Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 01, 2018 | Aug. 03, 2018 | |
Entity Registrant Name | MCCLATCHY CO | |
Entity Central Index Key | 1,056,087 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 1, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Common Class A | ||
Entity Common Stock, Shares Outstanding | 5,347,337 | |
Common Class B | ||
Entity Common Stock, Shares Outstanding | 2,428,191 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
REVENUES - NET: | ||||
Net revenues | $ 204,348 | $ 225,120 | $ 403,206 | $ 446,332 |
OPERATING EXPENSES: | ||||
Compensation | 77,937 | 86,823 | 157,149 | 178,231 |
Newsprint, supplements and printing expenses | 13,761 | 16,459 | 27,420 | 34,304 |
Depreciation and amortization | 19,222 | 19,624 | 38,455 | 39,428 |
Other operating expenses | 91,817 | 90,104 | 181,466 | 184,821 |
Other asset write-downs | 59 | 1,957 | ||
Operating expenses, total | 202,737 | 213,010 | 404,549 | 438,741 |
OPERATING INCOME (LOSS) | 1,611 | 12,110 | (1,343) | 7,591 |
NON-OPERATING INCOME (EXPENSE): | ||||
Interest expense | (17,939) | (20,292) | (36,835) | (40,746) |
Interest income | 169 | 136 | 306 | 289 |
Equity income (loss) in unconsolidated companies, net | 2,314 | (159) | 1,046 | (96) |
Impairments related to equity investments, net | (46,147) | (169,147) | ||
Loss on extinguishment of debt, net | (19) | (869) | (5,368) | (869) |
Retirement benefit expense | (2,779) | (3,328) | (5,557) | (6,655) |
Other - net | (104) | 23 | (65) | 83 |
Non-operating income (expense), total | (18,358) | (70,636) | (46,473) | (217,141) |
Loss before income taxes | (16,747) | (58,526) | (47,816) | (209,550) |
Income tax (benefit) expense | 3,618 | (21,080) | 11,490 | (76,529) |
NET LOSS | $ (20,365) | $ (37,446) | $ (59,306) | $ (133,021) |
Net loss per common share: | ||||
Net loss per share - basic (in dollars per share) | $ (2.62) | $ (4.91) | $ (7.66) | $ (17.49) |
Net loss per share - diluted (in dollars per share) | $ (2.62) | $ (4.91) | $ (7.66) | $ (17.49) |
Weighted average number of common shares: | ||||
Basic (in shares) | 7,761 | 7,622 | 7,741 | 7,605 |
Diluted (in shares) | 7,761 | 7,622 | 7,741 | 7,605 |
Advertising | ||||
REVENUES - NET: | ||||
Net revenues | $ 106,953 | $ 125,239 | $ 206,840 | $ 245,128 |
Audience | ||||
REVENUES - NET: | ||||
Net revenues | 84,825 | 89,915 | 171,103 | 181,331 |
Other | ||||
REVENUES - NET: | ||||
Net revenues | $ 12,570 | $ 9,966 | $ 25,263 | $ 19,873 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||
NET LOSS | $ (20,365) | $ (37,446) | $ (59,306) | $ (133,021) |
Pension and post retirement plans: | ||||
Change in pension and post-retirement benefit plans, net of taxes of $0, $(1,714), $0 and $(3,428) | 5,549 | 2,570 | 11,099 | 5,141 |
Investment in unconsolidated companies: | ||||
Other comprehensive income, net of taxes of $0, $(2,649), $0 and $(2,697) | 3,974 | 4,046 | ||
Other comprehensive income | 5,549 | 6,544 | 11,099 | 9,187 |
Comprehensive loss | $ (14,816) | $ (30,902) | $ (48,207) | $ (123,834) |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||
Change in pension and post-retirement benefit plans, taxes | $ 0 | $ (1,714,000) | $ 0 | $ (3,428,000) |
Other comprehensive income, taxes | $ 0 | $ (2,649,000) | $ 0 | $ (2,697,000) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 01, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 20,128 | $ 99,387 |
Trade receivables (net of allowances of $2,919 and $3,225 ) | 71,939 | 101,081 |
Other receivables | 10,319 | 11,556 |
Newsprint, ink and other inventories | 9,164 | 7,918 |
Assets held for sale | 6,050 | 6,332 |
Other current assets | 19,532 | 19,000 |
Total current assets | 137,132 | 245,274 |
Property, plant and equipment, net | 246,520 | 257,639 |
Intangible assets: | ||
Identifiable intangibles - net | 204,259 | 228,222 |
Goodwill | 705,174 | 705,174 |
Total intangible assets | 909,433 | 933,396 |
Investments and other assets: | ||
Investments in unconsolidated companies | 7,371 | 7,172 |
Other assets | 64,551 | 62,437 |
Total investments and other assets | 71,922 | 69,609 |
TOTAL ASSETS | 1,365,007 | 1,505,918 |
Current liabilities: | ||
Current portion of long-term debt | 74,140 | |
Accounts payable | 35,387 | 31,856 |
Accrued pension liabilities | 8,941 | 8,941 |
Accrued compensation | 21,893 | 24,050 |
Income taxes payable | 12,715 | 10,133 |
Unearned revenue | 62,058 | 60,436 |
Accrued interest | 7,624 | 7,954 |
Other accrued liabilities | 16,127 | 18,832 |
Total current liabilities | 164,745 | 236,342 |
Non-current liabilities : | ||
Long-term debt | 688,359 | 707,252 |
Deferred income taxes | 26,237 | 28,062 |
Pension and postretirement obligations | 589,238 | 599,763 |
Financing obligations | 105,401 | 91,905 |
Other long-term obligations | 45,544 | 46,926 |
Total non-current liabilities | 1,454,779 | 1,473,908 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Additional paid-in capital | 2,216,168 | 2,215,109 |
Accumulated deficit | (2,032,071) | (1,970,097) |
Treasury stock at cost, 43,155 shares and 3,157 shares | (422) | (51) |
Accumulated other comprehensive loss | (438,270) | (449,369) |
Total stockholders' equity | (254,517) | (204,332) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 1,365,007 | 1,505,918 |
Common Class A | ||
Stockholders' equity: | ||
Common stock | 54 | 52 |
Common Class B | ||
Stockholders' equity: | ||
Common stock | $ 24 | $ 24 |
CONDENSED CONSOLIDATED BALANCE6
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jul. 01, 2018 | Dec. 31, 2017 |
Trade receivables, allowance | $ 2,919 | $ 3,225 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Treasury stock, shares | 43,155 | 3,157 |
Common Class A | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 5,385,339 | 5,256,325 |
Common Class B | ||
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 2,428,191 | 2,443,191 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2018 | Jun. 25, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (59,306) | $ (133,021) |
Reconciliation to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 38,455 | 39,428 |
Gain on disposal of property and equipment (excluding other asset write-downs) | (2,820) | (3,694) |
Retirement benefit expense | 5,557 | 6,655 |
Stock-based compensation expense | 1,061 | 1,461 |
Equity (income) loss in unconsolidated companies | (1,046) | 96 |
Impairments related to equity investments | 169,147 | |
Distributions of income from equity investments | 2,876 | |
Loss on extinguishment of debt, net | 5,368 | 869 |
Other asset write-downs | 59 | 1,957 |
Other | (1,942) | (3,371) |
Changes in certain assets and liabilities: | ||
Trade receivables | 26,474 | 24,634 |
Inventories | (1,246) | 1,097 |
Other assets | (1,141) | 280 |
Accounts payable | 3,531 | (4,135) |
Accrued compensation | (2,157) | 2,189 |
Income taxes | 789 | (85,517) |
Accrued interest | (330) | (204) |
Other liabilities | (4,890) | (2,105) |
Net cash provided by operating activities | 9,292 | 15,766 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (5,872) | (4,626) |
Proceeds from sale of property, plant and equipment and other | 4,025 | 8,932 |
Contributions to cost and equity investments | (1,925) | (2,683) |
Other, net | (11) | |
Net cash provided by (used in) investing activities | (3,772) | 1,612 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repurchase of public notes | (99,826) | (15,675) |
Proceeds from sale-leaseback financial obligations | 15,749 | |
Purchase of treasury shares | (371) | (287) |
Other | (331) | 716 |
Net cash provided by (used in) financing activities | (84,779) | (15,246) |
Increase (decrease) in cash, cash equivalents and restricted cash | (79,259) | 2,132 |
Cash, cash equivalents and restricted cash at beginning of period | 131,354 | 36,248 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ 52,095 | $ 38,380 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jul. 01, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | THE MCCLATCHY COMPANY 1. SIGNIFICANT ACCOUNTING POLICIES Business and Basis of Accounting The McClatchy Company (“Company,” “we,” “us” or “our”) operates 30 media companies in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. We are a publisher of brands such as the Miami Herald , The Kansas City Star , The Sacramento Bee , The Charlotte Observer , The (Raleigh) News & Observer , and the (Fort Worth) Star-Telegram . We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the NYSE American under the symbol MNI. Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulation of the Securities and Exchange Commission requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The condensed consolidated financial statements include the Company and our subsidiaries. Intercompany items and transactions are eliminated. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, that are necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. The financial statements contained in this report are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”). Each of the fiscal periods included herein comprise 13 weeks for the second-quarter periods and 26 weeks for the six-month periods. See Note 9, Subsequent Events , for a discussion of recent refinancing transactions subsequent to the end of our second quarter of 2018. Fair Value of Financial Instruments We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – Unadjusted quoted prices available in active markets for identical investments as of the reporting date. Level 2 – Observable inputs to the valuation methodology are other than Level 1 inputs and are either directly or indirectly observable as of the reporting date and fair value can be determined through the use of models or other valuation methodologies. Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability, and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk. Our policy is to recognize significant transfers between levels at the actual date of the event or circumstance that caused the transfer. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents, accounts receivable and accounts payable. As of July 1, 2018, and December 31, 2017, the carrying amount of these items approximates fair value because of the short maturity of these financial instruments. Long-term debt. The fair value of our long-term debt is determined using quoted market prices and other inputs that were derived from available market information, including the current market activity of our publicly-traded notes and bank debt, trends in investor demand for debt and market values of comparable publicly-traded debt. These are considered to be Level 2 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value. At July 1, 2018 and December 31, 2017, the estimated fair value of long-term debt, including the current portion of long-term debt, was $639.2 million and $810.7 million, respectively. At July 1, 2018, and December 31, 2017, the carrying value of our long-term debt, including the current portion of long-term debt, if any, was $688.4 million and $781.4 million, respectively. Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Our non-financial assets that may be measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and equity method investments. All of these are measured using Level 3 inputs. We utilize valuation techniques that seek to maximize the use of observable inputs and minimize the use of unobservable inputs. The significant unobservable inputs include the expected cash flows and the discount rates that we estimate market participants would seek for bearing the risk associated with such assets. Newsprint, ink and other inventories Newsprint, ink and other inventories are stated at the lower of cost (based principally on the first‑in, first‑out method) and net realizable value. During the six months ended June 25, 2017, we recorded a $2.0 million write‑down of non-newsprint inventory, which is reflected in the other asset write-downs line on our condensed consolidated statement of operations. There were no similar write-downs of newsprint, ink or other inventories during the quarter and six months ended July 1, 2018. Property, Plant and Equipment Depreciation expense with respect to property, plant and equipment is summarized below: Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Depreciation expense $ 7,295 $ 7,531 $ 14,492 $ 15,252 Assets Held for Sale During the six months ended July 1, 2018, we began to actively market for sale the land and buildings at two of our media companies. In connection with classifying these assets as assets held for sale, the carrying value of the land and building at one of the properties was reduced to its estimated fair value less selling costs, as determined based on the current market conditions and the estimated selling price. As a result, an impairment charge of $0.1 million was recorded during the six months ended July 1, 2018, and is included in other asset write-downs on our condensed consolidated statement of operations. The land and building at this property were sold during the quarter ended July 1, 2018, with no gain or additional loss. The assets at the second property remain classified as assets held for sale. Intangible Assets and Goodwill We test for impairment of goodwill annually at year‑end, or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The required approach uses accounting judgments and estimates of future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results. Impairment testing is done at a reporting unit level. We perform this testing on our operating segments, which are also considered our reporting units. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The fair value of our reporting units is determined using a combination of a discounted cash flow model and market based approaches. The estimates and judgments that most significantly affect the fair value calculation are assumptions related to revenue growth, newsprint prices, compensation levels, discount rate, hypothetical transaction structures, and for the market based approach, private and public market trading multiples for newspaper assets. We consider current market capitalization, based upon the recent stock market prices plus an estimated control premium, in determining the reasonableness of the aggregate fair value of the reporting units. We had no impairment of goodwill during the quarter and six months ended July 1, 2018 or June 25, 2017. Newspaper mastheads (newspaper titles and website domain names) are not subject to amortization and are tested for impairment annually at year‑end, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of each newspaper masthead with its carrying amount. We use a relief-from-royalty approach, which utilizes the discounted cash flow model to determine the fair value of each newspaper masthead. We had no impairment of newspaper mastheads during the quarter and six months ended July 1, 2018, or June 25, 2017. Long‑lived assets such as intangible assets subject to amortization (primarily advertiser and subscriber lists) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of such asset group. We had no impairment of long‑lived assets subject to amortization during the quarter and six months ended July 1, 2018, or June 25, 2017. Financial Obligations Financial obligations consist of contributions of real properties to the Pension Plan in 2016 and 2011, and real property previously owned by The Sacramento Bee that was sold and leased back during the third quarter of 2017. In April 2018, we sold and leased back real property owned by The State in Columbia, SC, and as a result, our long-term financial obligations increased by approximately $14.6 million during the second quarter of 2018. Segment Reporting We operate 30 media companies, providing each of our communities with high-quality news and advertising services in a wide array of digital and print formats. We have two operating segments that we aggregate into a single reportable segment because each has similar economic characteristics, products, customers and distribution methods. Our operating segments are based on how our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”), makes decisions about allocating resources and assessing performance. The CODM is provided discrete financial information for the two operating segments. Each operating segment consists of a group of media companies and both operating segments report to the same segment manager. One of our operating segments (“Western Segment”) consists of our media companies’ operations in the West and Midwest, while the other operating segment (“Eastern Segment”) consists primarily of media operations in the Carolinas and East. Accumulated Other Comprehensive Loss Our accumulated other comprehensive loss (“AOCL”) and reclassifications from AOCL, net of tax, consisted of the following: Other Minimum Comprehensive Pension and Loss Post- Related to Retirement Equity (in thousands) Liability Investments Total Balance at December 31, 2017 $ (442,406) $ (6,963) $ (449,369) Amounts reclassified from AOCL 11,099 — 11,099 Other comprehensive income 11,099 — 11,099 Balance at July 1, 2018 $ (431,307) $ (6,963) $ (438,270) Amount Reclassified from AOCL Quarters Ended Six Months Ended (in thousands) July 1, June 25, July 1, June 25, Affected Line in the Condensed AOCL Component 2018 2017 2018 2017 Consolidated Statements of Operations Minimum pension and post-retirement liability $ 5,549 $ 4,284 $ 11,099 $ 8,569 Retirement benefit expense — (1,714) — (3,428) Benefit for income taxes (1) $ 5,549 $ 2,570 $ 11,099 $ 5,141 Net of tax _____________________ (1) There is no income tax benefit associated with the quarter and six months ended July 1, 2018, due to the recognition of a valuation allowance. Income Taxes We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted. The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal corporate rate from 35% to 21%; (ii) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (iii) creating a new limitation on deductible interest expense; (iv) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (v) bonus depreciation that will allow for full expensing of qualified property; and (vi) limitations on the deductibility of certain executive compensation. The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”) in December 2017, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides that the measurement period for the tax effects of the Tax Act should not extend more than one year from the date the Tax Act was enacted. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but the company is able to determine a reasonable estimate, the company must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740, Income Taxes , on the basis of the provisions of the tax laws that were in effect immediately before the Tax Act was enacted. We continue to evaluate the tax implications of the changes to the Tax Act for which our accounting was incomplete, including the impact on state taxes, certain compensation arrangements and depreciation. We will record appropriate adjustments, if any, in the periods in which we conclude our analysis. A tax valuation allowance is required when it is more-likely-than-not that all or a portion of deferred tax assets may not be realized. The timing of recording or releasing a valuation allowance requires significant judgment. Establishment and removal of a valuation allowance requires us to consider all positive and negative evidence and to make a judgmental decision regarding the amount of valuation allowance required as of a reporting date. The assessment takes into account expectations of future taxable income or loss, available tax planning strategies and the reversal of temporary differences. The development of these expectations involves the use of estimates such as operating profitability. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. We performed our assessment of the deferred tax assets during the third and fourth quarters of 2017, weighing the positive and negative evidence as outlined in ASC 740-10, Income Taxes . As we have incurred three years of cumulative pre-tax losses, such objective negative evidence limits our ability to give significant weight to other positive subjective evidence, such as projections for future growth and profitability. As of December 31, 2017, our valuation allowance against a majority of our deferred tax assets was $109.7 million. For the quarter and six months ended July 1, 2018, we recorded a valuation allowance charge of $10.1 million and $24.4 million, respectively, which is recorded in income tax (benefit) expense on our condensed consolidated statements of operations. Our valuation allowance as of July 1, 2018, was $134.1 million. We will continue to maintain a valuation allowance against our deferred tax assets until we believe it is more likely than not that these assets will be realized in the future. If sufficient positive evidence arises in the future that provides an indication that all of or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance may be reversed, in whole or in part, in the period that such determination is made. Current generally accepted accounting principles prescribe a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise’s tax returns. We recognize accrued interest related to unrecognized tax benefits in interest expense. Accrued penalties are recognized as a component of income tax expense. Earnings Per Share (EPS) Basic EPS excludes dilution from common stock equivalents and reflects income divided by the weighted average number of common shares outstanding for the period. Diluted EPS is based upon the weighted average number of outstanding shares of common stock and dilutive common stock equivalents in the period. Common stock equivalents arise from dilutive stock appreciation rights and restricted stock units, and are computed using the treasury stock method. Anti-dilutive common stock equivalents are excluded from diluted EPS. The weighted average anti-dilutive common stock equivalents that could potentially dilute basic EPS in the future, but were not included in the weighted average share calculation, consisted of the following: Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (shares in thousands) 2018 2017 2018 2017 Anti-dilutive common stock equivalents 198 388 201 325 Cash Flow Information Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above: July 1, December 31, (in thousands) 2018 2017 Cash and equivalents $ 20,128 $ 99,387 Restricted cash included in other assets (1) 31,967 31,967 Total cash, cash equivalents and restricted cash $ 52,095 $ 131,354 _____________________ (1) Restricted cash balances are certificates of deposits secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and a certain property lease. Cash paid for interest and income taxes and other non-cash activities consisted of the following: Six Months Ended July 1, June 25, (in thousands) 2018 2017 Interest paid (net of amount capitalized) $ 29,244 $ 35,127 Income taxes paid (net of refunds) 12,019 8,870 Other non-cash investing and financing activities related to pension plan transactions: Reduction of financing obligation due to sale of real properties by pension plan (2,667) — Reduction of PP&E due to sale of real properties by pension plan (2,854) — Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 (“Topic 606”), “ Revenue from Contracts with Customers. ” Topic 606 supersedes the revenue recognition requirements in Topic 605 " Revenue Recognition. " ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. Topic 606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In 2016 and 2017, the FASB issued additional updates: ASU No. 2016-08, 2016-10, 2016-11, 2016-12, 2016-20 and 2017-05. These updates provided further guidance and clarification on specific items within the previously issued update. We adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method. See Note 2 for further details. In January 2016, the FASB issued ASU No. 2016-01, “ Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ” ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. We adopted ASU 2016-01 as of January 1, 2018, on a prospective basis but it did not have an impact on our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ” ASU 2016-15 addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 as of January 1, 2018, retrospectively but it did not have an impact on our condensed consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash. ” ASU 2016-18 addresses the presentation of restricted cash in the statement of cash flows. The standard requires an entity to include restricted amounts with cash and cash equivalents in the statement of cash flows. An entity will no longer present transfers between cash and cash equivalents and restricted amounts on the statement of cash flows. We adopted ASU 2016-18 as of January 1, 2018, using the retrospective transition method to each period presented. As a result of the adoption, net cash provided by operating activities was adjusted to exclude the changes in restricted cash, resulting in a decrease of $1.0 million in the six months ended June 25, 2017, on our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “ Leases ” (Accounting Standards Codification 842 (“ASC 842”)) and it replaces the existing guidance in ASC 840, “ Leases. ” ASC 842 requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The new lease standard does not substantially change lessor accounting. In 2018, the FASB issued ASU No. 2018-01 that provides further guidance and clarification on specific items within the previously issued update. ASC 842 is effective for us for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are evaluating the impact this standard will have on our condensed consolidated financial statements, but expect an increase in assets and liabilities on our condensed consolidated balance sheet. We plan to finalize our determination of the impact by the end of the fourth quarter of 2018. In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ” ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected credit losses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. It is effective for us for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim or annual reporting periods beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, “ Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ” ASU 2018-02 allows for reclassification of stranded tax effects resulting from the Tax Act from accumulated other comprehensive income to retained earnings. Consequently, the standard eliminates the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the standard only relates to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This standard also requires certain disclosures about the stranded tax effects. It is effective for us for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements. |
REVENUES
REVENUES | 6 Months Ended |
Jul. 01, 2018 | |
REVENUES | |
REVENUES | 2. REVENUES Adoption of ASC 2014-09 (Topic 606), “Revenue from Contracts with Customers” On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. We recorded a net increase to opening accumulated deficit of $2.7 million as of January 1, 2018, due to the cumulative impact of adopting Topic 606, with the impact primarily related to our audience revenues. The impact to revenues as a result of applying Topic 606 was an increase of $0.1 million and $0.4 million for the quarter and six months ended July 1, 2018, respectively, compared to applying Topic 605. Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. All revenues recognized on the condensed consolidated statements of operations are the result of contracts with customers, except for revenues associated with lease income where we are the lessor through a sublease arrangement, as these are out of the scope of Topic 606. Advertising Revenues We generate revenues primarily by delivering advertising on our digital media sites, on our partners’ websites and in our newspapers. These advertising revenues are generated through digital and print performance obligations that are included in contracts with customers, which are typically one year or less in duration or commitment. There are no differences in the treatment of digital and print advertising performance obligations or the recognition of revenues for retail, national, classified, and direct marketing revenue categories under Topic 606. We generate advertising revenues through digital products that are sold on cost-per-thousand impressions (“CPM”) which means that an advertiser pays based upon number of times their ad is displayed on our owned and operated websites and apps, our partners’ websites, ad exchanges, in a video pre-roll or a programmatic bidding exchange. Such revenues are recognized according to the timing outlined in the contract. There are also monthly marketing campaigns which may include multiple products such as items sold by CPM, reputation management, search engine marketing and search engine optimization. In these arrangements as well as in a CPM sale, the contracted goods and services are performed over the specific contract term and the transfer of the performance obligation occurs as the benefits are consumed by the customer. As such, revenue is recognized daily regardless of the performance obligations classification of timing of being point in time or overtime. Print advertising is advertising that is printed in a publication, inserted into a publication, or physically mailed to a customer. Our performance obligations for print products are directly associated with the inclusion of the advertisement in the final publication and delivery of the product on the contracted distribution day. Revenues are recognized at the point in time that the newspaper publication is delivered and distribution of the advertisement is satisfied. Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. We estimate these amounts based on the expected value approach. For ads placed on our partners’ websites or selling a product hosted or managed by partners, we evaluate whether we are the principal or agent. Generally, we report advertising revenues for ads placed on our partners’ websites or for the resale of their products on a gross basis; that is, the amounts billed to our customers are recorded as revenues, and amounts paid to our partners for their products or advertising space are recorded as operating expenses. Where we are the principal, we are primarily responsible to our customers for fulfillment of the contract goals though, from time to time, the use of third party goods or services. Our control is further supported by our level of discretion in establishing price and in some cases, controlling inventory before it is transferred to the customer. Most products, including the printed newspaper advertising product, banner ads on our websites and video ads on our owned and operated player are reported on a gross basis. However, there are some third party products and services that we offer to customers, such as Cars.com and various revenue share arrangements such as exchange platforms, that are reported on a net basis. Revenues are earned through being a reseller of a product or participating in an exchange where control over the service provided is limited and costs of the arrangement are net of revenue received. Audience Revenues Audience revenues include digital and print subscriptions or a combination of both at various frequencies of delivery. Our subscribers typically pay us in advance of when their subscriptions start or shortly thereafter. Our performance obligation to subscribers of our digital products is the real-time access to news and information delivered through multiple digital platforms. Our performance obligation to our traditional print subscribers is delivery of the physical newspaper according to their subscription plan. Revenues related to digital and print subscriptions are recognized each day that a product is delivered to the subscriber. Digital subscriptions may be purchased for a day, month, quarter, or year, and revenue is reported daily over the term of the contract. Traditional print subscriptions may have various frequencies of delivery based upon the subscribers delivery preference. Revenues are recognized based upon each delivery, therefore at a point in time. Certain subscribers may enter into a grace period (“grace”) after their previous contract term has expired but before payment has be received on the renewal. Grace is granted as a continuation of the subscription contract, in order to not disrupt service, and the extension is accounted for as variable consideration. We estimate these revenue amounts based on the expected amount to be received, taking into account the expected discontinuation of service or nonpayment based on historical experience. Other Revenues Other revenues include primarily commercial printing and distribution revenues. The commercial print agreements are between us and a third party publisher to print and make available for distribution the finished products. Commercial print contracts are for a daily finished product and each day’s product is unique, or a separate performance obligation. Revenue is recorded at a point in time upon completion of each day’s print project. The performance obligation for distribution revenues is the transportation of third-party published products to their subscribers or stores for resale. Distribution is performed substantially the same over the life of the contract and revenue is recognized at the point in time each performance obligation is completed. We report distribution revenues from the third-party publishers on a gross basis. That is, the amounts that we bill to third party publishers to deliver their finished product to their customers is recorded as revenues, and the amounts paid to our independent carriers to deliver the third party product is recorded as operating expenses. Arrangements with Multiple Performance Obligations Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its standalone selling price. We generally determine standalone selling prices for audience revenue contracts based upon observable market values and the adjusted market assessment. For advertising revenue contracts with multiple performance obligations, stand alone selling price is based on the prices charged to customers or on an adjusted market assessment. Unearned Revenues We record unearned revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. The increase in the unearned revenue balance for the six months ended July 1, 2018, was primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $49.1 million of revenues recognized that were included in the unearned revenue balance as of December 31, 2017. Our payment terms vary for advertising and subscriber customers. Subscribers generally pay in advance of up to one year. Advertiser payments are due within 30 days of invoice issuance and therefore amounts paid in advance are not significant. For advertisers that are considered to be at a higher risk of collectability due to payment history or credit processing, we require payment before the products or services are delivered to the customer. Practical Expedients and Exemptions We expense sales commissions when incurred because the amortization period would have been one year or less if capitalized. These costs are recorded within compensation expenses. We record usage-based royalties promised in exchange for use of our intellectual property, including but not limited to photographs and articles. These royalty revenues are accrued when estimates of usage and recoverability are made. These revenues are recorded within other revenues. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 6 Months Ended |
Jul. 01, 2018 | |
INTANGIBLE ASSETS AND GOODWILL | |
INTANGIBLE ASSETS AND GOODWILL | 3. INTANGIBLE ASSETS AND GOODWILL Intangible assets subject to amortization (primarily advertiser lists, subscriber lists and developed technology), mastheads and goodwill consisted of the following: December 31, Amortization July 1, (in thousands) 2017 Expense 2018 Intangible assets subject to amortization $ 839,284 $ — $ 839,284 Accumulated amortization (761,013) (23,963) (784,976) 78,271 (23,963) 54,308 Mastheads 149,951 — 149,951 Goodwill 705,174 — 705,174 Total $ 933,396 $ (23,963) $ 909,433 Amortization expense with respect to intangible assets is summarized below: Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Amortization expense $ 11,927 $ 12,093 $ 23,963 $ The estimated amortization expense for the remainder of fiscal year 2018 and the five succeeding fiscal years is as follows: Amortization Expense Year (in thousands) 2018 (Remainder) $ 23,697 2019 24,154 2020 803 2021 680 2022 655 2023 667 |
INVESTMENTS IN UNCONSOLIDATED C
INVESTMENTS IN UNCONSOLIDATED COMPANIES | 6 Months Ended |
Jul. 01, 2018 | |
INVESTMENTS IN UNCONSOLIDATED COMPANIES | |
INVESTMENTS IN UNCONSOLIDATED COMPANIES | 4. INVESTMENTS IN UNCONSOLIDATED COMPANIES On June 19, 2017, we along with the then-existing ownership group of CareerBuilder, LLC (“CareerBuilder”) announced that we had entered into an agreement to sell a majority of the collective ownership interest in CareerBuilder to an investor group. The transaction closed on July 31, 2017. We received $73.9 million from the closing of the transaction, consisting of approximately $7.3 million in normal distributions and $66.6 million of gross proceeds. As a result of the closing of the transaction, our ownership interest in CareerBuilder was reduced to approximately 3.0% from 15.0%. As a result, we recorded $45.6 million and $168.6 million in pre-tax impairment charges on our equity investment in CareerBuilder during the quarter and six months ended June 25, 2017, respectively. In the quarter and six months ended July 1, 2018, we received distributions totaling approximately $2.8 million from CareerBuilder, which relate to returns of earnings. Our investment in CareerBuilder is accounted for under the cost method (measurement alternative under ASU 2016-01). |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jul. 01, 2018 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 5. LONG-TERM DEBT Our long-term debt consisted of the following: Face Value at Carrying Value July 1, July 1, December 31, (in thousands) 2018 2018 2017 Notes: 9.00% senior secured notes due in 2022 $ 344,101 $ 339,976 $ 433,819 7.150% debentures due in 2027 89,188 85,458 85,262 6.875% debentures due in 2029 276,230 262,925 262,311 Long-term debt $ 709,519 $ 688,359 $ 781,392 Less current portion — — 74,140 Total long-term debt, net of current $ 709,519 $ 688,359 $ 707,252 Our outstanding notes are stated net of unamortized debt issuance costs, and unamortized discounts, if applicable, totaling $21.2 million and $23.7 million as of July 1, 2018, and December 31, 2017, respectively. Debt Redemptions, Repurchases and Loss on Extinguishment of Debt During the first six months of 2018 and 2017, we reduced our outstanding debt as follows: Six Months Ended July 1, June 25, 2018 2017 (in thousands) Face Value Face Value 9.00% senior secured notes due in 2022 $ 95,529 $ 15,000 During the quarter and six months ended July 1, 2018, we redeemed $0.5 million of our 9.00% senior secured notes due in 2022 (“2022 Notes”) at par through a tender offer that expired on May 22, 2018, and we wrote off the associated debt issuance costs. Also during in the six months ended July 1, 2018, we redeemed $75.0 million of our 2022 Notes, which we had previously announced in December 2017, and we repurchased $20.0 million of the 2022 Notes through a privately negotiated transaction. We redeemed and repurchased the $95.0 million in 2022 Notes at a premium and wrote off the associated debt issuance costs. As a result of all of these transactions, we recorded a loss on the extinguishment of debt of $19.0 thousand and $5.4 million during the quarter and six months ended July 1, 2018, respectively. During the quarter and six months ended June 25, 2017, we repurchased a total $15.0 million of our 2022 Notes through a privately negotiated transaction. We repurchased these notes at a premium and wrote off debt issuance costs resulting in a loss on the extinguishment of debt of $0.9 million being recorded during the quarter and six months ended June 25, 2017. As discussed below, subsequent to July 1, 2018, we refinanced and replaced a significant portion of our debt outstanding at such time, with other long-term debt, therefore, we have continued to classify it as long-term in nature. Debt Refinancing in July 2018 On July 16, 2018, we entered into an Indenture (“2026 Notes Indenture”), among the Company, subsidiaries of the Company party thereto as guarantors and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (“2026 Notes Trustee”), pursuant to which we issued $310.0 million aggregate principal amount of 9.00% Senior Secured Notes due 2026 (“2026 Notes”) as described more fully under the section “ 2026 Senior Secured Notes and Indenture ” below. In connection with the issuance of the 2026 Notes and other junior debt instruments described below and as discussed more fully in Note 9, “ Subsequent Events ,” we completed a refinancing of all of our 2022 Notes and substantially all of our debentures, and our revolving credit facilities. On July 16, 2018, we deposited sufficient funds with The Bank of New York Mellon Trust Company, N.A., as trustee (“2022 Notes Trustee”) for the our 2022 Notes, to pay the redemption price payable in respect of all outstanding 2022 Notes, plus accrued and unpaid interest on the 2022 Notes to, but excluding, the redemption date. The 2022 Notes were issued under an Indenture, dated as of December 18, 2012, among the Company, subsidiaries of the Company party thereto as guarantors and the 2022 Notes Trustee (“2022 Notes Indenture”). As a consequence of the foregoing, we satisfied and discharged our obligations (subject to certain exceptions) under the 2022 Notes Indenture and the related security documents in accordance with the satisfaction and discharge provisions of the 2022 Notes Indenture. Upon the satisfaction and discharge of the 2022 Notes Indenture on July 16, 2018, all of the liens on the collateral securing the 2022 Notes were released and we and the guarantors were discharged from our respective obligations under the 2022 Notes and the guarantees thereof. On July 16, 2018, the 2022 Notes Trustee, at our direction, delivered a notice of redemption to holders of all $344.1 million in aggregate principal amount of outstanding 2022 Notes. ABL Credit Agreement Also on July 16, 2018, we entered into a Credit Agreement, among the Company, the subsidiaries of the Company party thereto as borrowers and Wells Fargo Bank, N.A. (“Wells Fargo”), as administrative agent (“ABL Credit Agreement”). The ABL Credit Agreement provides for up to $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provides for a $35.0 million cash secured letter of credit facility. The commitments under the ABL Credit Agreement expire July 16, 2023. Our obligations under the ABL Credit Agreement are guaranteed by us and certain of our subsidiaries meeting materiality thresholds set forth in the ABL Credit Agreement as described more fully in Note 9. Loans under the ABL Credit Agreement bear interest, at our option, at either a rate based on the London Interbank Offered Rate (“LIBOR”) for the applicable interest period or a base rate, in each case plus a margin. The base rate is the highest of Wells Fargo’s publicly announced prime rate, the federal funds rate plus 0.50% and one-month LIBOR plus 1.0%. The margin ranges from 1.75% to 2.25% for LIBOR loans and 0.75% to 1.25% for base rate loans and is determined based on average excess availability. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of LIBOR loans. The ABL Credit Agreement requires, at any time the availability under our revolving credit facility falls below the greater of 12.5% of the total facility size or approximately $8.1 million, to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 until such time as the availability under our revolving credit facility exceeds such threshold for 30 consecutive days. In connection with entering into the ABL Credit Agreement and the refinancing of our 2022 Notes as described above, we terminated our Third Amended and Restated Credit Agreement, which had a maturity date of December 18, 2019 and had no borrowings outstanding as of the end of our second quarter of 2018 or as of July 16, 2018, the date of termination. Separately we are party to an Issuance and Reimbursement Agreement (“LC Agreement”) with Bank of America, N.A., under which we may request letters of credit be issued on our behalf in an aggregate face amount not to exceed $35.0 million. We had standby letters of credit totaling $29.7 million outstanding under the LC Agreement as of July 1, 2018. We are required to provide cash collateral equal to 101% of the aggregate undrawn stated amount of each outstanding letter of credit. We expect this LC Agreement will remain in place for up to 90 days from July 16, 2018, as we transition our letters of credit to the ABL Credit Agreement. Cash collateral associated with this LC Agreement is classified in our condensed consolidated balance sheets in other assets. 2026 Senior Secured Notes and Indenture As discussed above, on July 16, 2018, we entered into the 2026 Notes Indenture, pursuant to which we issued $310.0 million aggregate principal amount of the 2026 Notes in a private placement to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act of 1933, as amended (“Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The 2026 Notes mature on July 15, 2026, and bear interest at a rate of 9.00% per annum. Interest on the 2026 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2019. We will be required to redeem the 2026 Notes from the net cash proceeds of certain asset dispositions and from a portion of our excess cash flow (as defined in the 2026 Notes Indenture). The 2026 Notes Indenture contains covenants that, among other things, restrict our ability and our restricted subsidiaries to: · incur certain additional indebtedness and issue preferred stock; · make certain distributions, investments and other restricted payments; · sell assets; · agree to any restrictions on the ability of restricted subsidiaries to make payments to us; · create liens; · merge, consolidate or sell substantially all of our assets, taken as a whole; and · enter into certain transactions with affiliates. These covenants are subject to a number of other limitations and exceptions set forth in the 2026 Notes Indenture. Junior Lien Term Loan Agreement On July 16, 2018, we entered into a Junior Lien Term Loan Credit Agreement, among the Company, the guarantors party thereto, the lenders party thereto and The Bank of New York Mellon, as administrative agent and collateral agent (“Junior Term Loan Agreement”). The Junior Term Loan Agreement provides for a $157.1 million secured term loan (“Tranche A Junior Term Loans”) and a $193.5 million term loan (“Tranche B Junior Term Loans”). The Tranche A Junior Term Loans mature on July 15, 2030 and the Tranche B Junior Term Loans mature on July 15, 2031. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes as set forth in the Junior Term Loan Agreement. The proceeds of the loans under the Junior Term Loan Agreement were used to effect the exchange with the holder of approximately $82.1 million in aggregate principal amount of 2027 Debentures (as defined in Note 9) and approximately $193.5 million in aggregate principal amount of 2029 Debentures (as defined in Note 9) and to pay fees, costs, and expenses in connection with our debt refinancing. Tranche A Junior Term Loans bear interest at a rate per annum equal to 7.795% and Tranche B Junior Term Loans bear interest at a rate per annum equal to 6.875%. Interest on the loans is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019. In general, the affirmative and negative covenants of the Junior Term Loan Agreement are substantially the same as the covenants in the 2026 Notes Indenture. Other Debt After giving effect to the Junior Term Loan Agreements, we have $7.1 million aggregate principal amount of 2027 Debentures and $82.8 million aggregate principal amount of 2029 Debentures outstanding as discussed more fully in Note 9. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 6 Months Ended |
Jul. 01, 2018 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 6. EMPLOYEE BENEFITS Pension Plan We maintain a qualified defined benefit pension plan (“Pension Plan”), which covers eligible current and former employees and has been frozen since March 31, 2009. No new participants may enter the Pension Plan and no further benefits will accrue. However, years of service continue to count toward early retirement calculations and vesting of benefits previously earned. We also have a limited number of supplemental retirement plans to provide certain key current and former employees with additional retirement benefits. These plans are funded on a pay-as-you-go basis and the accrued pension obligation is largely included in other long-term obligations. The elements of retirement benefit expense are as follows: Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Pension plans: Interest Cost 19,789 21,367 $ 39,577 $ 42,734 Expected return on plan assets (22,624) (22,393) (45,248) (44,785) Actuarial loss 6,296 5,084 12,591 10,168 Net pension expense 3,461 4,058 6,920 8,117 Net post-retirement benefit credit (682) (730) (1,363) (1,462) Net retirement benefit expenses $ 2,779 $ 3,328 $ 5,557 $ 6,655 In May 2018, the Pension Plan sold the Lexington real property for approximately $4.1 million and we terminated our lease on the property. The property was included in the real property contributions that we made to the Pension Plan in fiscal year 2011. As a result of the sale by the Pension Plan, we recognized a $0.2 million loss on the sale of the Lexington property in the other operating expenses on the condensed consolidated statement of operations for the quarter and six months ended July 1, 2018. 401(k) Plan We have a deferred compensation plan (“401(k) plan”), which enables eligible employees to defer compensation. During the fourth quarter of 2017, we announced the reinstatement of a company matching contribution program beginning with the first pay check paid in 2018. Our matching contributions in the quarter and six months ended July 1, 2018, were $0.6 million and $1.3 million, respectively, and are recorded in our compensation line item of our condensed consolidated statement of operations. Also during the fourth quarter of 2017, we terminated the 401(k) plan supplemental contribution that was tied to performance. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jul. 01, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 7. COMMITMENTS AND CONTINGENCIES In December 2008, carriers of The Fresno Bee filed a class action lawsuit against us and The Fresno Bee in the Superior Court of the State of California in Fresno County captioned Becerra v. The McClatchy Company (“Fresno case”) alleging that the carriers were misclassified as independent contractors and seeking mileage reimbursement. In February 2009, a substantially similar lawsuit, Sawin v. The McClatchy Company , involving similar allegations was filed by carriers of The Sacramento Bee (“Sacramento case”) in the Superior Court of the State of California in Sacramento County. The class consists of roughly 5,000 carriers in the Sacramento case and 3,500 carriers in the Fresno case. The plaintiffs in both cases are seeking unspecified restitution for mileage reimbursement. With respect to the Sacramento case, in September 2013, all wage and hour claims were dismissed and the only remaining claim is an equitable claim for mileage reimbursement under the California Civil Code. In the Fresno case, in March 2014, all wage and hour claims were dismissed and the only remaining claim is an equitable claim for mileage reimbursement under the California Civil Code. The court in the Sacramento case trifurcated the trial into three separate phases, independent contractor status, liability and restitution. On September 22, 2014, the court in the Sacramento case issued a tentative decision following the first phase, finding that the carriers that contracted directly with The Sacramento Bee during the period from February 2005 to July 2009 were misclassified as independent contractors. We objected to the tentative decision but the court ultimately adopted it as final. In June 2016, we were dismissed from the lawsuit, leaving The Sacramento Bee as the sole defendant. On August 30, 2017, the court issued a statement of decision ruling that the court would not hold a phase two trial but would, instead, assume liability from the evidence previously submitted and from the independent contractor agreements. We objected to this decision but the court adopted it as final. The third phase has not yet been defined. The court in the Fresno case bifurcated the trial into two separate phases: the first phase addressed independent contractor status and liability for mileage reimbursement and the second phase was designated to address restitution, if any. The first phase of the Fresno case began in the fourth quarter of 2014 and concluded in late March 2015. On April 14, 2016, the court in the Fresno case issued a statement of final decision in favor of us and The Fresno Bee . Accordingly, there will be no second phase. The plaintiffs filed a Notice of Appeal on November 10, 2016. We continue to defend these actions vigorously and expect that we ultimately will prevail. As a result, we have not established a reserve in connection with the cases. While we believe that a material impact on our condensed consolidated financial position, results of operations or cash flows from these claims is unlikely, given the inherent uncertainty of litigation, a possibility exists that future adverse rulings or unfavorable developments could result in future charges that could have a material impact. We have and will continue to periodically reexamine our estimates of probable liabilities and any associated expenses and make appropriate adjustments to such estimates based on experience and developments in litigation. Other than the cases described above, we are subject to a variety of legal proceedings (including libel, employment, wage and hour, independent contractor and other legal actions) and governmental proceedings (including environmental matters) that arise from time to time in the ordinary course of our business. We are unable to estimate the amount or range of reasonably possible losses for these matters. However, we currently believe, after reviewing such actions with counsel, that the expected outcome of pending actions will not have a material effect on our condensed consolidated financial statements. No material amounts for any losses from litigation that may ultimately occur have been recorded in the condensed consolidated financial statements as we believe that any such losses are not probable. We have certain indemnification obligations related to the sale of assets including but not limited to insurance claims and multi-employer pension plans of disposed newspaper operations. We believe the remaining obligations related to disposed assets will not be material to our financial position, results of operations or cash flows. As of July 1, 2018, we had $29.7 million of standby letters of credit secured under the LC Agreement. |
STOCK PLANS
STOCK PLANS | 6 Months Ended |
Jul. 01, 2018 | |
STOCK PLANS | |
STOCK PLANS | 8. STOCK PLANS Stock Plans Activity The following table summarizes the restricted stock units (“RSUs”) activity during the six months ended July 1, 2018: Weighted Average Grant Date Fair RSUs Value Nonvested — December 31, 2017 245,794 $ 11.55 Granted 218,580 $ 9.10 Vested (99,244) $ 13.31 Forfeited (2,490) $ 11.41 Nonvested — July 1, 2018 362,640 $ 9.59 The total fair value of the RSUs that vested during the six months ended July 1, 2018, was $0.9 million. The following table summarizes the stock appreciation rights (“SARs”) activity during the six months ended July 1, 2018: Weighted Aggregate Average Intrinsic Value SARs Exercise Price (in thousands) Outstanding December 31, 2017 156,175 $ 32.12 $ — Expired (24,825) $ 38.60 Outstanding July 1, 2018 131,350 $ 30.89 $ — Stock-Based Compensation All stock-based payments, including grants of stock appreciation rights, restricted stock units and common stock under equity incentive plans, are recognized in the financial statements based on their grant date fair values. As of July 1, 2018, we had two stock-based compensation plans. Stock-based compensation expenses are reported in the compensation line item in the condensed consolidated statements of operations. Total stock-based compensation expense for the periods presented in this report, are as follows: Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Stock-based compensation expense $ 320 $ 432 $ 1,061 $ 1,461 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jul. 01, 2018 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 9. SUBSEQUENT EVENTS Fifth Supplemental Indenture On July 13, 2018, in connection with our outstanding 7.15% debentures due November 1, 2027 (“2027 Debentures”) and 6.875% debentures due March 15, 2029 (“2029 Debentures” and together with the 2027 Debentures, “Debentures”), we entered into a Fifth Supplemental Indenture (“Supplemental Indenture”) by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (“Debentures Trustee”), supplementing that certain Indenture, dated as of November 4, 1997, by and between the Company and the Debentures Trustee (“Debentures Indenture”), pursuant to which the Debentures were issued. The Supplemental Indenture was entered into in connection with our refinancing of existing indebtedness to amend the Debentures Indenture to eliminate certain restrictive covenants. 2026 Notes Indenture On July 16, 2018, we entered into the 2026 Notes Indenture pursuant to which we issued $310.0 million aggregate principal amount of the 2026 Notes in a private placement to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act of 1933, as amended (“Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The 2026 Notes mature on July 15, 2026, and bear interest at a rate of 9.00% per annum. Interest on the 2026 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2019. We may redeem the 2026 Notes, in whole or in part, at any time on or after July 15, 2022, at specified redemption prices and may also redeem up to 40% of the aggregate principal amount of the 2026 Notes using the proceeds of certain equity offerings completed before July 15, 2021, at specified redemption prices, in each case, as set forth in the 2026 Notes Indenture. Prior to July 15, 2022, we may also redeem some or all of the 2026 Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date and a “make-whole” premium. We will be required to redeem the 2026 Notes from the net cash proceeds of certain asset dispositions and from a portion of our excess cash flow (as defined in the 2026 Notes Indenture). If we experience specified changes of control triggering events, we must offer to repurchase the 2026 Notes at a repurchase price equal to 101% of the principal amount of the 2026 Notes repurchased, plus accrued and unpaid interest, if any, to, but excluding the applicable repurchase date. The 2026 Notes Indenture contains covenants that, among other things, restrict the ability of us and our restricted subsidiaries to: · incur certain additional indebtedness and issue preferred stock; · make certain distributions, investments and other restricted payments; · pay dividends; · sell assets; · agree to any restrictions on the ability of restricted subsidiaries to make payments to us; · create liens; · merge, consolidate or sell substantially all of our assets, taken as a whole; and · enter into certain transactions with affiliates. These covenants are subject to a number of other limitations and exceptions set forth in the 2026 Notes Indenture. The 2026 Notes Indenture provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements, or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2026 Notes under the 2026 Notes Indenture will become due and payable immediately without further action or notice. If any other event of default under the 2026 Notes Indenture occurs or is continuing, the 2026 Notes Trustee or holders of at least 25% in aggregate principal amount of the then outstanding 2026 Notes under the 2026 Notes Indenture may declare all of such 2026 Notes to be due and payable immediately. ABL Credit Agreement On July 16, 2018, we entered into the ABL Credit Agreement, which provides for a $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provides for a $35.0 million cash secured letter of credit facility. The commitments under the ABL Credit Agreement expire July 16, 2023. The Borrowers’ obligations under the ABL Credit Agreement are guaranteed by us and certain of our subsidiaries meeting materiality thresholds set forth in the ABL Credit Agreement. The borrowing base under the ABL Credit Agreement is comprised of 85% of eligible advertising accounts; the lesser of (i) 80% of eligible unbilled advertising accounts receivable and (ii) $3.0 million; and the lesser of (i) $6.0 million and (ii) 50% of the book value of eligible inventory, in each case subject to reserves established by the administrative agent (“Borrowing Base”). The proceeds of the loans under the ABL Credit Agreement may be used for working capital and general corporate purposes. The Borrowers have the right to prepay loans under the ABL Credit Agreement in whole or in part at any time without penalty. Subject to availability under the Borrowing Base, amounts repaid may be reborrowed. As of July16, 2018, under the ABL Credit Agreement we had availability of $46.4 million, and $10.0 million was borrowed to pay expenses associated with the refinancing transactions (leaving $36.4 million in additional availability). The $10.0 million outstanding under the ABL Credit Agreement was repaid during the third quarter of 2018. The borrowing base is recalculated monthly and is not expected to be subject to material changes in availability except in the fourth quarter of 2018 and early in the first quarter of 2019 when it is expected to increase as a result of the seasonality of advertising sales around year-end holiday periods (and resulting growth in advertising accounts receivable balances). Loans under the ABL Credit Agreement bear interest, at our option, at either a rate based on LIBOR for the applicable interest period or a base rate, in each case plus a margin. The base rate is the highest of Wells Fargo’s publicly announced prime rate, the federal funds rate plus 0.50% or one-month LIBOR plus 1.0%. The margin ranges from 1.75% to 2.25% for LIBOR loans and 0.75% to 1.25% for base rate loans and is determined based on average excess availability. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of LIBOR loans. The ABL Credit Agreement requires, at any time the availability under our revolving credit facility falls below the greater of 12.5% of the total facility size or approximately $8.1 million, to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 until such time as the availability under our revolving credit facility exceeds such threshold for 30 consecutive days. The ABL Credit Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the ABL Credit Agreement contains customary negative covenants limiting our ability and the ability of our subsidiaries, among other things, to incur debt, grant liens, make investments, make certain restricted payments and sell assets, subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the ABL Credit Agreement immediately due and payable and may exercise the other rights and remedies provided for under the ABL Credit Agreement and related loan documents. The events of default under the ABL Credit Agreement include, subject to grace periods in certain instances, payment defaults, cross defaults with certain other indebtedness, breaches of covenants or representations and warranties, change in control of us and certain bankruptcy and insolvency events with respect to us meeting a materiality threshold set forth in the ABL Credit Agreement. Junior Lien Term Loan Agreement On July 16, 2018, we entered into the Junior Term Loan Agreement, which provides for a $157.1 million Tranche A Junior Term Loans and a $193.5 million Tranche B Junior Term Loans (collectively “Junior Term Loans”). The Tranche A Junior Term Loans mature and principal is payable on July 15, 2030 and the Tranche B Junior Term Loans mature and principal is payable on July 15, 2031. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes as set forth in the Junior Term Loan Agreement. Pursuant to the terms of the Junior Term Loan Agreement, affiliates of Chatham Asset Management, LLC may elect to convert up to $75.0 million in aggregate principal amount of 2029 Debentures owned by them into an equal principal amount of Tranche B Junior Term Loans or notes with terms substantially similar to the Tranche B Junior Term Loans upon written notice to us. The Junior Term Loans were issued at premiums in order to use the proceeds of the loans to repurchase certain unsecured debentures at a quoted value as the close of business on July 13, 2018, and to use the remaining proceeds, along with the issuance of our 2026 Notes, to repurchase our 2022 Notes (see “Satisfaction and Discharge of 2022 Notes” and discussions below). The proceeds of the loans under the Junior Term Loan Agreement were used to effect the exchange with the lender of approximately $82.1 million in aggregate principal amount of 2027 Debentures, approximately $193.5 million in aggregate principal amount of 2029 Debentures and to pay fees, costs and expenses in connection with the debt refinancing. We have the right to prepay loans under the Junior Term Loan Agreement, in whole or in part, at any time, at (i) specified prices that decline over time, plus accrued and unpaid interest, if any, in the case of Tranche A Junior Term Loans, and (ii) a price equal to 100% of the principal amount thereof, plus a “make-whole” premium and accrued and unpaid interest, if any, in the case of the Tranche B Junior Term Loans. Amounts prepaid may not be reborrowed. Tranche A Junior Term Loans bear interest at a rate per annum equal to 7.795% and Tranche B Junior Term Loans bear interest at a rate per annum equal to 6.875%. Interest on the loans is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019. The Junior Term Loan Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the Junior Term Loan Agreement contains customary negative covenants limiting the ability of us, among other things, to incur debt, grant liens, make investments, make certain restricted payments and sell assets, subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the Junior Term Loan Agreement immediately due and payable and may exercise the other rights and remedies provided for under the Junior Term Loan Agreement and related loan documents. In general the affirmative and negative covenants of the Junior Term Loan Agreement are substantially the same as the covenants in the 2026 Notes Indenture. Satisfaction and Discharge of 2022 Notes On July 16, 2018, we deposited sufficient funds with the 2022 Notes Trustee to pay the redemption price payable in respect of all outstanding 2022 Notes, plus accrued and unpaid interest on the 2022 Notes up to, but excluding, the redemption date. The 2022 Notes were issued under the 2022 Notes Indenture. As a consequence of the foregoing, we satisfied and discharged our obligations (subject to certain exceptions) under the 2022 Notes Indenture and the related security documents in accordance with the satisfaction and discharge provisions of the 2022 Notes Indenture. Upon the satisfaction and discharge of the 2022 Notes Indenture on July 16, 2018, all of the liens on the collateral securing the 2022 Notes were released and we and the guarantors were discharged from our respective obligations under the 2022 Notes and the guarantees thereof. On July 16, 2018, the 2022 Notes Trustee, at our direction, delivered a notice of redemption to holders of all $344.1 million in aggregate principal amount of outstanding 2022 Notes. We paid a redemption premium of $15.5 million, which was equal to 4.5% of the outstanding principal amount. The following table summarizes our ABL Credit Agreement and long-term debt as of July 16, 2018: Face Value at July 16, (in thousands) 2018 ABL Credit Agreement $ 10,000 Notes: 9.00% senior secured notes due in 2026 310,000 7.795% tranche A junior term loan due in 2030 157,083 6.875% tranche B junior term loan due in 2030 193,466 7.150% unsecured debentures due in 2027 7,105 6.875% unsecured debentures due in 2029 82,764 Total long-term debt $ 760,418 The $10.0 million on the ABL Credit Agreement debt is due within the next five years and all other debt is due thereafter. We expect to record a gain on extinguishment of debt related to our debt refinancing in the third quarter of 2018. |
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SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jul. 01, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Business and Basis of Accounting | Business and Basis of Accounting The McClatchy Company (“Company,” “we,” “us” or “our”) operates 30 media companies in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. We are a publisher of brands such as the Miami Herald , The Kansas City Star , The Sacramento Bee , The Charlotte Observer , The (Raleigh) News & Observer , and the (Fort Worth) Star-Telegram . We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the NYSE American under the symbol MNI. Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulation of the Securities and Exchange Commission requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The condensed consolidated financial statements include the Company and our subsidiaries. Intercompany items and transactions are eliminated. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, that are necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. The financial statements contained in this report are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”). Each of the fiscal periods included herein comprise 13 weeks for the second-quarter periods and 26 weeks for the six-month periods. See Note 9, Subsequent Events , for a discussion of recent refinancing transactions subsequent to the end of our second quarter of 2018. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – Unadjusted quoted prices available in active markets for identical investments as of the reporting date. Level 2 – Observable inputs to the valuation methodology are other than Level 1 inputs and are either directly or indirectly observable as of the reporting date and fair value can be determined through the use of models or other valuation methodologies. Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability, and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk. Our policy is to recognize significant transfers between levels at the actual date of the event or circumstance that caused the transfer. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents, accounts receivable and accounts payable. As of July 1, 2018, and December 31, 2017, the carrying amount of these items approximates fair value because of the short maturity of these financial instruments. Long-term debt. The fair value of our long-term debt is determined using quoted market prices and other inputs that were derived from available market information, including the current market activity of our publicly-traded notes and bank debt, trends in investor demand for debt and market values of comparable publicly-traded debt. These are considered to be Level 2 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value. At July 1, 2018 and December 31, 2017, the estimated fair value of long-term debt, including the current portion of long-term debt, was $639.2 million and $810.7 million, respectively. At July 1, 2018, and December 31, 2017, the carrying value of our long-term debt, including the current portion of long-term debt, if any, was $688.4 million and $781.4 million, respectively. Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Our non-financial assets that may be measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and equity method investments. All of these are measured using Level 3 inputs. We utilize valuation techniques that seek to maximize the use of observable inputs and minimize the use of unobservable inputs. The significant unobservable inputs include the expected cash flows and the discount rates that we estimate market participants would seek for bearing the risk associated with such assets. |
Newsprint, ink and other inventories | Newsprint, ink and other inventories Newsprint, ink and other inventories are stated at the lower of cost (based principally on the first‑in, first‑out method) and net realizable value. During the six months ended June 25, 2017, we recorded a $2.0 million write‑down of non-newsprint inventory, which is reflected in the other asset write-downs line on our condensed consolidated statement of operations. There were no similar write-downs of newsprint, ink or other inventories during the quarter and six months ended July 1, 2018. |
Property, Plant and Equipment | Property, Plant and Equipment Depreciation expense with respect to property, plant and equipment is summarized below: Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Depreciation expense $ 7,295 $ 7,531 $ 14,492 $ 15,252 |
Assets Held For Sale | Assets Held for Sale During the six months ended July 1, 2018, we began to actively market for sale the land and buildings at two of our media companies. In connection with classifying these assets as assets held for sale, the carrying value of the land and building at one of the properties was reduced to its estimated fair value less selling costs, as determined based on the current market conditions and the estimated selling price. As a result, an impairment charge of $0.1 million was recorded during the six months ended July 1, 2018, and is included in other asset write-downs on our condensed consolidated statement of operations. The land and building at this property were sold during the quarter ended July 1, 2018, with no gain or additional loss. The assets at the second property remain classified as assets held for sale. |
Intangible Assets and Goodwill | Intangible Assets and Goodwill We test for impairment of goodwill annually at year‑end, or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The required approach uses accounting judgments and estimates of future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results. Impairment testing is done at a reporting unit level. We perform this testing on our operating segments, which are also considered our reporting units. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The fair value of our reporting units is determined using a combination of a discounted cash flow model and market based approaches. The estimates and judgments that most significantly affect the fair value calculation are assumptions related to revenue growth, newsprint prices, compensation levels, discount rate, hypothetical transaction structures, and for the market based approach, private and public market trading multiples for newspaper assets. We consider current market capitalization, based upon the recent stock market prices plus an estimated control premium, in determining the reasonableness of the aggregate fair value of the reporting units. We had no impairment of goodwill during the quarter and six months ended July 1, 2018 or June 25, 2017. Newspaper mastheads (newspaper titles and website domain names) are not subject to amortization and are tested for impairment annually at year‑end, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of each newspaper masthead with its carrying amount. We use a relief-from-royalty approach, which utilizes the discounted cash flow model to determine the fair value of each newspaper masthead. We had no impairment of newspaper mastheads during the quarter and six months ended July 1, 2018, or June 25, 2017. Long‑lived assets such as intangible assets subject to amortization (primarily advertiser and subscriber lists) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of such asset group. We had no impairment of long‑lived assets subject to amortization during the quarter and six months ended July 1, 2018, or June 25, 2017. |
Financial Obligations | Financial Obligations Financial obligations consist of contributions of real properties to the Pension Plan in 2016 and 2011, and real property previously owned by The Sacramento Bee that was sold and leased back during the third quarter of 2017. In April 2018, we sold and leased back real property owned by The State in Columbia, SC, and as a result, our long-term financial obligations increased by approximately $14.6 million during the second quarter of 2018. |
Segment Reporting | Segment Reporting We operate 30 media companies, providing each of our communities with high-quality news and advertising services in a wide array of digital and print formats. We have two operating segments that we aggregate into a single reportable segment because each has similar economic characteristics, products, customers and distribution methods. Our operating segments are based on how our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”), makes decisions about allocating resources and assessing performance. The CODM is provided discrete financial information for the two operating segments. Each operating segment consists of a group of media companies and both operating segments report to the same segment manager. One of our operating segments (“Western Segment”) consists of our media companies’ operations in the West and Midwest, while the other operating segment (“Eastern Segment”) consists primarily of media operations in the Carolinas and East. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Our accumulated other comprehensive loss (“AOCL”) and reclassifications from AOCL, net of tax, consisted of the following: Other Minimum Comprehensive Pension and Loss Post- Related to Retirement Equity (in thousands) Liability Investments Total Balance at December 31, 2017 $ (442,406) $ (6,963) $ (449,369) Amounts reclassified from AOCL 11,099 — 11,099 Other comprehensive income 11,099 — 11,099 Balance at July 1, 2018 $ (431,307) $ (6,963) $ (438,270) Amount Reclassified from AOCL Quarters Ended Six Months Ended (in thousands) July 1, June 25, July 1, June 25, Affected Line in the Condensed AOCL Component 2018 2017 2018 2017 Consolidated Statements of Operations Minimum pension and post-retirement liability $ 5,549 $ 4,284 $ 11,099 $ 8,569 Retirement benefit expense — (1,714) — (3,428) Benefit for income taxes (1) $ 5,549 $ 2,570 $ 11,099 $ 5,141 Net of tax _____________________ (1) There is no income tax benefit associated with the quarter and six months ended July 1, 2018, due to the recognition of a valuation allowance. |
Income Taxes | Income Taxes We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted. The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal corporate rate from 35% to 21%; (ii) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (iii) creating a new limitation on deductible interest expense; (iv) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (v) bonus depreciation that will allow for full expensing of qualified property; and (vi) limitations on the deductibility of certain executive compensation. The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”) in December 2017, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides that the measurement period for the tax effects of the Tax Act should not extend more than one year from the date the Tax Act was enacted. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but the company is able to determine a reasonable estimate, the company must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740, Income Taxes , on the basis of the provisions of the tax laws that were in effect immediately before the Tax Act was enacted. We continue to evaluate the tax implications of the changes to the Tax Act for which our accounting was incomplete, including the impact on state taxes, certain compensation arrangements and depreciation. We will record appropriate adjustments, if any, in the periods in which we conclude our analysis. A tax valuation allowance is required when it is more-likely-than-not that all or a portion of deferred tax assets may not be realized. The timing of recording or releasing a valuation allowance requires significant judgment. Establishment and removal of a valuation allowance requires us to consider all positive and negative evidence and to make a judgmental decision regarding the amount of valuation allowance required as of a reporting date. The assessment takes into account expectations of future taxable income or loss, available tax planning strategies and the reversal of temporary differences. The development of these expectations involves the use of estimates such as operating profitability. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. We performed our assessment of the deferred tax assets during the third and fourth quarters of 2017, weighing the positive and negative evidence as outlined in ASC 740-10, Income Taxes . As we have incurred three years of cumulative pre-tax losses, such objective negative evidence limits our ability to give significant weight to other positive subjective evidence, such as projections for future growth and profitability. As of December 31, 2017, our valuation allowance against a majority of our deferred tax assets was $109.7 million. For the quarter and six months ended July 1, 2018, we recorded a valuation allowance charge of $10.1 million and $24.4 million, respectively, which is recorded in income tax (benefit) expense on our condensed consolidated statements of operations. Our valuation allowance as of July 1, 2018, was $134.1 million. We will continue to maintain a valuation allowance against our deferred tax assets until we believe it is more likely than not that these assets will be realized in the future. If sufficient positive evidence arises in the future that provides an indication that all of or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance may be reversed, in whole or in part, in the period that such determination is made. Current generally accepted accounting principles prescribe a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise’s tax returns. We recognize accrued interest related to unrecognized tax benefits in interest expense. Accrued penalties are recognized as a component of income tax expense. |
Earnings Per Share (EPS) | Earnings Per Share (EPS) Basic EPS excludes dilution from common stock equivalents and reflects income divided by the weighted average number of common shares outstanding for the period. Diluted EPS is based upon the weighted average number of outstanding shares of common stock and dilutive common stock equivalents in the period. Common stock equivalents arise from dilutive stock appreciation rights and restricted stock units, and are computed using the treasury stock method. Anti-dilutive common stock equivalents are excluded from diluted EPS. The weighted average anti-dilutive common stock equivalents that could potentially dilute basic EPS in the future, but were not included in the weighted average share calculation, consisted of the following: Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (shares in thousands) 2018 2017 2018 2017 Anti-dilutive common stock equivalents 198 388 201 325 |
Cash Flow Information | Cash Flow Information Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above: July 1, December 31, (in thousands) 2018 2017 Cash and equivalents $ 20,128 $ 99,387 Restricted cash included in other assets (1) 31,967 31,967 Total cash, cash equivalents and restricted cash $ 52,095 $ 131,354 _____________________ (1) Restricted cash balances are certificates of deposits secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and a certain property lease. Cash paid for interest and income taxes and other non-cash activities consisted of the following: Six Months Ended July 1, June 25, (in thousands) 2018 2017 Interest paid (net of amount capitalized) $ 29,244 $ 35,127 Income taxes paid (net of refunds) 12,019 8,870 Other non-cash investing and financing activities related to pension plan transactions: Reduction of financing obligation due to sale of real properties by pension plan (2,667) — Reduction of PP&E due to sale of real properties by pension plan (2,854) — |
Recently Adopted and Issued Not Yet Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 (“Topic 606”), “ Revenue from Contracts with Customers. ” Topic 606 supersedes the revenue recognition requirements in Topic 605 " Revenue Recognition. " ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. Topic 606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In 2016 and 2017, the FASB issued additional updates: ASU No. 2016-08, 2016-10, 2016-11, 2016-12, 2016-20 and 2017-05. These updates provided further guidance and clarification on specific items within the previously issued update. We adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method. See Note 2 for further details. In January 2016, the FASB issued ASU No. 2016-01, “ Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ” ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. We adopted ASU 2016-01 as of January 1, 2018, on a prospective basis but it did not have an impact on our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ” ASU 2016-15 addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 as of January 1, 2018, retrospectively but it did not have an impact on our condensed consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “ Statement of Cash Flows (Topic 230): Restricted Cash. ” ASU 2016-18 addresses the presentation of restricted cash in the statement of cash flows. The standard requires an entity to include restricted amounts with cash and cash equivalents in the statement of cash flows. An entity will no longer present transfers between cash and cash equivalents and restricted amounts on the statement of cash flows. We adopted ASU 2016-18 as of January 1, 2018, using the retrospective transition method to each period presented. As a result of the adoption, net cash provided by operating activities was adjusted to exclude the changes in restricted cash, resulting in a decrease of $1.0 million in the six months ended June 25, 2017, on our condensed consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “ Leases ” (Accounting Standards Codification 842 (“ASC 842”)) and it replaces the existing guidance in ASC 840, “ Leases. ” ASC 842 requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The new lease standard does not substantially change lessor accounting. In 2018, the FASB issued ASU No. 2018-01 that provides further guidance and clarification on specific items within the previously issued update. ASC 842 is effective for us for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are evaluating the impact this standard will have on our condensed consolidated financial statements, but expect an increase in assets and liabilities on our condensed consolidated balance sheet. We plan to finalize our determination of the impact by the end of the fourth quarter of 2018. In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ” ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected credit losses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. It is effective for us for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim or annual reporting periods beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, “ Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ” ASU 2018-02 allows for reclassification of stranded tax effects resulting from the Tax Act from accumulated other comprehensive income to retained earnings. Consequently, the standard eliminates the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the standard only relates to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This standard also requires certain disclosures about the stranded tax effects. It is effective for us for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements. |
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SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of components of property, plant and equipment | Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Depreciation expense $ 7,295 $ 7,531 $ 14,492 $ 15,252 |
Schedule of components of accumulated other comprehensive loss, net of tax | Other Minimum Comprehensive Pension and Loss Post- Related to Retirement Equity (in thousands) Liability Investments Total Balance at December 31, 2017 $ (442,406) $ (6,963) $ (449,369) Amounts reclassified from AOCL 11,099 — 11,099 Other comprehensive income 11,099 — 11,099 Balance at July 1, 2018 $ (431,307) $ (6,963) $ (438,270) |
Schedule of reclassification out of accumulated other comprehensive income | Amount Reclassified from AOCL Quarters Ended Six Months Ended (in thousands) July 1, June 25, July 1, June 25, Affected Line in the Condensed AOCL Component 2018 2017 2018 2017 Consolidated Statements of Operations Minimum pension and post-retirement liability $ 5,549 $ 4,284 $ 11,099 $ 8,569 Retirement benefit expense — (1,714) — (3,428) Benefit for income taxes (1) $ 5,549 $ 2,570 $ 11,099 $ 5,141 Net of tax _____________________ (1) There is no income tax benefit associated with the quarter and six months ended July 1, 2018, due to the recognition of a valuation allowance. |
Summary of anti-dilutive stock options | Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (shares in thousands) 2018 2017 2018 2017 Anti-dilutive common stock equivalents 198 388 201 325 |
Reconciliation of cash, cash equivalents and restricted cash | Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above: July 1, December 31, (in thousands) 2018 2017 Cash and equivalents $ 20,128 $ 99,387 Restricted cash included in other assets (1) 31,967 31,967 Total cash, cash equivalents and restricted cash $ 52,095 $ 131,354 _____________________ (1) Restricted cash balances are certificates of deposits secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and a certain property lease. |
Schedule of cash paid for interest and income taxes and other non-cash activities | Six Months Ended July 1, June 25, (in thousands) 2018 2017 Interest paid (net of amount capitalized) $ 29,244 $ 35,127 Income taxes paid (net of refunds) 12,019 8,870 Other non-cash investing and financing activities related to pension plan transactions: Reduction of financing obligation due to sale of real properties by pension plan (2,667) — Reduction of PP&E due to sale of real properties by pension plan (2,854) — |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
INTANGIBLE ASSETS AND GOODWILL | |
Schedule of intangible assets and goodwill | December 31, Amortization July 1, (in thousands) 2017 Expense 2018 Intangible assets subject to amortization $ 839,284 $ — $ 839,284 Accumulated amortization (761,013) (23,963) (784,976) 78,271 (23,963) 54,308 Mastheads 149,951 — 149,951 Goodwill 705,174 — 705,174 Total $ 933,396 $ (23,963) $ 909,433 |
Summary of amortization expense with respect to intangible assets | Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Amortization expense $ 11,927 $ 12,093 $ 23,963 $ |
Amortization expense for the five succeeding fiscal years | The estimated amortization expense for the remainder of fiscal year 2018 and the five succeeding fiscal years is as follows: Amortization Expense Year (in thousands) 2018 (Remainder) $ 23,697 2019 24,154 2020 803 2021 680 2022 655 2023 667 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
LONG-TERM DEBT | |
Summary of company's long-term debt | Face Value at Carrying Value July 1, July 1, December 31, (in thousands) 2018 2018 2017 Notes: 9.00% senior secured notes due in 2022 $ 344,101 $ 339,976 $ 433,819 7.150% debentures due in 2027 89,188 85,458 85,262 6.875% debentures due in 2029 276,230 262,925 262,311 Long-term debt $ 709,519 $ 688,359 $ 781,392 Less current portion — — 74,140 Total long-term debt, net of current $ 709,519 $ 688,359 $ 707,252 |
Summary of reduction of outstanding debt | Six Months Ended July 1, June 25, 2018 2017 (in thousands) Face Value Face Value 9.00% senior secured notes due in 2022 $ 95,529 $ 15,000 |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
EMPLOYEE BENEFITS | |
Schedule of elements of retirement expense | Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Pension plans: Interest Cost 19,789 21,367 $ 39,577 $ 42,734 Expected return on plan assets (22,624) (22,393) (45,248) (44,785) Actuarial loss 6,296 5,084 12,591 10,168 Net pension expense 3,461 4,058 6,920 8,117 Net post-retirement benefit credit (682) (730) (1,363) (1,462) Net retirement benefit expenses $ 2,779 $ 3,328 $ 5,557 $ 6,655 |
STOCK PLANS (Tables)
STOCK PLANS (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
STOCK PLANS | |
Summary of the restricted stock units ("RSUs") activity | Weighted Average Grant Date Fair RSUs Value Nonvested — December 31, 2017 245,794 $ 11.55 Granted 218,580 $ 9.10 Vested (99,244) $ 13.31 Forfeited (2,490) $ 11.41 Nonvested — July 1, 2018 362,640 $ 9.59 |
Summary of the stock appreciation rights ("SARs") activity | The following table summarizes the stock appreciation rights (“SARs”) activity during the six months ended July 1, 2018: Weighted Aggregate Average Intrinsic Value SARs Exercise Price (in thousands) Outstanding December 31, 2017 156,175 $ 32.12 $ — Expired (24,825) $ 38.60 Outstanding July 1, 2018 131,350 $ 30.89 $ — |
Summary of stock-based compensation expense | Quarters Ended Six Months Ended July 1, June 25, July 1, June 25, (in thousands) 2018 2017 2018 2017 Stock-based compensation expense $ 320 $ 432 $ 1,061 $ 1,461 |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 6 Months Ended |
Jul. 01, 2018 | |
SUBSEQUENT EVENTS | |
Summary of ABL Credit Agreement and long-term debt | Face Value at July 16, (in thousands) 2018 ABL Credit Agreement $ 10,000 Notes: 9.00% senior secured notes due in 2026 310,000 7.795% tranche A junior term loan due in 2030 157,083 6.875% tranche B junior term loan due in 2030 193,466 7.150% unsecured debentures due in 2027 7,105 6.875% unsecured debentures due in 2029 82,764 Total long-term debt $ 760,418 |
SIGNIFICANT ACCOUNTING POLICI24
SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jul. 01, 2018USD ($)companyitem | Jul. 01, 2018USD ($)companyitem | Dec. 31, 2017USD ($) | |
Investments in Unconsolidated Companies Activity | |||
Number of media companies | company | 30 | 30 | |
Number of states | item | 14 | 14 | |
Length of fiscal quarter | 91 days | 182 days | |
Long-term debt fair value disclosure | |||
Estimated fair value of long-term debt | $ 639,200 | $ 639,200 | $ 810,700 |
Long-term debt | $ 688,359 | $ 688,359 | $ 781,392 |
SIGNIFICANT ACCOUNTING POLICI25
SIGNIFICANT ACCOUNTING POLICIES - PP&E, Intangibles (Details) | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018USD ($) | Jun. 25, 2017USD ($) | Jul. 01, 2018USD ($)segmentcompanyproperty | Jun. 25, 2017USD ($) | |
Property, plant and equipment | ||||
Other asset write-downs | $ 59,000 | $ 1,957,000 | ||
Depreciation expense | $ 7,295,000 | $ 7,531,000 | $ 14,492,000 | 15,252,000 |
Assets held for sale | ||||
Number of media companies with assets held for sale | company | 2 | |||
Facilities with reduced carrying value | property | 1 | |||
Impairment charge of assets held for sale | $ 100,000 | |||
Gain (loss) on sale of property | 0 | |||
Intangible assets: | ||||
Goodwill impairment charge | 0 | 0 | 0 | 0 |
Impairment charge of newspaper masthead | 0 | 0 | 0 | 0 |
Intangible assets subject to amortization, net | ||||
Impairment of long-lived assets subject to amortization | 0 | $ 0 | $ 0 | 0 |
Financial Obligations | ||||
Increase in financing obligations | 14,600,000 | |||
Segment reporting | ||||
Number of operating segments | segment | 2 | |||
Other asset write-downs | ||||
Property, plant and equipment | ||||
Write-down of non-newsprint inventory | $ 0 | $ 0 | $ 2,000,000 |
SIGNIFICANT ACCOUNTING POLICI26
SIGNIFICANT ACCOUNTING POLICIES - AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
Changes in stockholders' equity | ||||
Balance at the beginning of the period | $ (449,369) | |||
Amounts reclassified from AOCL | 11,099 | |||
Other comprehensive income | $ 5,549 | $ 6,544 | 11,099 | $ 9,187 |
Balance at the end of the period | (438,270) | (438,270) | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Retirement benefit expense | 2,779 | 3,328 | 5,557 | 6,655 |
Benefit for income taxes | 3,618 | (21,080) | 11,490 | (76,529) |
Net of tax | 20,365 | 37,446 | 59,306 | 133,021 |
Minimum Pension and Post-Retirement Liability | ||||
Changes in stockholders' equity | ||||
Balance at the beginning of the period | (442,406) | |||
Amounts reclassified from AOCL | 11,099 | |||
Other comprehensive income | 11,099 | |||
Balance at the end of the period | (431,307) | (431,307) | ||
Minimum Pension and Post-Retirement Liability | Amount Reclassified from AOCI | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Retirement benefit expense | 5,549 | 4,284 | 11,099 | 8,569 |
Benefit for income taxes | (1,714) | (3,428) | ||
Net of tax | 5,549 | $ 2,570 | 11,099 | $ 5,141 |
Other Comprehensive Loss Related to Equity Investments | ||||
Changes in stockholders' equity | ||||
Balance at the beginning of the period | (6,963) | |||
Balance at the end of the period | $ (6,963) | $ (6,963) |
SIGNIFICANT ACCOUNTING POLICI27
SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 01, 2018 | Dec. 31, 2017 | Sep. 24, 2017 | Jul. 01, 2018 | Dec. 31, 2017 | |
SIGNIFICANT ACCOUNTING POLICIES | |||||
Statutory rate (as a percent) | 21.00% | 35.00% | |||
Measurement period | 1 year | ||||
Number of years of pre-tax losses | 3 years | 3 years | |||
Increase in valuation allowance | $ 10.1 | $ 24.4 | |||
Valuation allowance against majority of deferred tax assets | $ 109.7 | $ 109.7 | |||
Valuation allowance | $ 134.1 | $ 134.1 |
SIGNIFICANT ACCOUNTING POLICI28
SIGNIFICANT ACCOUNTING POLICIES - EPS (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
Anti-dilutive stock options | ||||
Weighted average anti-dilutive stock options | ||||
Anti-dilutive stock options (in shares) | 198 | 388 | 201 | 325 |
SIGNIFICANT ACCOUNTING POLICI29
SIGNIFICANT ACCOUNTING POLICIES - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Dec. 31, 2017 | Jun. 25, 2017 | Dec. 25, 2016 |
Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above: | ||||
Cash equivalents | $ 20,128 | $ 99,387 | ||
Restricted cash included in other assets | 31,967 | 31,967 | ||
Cash, cash equivalents and restricted cash | $ 52,095 | $ 131,354 | $ 38,380 | $ 36,248 |
SIGNIFICANT ACCOUNTING POLICI30
SIGNIFICANT ACCOUNTING POLICIES - Cash Flow (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2018 | Jun. 25, 2017 | |
Cash Flow Information | ||
Interest paid (net of amount capitalized) | $ 29,244 | $ 35,127 |
Income taxes paid (net of refunds) | 12,019 | $ 8,870 |
Other non-cash financing activities | ||
Reduction of financing obligation due to sale of real properties by pension plan | (2,667) | |
Reduction of PP&E due to sale of real properties by pension plan | $ (2,854) |
SIGNIFICANT ACCOUNTING POLICI31
SIGNIFICANT ACCOUNTING POLICIES - Adopted Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net cash provided by operating activities | $ 9,292 | $ 15,766 | ||
Labor and Related Expense | $ 77,937 | $ 86,823 | 157,149 | 178,231 |
Pension and Other Postretirement Benefit Expense | $ 2,779 | $ 3,328 | $ 5,557 | 6,655 |
2016-18 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net cash provided by operating activities | $ (1,000) |
REVENUES (Details)
REVENUES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jul. 01, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenues | ||||
Accumulated deficit | $ (2,032,071) | $ (2,032,071) | $ (1,970,097) | |
Maximum | ||||
Revenues | ||||
Contract duration | 1 year | |||
Before and after Topic 606 | 2014-09 | ||||
Revenues | ||||
Accumulated deficit | $ (2,700) | |||
Revenues | $ 100 | $ 400 |
REVENUES - Unearned Revenues (D
REVENUES - Unearned Revenues (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jul. 01, 2018 | Dec. 31, 2017 | |
REVENUES | ||
Cash payments received or due in advance satisfying performance obligations | $ 49.1 | |
Subscribers advance payment term (in years) | 1 year | |
Advertiser maximum payment (in days) | 30 days |
REVENUES - Practical Expedients
REVENUES - Practical Expedients and Exemptions (Details) | 6 Months Ended |
Jul. 01, 2018 | |
REVENUES | |
Practical expedient incremental cost of obtaining contract | true |
Practical expedient, remaining performance obligation | true |
INTANGIBLE ASSETS AND GOODWIL35
INTANGIBLE ASSETS AND GOODWILL (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
Intangible assets subject to amortization, gross | ||||
Balance at the beginning of the period | $ 839,284,000 | |||
Balance at the end of the period | $ 839,284,000 | 839,284,000 | ||
Accumulated amortization | ||||
Balance at the beginning of the period | (761,013,000) | |||
Amortization Expense | (11,927,000) | $ (12,093,000) | (23,963,000) | $ (24,176,000) |
Balance at the end of the period | (784,976,000) | (784,976,000) | ||
Intangible assets subject to amortization, net | ||||
Balance at the beginning of the period | 78,271,000 | |||
Amortization Expense | (11,927,000) | (12,093,000) | (23,963,000) | (24,176,000) |
Balance at the end of the period | 54,308,000 | 54,308,000 | ||
Mastheads | ||||
Balance at the beginning of the period | 149,951,000 | |||
Impairment Charges | 0 | 0 | 0 | 0 |
Balance at the end of the period | 149,951,000 | 149,951,000 | ||
Goodwill [Roll Forward] | ||||
Balance at the beginning of the period | 705,174,000 | |||
Goodwill impairment charge | 0 | 0 | 0 | 0 |
Balance at the end of the period | 705,174,000 | 705,174,000 | ||
Total | ||||
Balance at the beginning of the period | 933,396,000 | |||
Amortization Expense | (11,927,000) | $ (12,093,000) | (23,963,000) | $ (24,176,000) |
Balance at the end of the period | $ 909,433,000 | $ 909,433,000 |
INTANGIBLE ASSETS AND GOODWIL36
INTANGIBLE ASSETS AND GOODWILL - Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
Estimated amortization expense | ||||
Amortization expense | $ 11,927 | $ 12,093 | $ 23,963 | $ 24,176 |
2018 (Remainder) | 23,697 | 23,697 | ||
2,019 | 24,154 | 24,154 | ||
2,020 | 803 | 803 | ||
2,021 | 680 | 680 | ||
2,022 | 655 | 655 | ||
2,023 | $ 667 | $ 667 |
INVESTMENTS IN UNCONSOLIDATED37
INVESTMENTS IN UNCONSOLIDATED COMPANIES (Details) - USD ($) $ in Thousands | Jul. 31, 2017 | Jul. 30, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 |
Investments in unconsolidated companies and joint ventures | ||||||
Distributions of income from equity investments | $ 2,876 | |||||
Write down of certain unconsolidated investments | $ 46,147 | $ 169,147 | ||||
Career Builder LLC | ||||||
Investments in unconsolidated companies and joint ventures | ||||||
Proceeds from sale | $ 73,900 | |||||
Distributions of income from equity investments | 7,300 | $ 2,800 | $ 2,800 | |||
Gross proceeds | $ 66,600 | |||||
Write down of certain unconsolidated investments | $ 45,600 | $ 168,600 | ||||
Ownership interest (as a percent) | 3.00% | 15.00% |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Dec. 31, 2017 |
Long-term debt disclosures | ||
Face Value | $ 709,519 | |
Total long-term debt, net of current | 709,519 | |
Carrying value | 688,359 | $ 781,392 |
Less current portion | 74,140 | |
Total long-term debt, net of current | 688,359 | 707,252 |
Unamortized debt issuance costs and discounts | $ 21,200 | $ 23,700 |
9.00% senior secured notes due in 2022 | ||
Long-term debt disclosures | ||
Interest rate (as a percent) | 9.00% | 9.00% |
Face Value | $ 344,101 | |
Carrying value | $ 339,976 | $ 433,819 |
7.150% unsecured debentures due in 2027 | ||
Long-term debt disclosures | ||
Interest rate (as a percent) | 7.15% | 7.15% |
Face Value | $ 89,188 | |
Carrying value | $ 85,458 | $ 85,262 |
6.875% unsecured debentures due in 2029 | ||
Long-term debt disclosures | ||
Interest rate (as a percent) | 6.875% | 6.875% |
Face Value | $ 276,230 | |
Carrying value | $ 262,925 | $ 262,311 |
LONG-TERM DEBT - Debt Redemptio
LONG-TERM DEBT - Debt Redemptions, Repurchases and Loss on Extinguishment of Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | Dec. 31, 2017 | |
LONG-TERM DEBT | |||||
Loss on extinguishment of debt, net | $ (19) | $ (869) | $ (5,368) | $ (869) | |
9.00% senior secured notes due in 2022 | |||||
LONG-TERM DEBT | |||||
Face value debt reduced | 95,529 | 15,000 | 95,529 | 15,000 | |
Debt redeemed through tender offer | $ 500 | 500 | |||
Amount of debt redeemed | $ 75,000 | ||||
Debt repurchased privately | $ 15,000 | $ 15,000 | $ 20,000 |
LONG-TERM DEBT - Debt Refinanci
LONG-TERM DEBT - Debt Refinancing (Details) - USD ($) $ in Millions | Jul. 16, 2018 | Jul. 01, 2018 | Dec. 31, 2017 |
9.00% senior secured notes due in 2022 | |||
LONG-TERM DEBT | |||
Interest rate (as a percent) | 9.00% | 9.00% | |
Amount of debt redeemed | $ 75 | ||
Forecast | 9.00% senior secured notes due in 2022 | |||
LONG-TERM DEBT | |||
Amount of debt redeemed | $ 344.1 | ||
Forecast | 9.00% senior secured notes due in 2026 | |||
LONG-TERM DEBT | |||
Aggregate principal amount of notes issued | $ 310 | ||
Interest rate (as a percent) | 9.00% |
LONG-TERM DEBT - Credit Agreeme
LONG-TERM DEBT - Credit Agreement (Details) $ in Millions | Jul. 16, 2018USD ($) | Jul. 01, 2018USD ($) | Dec. 31, 2017 | Oct. 21, 2014USD ($) |
Letter of credit | ||||
LONG-TERM DEBT | ||||
Outstanding letters of credit | $ 29.7 | |||
9.00% senior secured notes due in 2022 | ||||
LONG-TERM DEBT | ||||
Interest rate (as a percent) | 9.00% | 9.00% | ||
Third Amended and Restated Credit Agreement | 9.00% senior secured notes due in 2022 | Revolving credit facility | ||||
LONG-TERM DEBT | ||||
Outstanding line of credit | $ 0 | |||
LC Agreement | Bank of America | ||||
LONG-TERM DEBT | ||||
Duration of LC Agreement from July 16, 2018 | 90 days | |||
LC Agreement | Bank of America | Letter of credit | ||||
LONG-TERM DEBT | ||||
Maximum borrowing capacity | $ 35 | |||
Outstanding letters of credit | $ 29.7 | |||
Percentage of aggregate undrawn amount of letter of credit required to provide cash collateral | 101.00% | |||
Forecast | ABL Credit Agreement | LIBOR | ||||
LONG-TERM DEBT | ||||
Basis spread on variable rate (as a percent) | 1.00% | |||
Forecast | ABL Credit Agreement | Federal funds rate | ||||
LONG-TERM DEBT | ||||
Basis spread on variable rate (as a percent) | 0.50% | |||
Forecast | ABL Credit Agreement | Minimum | LIBOR | ||||
LONG-TERM DEBT | ||||
Basis spread on variable rate (as a percent) | 1.75% | |||
Forecast | ABL Credit Agreement | Minimum | Base rate | ||||
LONG-TERM DEBT | ||||
Basis spread on variable rate (as a percent) | 0.75% | |||
Forecast | ABL Credit Agreement | Maximum | ||||
LONG-TERM DEBT | ||||
Interest payable period | 3 months | |||
Forecast | ABL Credit Agreement | Maximum | LIBOR | ||||
LONG-TERM DEBT | ||||
Basis spread on variable rate (as a percent) | 2.25% | |||
Forecast | ABL Credit Agreement | Maximum | Base rate | ||||
LONG-TERM DEBT | ||||
Basis spread on variable rate (as a percent) | 1.25% | |||
Forecast | ABL Credit Agreement | Revolving credit facility | ||||
LONG-TERM DEBT | ||||
Minimum fixed charge coverage ratio | 1.10 | |||
Minimum percentage of loan amount maintain | 12.50% | |||
Minimum amount of debt maintain | $ 8.1 | |||
Number of threshold consecutive days | 30 days | |||
Forecast | ABL Credit Agreement | Wells Fargo | Revolving credit facility | ||||
LONG-TERM DEBT | ||||
Maximum borrowing capacity | $ 65 | |||
Forecast | ABL Credit Agreement | Wells Fargo | Letter of credit | ||||
LONG-TERM DEBT | ||||
Maximum borrowing capacity | $ 35 |
LONG-TERM DEBT - Junior Lien Te
LONG-TERM DEBT - Junior Lien Term Loan Agreement (Details) - USD ($) $ in Thousands | Jul. 16, 2018 | Jul. 01, 2018 | Dec. 31, 2017 |
LONG-TERM DEBT | |||
Aggregate principal amount of outstanding, redemptions notice issued | $ 709,519 | ||
Carrying value of long-term debt | $ 688,359 | $ 781,392 | |
7.150% unsecured debentures due in 2027 | |||
LONG-TERM DEBT | |||
Interest rate (as a percent) | 7.15% | 7.15% | |
Aggregate principal amount of outstanding, redemptions notice issued | $ 89,188 | ||
Carrying value of long-term debt | $ 85,458 | $ 85,262 | |
6.875% unsecured debentures due in 2029 | |||
LONG-TERM DEBT | |||
Interest rate (as a percent) | 6.875% | 6.875% | |
Aggregate principal amount of outstanding, redemptions notice issued | $ 276,230 | ||
Carrying value of long-term debt | $ 262,925 | $ 262,311 | |
Forecast | Tranche A | Junior Lien Term Loan Credit Agreement | The Bank of New York Mellon | |||
LONG-TERM DEBT | |||
Maximum borrowing capacity | $ 157,100 | ||
Forecast | Tranche B | Junior Lien Term Loan Credit Agreement | The Bank of New York Mellon | |||
LONG-TERM DEBT | |||
Maximum borrowing capacity | 193,500 | ||
Forecast | 7.150% unsecured debentures due in 2027 | The Bank of New York Mellon | |||
LONG-TERM DEBT | |||
Carrying value of long-term debt | 7,100 | ||
Forecast | 7.150% unsecured debentures due in 2027 | Junior Lien Term Loan Credit Agreement | The Bank of New York Mellon | |||
LONG-TERM DEBT | |||
Proceeds from Issuance of Long-term debt | $ 82,100 | ||
Forecast | 7.795% tranche A junior term loan due in 2030 | Tranche A | The Bank of New York Mellon | |||
LONG-TERM DEBT | |||
Interest rate (as a percent) | 7.795% | ||
Forecast | 6.875% unsecured debentures due in 2029 | The Bank of New York Mellon | |||
LONG-TERM DEBT | |||
Carrying value of long-term debt | $ 82,800 | ||
Forecast | 6.875% unsecured debentures due in 2029 | Junior Lien Term Loan Credit Agreement | The Bank of New York Mellon | |||
LONG-TERM DEBT | |||
Proceeds from Issuance of Long-term debt | $ 193,500 | ||
Forecast | 6.875% unsecured debentures due in 2029 | Tranche B | The Bank of New York Mellon | |||
LONG-TERM DEBT | |||
Interest rate (as a percent) | 6.875% |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) - Pension plan | 6 Months Ended |
Jul. 01, 2018USD ($)item | |
EMPLOYEE BENEFITS | |
Number of new participants | item | 0 |
Further benefits | $ | $ 0 |
EMPLOYEE BENEFITS - Retirement
EMPLOYEE BENEFITS - Retirement and Post retirement costs - (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
May 31, 2018 | Jul. 01, 2018 | Jun. 25, 2017 | Jul. 01, 2018 | Jun. 25, 2017 | |
Retirement expense for continuing operations | |||||
Net pension expense | $ 2,779 | $ 3,328 | $ 5,557 | $ 6,655 | |
Matching contributions | 600 | 1,300 | |||
Pension plan | |||||
Retirement expense for continuing operations | |||||
Interest cost | 19,789 | 21,367 | 39,577 | 42,734 | |
Expected return on plan assets | (22,624) | (22,393) | (45,248) | (44,785) | |
Actuarial loss | 6,296 | 5,084 | 12,591 | 10,168 | |
Net pension expense | 3,461 | 4,058 | 6,920 | 8,117 | |
Proceeds from sale of real property location | $ 4,100 | ||||
(Loss) on sale of real property location | (200) | (200) | |||
Post-retirement plans | |||||
Retirement expense for continuing operations | |||||
Net pension expense | $ (682) | $ (730) | $ (1,363) | $ (1,462) |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Legal Proceedings (Details) $ in Millions | 1 Months Ended | 6 Months Ended | |
Feb. 28, 2009item | Dec. 31, 2008item | Jul. 01, 2018USD ($)item | |
Letter of credit | |||
Contingencies | |||
Outstanding letters of credit | $ | $ 29.7 | ||
"Sacramento Case" | |||
Contingencies | |||
Number of carriers | 5,000 | ||
Number of phases | 3 | ||
"Fresno Case" | |||
Contingencies | |||
Number of carriers | 3,500 | ||
Number of phases | 2 |
STOCK PLANS - Activity (Details
STOCK PLANS - Activity (Details) $ / shares in Units, $ in Millions | 6 Months Ended |
Jul. 01, 2018USD ($)$ / sharesshares | |
RSUs | |
RSU's | |
Nonvested at the beginning of the period (in shares) | shares | 245,794 |
Granted (in shares) | shares | 218,580 |
Vested (in shares) | shares | (99,244) |
Forfeited (in shares) | shares | (2,490) |
Nonvested at the end of the period (in shares) | shares | 362,640 |
Weighted Average Grant Date Fair Value | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 11.55 |
Granted (in dollars per share) | $ / shares | 9.10 |
Vested (in dollars per share) | $ / shares | 13.31 |
Forfeited (in dollars per share) | $ / shares | 11.41 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 9.59 |
Additional disclosures | |
Total fair value | $ | $ 0.9 |
Stock options and SARs | |
Options/SARs | |
Outstanding at the beginning of the period (in shares) | shares | 156,175 |
Expired (in shares) | shares | (24,825) |
Outstanding at the end of the period (in shares) | shares | 131,350 |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 32.12 |
Expired (in dollars per share) | $ / shares | 38.60 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 30.89 |
STOCK PLANS - Stock-based compe
STOCK PLANS - Stock-based compensation (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2018USD ($) | Jun. 25, 2017USD ($) | Jul. 01, 2018USD ($)item | Jun. 25, 2017USD ($) | |
STOCK PLANS | ||||
Number of stock-based compensation plans | item | 2 | |||
Stock-based compensation expense | $ | $ 320 | $ 432 | $ 1,061 | $ 1,461 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Thousands | Jul. 16, 2018USD ($) | Jul. 13, 2018 | Jul. 01, 2018USD ($) | Dec. 31, 2017 |
Lessor of | ||||
Long-term debt | $ 709,519 | |||
9.00% senior secured notes due in 2022 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 9.00% | 9.00% | ||
Lessor of | ||||
Long-term debt | $ 344,101 | |||
6.875% unsecured debentures due in 2029 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 6.875% | 6.875% | ||
Lessor of | ||||
Long-term debt | $ 276,230 | |||
7.150% unsecured debentures due in 2027 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 7.15% | 7.15% | ||
Lessor of | ||||
Long-term debt | $ 89,188 | |||
Subsequent event | ||||
Lessor of | ||||
Long-term debt | $ 760,418 | |||
Subsequent event | ABL Credit Agreement | ||||
Subsequent Events | ||||
Maximum borrowing capacity | $ 46,400 | |||
Percentage of Eligible Advertising Accounts | 85.00% | |||
Percentage of Eligible Unbilled Advertising Accounts Receivable | 80.00% | |||
Lessor of | ||||
Value of unbilled advertising accounts receivable | $ 3,000 | |||
Book value of eligible inventory | $ 6,000 | |||
Book value of eligible inventory (as a percent) | 50.00% | |||
Amount borrowed | $ 10,000 | |||
Remaining borrowing capacity | 36,400 | |||
Long-term debt | $ 10,000 | |||
Subsequent event | ABL Credit Agreement | Revolving credit facility | ||||
Subsequent Events | ||||
Minimum percentage of loan amount maintain | 12.50% | |||
Maximum borrowing capacity | $ 65,000 | |||
Lessor of | ||||
Minimum amount of debt maintain | $ 8,100 | |||
Minimum fixed charge coverage ratio | 1.10 | |||
Number of threshold consecutive days | 30 days | |||
Subsequent event | ABL Credit Agreement | Letter of credit | ||||
Subsequent Events | ||||
Maximum borrowing capacity | $ 35,000 | |||
Subsequent event | ABL Credit Agreement | Maximum | ||||
Lessor of | ||||
Interest payable period | 3 months | |||
Subsequent event | Junior Lien Term Loan Credit Agreement | ||||
Lessor of | ||||
Principal amount of debt (as a percent) | 100.00% | |||
Subsequent event | Junior Lien Term Loan Credit Agreement | Tranche A | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 7.795% | |||
Maximum borrowing capacity | $ 157,100 | |||
Subsequent event | Junior Lien Term Loan Credit Agreement | Tranche B | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 6.875% | |||
Maximum borrowing capacity | $ 193,500 | |||
Subsequent event | LIBOR | ABL Credit Agreement | ||||
Lessor of | ||||
Basis spread on variable rate (as a percent) | 1.00% | |||
Subsequent event | LIBOR | ABL Credit Agreement | Minimum | ||||
Lessor of | ||||
Basis spread on variable rate (as a percent) | 1.75% | |||
Subsequent event | LIBOR | ABL Credit Agreement | Maximum | ||||
Lessor of | ||||
Basis spread on variable rate (as a percent) | 2.25% | |||
Subsequent event | Federal funds rate | ABL Credit Agreement | ||||
Lessor of | ||||
Basis spread on variable rate (as a percent) | 0.50% | |||
Subsequent event | Base rate | ABL Credit Agreement | Minimum | ||||
Lessor of | ||||
Basis spread on variable rate (as a percent) | 0.75% | |||
Subsequent event | Base rate | ABL Credit Agreement | Maximum | ||||
Lessor of | ||||
Basis spread on variable rate (as a percent) | 1.25% | |||
Subsequent event | 9.00% senior secured notes due in 2022 | Junior Lien Term Loan Credit Agreement | ||||
Lessor of | ||||
Repayments of long-term debt | $ 193,500 | |||
Subsequent event | 6.875% unsecured debentures due in 2029 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 6.875% | 6.875% | ||
Lessor of | ||||
Long-term debt | $ 82,764 | |||
Subsequent event | 6.875% unsecured debentures due in 2029 | Junior Lien Term Loan Credit Agreement | Tranche B | ||||
Lessor of | ||||
Debt conversion amount | $ 75,000 | |||
Subsequent event | 7.150% unsecured debentures due in 2027 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 7.15% | 7.15% | ||
Lessor of | ||||
Long-term debt | $ 7,105 | |||
Subsequent event | 7.150% unsecured debentures due in 2027 | Junior Lien Term Loan Credit Agreement | ||||
Lessor of | ||||
Repayments of long-term debt | $ 82,100 | |||
Subsequent event | 9.00% senior secured notes due in 2026 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 9.00% | |||
Repurchase price (as percent) | 101.00% | |||
Minimum percentage of loan amount maintain | 25.00% | |||
Lessor of | ||||
Long-term debt | $ 310,000 | |||
Subsequent event | 9.00% senior secured notes due in 2026 | Private Placement | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 9.00% | |||
Aggregate principal amount of notes issued | $ 310,000 |
SUBSEQUENT EVENTS - Others (Det
SUBSEQUENT EVENTS - Others (Details) - USD ($) $ in Thousands | Jul. 16, 2018 | Jul. 01, 2018 | Jul. 13, 2018 | Dec. 31, 2017 |
Subsequent Events | ||||
Face Value | $ 709,519 | |||
9.00% senior secured notes due in 2022 | ||||
Subsequent Events | ||||
Amount of debt redeemed | $ 75,000 | |||
Interest rate (as a percent) | 9.00% | 9.00% | ||
Face Value | $ 344,101 | |||
7.150% unsecured debentures due in 2027 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 7.15% | 7.15% | ||
Face Value | $ 89,188 | |||
6.875% unsecured debentures due in 2029 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 6.875% | 6.875% | ||
Face Value | $ 276,230 | |||
Subsequent event | ||||
Subsequent Events | ||||
Face Value | $ 760,418 | |||
Subsequent event | 9.00% senior secured notes due in 2022 | ||||
Subsequent Events | ||||
Amount of debt redeemed | 344,100 | |||
Redemption premium paid | $ 15,500 | |||
Redemption of debt as a percentage of principle amount | 4.50% | |||
Subsequent event | 9.00% senior secured notes due in 2026 | ||||
Subsequent Events | ||||
Redemption of debt as a percentage of principle amount | 100.00% | |||
Interest rate (as a percent) | 9.00% | |||
Face Value | $ 310,000 | |||
Subsequent event | 9.00% senior secured notes due in 2026 | Maximum | ||||
Subsequent Events | ||||
Redemption of debt as a percentage of principle amount | 40.00% | |||
Subsequent event | 7.795% tranche A junior term loan due in 2030 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 7.795% | |||
Face Value | $ 157,083 | |||
Subsequent event | 6.875% tranche B junior term loan due in 2030 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 6.875% | |||
Face Value | $ 193,466 | |||
Subsequent event | 7.150% unsecured debentures due in 2027 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 7.15% | 7.15% | ||
Face Value | $ 7,105 | |||
Subsequent event | 6.875% unsecured debentures due in 2029 | ||||
Subsequent Events | ||||
Interest rate (as a percent) | 6.875% | 6.875% | ||
Face Value | $ 82,764 | |||
Subsequent event | ABL Credit Agreement | ||||
Subsequent Events | ||||
Face Value | $ 10,000 | |||
Subsequent event | ABL Credit Agreement | Maximum | ||||
Subsequent Events | ||||
Debt term (in years) | 5 years |