the Compensation, Nominating and Corporate Governance Committee of the Board and against the removal of any Company director and (b) not deposit any shares of common stock that they own or have the right to vote into a voting trust or subject them to a voting agreement or similar arrangement.
Nant Capital, LLC
Dr. Patrick Soon-Shiong, a former director of the Company, together with Nant Capital, beneficially own 8,743,619 shares of Tribune common stock, which represented 24.0%23.7% of the outstanding shares of Tribune common stock as of JuneMarch 28, 2020.2021. California Capital Equity, LLC (“CalCap”) directly owns all of the equity interests of Nant Capital, and CalCap may be deemed to have beneficial ownership of the shares held by Nant Capital. Dr. Soon-Shiong directly owns all of the equity interests of CalCap and may be deemed to beneficially own and share voting power and investment power with Nant Capital over all shares of Tribune common stock beneficially owned by Nant Capital. Under the Securities Purchase Agreement dated May 22, 2016, among the Company, Nant Capital and Dr. Patrick Soon-Shiong (“Nant Purchase Agreement”), Nant Capital and Dr. Soon-Shiong and their respective affiliates are prohibited from transferring shares of the Company’s common stock if the transfer would result in a person beneficially owning more than 4.9% of the Company’s then-outstanding shares of common stock following the transfer, as well as transfers to a material competitor of the Company in any of the Company’s then-existing primary geographical markets.
On January 17, 2019, Dr. Patrick Soon-Shiong, NantMedia and Nant Capital entered into a Standstill and VotingRights Agreement (“Standstill Agreement”) with the Company. The Standstill Agreement provides that until June 30, 2020, Dr. Patrick Soon-Shiong, Nant Media, and Nant Capital would not (a) make or participate in any solicitation of proxies to vote,
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TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


or seek to advise or knowingly influence any person with respect to the voting of any voting securities of the Company, (b) join or participate in a “group” (as defined in the rules of the SEC) in connection with any securities of the Company or (c) seek to control or knowingly influence the management, board of directors or policies of the Company. Furthermore, under the Standstill Agreement, Dr. Patrick Soon-Shiong, Nant Media and Nant Capital would, until June 30, 2020, vote their shares of common stock (a) in favor of each nominee or director designated by the Nominating and Governance Committee of the Board of Directors at each election of directors and (b) in accordance with the Board’s recommendations on any change of control transaction involving the Company at or above a minimum purchase price. The Company recorded a charge to non-operating expense during the six months ended June 30, 2019 for $0.5 million related to the Standstill Agreement.
Rights Agreement
On July 27, 2020, the Board of the Company declared a dividend of 1 preferred stock purchase right (a “Right”) for each outstanding share of common stock, par value $0.01 per share of the Company. The dividend iswas payable on August 7, 2020, to holders of record as of the close of business on that date. The Board has adopted the Rights Agreement to reduce the likelihood that a potential acquirer would gain (or seek to influence or change) control of the Company through acquisitions from other stockholders, open market accumulation or other tactics without paying an appropriate premium for the Company’s shares. In general terms and subject to certain exceptions, it works by imposing a significant penalty upon any person or group (including a group of persons that are acting in concert with each other) that acquires 10.0% or more of the outstanding common stock of the Company without the approval of the Board.
The Rights will expire on July 27, 2021, unless earlier exercised, exchanged, amended or redeemed. The Rights Agreement, which is desccribeddescribed more fully in the Company’s Current Report on Form 8-K dated July 28, 2020, includes antidilution provisions designed to prevent efforts to diminish the effectiveness of the Rights.
On February 16, 2021 in connection with the transactions contemplated by the Merger Agreement, the Company entered into an Amendment No. 1 (“Amendment No. 1”) to the Rights Agreement. Amendment No. 1 provides, among other things, that (i) neither the approval, execution, delivery or performance of the Merger Agreement or the other contracts or instruments related thereto, nor the announcement or the consummation of the Merger, will (a) cause the Rights to become exercisable, (b) cause TELLC, Merger Sub or any of their Affiliates or Associates (as defined in the Rights Agreement) to become an Acquiring Person (as defined in the Rights Agreement) or (c) give rise to a Stock Acquisition Date (as defined in the Rights Agreement), Distribution Date (as defined in the Rights Agreement) or Section 9(a)(ii) Event (as defined in the Rights Agreement), (ii) the Company Rights will expire in their entirety, and the Rights Agreement will terminate, immediately prior to the Effective Time (but only if the Effective Time occurs) without any consideration payable therefor or in respect thereof, and (iii) the “Acting in Concert” (as defined in the Rights Agreement) provisions of the Rights Agreement will be removed.
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TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


On April 23, 2021, the Company entered into an Amendment No. 2 (“Amendment No. 2”) to the Rights Agreement. Amendment No. 2 provides, among other things, that (1) the definition of “Passive Investor” shall be amended to replace “and” with “or” between romanettes (ii) and (iii) thereof and (2) the definition of “Specified Percentage” shall be amended to replace “10%” with “15%.” The Company entered into Amendment No. 2 in connection with the court approved settlement of litigation concerning the Rights Agreement. The Company settled plaintiff’s legal costs totaling $2.4 million related to the litigation.
Stock Repurchases
On March 13, 2019, the Board authorized $25.0 million to be used for stock repurchases for 24 months from the date of authorization. The authorization expired on March 12, 2021 and no repurchases were made.
NOTE 16:12: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table sets forth the components of accumulated other comprehensive income (loss), net of tax, for the sixthree months ended JuneMarch 28, 2020,2021, where applicable (in thousands):
Foreign CurrencyOPEBPensionTotalForeign CurrencyOPEBPensionTotal
Balance at December 29, 2019$(60) $42  $(2,334) $(2,352) 
Balance at December 27, 2020Balance at December 27, 2020$(83)$(44)$(2,565)$(2,692)
Amounts reclassified from AOCIAmounts reclassified from AOCI—  (44) —  (44) Amounts reclassified from AOCI
Foreign currency translation adjustmentsForeign currency translation adjustments(7) —  —  (7) Foreign currency translation adjustments52 52 
Balance at June 28, 2020$(67) $(2) $(2,334) $(2,403) 
Balance at March 28, 2021Balance at March 28, 2021$(31)$(44)$(2,565)$(2,640)
The following table presents the amounts and line items in the Consolidated Statements of Income (Loss) where adjustments reclassified from accumulated other comprehensive income (loss) were recorded during the three and six months ended JuneMarch 29, 2020. There were no reclassifications from accumulated other comprehensive income (loss) during the three months ended March 28, 2020 and June 30, 2019 (in thousands):2021.
Three months endedSix months endedAffected Line Items in the Consolidated Statements of Income (Loss)
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Pension and postretirement benefit adjustments:
Amortization of prior service credits$(31) $(82) $(66) $(164) Other income, net
Amortization of actuarial gains —   —  Other income, net
Total before taxes(29) (82) (61) (164) 
Tax effect(8) (23) (17) (46) Income tax expense (benefit)
Total reclassifications for the period$(21) $(59) $(44) $(118) 
Three months endedAffected Line Items in the Consolidated Statements of Income (Loss)
(in thousands)March 29, 2020
Pension and postretirement benefit adjustments:
Amortization of prior service credits$(35)Other income, net
Amortization of actuarial gainsOther income, net
Total before taxes(32)
Tax effect(9)Income tax expense (benefit)
Total reclassifications for the period$(23)

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


NOTE 17:13: CONTINGENCIES
The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business. The legal entities comprising our operations are defendants from time to time in actions for matters arising out of their business operations. In addition, the legal entities comprising our operations are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies.
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TRIBUNE PUBLISHING COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


NOTE 18:14: SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information for each of the periods presented is as follows (in thousands):
Six months endedThree months ended
June 28, 2020June 30, 2019March 28, 2021March 29, 2020
Cash paid during the period for:Cash paid during the period for:Cash paid during the period for:
InterestInterest$194  $—  Interest$$258 
Income taxes, net of refundsIncome taxes, net of refunds(3,895) 7,957  Income taxes, net of refunds$(14)$(1,392)
The Company established restricted cash to collateralize outstanding letters of credit related to workers’ compensation obligations. The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Consolidated Condensed Balance Sheets that sum to the cash, cash equivalents and restricted cash as reported in the Consolidated Statements of Cash Flows (in thousands):
June 28, 2020December 29, 2019March 28, 2021December 27, 2020
CashCash$80,515  $60,963  Cash$222,409 $98,862 
Restricted cashRestricted cash33,449  37,290  Restricted cash28,270 29,925 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flowsTotal cash, cash equivalents, and restricted cash shown in the statement of cash flows$113,964  $98,253  Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$250,679 $128,787 
Cash, cash equivalents, and restricted cash in discontinued operationsCash, cash equivalents, and restricted cash in discontinued operations$$1,159 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the other sections of this Quarterly Report on Form 10-Q, including the Company’s Consolidated Financial Statements and related Notes filed as part of this Quarterly Report, and “Cautionary Statement Concerning Forward-Looking Statements.” Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and other factors described throughout this Quarterly Report as well as the factors described in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 11, 20208, 2021 (“the “2019“2020 Annual Report”), particularly under Item 1A. “Risk Factors,” and in the Company’s other filings with the SEC.SEC.
We believe that the assumptions underlying the Consolidated Financial Statements included in this Quarterly Report are reasonable. However, the Consolidated Financial Statements may not necessarily reflect our results of operations, financial position and cash flows for future periods.
OVERVIEW
Tribune Publishing Company was formed as a Delaware corporation on November 21, 2013. Tribune Publishing Company together with its subsidiaries (collectively, the “Company” or “Tribune”) is a media company rooted in award-winning journalism. Headquartered in Chicago, Tribune operates local media businesses in eight markets with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Hartford Courant, South Florida’s Sun Sentinel, Orlando Sentinel, Virginia’s Daily Press and The Virginian-Pilot, and The Morning Call of Lehigh Valley, Pennsylvania. Tribune also operates Tribune Content Agency (“TCA”) and is the majority owner in BestReviews LLC (“BestReviews”).
Tribune’s unique and valuable content across its brands have earned a combined 65 Pulitzer Prizes and are committed to informing, inspiring and engaging local communities. Tribune’s brands create and distribute content across our media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities.
On December 29, 2020, the Company completed the sale of its majority ownership of BestReviews Inc. (“BestReviews”). See Note 5 to the Consolidated Financial Statements for additional information on the disposition and related discontinued operations.
On February 16, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Tribune Enterprises, LLC, a Delaware limited liability company (“TELLC”), Tribune Merger Sub, Inc, a Delaware corporation and a direct, wholly owned subsidiary of TELLC (“Merger Sub”), and the Company, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC. TELLC is an affiliate of Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (collectively, “Alden Funds”), the Company’s largest shareholder. Upon completion of the transaction the Company will become a privately held company, and its common stock will no longer be listed on any public market. See Note 11 to the Consolidated Financial Statements for additional information related to the Merger Agreement.
The Company continues to position itself as a leaner, more agile operation in order to sustain itself for the long term. Accordingly, the Company is aggressively flattening its management organization, reducing its real estate footprint and eliminating fixed cost infrastructure as well as continually assessing its operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. In the past these activities have included, and could include in the future, outsourcing of various functions or operations, abandonment of leased space and other activities which may result in changes to employee headcount. See Note 54 to the Consolidated Financial Statements for more information on changes in operations in the sixthree months ended JuneMarch 28, 2020.2021. The Company expects to continue to take actions deemed appropriate to enhance profitability but does not currently know whether or when any such actions will occur or the potential costs and expected savings. Depending on the actions taken and the timing of any such actions, the anticipated cost savings could be recognized in fiscal periods that do not correspond to the fiscal period(s) in which the charges are recognized. As a result, the Company’s net income trends could be impacted and be more difficult to predict.
23
COVID-19 Update
With the global outbreak of the novel coronavirus (“COVID-19”) and the declaration of a pandemic by the World Health Organization on March 11, 2020, the governments in the states in which Tribune operates have deemed news publishing and media services as “critical infrastructure” providing essential services and information during this global emergency. As a provider of critical infrastructure, Tribune is not subject to business closure requirements and has taken steps to keep employees working safely and news and information being distributed. Tribune remains focused on protecting the health and well being of its employees and the communities in which it operates while assuring the continuity of its business operations.
The Company has proactively implemented its business continuity plans and has taken a variety of measures to ensure the ongoing availability of its newspapers and information, while taking appropriate health and safety measures, including implementing remote work policies, where possible, and implementing enhanced cleaning and hygiene protocols in its production facilities. To date, as a result of these business continuity measures, the Company has not experienced disruptions in the distribution of news and information through the Company’s newspapers and websites.
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Until fiscal 2019, advertising revenue was historically Tribune’s largest source of revenue. The Company’s advertising customers are typically local and regional, small and mid-sized businesses that purchase advertising to drive traffic to their businesses. These are the businesses that have been particularly hard hit by the widespread closures of businesses, government facilities and schools, cancellation of events and sports leagues, restriction on gathering and a significant reduction in economic activity. The decrease in advertising revenue and ongoing disruptions in Tribune’s operations due to the COVID-19 pandemic have adversely impacted its business, results of operations, financial condition and cash flows. The degree to which COVID-19 may impact Tribune’s results of operations and financial condition in the future is unknown at this time and will depend on future developments, including the severity and the duration of the pandemic.
The Company has taken extensive steps to mitigate the economic impact COVID-19 has had on its results of operations. These steps include evaluation of and adjustments to manufacturing and distribution processes, delaying non-essential repairs and maintenance, reducing third-party spending, freezing discretionary spending, eliminating incentive and discretionary bonuses and salary reductions and employee furloughs. These mitigation measures may not be sufficient to prevent adverse impacts on our business and financial condition from COVID-19.
As part of the Company’s reduction in spending, it has withheld payment of rent for a majority of its leased facilities in April and May and requested rent relief in various forms, as described in Note 3 to the Consolidated Financial Statements. Tribune has been notified by a number of lessors that it is in default under the terms of the respective leases and the Company and certain of such lessors have formally filed complaints in their local jurisdictions. The Company is negotiating with such lessors on the terms of the potential rent relief and the lessors’ remedies and is responding timely to all filed complaints. The Company has secured lease restructuring, rent abatements and deferrals for approximately 24 leases and terminations on 4 leases.
Products and Services
Our publication product mix includes three primary types: (i) daily newspapers, (ii) weekly newspapers and (iii) niche publications and direct mail. The key characteristics of each of these types of publications are summarized in the table below.
Daily NewspapersWeekly NewspapersNiche Publications
Cost:PaidPaid and freePaid and free
Distribution:Distributed four to seven days per weekDistributed one to three days per weekDistributed weekly, monthly or on an annual basis
Income:Revenue from advertisers, subscribers, rack/box salesPaid: Revenue from advertising, subscribers, rack/box salesPaid: Revenue from advertising, rack/box sales
Free: Advertising revenue onlyFree: Advertising revenue only
As of JuneMarch 28, 2020,2021, the Company’s prominent print publications and websites include:
Media GroupCityMastheadWebsiteCirculation TypePaid or Free
Chicago Tribune Media Group
Chicago, ILChicago Tribunewww.chicagotribune.comDailyPaid
Chicago, ILChicago Magazinewww.chicagomag.comMonthlyPaid
New York Daily News Media Group
New York, NYNew York Daily Newswww.nydailynews.comDailyPaid
The Baltimore Sun Media Group
Baltimore, MDThe Baltimore Sunwww.baltimoresun.comDailyPaid
Annapolis, MDThe Capitalwww.capitalgazette.comDailyPaid
Westminster, MDCarroll County Timeswww.carrollcountytimes.comDailyPaid
Hartford Courant Media Group
Hartford County, CT,
Middlesex County, CT,
Tolland County, CT
Hartford Courantwww.courant.comDailyPaid
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Media GroupCityMastheadWebsiteCirculation TypePaid or Free
Sun Sentinel Media Group
Broward County, FL,
Palm Beach County, FL
Sun Sentinelwww.sun-sentinel.comDailyPaid
Broward County, FL,
Palm Beach County, FL
el Sentinelwww.sun-sentinel/elsentinel.comWeeklyFree
Orlando Sentinel Media Group
Orlando, FLOrlando Sentinelwww.orlandosentinel.comDailyPaid
Orlando, FLel Sentinelwww.orlandosentinel/elsentinel.comWeeklyFree
Virginia Media Group
Newport News, VA (Peninsula)Daily Presswww.dailypress.comDailyPaid
Norfolk, VAThe Virginian-Pilotwww.pilotonline.comDailyPaid
The Morning Call Media Group
Lehigh Valley, PAThe Morning Callwww.themorningcall.comDailyPaid
TCA is a syndication and licensing business providing content solutions for publishers around the globe. Working with a vast collection of the world’s news and information sources, TCA delivers a daily news service and syndicated premium content to over 2,000 media and digital information publishers in more than 70 countries. Tribune News Service delivers material from 70 leading publications, including Chicago Tribune, Bloomberg News, Miami Herald, The Dallas Morning News, Seattle Times, The Philadelphia Inquirer, and Los Angeles Times. Tribune Premium Content syndicates columnists such as Leonard Pitts, Cal Thomas, Clarence Page, Ask Amy and Rick Steves. TCA manages the licensing of premium content from publications such as Rolling Stone, The Atlantic, Fast Company, Mayo Clinic, Variety and many more. TCA traces its roots back to 1918.
BestReviews is a company engaged in the business of testing, researching and reviewing consumer products. BestReviews generates referral fee revenue by directing online traffic from their published reviews to sites where the products can be purchased. BestReviews has affiliate agreements with online sellers, of which the largest is Amazon.com. BestReviews receives a referral fee once the product is purchased.
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Revenue Sources
Circulation revenue results from the sale of print and digital editions of newspapers and other owned publications to individual subscribers, the sale of print editions of newspapers to sales outlets that re-sell the newspapers, and the sale of digital subscription access to the Company’s websites.
Print advertising is typically in the form of display, preprint or classified advertising. Advertising and marketing services revenues are comprised of three basic categories: retail, national and classified. Retail is a category of customers who generally do business directly with the public. National is a category of customers who generally do business directly with other businesses. Classified is a type of advertising which is other than display or preprint.
Digital advertising consists of website display, banner ads, advertising widgets, coupon ads, video, search advertising and linear ads placed byon Tribune onand affiliated websites. Digital marketing services include development of mobile websites, search engine marketing and optimization, social media account management and content marketing for customers’ web presence for small to medium size businesses.
Circulation revenue results from the sale of print and digital editions of newspapers to individual subscribers, the sale of print editions of newspapers to sales outlets that re-sell the newspapers, and the sale of digital subscription access to the Company’s websites.
Other revenues are derived from commercial printing and delivery services provided to other newspapers, direct mail advertising and services, content syndication and licensing, referral fees and other related activities. The Company contracts with a number of national and local newspapers to both print and distribute their respective publications in local markets where it is a newspaper publisher. In some instances where it prints publications, it also manages and procures newsprint, ink and plates on their behalf. These arrangements allow the Company to leverage its investment in infrastructure in those markets that support its own publications. As a result, these arrangements tend to contribute incremental profitability and revenues. The Company currently distributes national newspapers (including The New York Times, USA Today, and The
29



Wall Street Journal) in its local markets under multiple agreements. Additionally, in New York, Chicago, and South Florida, the Company provides some or all of these services to other local publications.
Results of OperationsRESULTS OF OPERATIONS
Operating results from continuing operations are shown in the table below (in thousands):
Three months endedSix months endedThree months ended
Jun 28, 2020Jun 30, 2019% ChangeJun 28, 2020Jun 30, 2019% ChangeMar 28, 2021Mar 29, 2020% Change
CirculationCirculation$87,542 $90,012 (2.7%)
AdvertisingAdvertising$53,761  $103,552  (48.1 %)$130,577  $200,320  (34.8 %)Advertising56,531 76,816 (26.4%)
Circulation87,255  91,571  (4.7 %)177,267  184,446  (3.9 %)
OtherOther42,084  55,204  (23.8 %)91,741  110,086  (16.7 %)Other29,481 39,613 (25.6%)
Total operating revenuesTotal operating revenues183,100  250,327  (26.9 %)399,585  494,852  (19.3 %)Total operating revenues173,554 206,441 (15.9%)
CompensationCompensation70,265  95,808  (26.7 %)167,093  193,517  (13.7 %)Compensation61,759 96,268 (35.8%)
Newsprint and inkNewsprint and ink7,399  15,118  (51.1 %)18,119  31,221  (42.0 %)Newsprint and ink6,624 10,720 (38.2%)
Outside servicesOutside services66,169  80,425  (17.7 %)141,211  164,238  (14.0 %)Outside services63,200 74,585 (15.3%)
Other operating expensesOther operating expenses30,073  39,223  (23.3 %)65,491  81,441  (19.6 %)Other operating expenses28,284 30,154 (6.2%)
Depreciation and amortizationDepreciation and amortization9,869  11,648  (15.3 %)19,342  23,732  (18.5 %)Depreciation and amortization5,242 8,813 (40.5%)
ImpairmentImpairment—  —  *51,049  —  *Impairment— 51,049 *
Total operating expensesTotal operating expenses183,775  242,222  (24.1 %)462,305  494,149  (6.4 %)Total operating expenses165,109 271,589 (39.2%)
Income (loss) from operationsIncome (loss) from operations(675) 8,105  *(62,720) 703  *Income (loss) from operations8,445 (65,148)*
Interest income (expense), net(185) 315  *(215) 535  *
Loss on equity investments, net(117) (555) (78.9 %)(117) (1,042) (88.8%)
Other income (expense), net449  (56) *836  17  *
Income tax expense (benefit)2,084  (2,465) *19,766  417  *
Interest expense, netInterest expense, net(144)(30)*
Other income, netOther income, net403 387 4.1%
Income tax (expense) benefitIncome tax (expense) benefit(2,582)15,811 *
Net income (loss) from continuing operationsNet income (loss) from continuing operations1,556  5,344  (70.9%)(42,450) 630  *Net income (loss) from continuing operations6,122 (48,980)*
Plus: Loss from discontinued operations, net of taxes—  (722) *—  (722) *
Plus: Income from discontinued operations, net of taxesPlus: Income from discontinued operations, net of taxes20,500 4,974 *
Net income (loss)Net income (loss)1,556  4,622  (66.3%)(42,450) (92) *Net income (loss)26,622 (44,006)*
Less: Income attributable to noncontrolling interest2,162  1,926  12.3 %3,492  1,887  85.1%
Less: Income (loss) attributable to noncontrolling interest ("NCI")Less: Income (loss) attributable to noncontrolling interest ("NCI")(413)1,330 *
Net income (loss) attributable to Tribune common stockholdersNet income (loss) attributable to Tribune common stockholders$(606) $2,696  *$(45,942) $(1,979) *Net income (loss) attributable to Tribune common stockholders$27,035 $(45,336)*
* Represents positive or negative change in excess of 100%
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Three months ended JuneMarch 28, 20202021 compared to the three months ended June 30, 2019March 29, 2020
Circulation Revenue—Circulation revenues decreased 2.7%, or $2.5 million, in the three months ended March 28, 2021, compared to the same period for 2020. Home delivery revenue decreased $5.9 million and single copy sales decreased $2.3 million. These decreases were partially offset by an increase of $5.8 million in digital subscription revenue as customers turn to digital delivery.
Advertising Revenue—Advertising revenues decreased 48.1%26.4%, or $49.8$20.3 million, in the three months ended JuneMarch 28, 2020,2021, compared to the same period for 2019,2020, due to decreases in all revenue categories. Retail advertising decreased $39.3$18.4 million, year over year,classified advertising decreased $1.8 million and national advertising decreased $5.4 million and classified advertising decreased $5.3$0.2 million. The COVID-19 pandemic continues to exacerbate the decline in advertising revenue.
Circulation Revenue—Circulation revenues decreased 4.7%, or $4.3revenue when comparing to pre-pandemic periods and the prior year included $2.0 million related to cars.com and forsalebyowner.com transition sales contracts which fully cycled in the three months ended June 28, 2020, compared to the same period for 2019. Home delivery revenue decreased $4.4 million and single copy sales decreased $3.4 million. These decreases were partially offset by an increasesecond quarter of $3.4 million in digital subscription revenue as customers turn to digital delivery.last year..
Other Revenue—Other revenues consist of commercial print and delivery, direct mail and marketing, and content syndication and licensing, referral fees and other revenue. Other revenues decreased 23.8%25.6%, or $13.1$10.1 million, in the three months ended JuneMarch 28, 2020,2021, compared to the same period for 2019.2020. Commercial print and delivery revenue decreased $6.8$4.9 million, direct
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mail revenue decreased $3.9$2.6 million, and revenue from the TSA agreement decreased $5.0 million. These decreases were partially offset by a $3.1$1.7 million increasedue to the conclusion of the operational transition to NantMedia Holdings, LLC in referral revenue at BestReviews.the second quarter of 2020.
Compensation Expense—Compensation expense decreased 26.7%35.8%, or $25.5$34.5 million, in the three months ended JuneMarch 28, 2020.2021. This decrease was due primarily to a decrease in salary and payroll tax expense of $13.4$17.2 million, a decrease in severance costs of $8.7 million in multiemployer pension expense, a decrease in incentive compensation of $6.9$15.1 million and a decrease of $1.4 million in stock-basedworkers compensation of $1.3 million.expense. These decreases were partially offset by an increase of $1.6 million in severance costs of $6.2 million.multiemployer pension expense.
Newsprint and Ink Expense—Newsprint and ink expense decreased 51.1%38.2%, or $7.7$4.1 million, in the three months ended JuneMarch 28, 2020.2021. This decrease was due primarily to a decrease in the average cost per ton of newsprint and a decrease in volume.
Outside Services Expense—Outside services expense decreased 17.7%15.3%, or $14.3$11.4 million, in the three months ended JuneMarch 28, 2020.2021. This decrease was due primarily to a reductiondecrease of $6.4$5.8 million in third party delivery expense, a reductiondecrease of $3.0$1.7 million in circulation and distribution expenses,digital services related to consolidation of third party providers, a decrease of $1.4 million in accrued legal expense, a decrease of $1.1 million in temporary help and a decrease of $1.0 million in freelance purchased content.
Other Operating Expenses—Other expenses include occupancy costs, promotion and marketing costs, affiliate fees and other miscellaneous expenses, including gains on fixed asset sales. These expenses decreased 23.3%6.2%, or $9.2$1.9 million, in the three months ended JuneMarch 28, 2020,2021, due primarily to a decrease of $3.7$3.4 million in occupancy expenses, a decrease of $1.9 million in promotion expenses, a decrease of $2.3 million in occupancy expenses, a decrease of $1.5 million in repairs and maintenance, a decrease of $1.3$0.9 million in travel and entertainment expenses, with additionala decrease of $0.9 million in repairs and maintenance. These decreases across all categories.were partially offset by a $2.4 million legal settlement related to the Rights Agreement. Additionally, in the first quarter of 2020, the Company recognized a gain on the sale of fixed assets of $5.2 million which partially offset the decreases in expenses in the first quarter of 2021.
Depreciation and Amortization Expense—Depreciation and amortization expense decreased 15.3%40.5%, or $1.8$3.6 million, primarily due to decreased depreciation related to asset retirements in previous periods partially offset by.
Impairment Expense—During the accelerated depreciationfirst quarter of 2020, the Company recorded a non-cash impairment charge of $51.0 million with $41.4 million related to printinglong-lived assets, $7.1 million related to mastheads, and packaging outsourcing at The Virginian-Pilot.
Loss on Equity Investments, Net—Loss on equity investments, net decreased $0.4$2.5 million primarily duerelated to additional reserves for certain investments of the Company in the prior year.goodwill. Long-lived asset impairments included $7.0 million related to abandoned lease space.
Income Tax Expense (Benefit)—Income tax expense (benefit) inincreasedcreased $4.5$18.4 million for the three months ended JuneMarch 28, 20202021, over the prior year period. For the three months ended JuneMarch 28, 2020,2021, the Company recorded an income tax expense of $2.6 million. The effective tax rate on pretax income was 29.7% in the three months ended March 28, 2021. This rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit, tax expense related to vesting of stock compensation, and non-deductible expenses.
For the three months ended March 29, 2020, the Company recorded income tax benefit of $2.1$15.8 million which includes an additional $0.2$0.0 million benefit from the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) relating to the carryback of a loss to a period with a higher tax rate. The effective tax rate on pretax income was 394.7%24.4% in the three months ended June 28,March 29, 2020. This rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit, noncontrolling interest, tax expense related to vesting of stock compensation, and non-deductible expenses.
For the three months ended June 30, 2019, the Company recorded income tax expense of $2.5 million. The effective tax rate on pretax income was 31.6% in the three months ended June 30, 2019. The rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit and non-deductible expenses.
Six months ended June 28, 2020 compared to the six months ended June 30, 2019
Advertising Revenue—Advertising revenues decreased 34.8%, or $69.7 million, in the six months ended June 28, 2020, compared to the same period for 2019, due to decreases in all revenue categories. Retail advertising decreased $53.9 million, year over year, national advertising decreased $8.2 million and classified advertising decreased $7.8 million. The COVID-19 pandemic continues to exacerbate the decline in advertising revenue.
Circulation Revenue—Circulation revenues decreased 3.9%, or $7.2 million, in the six months ended June 28, 2020, compared to the same period for 2019. Home delivery revenue decreased $8.9 million and single copy sales decreased $4.5 million. These decreases were partially offset by an increase of $6.0 million in digital subscription revenue as customers turn to digital delivery.
Other Revenue—Other revenues consist of commercial print and delivery, direct mail and marketing, and content syndication and licensing, referral fees and other revenue. Other revenues decreased 16.7%, or $18.3 million, in the six months ended June 28, 2020, compared to the same period for 2019. Commercial print and delivery revenue decreased $9.3 million, direct
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mail revenue decreased $4.9 million, and revenue from the TSA agreement decreased $10.3 million. These decreases were partially offset by a $6.4 million increase in referral revenue at BestReviews.
Compensation Expensefederal benefit, —Compensation expense decreased 13.7%, or $26.4 million, in the six months ended June 28, 2020. This decrease was due primarily to a decrease in salary and payroll tax expense of $18.1 million, a decrease in incentive compensation of $10.3 million, a decrease of $8.0 million in multiemployer pension expense and a decrease in stock-based compensation of $5.5 million. These decreases were partially offset by an increase in severance costs of $15.7 million.
Newsprint and Ink Expense—Newsprint and ink expense decreased 42.0% or $13.1 million for the six months ended June 28, 2020. This decrease was due primarily to a decrease in the average cost per ton of newsprint and a decrease in volume.
Outside Services Expense—Outside services expense decreased 14.0%, or $23.0 million, in the six months ended June 28, 2020. This decrease was due primarily to a reduction of $10.2 million in third party delivery expense, a decrease of $4.1 million in professional services expense, a reduction of $3.8 million in circulation and distribution expenses, a decrease of $1.7 million in temporary help and a decrease of $1.2 million in freelance purchased content.
Other Operating Expenses—Other expenses include occupancy costs, promotion and marketing costs, affiliate fees and other miscellaneous expenses. These expenses decreased 19.6%, or $16.0 million, in the six months ended June 28, 2020, due primarily to the $5.2 million gain recognized related to the sale of property in Virginia, a decrease of $3.0 million in occupancy expenses, a decrease of $2.7 million in promotion expenses, a decrease of $2.4 million in repairs and maintenance and a decrease of $1.6 million in travel and entertainment expenses. These decreases were partially offset by an increase of $2.2 million in bad debt expense.
Depreciation and Amortization Expense—Depreciation and amortization expense decreased 18.5%, or $4.4 million, primarily due to decreased depreciation related to asset retirements in previous periods partially offset by the accelerated depreciation related to printing and packaging outsourcing at The Virginian-Pilot.
Impairment Expense—For the six months ended June 28, 2020, the Company recorded a non-cash impairment charge of $51.0 million with $41.4 million related to long-lived assets, $7.1 million related to mastheads, and $2.5 million related to goodwill. Long-lived asset impairments include $7.0 million related to abandoned lease space. See the notes to the consolidated financial statements for additional information on these impairments.
Loss on Equity Investments, Net—Loss on equity investments, net decreased $0.9 million primarily due to additional impairments for certainimpact of the Company’s investments in the prior year.
Income Tax Expense (Benefit)Income tax expense (benefit) increased $19.3 million for the six months ended June 28, 2020 over the prior year period. For the six months ended June 28, 2020, the Company recorded an income tax benefit of $19.8 million which includes an additional $1.0 million benefit from the CARES Act, relating to the carryback of a loss to a period with a higher tax rate. The effective tax rate on pretax income was 31.8% in the six months ended June 28, 2020. This rate differs from the U.S. federal statutory rate of 21% primarily due to state income taxes, net of federal benefit, noncontrolling interest, tax expense related to the vesting of stock compensation, and non-deductible expenses.
For the six months ended June 30, 2019, the Company recorded incomeDiscontinued OperationsIncome from discontinued operations, net of tax benefit of $0.4 million. The effective tax rate on pretax income was (195.8%) in the six months ended June 30, 2019. This rate differs from the U.S. federal statutory rate of 21%increased $15.5 million or 312.1% primarily due to state income taxes, netthe gain of federal benefit and non-deductible expenses.$29.5 million recognized on the sale of BestReviews during the first quarter of 2021.
NON-GAAP MEASURES
Adjusted EBITDA—The Company defines Adjusted EBITDA as income (loss) from continuing operations before equity in earnings of unconsolidated affiliates, income taxes, loss on early debt extinguishment, interest income (expense), other (expense) income, realized gain (loss) on investments, reorganization items, depreciation and amortization, net income attributable to noncontrolling interest, and other items that the Company does not consider in the evaluation of ongoing operating performance. These items include stock-based compensation expense, restructuring charges, impairment,
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transaction expenses, certain other charges and gains that the Company does not believe reflects the underlying business performance.
Three months endedSix months endedThree months ended
(in thousands)(in thousands)June 28, 2020June 30, 2019% ChangeJune 28, 2020June 30, 2019% Change(in thousands)Mar 28, 2021Mar 29, 2020% Change
Net income (loss) from continuing operationsNet income (loss) from continuing operations$1,556  $5,344  (70.9)$(42,450) $630  *Net income (loss) from continuing operations$6,122 $(48,980)*
Income tax expense (benefit) from continuing operationsIncome tax expense (benefit) from continuing operations(2,084) 2,465  *(19,766) (417) *Income tax expense (benefit) from continuing operations2,582 (15,811)*
Interest income (expense), net185  (315) *215  (535) *
Loss on equity investments, net117  555  (78.9)117  1,042  (88.8)
Other income (expense), net(449) 56  *(836) (17) *
Interest expense, netInterest expense, net144 30 *
Other income, netOther income, net(403)(387)4.1%
Income (loss) from operationsIncome (loss) from operations(675) 8,105  *(62,720) 703  *Income (loss) from operations8,445 (65,148)*
Depreciation and amortizationDepreciation and amortization9,869  11,648  (15.3)19,342  23,732  (18.5 %)Depreciation and amortization5,242 8,813 (40.5%)
ImpairmentImpairment—  —  *51,049  —  *Impairment— 51,049 *
Restructuring and transaction costs (1)
Restructuring and transaction costs (1)
8,061  1,796  *21,282  12,669  68.0 %
Restructuring and transaction costs (1)
10,664 13,221 (19.3%)
Stock based compensationStock based compensation1,540  2,879  (46.5%)3,132  8,616  (63.6 %)Stock based compensation1,116 1,592 (29.9%)
Adjusted EBITDA from continuing operationsAdjusted EBITDA from continuing operations$18,795  $24,428  (23.1%)$32,085  $45,720  (29.8 %)Adjusted EBITDA from continuing operations$25,467 $9,527 *
* Represents positive or negative change in excess of 100%
(1) - Restructuring and transaction costs include costs related to Tribune’s internal restructuring, such as severance, charges associated with vacated space and costs related to completed and potential acquisitions.
Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP. Management believes that because Adjusted EBITDA excludes (i) certain non-cash expenses (such as depreciation, amortization, stock-based compensation, and gain/loss on equity investments) and (ii) expenses that are not reflective of the Company’s core operating results over time (such as restructuring costs, including the employee voluntary separation program and gain/losses on employee benefit plan terminations, litigation or dispute settlement charges or gains, premiums on stock buyback, impairment, and transaction-related costs), this measure provides investors with additional useful information to measure the Company’s financial performance, particularly with respect to changes in performance from period to period.  The Company’s management uses Adjusted EBITDA (a) as a measure of operating performance; (b) for planning and forecasting in future periods; and (c) in communications with the Company’s Board of Directors (the "Board") concerning the Company’s financial performance. In addition, Adjusted EBITDA, or a similarly calculated measure, has been used as the basis for certain financial maintenance covenants that the Company was subject to in connection with certain credit facilities. Since not all companies use identical calculations, the Company’s presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies and should not be used by investors as a substitute or alternative to net income or any measure of financial performance calculated and presented in accordance with U.S. GAAP. Instead, management believes Adjusted EBITDA should be used to supplement the Company’s financial measures derived in accordance with U.S. GAAP to provide a more complete understanding of the trends affecting the business.
Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for, or more meaningful than, amounts determined in accordance with U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical tool are:
they do not reflect the Company’s interest income and expense, or the requirements necessary to service interest or principal payments on the Company’s debt;
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they do not reflect future requirements for capital expenditures or contractual commitments; and
although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and non-GAAP measures do not reflect any cash requirements for such replacements.
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LIQUIDITY AND CAPITAL RESOURCES
The Company expects to fund capital expenditures and potential pension contributions in 20202021 and other operating requirements through a combination of existing cash balances and cash flows from operations and investments. The Company believes that its working capital and future cash from operations discussed below will provide adequate resources to fund its operating and financing needs for the foreseeable future. However, as discussed above under the COVID-19 Update section and in Item 1A Risk Factors, the Company’s financial and operating performance remains subject to prevailing economic and industry conditions and to financial, business and other factors, some of which are beyond the control of the Company. Tribune’s liquidity could be negatively impacted if these conditions continue for a significant period of time and the Company may be required to pursue additional sources of financing to obtain working capital, maintain appropriate inventory levels and to meet our financial obligations. Capital and credit markets have been disrupted by the crisis and our ability to obtain any required financing is not guaranteed and largely dependent upon evolving market conditions and other factors. Depending on the continued impact of the crisis, further actions may be required to improve the Company’s cash position and capital structure. Despite the Company’s current liquidity position, no assurances can be made that cash flows from operations and investments, or dispositions of assets or operations will be sufficient to satisfy the Company’s future liquidity needs.
Sources and Uses
The table below details the total operating, investing and financing activity cash flows from continuing operations (in thousands):
Six months endedThree months ended
June 28, 2020June 30, 2019March 28, 2021March 29, 2020
Net cash provided by operating activities$30,312  $17,569  
Net cash provided by (used for) operating activitiesNet cash provided by (used for) operating activities$22,741 $(9,123)
Net cash provided by (used for) investing activitiesNet cash provided by (used for) investing activities2,902  (9,467) Net cash provided by (used for) investing activities(2,271)5,500 
Net cash used for financing activitiesNet cash used for financing activities(17,503) (3,716) Net cash used for financing activities1,597 (9,674)
Increase in cash attributable to continuing operations$15,711  $4,386  
Increase (decrease) in cash attributable to continuing operationsIncrease (decrease) in cash attributable to continuing operations22,067 (13,297)
Increase in cash attributable to discontinued operationsIncrease in cash attributable to discontinued operations99,825 4,907 
Net increase (decrease) in cashNet increase (decrease) in cash$121,892 $(8,390)
Cash flow generated from operating activities is Tribune’s primary source of liquidity. Cash provided by continuing operating activities for the sixthree months ended JuneMarch 28, 2020,2021, totaled $30.3$22.7 million compared to cash provided byused for continuing operating activities of $17.6$9.1 million for the sixthree months ended June 30, 2019.March 29, 2020. The increase in cash provided by operating activities was driven by an increase in cash from working capital of $28.6$19.5 million primarily related to a decreasesfavorable changes in accounts payable partially offset by a decreaseand prepaid expenses and an increase in operating results of $15.8$12.3 million (defined as net income (loss) adjusted for non-working capital items).
Net cash used for investing activities from continuing operations totaled $2.3 million in the three months ended March 28, 2021, primarily used for capital expenditures. In the three months ended March 29, 2020, net cash provided by investing activities from continuing operations totaled $2.9$5.5 million, in the six months ended June 28, 2020, primarily due to the net proceeds of $9.0$9.0 million related to the sale of real property in Norfolk, Virginia, partially offset by $6.5 million used for capital expenditures. In the six months ended June 30, 2019, net cash used for investing activities from continuing operations totaled $9.5 million, primarily due to $9.33.5 million used for capital expenditures.
Net cash provided by financing activities totaled $1.6 million for the three months ended March 28, 2021, primarily due to withholding for taxes on restricted stock unit vesting. In the three months ended March 29, 2020, net cash used for financing activities totaled $17.5was $9.7 million, for the six months ended June 28, 2020, primarily due to payment of a cash dividend of $9.1 million to the Company’s common stockholders on March 16, 2020.
Net cash provided by discontinued operations totaled $99.8 million for the three months ended March 28, 2021 primarily related to the $99.9 million proceeds for the sale of BestReviews. Cash provided by discontinued operations totaled $4.9 million for the three months ended March 29, 2020, andprimarily related to BestReviews operating results partially offset by a payment of $7.6$5.2 million in dividends paid to the noncontrolling interest. There were no material financing activities for the six months ended June 30, 2019.
There was no cash used for discontinued operations for the six months ended June 28, 2020. Cash used for discontinued operations totaled $6.0 million for the six months ended June 30, 2019 related to the final tax payment related to the sale of the California Properties.
Dividends
On February 19, 2020, the Board of Directors declared a cash dividend of $0.25 per share of common stock outstanding. The cash dividend of $9.1 million was paid on March 16, 2020 to shareholders of record as of March 2, 2020. Additionally, the Company accrued dividend equivalents of $0.2 million for RSUs outstanding as of the record date.
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Subsequent to the February 3, 2020 amendment BestReviews declared dividends of $13.0 million to its stockholders. The Company’s portion of these dividends was $7.8 million and the noncontrolling interest’s portion was $5.2 million. In June 2020, BestReviews declared dividends of $6.0 million to its stockholders. The Company’s portion of these dividends was $3.6 million and the noncontrolling interest’s portion was $2.4 million. See Note 13 to the Consolidated Financial Statements for additional information on the dividend to the noncontrolling interest.
On May 8, 2020, the Board of Directors of the Company suspended the Company's quarterly cash dividend program until further notice given the unprecedented economic disruption caused by COVID-19. This action along with many other operational actions taken at the Company will help preserve liquidity. The Board of Directors will continue to monitor liquidity needs and capital allocation in the future.
Multiemployer pension
During 20202021 the Company is required to make $7.3$9.1 million in payments to the Teamsters Local Union No. 727 Pension Fund (the “Teamsters Fund”) under the amended rehabilitation plan. During the sixthree months ended JuneMarch 28, 20202021, the Company has paid $3.4$2.3 million of the payments required. The Company expects to contribute an additional $3.9$6.8 million during the remainder of 2020.2021.
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The Company’s funding obligationobligations under multiemployer plans are subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations. These payments are expensed as the payments become due.
Employee Reductions
During the sixthree months ended JuneMarch 28, 2020,2021, the Company implemented reductions in staffing levels in its operations of 56886 positions for which the Company recorded pretax charges related to these reductions totaling $23.0$1.6 million. These reductions include 199 positions related to the voluntary severance incentive plan initiated in the first quarter of 2020 and 141 position related to the outsourcing below. The related salary continuation payments began during the first quarter of 2020 and the final payment to the last employee is expected to be made in the third quarter of 2021.
During the three months ended June 28, 2020, the Company contracted with a third party to outsource the printing and packaging of The Virginian-Pilot. The services will be fully transitioned to the third party by the end of the third quarter. The change in operations resulted in staff reductions of 141 positions. The related salary continuation payments began during the second quarter of 2020 and are expected to continue through the third quarter of 2021.
Contractual Obligations
The table below represents Tribune’s contractual obligations as of June 28, 2020, which has been updated to reflect the lease restructurings, abatements, deferrals and terminations during the six months ended June 28, 2020 (in thousands):
Total2020, remaining2021202220232024Thereafter
Finance leases6,999  50  6,949  —  —  —  —  
Operating leases (1)
133,768  18,690  28,745  26,638  17,084  9,560  33,051  
Teamsters Fund53,570  3,925  9,100  9,975  10,950  12,210  7,410  
NYDN Pension Plan2,410  40  2,370  —  —  —  —  
Total196,747  22,705  47,164  36,613  28,034  21,770  40,461  
(1) - The Company leases certain equipment and office and production space under various operating leases. Net lease expense for Tribune was $12.1 million and $12.4 million for the six months ended June 28, 2020 and June 30, 2019, respectively.
The contractual obligations table includes the Company’s estimated minimum contribution to the NYDN Pension Plan for 2020. The contractual obligations table does not include actuarially projected minimum funding requirements of the NYDN Pension Plan after 2020. The projected minimum funding requirements contain significant uncertainties regarding
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the actuarial assumptions involved in making such minimum funding projections, including interest rate levels, asset returns, mortality and cost trends, and what, if any, changes will occur to regulatory requirements. Further contributions are currently projected for 2020 through 2025, however the amounts cannot be reasonably estimated.

The contractual obligation table includes the Company’s required minimum contributions to the Teamsters Fund under the amended rehabilitation plan. With respect to the additional contributions to the Teamsters Fund outside of the required payments under the amended rehabilitation plan and the Company’s contributions to other multiemployer plans, the Company’s funding obligation will be subject to change based on a number of factors, including the outcome of collective bargaining within the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations. See Note 12 to the Consolidated Financial Statements for additional information on the Company’s pension plans.
Other Changes
On July 23, 2019, the Company entered into an agreement to sell real property located in Norfolk, Virginia for a cash sales price of $9.5 million. The sale closed on January 22, 2020. The Company received net proceeds of $9.0 million and recorded a pre-tax gain of $5.2 million related to the sale.
NEW ACCOUNTING STANDARDS
See Note 1 in the Consolidated Financial Statements for a description of new accounting standards issued and/or adopted in the three and six months ended June 28, 2020.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of JuneMarch 28, 2020,2021, there had been no material changes in the Company’s exposure to market risk from the disclosure included in the 20192020 Annual Report.
Item 4. Controls and Procedures
The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Interim Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934), as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Interim Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter ended JuneMarch 28, 20202021, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We have not experienced any material change in our internal controls over financial reporting despite most of our employees working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.
PART II.
Item 1. Legal Proceedings
We are subject to various legal proceedings and claims that have arisen in the ordinary course of business. The legal entities comprising our operations are defendants from time to time in actions for matters arising out of their business operations. In addition, the legal entities comprising our operations are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies.
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Tribune Company Bankruptcy
On December 31, 2012, Tribune Media Company, formerly Tribune Company (“TCO”) and 110 of its direct and indirect wholly-owned subsidiaries that had filed voluntary petitions for relief under Chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware on December 8, 2008 (or on October 12, 2009, in the case of Tribune CNLBC, LLC) (collectively, the “Debtors”) emerged from Chapter 11. Certain of the legal entities included in the Consolidated Financial Statements of Tribune were Debtors or, as a result of the restructuring transactions undertaken at the time of the Debtors’ emergence, are successor legal entities to legal entities that were Debtors (“Tribune Debtors”).
Notices of appeal of the Bankruptcy Court’s order confirming the Plan (the “Confirmation Order”) were filed by (i) Aurelius Capital Management L.P. on behalf of its managed entities that were holders of TCO’s senior notes and Exchangeable Subordinated Debentures due 2029 (“PHONES”), (ii) Law Debenture Trust Company of New York (n/k/a Delaware Trust Company (“Delaware Trust Company”)) and Deutsche Bank Trust Company Americas (“Deutsche Bank”), each successor trustees under the respective indentures for TCO’s senior notes; (iii) Wilmington Trust Company, as successor indenture trustee for the PHONES, and (iv) EGI-TRB, L.L.C., a Delaware limited liability company wholly-owned by Sam Investment Trust (a trust established for the benefit of Samuel Zell and his family) (the “Zell Entity”). The appellants sought, among other relief, to overturn the Confirmation Order and certain prior orders of the Bankruptcy Court embodied in the Plan, including the settlement of certain claims and causes of action related to a series of transactions consummated by TCO, the TCO employee stock ownership plan, the Zell Entity and Samuel Zell in 2007. Each of the Confirmation Order appeals have been dismissed or otherwise resolved by a final order, with the exception of the appeals of Delaware Trust Company and Deutsche Bank. On July 30, 2018, the United States District Court for the District of Delaware (the “District Court”) entered an order affirming (i) the Bankruptcy Court’s judgment overruling Delaware Trust Company’s and Deutsche Bank’s objections to confirmation of the Plan and (ii) the Bankruptcy Court’s order confirming the Plan.  Delaware Trust Company and Deutsche Bank appealed the District Court’s order to the United States Court of Appeals for the Third Circuit (the “Third Circuit”) on August 27, 2018.  That appeal remains pending before the Third Circuit. There is no stay of the Confirmation Order in place pending resolution of the confirmation related appeals.
The Bankruptcy Court had entered final decrees collectively closing 108 of the Debtors’ Chapter 11 cases, including the last one of the Tribune Debtors’ cases. The remaining Chapter 11 cases relate to Debtors and successor legal entities that are subsidiaries of TCO. These cases have not yet been closed by the Bankruptcy Court, and certain claims asserted against various of the Debtors (including certain of the Tribune Debtors) in the Chapter 11 cases remain unresolved. The remaining Chapter 11 cases continue to be administered under the caption “In re: Tribune Media Company, et al.,” Case No 08-13141.
Item 1A. Risk Factors
In addition to the other information in this report, investors should carefully consider the discussion under “Risk Factors” in Item 1A as filed in the 20192020 Annual Report. WeAs of the filing date of this report there have described in the 2019 Annual Report the primary risks related to our business and securities, and we periodically update those risks for material developments. We are providing below, in supplemental form, thebeen no material changes to the Company’sour risk factors that occurred during the past quarter. The risk factorsas disclosed in Item 1A of the 2019 Annual Report, provide additional disclosure and context for these supplemental risks.
Risks Relating to Our Business
The recent outbreak of the novel coronavirus has adversely affected our results of operations and could materially impact our business, financial condition, results of operations and cash flows in the future.
The recent outbreak of COVID-19 and ensuing pandemic has created significant volatility, uncertainty and economic disruption as federal, state and local governments take increasingly broad actions to mitigate this public health crisis. We have experienced significant disruption to our business, both in our operations and from the adverse effect on overall economic conditions. We have seen a decrease in demand for advertising as our customers cope with the uncertainties related to the pandemic and its related business closures, particularly in the retail and consumer services sectors. The volume under our commercial production and distribution contracts has also decreased. Additionally, the Company has closed many of its facilities and implemented widespread work-from-home arrangements which have disrupted our normal processes. The ultimate scope and duration of these closures is not known.
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Additionally, our liquidity could be negatively impacted if these conditions continue for a significant period of time and we may be required to pursue additional sources of financing to obtain working capital, maintain appropriate inventory levels and to meet our financial obligations. Capital and credit markets have been disrupted by the crisis and our ability to obtain any required financing is not guaranteed and largely dependent upon evolving market conditions and other factors. Depending on the continued impact of the crisis, further actions may be required to improve the Company’s cash position and capital structure.
A sustained economic downturn may also result in the carrying value of our goodwill or other intangible assets exceeding their fair value, which may require us to recognize an impairment to those assets. A sustained downturn in the financial markets and related pension asset values may have the effect of increasing our pension funding obligations in order to ensure that our qualified pension plans continue to be adequately funded, which may divert cash flow from other uses.
The extent to which the COVID-19 outbreak ultimately impacts our business, sales, results of operations and financial condition will depend on future developments which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, we may continue to experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future.
Our efforts to protect the health and safety of our employees may not be adequate, which could materially impact our business, financial condition and results of operations.
We rely on our employees’ ability to interact with the public. The COVID-19 pandemic, and the restrictions placed on social interaction, has impacted our ability to protect the health and safety of our employees. Though most of our employees are able to work remotely while sheltered in place, we have certain employees who must physically work together in our production facilities to produce our products, employees that interact with personnel in distribution locations to deliver such products and reporters who must interact with the public to gather information. We have to date and may in the future incur costs to ensure the safety of our employees, including medical testing, additional facility and equipment cleaning, process changes to ensure social distancing is maintained, and purchases of personal protective equipment, including masks, gloves, etc. Additionally, we could incur workers’ compensation or medical costs if our employees contract the virus. If we cannot adequately protect the health and safety of our employees, our business, financial condition and results of operations could be adversely affected.
The COVID-19 pandemic has highlighted challenges to our ability to react quickly to significant changes in business conditions.
We have taken extensive steps to mitigate the economic impact COVID-19 has had on our results of operations. These steps include salary reductions, elimination of staff positions, employee furloughs, revisions to manufacturing and distribution processes, reducing third-party spending, freezing discretionary spending, eliminating incentive and discretionary bonuses and delaying non-essential repairs and maintenance. However, these measures may not be sufficient to prevent adverse impacts on our business and financial condition from COVID-19. The COVID-19 pandemic has highlighted existing impediments to operational flexibility that have slowed our financial response to the decrease in revenue. These include a number of significant longer-term leases, multiemployer pension plans and collective bargaining issues which limit our ability to respond quickly to the rapidly changing economic environment. Our mitigation steps may also exacerbate certain existing operational risks such as retaining senior management or key employees given the salary reductions, and potential disputes with third parties.filing.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On March 13, 2019, the Board of Directors of the Company authorized $25.0 million to be used for stock repurchases for 24 months from the date of authorization. No repurchases were made in the sixthree months ended JuneMarch 28, 2020.2021.
Item 3. Defaults Upon Senior Securities
None.
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Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
None.
Item 6. Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by the Company with the SEC, as indicated. 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. Certain agreements are included as exhibits to this Quarterly Report on Form 10-Q to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the parties to the agreement. Each agreement may contain representations and warranties by the parties to the agreement. These representations and warranties have been made solely for the benefit of the other party or parties to the agreement and (1) should not in all instances be treated as categorical statements of fact, but rather as a means of allocating the risk to one of the parties if those statements prove to be inaccurate; (2) may have been qualified by disclosures that were made to the other party or parties in connection with the negotiation of the attached agreement, which disclosures are not necessarily reflected in the agreement; (3) may apply standards of materiality in a manner that is different from what may be viewed as material to you or other investors; and (4) were made only as of the date of the agreement or other date or dates that may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
Exhibit    Description
Number
2.1*    Acquisition Agreement, dated February 6, 2018, by and among BestReviews, Inc., BestReviews LLC, Tribune Publishing Company, LLC, and tronc, Inc., and Denis Grosz (as the Sellers’ Representative), and the Stockholders defined in the Purchase Agreement (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on February 7, 2018).
2.2*    Membership Interest Purchase Agreement, dated February 7, 2018, by and among Nant Capital, LLC, and tronc, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on February 7, 2018).
2.3*    Agreement and Plan of Merger by and among Tribune Enterprises, LLC, Tribune Merger Sub, Inc., and Tribune Publishing Company, dated as of February 16, 2021 (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on February 17, 2021).
2.4*    Limited Guarantee by Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. in favor of Tribune Publishing Company, dated as of February 16, 2021 (incorporated by reference to Exhibit 2.2 to the Form 8-K filed on February 17, 2021).
2.5*    Membership Unit Purchase Agreement, dated as of December 11, 2020, by and among Nexstar Inc., BestReviews LLC, Tribune Publishing Company, LLC, and BR Holding Company, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on December 17, 2020).
3.1*    Amended and Restated Certificate of Incorporation of Tribune Publishing Company, as amended (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018 filed on November 30, 2018).
3.2*    Certificate of Designation of Series A Participating Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on July 28, 2020).
3.3*    Amended and Restated By-laws of Tribune Publishing Company (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on October 9, 2018).
4.1*    Rights Agreement, dated as of July 28, 2020, between Tribune Publishing Company and Computershare TrustCompany, N.A., as Rights Agent (incorporated(incorporated by reference to Exhibit 4.1 to the Form 8-K filed on July 28, 2020).
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10.1*

4.2*    Amended and Restated CooperationAmendment No. 1 to Rights Agreement dated as of July 1, 2020, by and amongbetween Tribune Publishing Company Alden Global Opportunities Master Fund, L.P.and Computershare Trust Company, N.A., Alden Global Value Recovery Master Fund, L.P., and Alden Global Capital LLCdated as of February 16, 2021 (incorporated by reference to Exhibit 10.14.1 to the Current Report on Form 8-K filed on JulyFebruary 17, 2021).
4.3*    Amendment No. 2 2020)to Rights Agreement b.y and between Tribune Publishing Company and Computershare Trust Company, N.A., dated as of April 23, 2021 (incorporated by reference to Exhibit 4.1 to the Form 8-K filed on April26, 2021
31.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32    Certification of Chief Executive Officer and Chief 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
101.SCH    Inline XBRL Taxonomy Extension Scheme 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 Labels Linkbase Document
101.PRE    Inline XBRL Taxonomy Extension Presentation Linkbase Document
104    Cover Page formatted as Inline XBRL and contained Exhibit 101
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SIGNATURES
Pursuant to the requirements 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.
TRIBUNE PUBLISHING COMPANY
August 5, 2020By:/s/ Michael N. Lavey
Michael N. Lavey
Interim Chief Financial Officer, Chief Accounting Officer and Controller
Date:May 6, 2021

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