Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 29, 2019 | Mar. 25, 2020 | Jun. 30, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 29, 2019 | ||
Entity Registrant Name | McClatchy Company | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 17.1 | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Central Index Key | 0001056087 | ||
Current Fiscal Year End Date | --12-29 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Common Class A | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 5,506,185 | ||
Common Class B | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 2,428,191 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
REVENUES - NET: | ||
Net revenues | $ 709,516 | $ 807,226 |
OPERATING EXPENSES: | ||
Compensation | 251,677 | 298,033 |
Newsprint, supplements and printing expenses | 45,617 | 54,592 |
Depreciation and amortization | 46,021 | 76,242 |
Other operating expenses | 342,631 | 364,038 |
Goodwill and other asset write-downs (see Notes 3 and 6) | 335,676 | 37,274 |
Operating expenses, total | 1,021,622 | 830,179 |
OPERATING LOSS | (312,106) | (22,953) |
NON-OPERATING INCOME (EXPENSE): | ||
Interest expense | (78,970) | (81,397) |
Equity income (loss) in unconsolidated companies, net | (1,039) | 592 |
Gains related to investments in unconsolidated companies | 1,721 | |
Gain (loss) on extinguishment of debt, net | (2,272) | 30,577 |
Retirement benefit expense | (23,715) | (11,114) |
Other - net | 716 | 647 |
Non-operating income (expense), total | (105,280) | (58,974) |
Loss before income taxes | (417,386) | (81,927) |
Income tax benefit | (6,279) | (2,170) |
NET LOSS | $ (411,107) | $ (79,757) |
Net loss per common share: | ||
Net loss per share - basic (in dollars per share) | $ (51.97) | $ (10.27) |
Net loss per share - diluted (in dollars per share) | $ (51.97) | $ (10.27) |
Weighted average number of common shares: | ||
Basic (in shares) | 7,911 | 7,768 |
Diluted (in shares) | 7,911 | 7,768 |
Advertising | ||
REVENUES - NET: | ||
Net revenues | $ 337,110 | $ 416,720 |
Audience | ||
REVENUES - NET: | ||
Net revenues | 321,782 | 339,506 |
Other | ||
REVENUES - NET: | ||
Net revenues | $ 50,624 | $ 51,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
NET LOSS | $ (411,107) | $ (79,757) |
Pension and post retirement plans: | ||
Change in pension and post-retirement benefit plans | 28,150 | (56,530) |
Other comprehensive income | 28,150 | (56,530) |
Comprehensive loss | $ (382,957) | $ (136,287) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 10,514 | $ 21,906 |
Trade receivables (net of allowances of $1,754 and $3,008) | 56,096 | 81,709 |
Other receivables | 8,348 | 12,198 |
Newsprint, ink and other inventories | 5,297 | 9,115 |
Assets held for sale | 14,170 | 9,920 |
Other current assets | 20,087 | 15,505 |
Total current assets | 114,512 | 150,353 |
Property, plant and equipment, net | 203,575 | 233,692 |
Intangible assets: | ||
Identifiable intangibles - net | 69,253 | 143,347 |
Goodwill | 420,178 | 705,174 |
Total intangible assets | 489,431 | 848,521 |
Investments and other assets: | ||
Investments in unconsolidated companies | 2,726 | 3,888 |
Operating lease right-of-use assets | 45,128 | |
Other assets | 55,883 | 58,847 |
Total investments and other assets | 103,737 | 62,735 |
TOTAL ASSETS | 911,255 | 1,295,301 |
Current liabilities: | ||
Current portion of long-term debt | 4,312 | |
Accounts payable | 29,758 | 37,521 |
Accrued pension liabilities | 124,200 | 11,510 |
Accrued compensation | 18,932 | 20,481 |
Income taxes payable | 6,535 | |
Unearned revenue | 55,155 | 58,340 |
Accrued interest | 25,307 | 26,037 |
Financing obligation | 13,027 | 10,417 |
Current portion of operating lease liabilities | 8,105 | |
Other accrued liabilities | 5,146 | 5,385 |
Total current liabilities | 279,630 | 180,538 |
Non-current liabilities: | ||
Long-term debt | 607,672 | 633,383 |
Deferred income taxes | 15,027 | 20,775 |
Pension and postretirement obligations | 526,010 | 655,310 |
Financing obligations | 132,278 | 108,252 |
Operating lease liabilities | 46,733 | |
Other long-term obligations | 27,361 | 38,708 |
Total non-current liabilities | 1,355,081 | 1,456,428 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Additional paid-in-capital | 2,217,823 | 2,216,681 |
Accumulated deficit | (2,365,216) | (1,954,132) |
Treasury stock at cost, 608 shares and 252 shares | (3) | (2) |
Accumulated other comprehensive loss | (576,139) | (604,289) |
Total stockholders' equity (deficit) | (723,456) | (341,665) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 911,255 | 1,295,301 |
Common Class A | ||
Stockholders' deficit: | ||
Common stock | 55 | 53 |
Common Class B | ||
Stockholders' deficit: | ||
Common stock | $ 24 | $ 24 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Trade receivables, allowance | $ 1,754 | $ 3,008 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Treasury stock, shares | 608 | 252 |
Common Class A | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 5,506,030 | 5,384,303 |
Common Class B | ||
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 2,428,191 | 2,428,191 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (411,107) | $ (79,757) |
Reconciliation to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 46,021 | 76,242 |
Gain on disposal of property and equipment (excluding other asset write-downs) | (2,554) | (4,092) |
Contribution to qualified defined benefit pension plan | (3,088) | |
Retirement benefit expense | 23,715 | 11,114 |
Stock-based compensation expense | 1,504 | 2,057 |
Deferred income taxes | (5,748) | (7,287) |
Equity (income) loss in unconsolidated companies | 1,039 | (592) |
Gains related to investments in unconsolidated companies | (1,721) | |
Distributions of income from investments in unconsolidated companies | 1,295 | 2,876 |
(Gain) loss on extinguishment of debt, net | 2,272 | (30,577) |
Goodwill and other asset write-downs | 335,676 | 37,274 |
Amortization of bond fees and other debt-related items | 9,980 | 6,215 |
Noncash lease expense | 6,449 | |
Other | (80) | (3,766) |
Changes in certain assets and liabilities: | ||
Trade receivables | 25,613 | 16,704 |
Inventories | 3,818 | (1,197) |
Other assets | (2,598) | 2,475 |
Accounts payable | (7,637) | 5,665 |
Accrued compensation | (1,326) | (3,577) |
Income taxes | (6,419) | (3,058) |
Accrued interest | (730) | 18,083 |
Postretirement obligations and other liabilities | (23,018) | (24,694) |
Net cash provided by (used in) operating activities | (6,763) | 25,919 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (2,729) | (11,120) |
Proceeds from sale of property, plant and equipment and other | 8,773 | 5,679 |
Purchase of certificates of deposit | (28,651) | |
Proceeds from redemption of certificates of deposit | 2,000 | 30,957 |
Contributions to cost and equity investments | (825) | (2,540) |
Proceeds from sale of unconsolidated companies and other-net | 5,301 | |
Net cash provided by (used in) investing activities | 7,219 | (374) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repurchase of notes and related expenses | (41,873) | (464,870) |
Proceeds from issuance of debt | 361,449 | |
Payment of financing costs | (28) | (17,684) |
Proceeds from sale-leaseback financing obligations | 29,743 | |
Proceeds from sale-leaseback financing obligations | 15,749 | |
Purchase of treasury shares | (361) | (436) |
Other | (1,329) | (552) |
Net cash used in financing activities | (13,848) | (106,344) |
Decrease in cash, cash equivalents and restricted cash | (13,392) | (80,799) |
Cash, cash equivalents and restricted cash at beginning of period | 50,555 | 131,354 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ 37,163 | $ 50,555 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - 12 months ended Dec. 29, 2019 $ in Thousands | USD ($) |
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 30, 2018 | $ (341,665) |
Changes in stockholders' equity | |
Net income loss | (411,107) |
Stockholders' Equity Attributable to Parent, Ending Balance at Dec. 29, 2019 | $ (723,456) |
BUSINESS AND BASIS OF ACCOUNTIN
BUSINESS AND BASIS OF ACCOUNTING | 12 Months Ended |
Dec. 29, 2019 | |
BUSINESS AND BASIS OF ACCOUNTING | |
BUSINESS AND BASIS OF ACCOUNTING | 1. BUSINESS AND BASIS OF ACCOUNTING The McClatchy Company (the “Company,” “we,” “us” or “our”) provides strong, independent local journalism to 30 communities with operations in 14 states, as well as selected national news coverage through our Washington D.C. based bureau. We also provide a full suite of digital marketing services, both through our local sales teams based in the communities we serve, as well as through excelerate ® , our national digital marketing agency. 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. Our fiscal year ends on the last Sunday in December in each calendar year. The fiscal years ended December 29, 2019, and December 30, 2018, consisted of 52-week periods. Preparation of the financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulation of the Securities and Exchange Commission (“SEC”) 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 consolidated financial statements include the Company and our subsidiaries. Intercompany items and transactions are eliminated. Reclassifications Certain amounts in the accompanying consolidated statement of cash flows for the year ended December 30, 2018, have been reclassified to conform to the year ended December 29, 2019, presentation. Going Concern We have concluded our financial condition and our projected operating results, contribution amounts required on our qualified defined benefit pension plan (“Pension Plan”) (as described below), the defaults under our debt agreements subsequent to December 29, 2019, and the risks and uncertainties surrounding our Chapter 11 Cases (see Note 2) raise substantial doubt as to our ability to continue as a going concern. As of December 29, 2019, we faced liquidity challenges relating to the minimum required contributions in fiscal year 2020 to our Pension Plan. These required contributions were estimated to be approximately $124.2 million, which would be paid in installments beginning in January 2020 with the majority of those payments due on or subsequent to September 15, 2020. At December 29, 2019, we had $703.3 million aggregate principal amount of outstanding debt consisting of $262.9 million of our Senior Secured Notes due 2026 (“2026 Notes” or “First Lien Notes”) , $157.1 million of our Junior Term Loan, $268.4 million of our senior secured junior lien 2031 Notes and $14.9 million of our Debentures. In January 2020, we entered into a Standstill Agreement with the Pension Benefit Guarant y Corporation (“PBGC”), pursuant to which the PBGC agreed not to exercise the remedies available to it as a result of our not making the scheduled qualified pension contribution of $4.0 million due in January 2020. The payment obligations to the PBGC were further stayed when we filed for reorganization under Chapter 11 in February 2020. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. NYSE American Continued Listing Status Our Class A Common Stock was previously listed on the NYSE American under the symbol MNI. On February 13, 2020, the NYSE American suspended the trading of our Class A Common Stock upon our filing the Chapter 11 petitions, and our Class A Common Stock has been quoted “over-the-counter” on the OTC Pink Market, operated by OTC Markets Group, under the symbol MNIQQ. On February 21, 2020, the NYSE American filed a Form 25 with the SEC to delist our Class A Common Stock from the NYSE American. The delisting was effective 10 days after the Form 25 was filed. The deregistration of the Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will become effective 90 days after the filing date of the Form 25. Coronavirus (COVID-19) Pandemic Subsequent to December 29, 2019, the World Health Organization declared that the recent coronavirus disease 2019 (“COVID-19”) outbreak was a global health emergency and then in March 2020, they raised the COVID-19 outbreak to “pandemic” status. The transmission of COVID-19 and efforts to contain its spread have resulted in international, national and local border closings and other significant travel restrictions and disruptions, significant disruptions to business operations, supply chains and customer activity, event cancellations and restrictions, service cancellations, reductions and other changes, significant challenges in healthcare service preparation and delivery, quarantines and related government actions and policies, as well as general concern and uncertainty that has negatively affected the economic environment. We are unable to predict the duration or extent of the business disruption, or any potential financial impact. We have concluded that the COVID-19 outbreak has negatively impacted the collectability of our accounts receivables outstanding as of December 29, 2019; however, we estimate this impact to be immaterial. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. Key provisions of the CARES Act include one-time payments to individuals, strengthened unemployment insurance, additional health-care funding, loans and grants to certain businesses, and temporary amendments to the Internal Revenue Code. While we do not qualify for any of the business loans or grants under the CARES Act, modifications to the tax rules for the carryback of net operating losses and business interest limitations may result in a federal tax refund of approximately $9.0 million. |
CHAPTER 11 BANKRUPTCY FILING (S
CHAPTER 11 BANKRUPTCY FILING (Subsequent Event) | 12 Months Ended |
Dec. 29, 2019 | |
CHAPTER 11 BANKRUPTCY FILING (Subsequent Event) | |
CHAPTER 11 BANKRUPTCY FILING (Subsequent Event) | 2. CHAPTER 11 BANKRUPTCY FILING (Subsequent Event) Bankruptcy Petitions On February 13, 2020 (“Petition Date”), McClatchy and each of our 53 wholly owned subsidiaries filed voluntary petitions (“Chapter 11 Cases”) for reorganization under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”). The Chapter 11 Cases are being jointly administered under the caption In re: The McClatchy Company, et al ., Case No. 20-10418. Operation and Implications of the Bankruptcy Filing We and our 30 local media companies will continue to operate our businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. We intend to continue to operate our businesses in the ordinary course during the pendency of the Chapter 11 Cases. In general, as debtors-in-possession under the Bankruptcy Code, we are authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. Pursuant to first-day motions filed with the Bankruptcy Court, the Bankruptcy Court authorized us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to obtain debtor-in-possession financing, pay employee wages and benefits, and pay vendors and suppliers in the ordinary course for all goods and services going forward. Debtor-In-Possession Financing To ensure sufficient liquidity throughout the Chapter 11 Cases, we have obtained new $50.0 million debtor-in-possession financing under a credit agreement (“DIP Credit Agreement”) from Encina Business Credit, LLC (“Encina”). This DIP Credit Agreement, coupled with our normal operating cash flows, is providing liquidity for McClatchy and all of our local news outlets to operate as usual and fulfill ongoing commitments to stakeholders. The DIP Credit Agreement, which replaces our former asset based loan (“ABL”) revolver from Wells Fargo, N.A. (see Note 7 for further discussion of our debt), provides for a secured debtor-in-possession credit facility (“DIP Facility”) consisting of a new revolving loan facility in an aggregate principal amount of up to $50.0 million, which will be in the form of revolving loans or, subject to a sub-limit of $3.5 million, in the form of letters of credit. Our obligations under the DIP Facility will be guaranteed by all of our assets, whether now existing or hereafter acquired. The scheduled maturity date of the DIP Facility will be the eighteen-month anniversary following the Closing Date (as defined in the DIP Credit Agreement). The DIP Credit Agreement contains customary representations, warranties and covenants that are typical and customary for debtor-in-possession facilities of this type, including, but not limited to specified restrictions on indebtedness, liens, guarantee obligations, mergers, acquisitions, consolidations, liquidations and dissolutions, sales of assets, leases, payment of dividends and other restricted payments, voluntary payments of other indebtedness, investments, loans and advances, transactions with affiliates, sale and leaseback transactions and compliance with case milestones. The DIP Credit Agreement also contains customary events of default, including as a result of certain events occurring in the Chapter 11 Cases. The DIP Credit Agreement was subject to approval by the Bankruptcy Court and is subject to customary conditions precedent. Ongoing Negotiations on Proposed Plan of Reorganization The Chapter 11 Cases provides immediate protection to the Company, which will continue to operate in the ordinary course of business as it pursues approval of a proposed restructuring plan with its secured lenders, bondholders, and the Pension Benefit Guarant y Corporation (“PBGC”). We have included lenders holding approximately 87% of our First Lien Notes in these confidential discussions. In summary, our proposed plan of reorganization, which has been submitted to creditors for approval, provides: · Our existing First Lien Notes will be exchanged for new first lien notes in an amount not more than a principal balance of $217.9M, secured by the same collateral, having the same maturity and accruing interest at a rate of 10% per annum; · Our largest holder of secured debt, including First Lien Notes, the loans made under our Junior Lien Term Loan Credit Agreement dated as of July 16, 2018 (“Second Lien Term Loans”), and the 6.875% Senior Secured Junior Lien Notes due 2031 (“Third Lien Notes”) will receive $81.0 million of secured debt subordinate to the new first lien notes in exchange for a portion of its existing First Lien Notes and a commitment to provide us with $30.0 million of exit financing (such subordinated debt to accrue payment-in-kind interest of 12.5% or cash-pay interest of 10%, depending on our ratio of leverage to adjusted EBITDA); · Our existing Second Lien Term Loans and Third Lien Notes will be extinguished in exchange for 97% of the equity ownership of the Company, subject to dilution for management incentives and certain warrants for up to 2.5% of the equity ownership of the Company; · Certain creditors who are no longer part of our go-forward operations will share, pro rata, in a pool of $3 million or warrants to acquire up to 2.5% of the equity ownership of the Company; · Our existing Class A and Class B Common Stock will be cancelled; and · We will seek the Bankruptcy Court’s authority to terminate our Pension Plan and appoint the PBGC as the plan’s trustee. Under a plan termination, the PBGC would continue to pay the Pension Plan participants their benefits, subject to federal statutory limits. Under current regulations, we believe that such a solution would not have an adverse impact on qualified pension benefits for substantially all plan participants. We have proposed to settle our liabilities in connection with the Pension Plan by paying the PBGC $3.3 million each year for ten years and 3% of the equity ownership of the Company. The terms of the plan described above represent our good faith proposal to restructure our existing obligations. As previously announced, we have been negotiating such proposals with our largest stakeholders for some time. Certain issues, summarized below, represent the most recent bargaining position of certain of those parties. · First, while the PBGC has not indicated that it disputes that the Pension Plan satisfies the standards for termination, the PBGC has requested a materially larger stream of cash payments over ten years and a materially larger percentage of equity ownership in the Company in settlement of the PBGC’s claims relating to termination of the qualified pension plan; and · Second, the parties continue to negotiate the final details surrounding governance and senior management. Confirmation of a plan of reorganization could materially alter the classifications and amounts reported in our consolidated financial statements. The financial statements as of and for the year ended December 29, 2019, do not give effect to any adjustments to the carrying values of assets or amounts of liabilities that might be necessary as a consequence of confirmation of a plan of reorganization or other arrangement, or the effect of any operational changes that may be implemented. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 29, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | 3. SIGNIFICANT ACCOUNTING POLICIES 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. During 2018, as a result of the refinancing transactions discussed in Note 7, we transferred our Debentures (as defined in Note 7) from Level 2 to Level 3 in the fair value hierarchy. No similar transactions occurred in 2019. 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 December 29, 2019, and December 30, 2018, the carrying amount of these items approximates fair value because of the short maturity of these financial instruments. Long‑term debt. At December 29, 2019 the carrying value and the estimated fair value of our 2026 Notes (as defined in Note 7) was $249.8 million and $240.5 million, respectively. As of December 30, 2018, the carrying value and the estimated fair value of the 2026 Notes was $287.2 million and $302.4 million, respectively. The fair value of our 2026 Notes as described above was determined using quoted market prices. 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 December 29, 2019, the carrying value and the estimated fair value of our Debentures, Junior Term Loan and 2031 Notes (as defined in Note 7), was $357.9 million and $213.3 million, respectively. At December 30, 2018, the carrying value and the estimated fair value of our Debentures, Junior Term Loan and 2031 Notes, was $350.4 million and $296.5 million, respectively. Market evidence was not available or reliable to value our Debentures, Junior Term Loan and 2031 Notes. The fair value was based on the net present value of the future cash flows using interest rates derived from market inputs and a Treasury yield curve in effect at December 29, 2019. These are considered to be Level 3 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value. Pension plan. As of December 29, 2019, and December 30, 2018, we had assets related to our Pension Plan measured at fair value. The required disclosures, including assets valued with Level 3 inputs, are presented in Note 9. 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 are measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and cost or 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, but are not limited to, the expected cash flows and the discount rates that we estimate market participants would seek for bearing the risk associated with such assets. See goodwill and intangible asset discussion below regarding valuation inputs and impairments recorded during 2019. We incurred impairment charges during 2018 on our newspaper masthead intangible assets. See below in Note 3 and Note 6 for further information. Revenue recognition We recognize revenues when control of the promised goods is transferred to our customers or when the services are performed, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. All revenue recognized on the 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 outside the scope of Topic 606. See Note 4. Concentrations of credit risks Financial instruments, which potentially subject us to concentrations of credit risks, are principally cash and cash equivalents and trade accounts receivables. Cash and cash equivalents are placed with major financial institutions. As of December 29, 2019, substantially all of our cash and cash equivalents are in excess of the FDIC insured limits. We have not experienced any losses related to amounts in excess of FDIC limits. We routinely assess the financial strength of significant customers and this assessment, combined with the large number and geographic diversity of our customers, limits our concentration of risk with respect to trade accounts receivable. Allowance for doubtful accounts We maintain an allowance account for estimated losses resulting from the risk that our customers will not make required payments. At certain of our media companies, we establish our allowances based on collection experience, aging of our receivables and significant individual account credit risk. At the remaining media companies, we use the aging of accounts receivable, reserving for all accounts due 90 days or longer, to establish allowances for losses on accounts receivable; however, if we become aware that the financial condition of specific customers has deteriorated, additional allowances are provided. We provide an allowance for doubtful accounts as follows: Years Ended December 29, December 30, (in thousands) 2019 2018 Balance at beginning of year $ 3,008 $ 3,225 Charged to costs and expenses 7,134 8,995 Amounts written off (8,388) (9,212) Balance at end of year $ 1,754 $ 3,008 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. There have been no write-downs of newsprint, ink or other inventories during 2019 or 2018. Property, plant and equipment Property, plant and equipment (“PP&E”) are recorded at cost. Additions and substantial improvements, as well as interest expense incurred during construction, are capitalized. Capitalized interest was not material in 2019 or 2018. Expenditures for maintenance and repairs are charged to expense as incurred. When PP&E is sold or retired, the asset and related accumulated depreciation are removed from the accounts and the associated gain or loss is recognized. Property, plant and equipment consisted of the following: December 29, December 30, Estimated (in thousands) 2019 2018 Useful Lives Land $ 27,869 $ 32,335 Building and improvements 245,748 268,157 - years Equipment 462,449 506,307 - years (1) Construction in process 324 1,890 736,390 808,689 Less accumulated depreciation (532,815) (574,997) Property, plant and equipment, net $ 203,575 $ 233,692 (1) Presses are 9 - 25 years and other equipment is 2 - 15 years We record depreciation using the straight‑line method over estimated useful lives. The useful lives are estimated at the time the assets are acquired and are based on historical experience with similar assets and anticipated technological changes. Our depreciation expense was $21.9 million and $28.6 million in 2019 and 2018, respectively. During 2019 and 2018, we incurred $0.3 million and $0.6 million, respectively, in accelerated depreciation related to production equipment that was no longer needed due to outsourcing of our printing process at certain of our media companies. We review the carrying amount of long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events that result in an impairment review include the decision to close a location or a significant decrease in the operating performance of the long‑lived asset. Long‑lived assets are considered impaired if the estimated undiscounted future cash flows of the asset or asset group are less than the carrying amount. For impaired assets, we recognize a loss equal to the difference between the carrying amount of the asset or asset group and its estimated fair value, which is recorded in operating expenses in the consolidated statements of operations. The estimated fair value of the asset or asset group is based on the discounted future cash flows of the asset or asset group. The asset group is defined as the lowest level for which identifiable cash flows are available. Assets held for sale As of December 29, 2019, we have land and/or buildings classified as assets held for sale at five of our media companies compared to only three as of December 30, 2018. During 2019, we began to actively market for sale five properties, which includes land and/or buildings, at four of our media companies. In connection with classifying properties as assets held for the sale, we reduce the carrying value of the land and building to its estimated fair value less selling costs, if applicable. As a result, during 2019, we recorded a $0.7 million impairment charge at one of our properties which is included in goodwill and other asset write-downs on our consolidated statement of operations. During the year ended December 29, 2019, we sold land and buildings in Kennewick, Washington, Belleville, Illinois, and Miami, Florida. We recorded gains of $3.3 million, which are included in other operating expenses on our consolidated statements of operations. Goodwill and intangible impairment Goodwill represents the excess of cost of a business acquisition over the fair value of the net assets acquired. In accordance with FASB ASC 350 " Intangibles - Goodwill and Other " goodwill is not amortized. An impairment loss is recognized when the carrying amount of the reporting unit's net assets exceed the estimated fair value of the reporting unit. 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. We perform this testing on operating segments, which are also considered our reporting units. One reporting unit (“Western” reporting unit) consists of operations in California, Washington and the Central region and the other reporting unit (“Eastern” reporting unit) consists of operations primarily in the Carolinas and the East and Southeast regions We test for goodwill impairment using an equal weighting of a market approach and an income approach. We use market multiples derived from a set of competitors or companies with comparable market characteristics to establish fair values for a reporting unit (market approach). We also estimate fair value using discounted projected cash flow analysis (income approach). This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, the long‑term rate of growth for our business, and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. We performed interim and annual impairment tests during 2019 and only annual impairment tests for 2018. See Note 6 for discussion of our goodwill impairment testing results. 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 a discounted cash flow model to determine the fair value of each newspaper masthead. Individual newspaper masthead fair values were estimated using the present value of expected future cash flows, using estimates, judgments and assumptions discussed above that we believe were appropriate in the circumstances. We performed interim and annual impairment tests during 2019 and 2018. See Note 6 for discussion of our newspaper masthead impairment testing results. 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 impairments of long‑lived assets subject to amortization during 2019 or 2018. Investments in unconsolidated companies Investments in unconsolidated companies are accounted for using either the equity method or measurement alternative method. Investments through which we exercise significant influence but do not have control over the investee are accounted for under the equity method. Investments through which we are not able to exercise significant influence over the investee are accounted for under the measurement alternative method as these investments do not have readily determinable fair values. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The measurement alternative value represents cost minus any impairments, if any, plus or minus any observable price changes. There were no impairments of our investments in unconsolidated companies during 2019 or 2018. In the year ended December 29, 2019, we received distributions totaling $1.3 million, which primarily relates to cost or equity method investees who are winding down their operations. On September 13, 2018, we sold our remaining 3.0% ownership interest in CareerBuilder, LLC (“CareerBuilder”) and received gross proceeds of $5.3 million. As a result of this sale, we recognized a gain on sale of investments in unconsolidated companies of $1.7 million in the year ended December 30, 2018. In the year ended December 30, 2018, we also received distributions totaling approximately $2.8 million from CareerBuilder, which relate to returns of earnings. Our 3.0% ownership interest in CareerBuilder was accounted for under the cost method. Financial obligations Financial obligations (also known as failed sale and leaseback transactions) consist of contributions of real properties to the Pension Plan in 2016 and 2011 (see Note 9), real property previously owned by The Sacramento Bee in Sacramento, California that was sold and leased back during the third quarter of 2017, real property previously owned by The State in Columbia, South Carolina that we sold and leased back during the second quarter of 2018, and real property previously owned by The Kansas City Star in Kansas City, Missouri that was sold and leased back during the second quarter of 2019. Segment reporting 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 during 2019 and 2018, both operating segments reported to the same segment manager. One of our operating segments (“Western Segment”) consists of our media companies’ operations in California, Washington and the Central region, while the other operating segment (“Eastern Segment”) consists primarily of media company operations in the Carolinas and the East and Southeast regions. Stock‑based compensation All stock‑based compensation, including grants of stock appreciation rights, restricted stock units and common stock under equity incentive plans, is recognized in the financial statements based on their fair values. At December 29, 2019, we had two stock‑based compensation plans. See Note 12. 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. During 2018, we elected to early adopt new guidance that allowed for certain stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (“Tax Act”) to be reclassified from accumulated other comprehensive income to retained earnings. As such, we recorded a reclass of $98.4 million of stranded tax effects from accumulated other comprehensive income to retained earnings in 2018. 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 considers 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 perform our assessment of the deferred tax assets quarterly, weighing the positive and negative evidence as outlined in ASC 740-10, Income Taxes . As we had 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. 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 also evaluate any uncertain tax positions and recognize a liability for the tax benefit associated with an uncertain tax position if it is more likely than not that the tax position will not be sustained on examination by the taxing authorities upon consideration of the technical merits of the position. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. We record a liability for uncertain tax positions taken or expected to be taken in a tax return. Any change in judgment related to the expected ultimate resolution of uncertain tax positions is recognized in earnings in the period in which such change occurs. We record accrued interest related to unrecognized tax benefits in interest expense. Accrued penalties are recorded as a component of income tax expense. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “ Leases” (“Topic 842”) which replaces the existing guidance in ASC 840, “ Leases. ” Topic 842 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. We adopted Topic 842 as of December 31, 2018, without restating periods prior to the adoption date using a modified retrospective transition method, as allowed under ASU 2018-11, “Targeted Improvements to ASC 842.” As a result of the adoption of Topic 842, on December 31, 2018, we recorded operating lease right-of-use (“ROU”) assets of $51.6 million and lease liabilities of $61.2 million. Finance leases were not impacted by the adoption of Topic 842, as capital lease liabilities and the corresponding assets were already recorded in the balance sheet under the ASC 840 guidance. The adoption of Topic 842 had an inconsequential impact on our consolidated statement of operations and consolidated statement of cash flows in 2019. The new standard provides a number of optional practical expedients that we adopted. We elected the “package of practical expedients” which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides expedients for our ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. For those leases that qualified, we did not recognize ROU assets or liabilities. We also elected the practical expedient allowing us to combine lease and non-lease components for our real estate leases. Additional information and disclosures required by this new standard are contained in Note 5. In August 2018, the FASB issued ASU 2018-15, “ Intangibles-Goodwill and Other-Internal -Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). It is effective for us for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. We early adopted this standard as of April 1, 2019, and it did not have an impact on our consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted 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 measurement of expected credit losses is to be based upon a broad set of information to include historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 has been amended by ASU’s 2018-19, 2019-04 and 2019-05, which provide further guidance and clarification on specific items within the previously issued update. In November 2019, the FASB issued ASU 2019-11, that grants private companies, not-for-profit organizations and certain small public companies an effective date delay for its credit loss standard. As a result, ASU 2016-13 and the subsequent updates will be effective for us for interim and annual reporting periods beginning after December 15, 2022. We are currently in the process of evaluating the impact of the adoption on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, “ Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ” ASU 2018-13 adds, removes and modifies various disclosure requirements within Topic 820. It is effective for us for interim and annual reporting periods beginning after December 15, 2019. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this guidance and delay adoption of the additional disclosures until their effective date. We are currently in the process of evaluating the impact of the adoption on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-14, “ Compensation-Retirement Benefits-Defined Benefit Plan-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans. ” ASU 2018-14 adds, removes or clarifies various disclosure requirements within guidance. It is effective for us for annual reporting periods beginning after December 15, 2020, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our consolidated financial statements. |
REVENUES
REVENUES | 12 Months Ended |
Dec. 29, 2019 | |
REVENUES | |
REVENUES | 4. REVENUES 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 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. 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. 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. In addition to the advertising sold on a CPM basis, we also sell monthly marketing campaigns to some of our clients. Monthly marketing campaigns include multiple products some of which are sold as a CPM basis and other – like reputation management and search engine optimization – which are not. The contracted goods and services offered as part of monthly marketing campaigns 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 advertisements 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. If we are determined to be the principal, we are primarily responsible to our customers for fulfillment of the contract goals though, from time to time, we use 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 advertisements on our websites and video advertisements 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 and various revenue share arrangements, such as exchange platforms, that are reported on a net revenue 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 revenues 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 ratably 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 each subscriber’s 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 been received on the renewal. Grace is granted as a continuation of the subscription contract, so that service is not disrupted, and the extension is accounted for as variable consideration. We estimate these revenue amounts based on the expected amount to be received, considering the expected discontinuation of service or nonpayment based on historical experience. Other Revenues The largest revenue streams within other revenues are for commercial printing and distribution. The commercial print agreements are between us and third-party publishers to print and make available for distribution their 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 are recorded as revenues, and the amounts paid to our independent carriers to deliver the third-party product are recorded as operating expenses. Other revenues also include revenues from subleasing contracts and grant and sponsorship revenue received through our Community Funding Initiatives and the Compass Experiment. Revenues received from subleasing are discussed in Note 5. Grants and sponsorships are accounted for in accordance with ASC Subtopic 958-605, Not-for-Profit Entities – Revenue Recognition , and revenues are recorded when funds are received, and no conditions exist, or conditions have been met. 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 stand-alone selling price. We generally determine stand-alone 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. 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. |
LEASES
LEASES | 12 Months Ended |
Dec. 29, 2019 | |
LEASES | |
LEASES | 5. LEASES We determine if a contract is a lease at the inception of the arrangement. If an operating lease is identified, it is classified as one of three asset classes: building and land, vehicles or equipment. We lease space under non-cancelable operating leases for general office facilities, distribution centers, a training center and a call center. We also have operating leases for vehicles that consist mainly of tractor trailers and box trucks to transport newspapers from printing facilities to distribution centers, as well as office equipment consisting mostly of copiers. Certain leases have rent holidays or leasehold improvement incentives which account for the difference between the ROU assets and the lease liabilities. Many of our leases include lease components (e.g., fixed rent payments) and non-lease components (e.g., common-area or other maintenance costs, utilities, or other lease costs imposed) which are accounted for as a single lease component, because we have elected the practical expedient to group lease and non-lease components for all leases. None of our leases contain contingent rent provisions or concessions, residual value guarantees or restrictive covenants. Our leases have remaining terms of less than one year to nine years, except for one parking lot lease with 43 years remaining. Some of our distribution center, vehicle, and equipment leases have a combination of cancelable month-to-month lease terms and non-cancelable lease terms of less than one year. We have elected the practical expedient to exclude these short-term leases from our ROU assets and lease liabilities. Most leases include escalating lease payments, and many include one or more options to renew or terminate the lease. The exercise of lease renewal options is typically at our sole discretion; therefore, the renewals to extend the lease terms are not included in our ROU assets and lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in our lease term. We have one financing lease (formerly known as a capital lease which is not included in Financing Obligations discussed above in Note 3) for office furniture and fixtures located at one of our office facilities. The total financing lease payments are calculated to be approximately $1.0 million and $1.1 million as of December 29, 2019, and December 30, 2018, respectively. As of December 29, 2019, the payments run over the course of the remaining 5.9 years and are not material to the future lease payments schedules presented below. The finance lease asset is recorded within the other assets line item of the consolidated balance sheet. The finance lease short-term and long-term obligations are recorded within other accrued liabilities and other long-term liabilities line items of the consolidated balance sheet, respectively. As our lease contracts do not provide an implicit interest rate, for 2019, we used the effective yield of our secured debt that we refinanced in July 2018 as our secured incremental borrowing rate for leases with an 8-year tenure. The secured incremental borrowing rate was adjusted using the treasury yield curve at the transition date to determine the present value of each of the future payments. The cost components of our operating and financing leases were as follows: Year Ended December 29, (in thousands) 2019 Financing lease costs: Amortization of ROU asset $ 96 Interest on lease liabilities 78 Operating lease costs 13,624 Short-term lease cost 2,119 Variable lease cost 2,444 Sublease income (5,931) Total lease costs $ 12,430 Variable lease costs for our leased facilities consist primarily of taxes and insurance, as well as common area maintenance true-up assessments which are paid based on actual costs incurred by the lessor. We also incur variable mileage costs related to our leased vehicles and variable usage costs related to leased equipment. Variable lease costs also include annual changes in monthly rent costs, mainly based on the consumer price index. We sublease office space to other companies under non-cancelable agreements. There are no residual value guarantees or restrictions or covenants imposed as part of these sublease arrangements, except that the subtenant may not transfer the assignment of the sublease without prior permission or permit liens against the office space. Some sublease agreements included options to renew or terminate the lease, but only within the term of the master lease arrangement held by us. As of December 29, 2019, the aggregate future lease payments for operating leases are as follows: Operating (in thousands) Leases 2020 12,879 2021 10,776 2022 10,947 2023 10,350 2024 9,004 Thereafter 21,858 Total undiscounted cash flows 75,814 Less imputed interest (20,976) Total lease liability $ 54,838 Our future minimum lease commitments, net of sub-lease rental income, as of December 30, 2018, under ASC 840, the predecessor to Topic 842, was as follows: Operating Sublease Net Lease (in thousands) Leases Income Obligation 2019 $ 16,408 $ (4,044) $ 12,364 2020 11,921 (1,306) 10,615 2021 9,797 (379) 9,418 2022 10,178 (334) 9,844 2023 10,160 (232) 9,928 Thereafter 31,139 — 31,139 Total $ 89,603 $ (6,295) $ 83,308 The weighted average remaining lease terms and discount rates for all of our operating and financing leases were as follows: December 29, 2019 Operating Financing Leases Lease Weighted average remaining lease term (years) 6.90 5.84 Weighted average discount rate 9.19 % 10.50 % Supplemental cash flow information related to our operating and financing leases was as follows: Year Ended December 29, (in thousands) 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 14,198 Operating cash outflow from financing lease 78 Financing cash outflow from financing lease 71 ROU assets obtained in exchange for new operating lease liabilities 3,154 As of December 29, 2019, we do not have any new financing leases or significant additional operating leases that have not yet commenced. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 12 Months Ended |
Dec. 29, 2019 | |
INTANGIBLE ASSETS AND GOODWILL | |
INTANGIBLE ASSETS AND GOODWILL | 6. INTANGIBLE ASSETS AND GOODWILL Changes in identifiable intangible assets and goodwill consisted of the following: December 30, Disposition Impairment Amortization December 29, (in thousands) 2018 Adjustment Charges Expense 2019 Intangible assets subject to amortization $ 838,336 $ — $ — $ — $ 838,336 Accumulated amortization (807,725) — — (24,153) (831,878) 30,611 — — (24,153) 6,458 Mastheads 112,736 — (49,941) — 62,795 Goodwill 705,174 — (284,996) — 420,178 Total $ 848,521 $ — $ (334,937) $ (24,153) $ 489,431 December 31, Disposition Impairment Amortization December 30, (in thousands) 2017 Adjustment Charges Expense 2018 Intangible assets subject to amortization $ 839,284 $ (948) $ — $ — $ 838,336 Accumulated amortization (761,013) 948 — (47,660) (807,725) 78,271 — — (47,660) 30,611 Mastheads 149,951 — (37,215) — 112,736 Goodwill 705,174 — — — 705,174 Total $ 933,396 $ — $ (37,215) $ (47,660) $ 848,521 Impairment of Goodwill and Intangible Assets During the year ended December 29, 2019, we performed an interim and annual testing of impairment of goodwill and intangible newspaper mastheads due to the continuing challenging business conditions and changes in our assessment of profitability in future years. The fair values of our reporting units for goodwill impairment testing and individual newspaper mastheads were estimated using the present value of expected future cash flows, using estimates, judgments and assumptions (see Note 3) that we believe were appropriate in the circumstances. As a result, we recorded goodwill impairment charges of $258.1 million and $285.0 million during the third quarter and the full year ended December 29, 2019, respectively. We also recorded an intangible newspaper masthead impairment charges of $37.2 million and $49.9 million in third quarter and full year ended December 29, 2019, respectively. These impairments were recorded in the goodwill and other asset write-downs line item on our consolidated statements of operations. During the third quarter and full year ended December 30, 2018, based on our interim and annual impairment testing of intangible newspaper mastheads, we recorded $14.1 million and $37.2 million, respectively, in masthead impairments. These impairment charges were recorded in other asset write-downs line item on our consolidated statements of operations. There were no goodwill impairment charges during 2018. Accumulated changes in indefinite lived intangible assets and goodwill as of December 29, 2019, and December 30, 2018, consisted of the following: December 29, 2019 December 30, 2018 Original Gross Accumulated Carrying Original Gross Accumulated Carrying (in thousands) Amount Impairment Amount Amount Impairment Amount Mastheads $ 684,500 $ (621,705) $ 62,795 $ 684,500 $ (571,764) $ 112,736 Goodwill 3,571,111 (3,150,933) 420,178 3,571,111 (2,865,937) 705,174 Total $ 4,255,611 $ (3,772,638) $ 482,973 $ 4,255,611 $ (3,437,701) $ 817,910 Amortization expense was $24.2 million and $47.7 million in 2019 and 2018, respectively. A majority of the intangible assets subject to amortization became fully amortized in the second quarter of 2019 and therefore amortization expense during the last six months of 2019 was significantly lower. The estimated amortization expense for the five succeeding fiscal years is as follows: Amortization Expense Year (in thousands) 2020 $ 803 2021 680 2022 655 2023 667 2024 640 |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 29, 2019 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 7. LONG‑TERM DEBT In connection with the Chapter 11 Cases, we entered into the DIP Credit Agreement. See Note 2. The DIP Credit Agreement replaces the ABL Credit Agreement, defined below, except for certain provisions related to the letters of credit under the LOC Facility (defined below). The commencement of the Chapter 11 Cases constituted an event of default under, and caused the automatic and immediate acceleration of all debt outstanding under or in respect of, a number of our debt agreements. However, any efforts to enforce payment obligations under the debt agreements are automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the debt agreements are subject to the applicable provisions of the Bankruptcy Code. As of December 29, 2019, all of our long‑term debt is in fixed rate obligations. As of December 29, 2019, and December 30, 2018, our outstanding long‑term debt consisted of senior secured notes, unsecured notes, and loans. They are stated net of unamortized debt issuance costs and unamortized discounts, if applicable, totaling $95.6 million and $107.4 million as of December 29, 2019, and December 30, 2018, respectively. The unamortized discounts include; fair value adjustments on unsecured debt acquired in 2006, as well as the Junior Term Loans and the 2026 Notes that included original issue discounts from the 2018 debt refinancing discussed below. Our ABL Credit Agreement has unamortized debt issuance costs of $1.4 million and $1.8 million as of December 29, 2019, and December 30, 2018, respectively, that are included in other assets on our consolidated balance sheets. The face values of the notes, as well as the carrying values are as follows: Face Value at Carrying Value December 29, December 29, December 30, (in thousands) 2019 2019 2018 ABL Credit Agreement $ — $ — $ — Notes: 9.000% senior secured notes due in 2026 262,851 249,793 287,249 7.795% junior term loan due in 2030 157,083 126,148 123,213 6.875% senior secured junior lien notes due in 2031 268,423 217,392 141,447 7.150% debentures due in 2027 7,105 6,855 6,824 6.875% debentures due in 2029 7,807 7,484 78,962 Long-term debt $ 703,269 $ 607,672 $ 637,695 Less current portion — — 4,312 Total long-term debt, net of current $ 703,269 $ 607,672 $ 633,383 Debt Maturities, Repurchases, Redemptions and Extinguishment of Debt In March 2019, we issued $75.0 million aggregate principal amount of additional 6.875% senior secured junior lien notes due in 2031 (“2031 Notes”). The additional 2031 Notes were issued in exchange for an equal principal amount of the unsecured 6.875% debentures due in 2029 (“2029 Debentures”). See Junior Lien Term Loan Agreement section below for additional discussion. This exchange was accounted for as a modification of debt with no gain or loss recorded in earnings. During the year ended December 29, 2019, we redeemed $41.8 million aggregate principal amount of our 9.000% senior secured notes due in 2026 (“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). As a result of these transactions, we recorded a loss on extinguishment of debt of $2.3 million during the year ended December 29, 2019. During 2018, we recorded a net gain on the extinguishment of debt of $30.6 million as a result of the following transactions that occurred in 2018, as described below. During the quarter ended September 30, 2018, in conjunction with our 2018 refinancing discussed below, we redeemed $344.1 million of our 2022 senior secured notes due in 2022 (“2022 Notes”). We also executed a non-cash exchange of most of our 7.150% debentures due November 1, 2027 (“2027 Debentures”) and 6.875% debentures due March 15, 2029 (“2029 Debentures” and together with the 2027 Debentures, the “Debentures”) for new Tranche A and Tranche B Junior Term Loans (as defined below). The non-cash exchange of the Debentures discussed above was executed with a single lender and its affiliates. We reviewed all of our debt instruments held by this lender prior to and after the refinancing and determined that the new debt instruments were substantially different from the previously held instruments. We concluded that the exchange of the Debentures for the Junior Term Loans should be accounted for as an extinguishment of the Debentures. As a result, during 2018, we recorded a gross gain of $68.7 million, which represents the difference between the carrying value of the Debentures and the fair market value of the Junior Term Loans at time of the exchange. This gain was partially offset by a $32.3 million write-off of the unamortized discounts on the Debentures, unamortized debt issuance costs on the 2022 Notes, and premiums paid on the 2022 Notes for a net gain of $30.6 million. The net gain on extinguishment of debt recorded on the above transactions was partially offset by a loss on extinguishment of debt recorded in conjunction with our notes redemptions and repurchases during 2018. During 2018, we (i) redeemed $0.5 million of our 2022 Notes through a tender offer that expired on May 22, 2018, (ii) redeemed $75.0 million of our 2022 Notes, which we had previously announced in December 2017, (iii) repurchased $20.0 million of the 2022 Notes through a privately negotiated transaction, and (iv) redeemed $5.3 million of our 2026 Notes, which was previously announced in October 2018. We recorded any applicable premiums that were paid and wrote off the associated debt issuance costs on the above transactions. In December 2018, we entered into an indenture (“2031 Notes Indenture”) in the amount of $193.5 million aggregate principal amount of our 2031 Notes. The 2031 Notes were issued in exchange for an equal principal amount of Tranche B Junior Term Loans (as defined below). These 2031 Notes have substantially the same terms as the Tranche B Junior Term Loan. As a result of this transaction, the Tranche B Junior Term Loan has been fully extinguished. ABL Credit Agreement The ABL Credit Agreement entered into in July 2018, among the Company, the subsidiaries of the Company party thereto, as borrowers, the lenders party thereto, and Wells Fargo Bank, N.A. (“Wells Fargo”), as administrative agent (“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 (“LOC Facility”). The commitments under the ABL Credit Agreement expire July 16, 2023. As of December 29, 2019, our obligations under the ABL Credit Agreement are guaranteed by us and by certain of our subsidiaries meeting materiality thresholds set forth in the ABL Credit Agreement as described below. The proceeds of the loans under the ABL Credit Agreement may be used for working capital and general corporate purposes. We 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 December 29, 2019, under the ABL Credit Agreement we had $36.6 million of available credit. The Borrowing Base is recalculated monthly and is subject to seasonality of advertising sales around year-end holiday periods (and resulting growth in advertising accounts receivable balances). As of December 29, 2019, we had a $26.7 million standby letters of credit secured under the LOC Facility. We are required to provide cash collateral equal to 100% of the aggregate undrawn stated amount of each outstanding letter of credit. Cash collateral associated with the LOC Facility is classified in our consolidated balance sheets in other assets and considered restricted cash. 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 us, 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 and our subsidiaries meeting a materiality threshold set forth in the ABL Credit Agreement. 2026 Senior Secured Notes and Indenture We entered into the 2026 Notes Indenture in July 2018, among the Company, guarantor subsidiaries of the Company 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 2026 Notes. We are 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). As of December 30, 2018, we determined the excess cash flow due was $4.6 million aggregate principal amount and as such the carrying value of $4.3 million was classified as current portion of long-term debt on the consolidated balance sheet. The redemption was made on April 5, 2019. 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 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. 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. The 2026 Notes mature on July 15, 2026, and bear interest at a rate of 9.000% per annum. Interest on the 2026 Notes is payable semi-annually in arrears on January 15 and July 15 of each year and commenced on January 15, 2019. 2031 Senior Secured Junior Lien Notes and Indenture Under the terms of the Junior Term Loan Agreement (discussed below), affiliates of Chatham Asset Management, LLC (“Chatham”) could 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. As discussed previously, in March 2019, Chatham notified us of their election to convert approximately $75.0 million aggregate principal amount of 2029 Debentures to additional 2031 Notes. The additional 2031 Notes have identical terms, other than with respect to the date of issuance, to the 2031 Notes and will be treated as a single class for all purposes under the applicable indenture, together referred to hereafter as the 2031 Notes. These 2031 Notes have substantially the same terms as the Tranche A Junior Term Loan. We have the right to prepay notes under the 2031 Notes, in whole or in part, at any time, at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium and accrued and unpaid interest, if any. Amounts prepaid may not be reborrowed. The 2031 Notes bear interest at a rate per annum of 6.875%. Interest on the loan is payable semi-annually in arrears on January 15 and July 15 of each year and commenced on January 15, 2019. Junior Lien Term Loan Agreement We entered into a Junior Lien Term Loan Credit Agreement in July 2018, 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 provided for a $157.1 million secured term loan (“Junior Term Loan”) that matures on July 15, 2030. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes. We have the right to prepay loans under the Junior Term Loan Agreement, in whole or in part, at any time, at specified prices that decline over time, plus accrued and unpaid interest, if any, of the Junior Term Loan. We have the right to prepay notes under the 2031 Notes, in whole or in part, at any time, at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium and accrued and unpaid interest, if any. Amounts prepaid may not be reborrowed. The Junior Term Loan bears interest at a rate per annum equal to 7.795% payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019. The Junior Term Loan Agreement and the 2031 Notes 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 and 2031 Notes contains customary negative covenants limiting the ability of us and 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 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. Other Debt After giving effect to the 2031 Notes, we have $7.1 million aggregate principal amount of 2027 Debentures and $7.8 million aggregate principal amount of 2029 Debentures outstanding as of December 29, 2019. Maturities The following table presents the approximate annual maturities of outstanding long‑term debt as of December 29, 2019, based upon our required payments, for the next five years and thereafter: Payments Year (in thousands) 2020 $ — 2021 — 2022 — 2023 — 2024 — Thereafter 703,269 Debt principal $ 703,269 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 29, 2019 | |
INCOME TAXES | |
INCOME TAXES | 8. INCOME TAXES Income tax provision (benefit) consisted of: Years Ended December 29, December 30, (in thousands) 2019 2018 Current: Federal $ (24) $ 5,546 State (507) (429) Deferred: Federal (4,729) (961) State (1,019) (6,326) Income tax provision (benefit) $ (6,279) $ (2,170) As of December 30, 2018, we completed our accounting for the tax effects of enactment of the Tax Act and noted no significant adjustments were required. During 2019 and 2018, we re-measured certain deferred tax assets and liabilities based on the rates at which we expect them to reverse in the future. The effective tax rate expense (benefit) and the statutory federal income tax rate are reconciled as follows: Years Ended December 29, December 30, 2019 2018 Statutory rate (21.0) % (21.0) % State taxes, net of federal benefit 0.1 (4.3) Changes in estimates — 0.8 Changes in unrecognized tax benefits (0.3) (4.3) Other 0.5 2.8 Impact of valuation allowance 6.5 23.0 Impact of tax rate changes — — Goodwill impairment 12.6 — Stock compensation 0.1 0.3 Effective tax rate (1.5) % (2.7) % The components of deferred tax assets and liabilities consisted of the following: December 29, December 30, (in thousands) 2019 2018 Deferred tax assets: Compensation benefits $ 150,893 $ 157,715 State taxes 1,533 1,909 State loss carryovers 9,398 4,006 Federal loss carryovers 4,899 — Investments in unconsolidated subsidiaries 4,478 4,242 Deferred interest expense 33,069 15,342 Leases 15,564 — Other 3,353 3,407 Total deferred tax assets 223,187 186,621 Valuation allowance (176,069) (143,764) Net deferred tax assets 47,118 42,857 Deferred tax liabilities: Depreciation and amortization 28,386 45,239 Debt discount 17,874 17,876 Leases ROU Asset 15,419 — Other 466 517 Total deferred tax liabilities 62,145 63,632 Net deferred tax liabilities $ (15,027) $ (20,775) The valuation allowance increased by $32.3 million and $34.0 million in 2019 and 2018, respectively. The timing of recording or releasing a valuation allowance requires significant judgment. A valuation allowance is required when it is more-likely-than-not that all or a portion of deferred tax assets may not be realized. Establishment and removal of a valuation allowance requires us to consider all positive and negative evidence and to make a judgmental decision regarding the timing and amount of valuation allowance required as of a reporting date. The assessment considers 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 an assessment of the deferred tax assets quarterly during 2019 and 2018, weighing the positive and negative evidence as outlined in ASC 740, 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 30, 2018, our valuation allowance against a majority of our deferred tax assets was $143.8 million. For the year ended December 29, 2019, we recorded valuation allowance charges of $32.3 million due to changes to the deferred tax balances. Of this amount, $28.5 million was included as income tax expense and $3.8 million was recorded as an offset to other comprehensive income for changes related to our pension deferred tax asset. Our valuation allowance as of December 29, 2019, was $176.1 million. We will continue to maintain a valuation allowance against our deferred tax assets until 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 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. As of December 29, 2019, we have net operating loss federal carryforwards totaling approximately $23.3 million, which do not expire. As of December 29, 2019, we have net operating loss carryforwards in various states totaling approximately $395.2 million, which expire in various years between 2024 and 2038, if not used. We also have state tax credits of $0.4 million which expire between 2025 and 2028, if not utilized. As of December 29, 2019, we had approximately $13.9 million of uncertain tax positions consisting of approximately $11.3 million in gross unrecognized tax benefits (primarily state tax positions before the offsetting effect of federal income tax) and $2.6 million in gross accrued interest and penalties. If recognized, approximately $5.4 million of the net unrecognized tax benefits would impact the effective tax rate, with the remainder impacting other accounts, primarily deferred taxes. It is reasonably possible that up to $2.2 million reduction of unrecognized tax benefits and related interest may occur within the next 12 months as a result of the expiration of statutes of limitations. We record interest on unrecognized tax benefits as a component of interest expense, while penalties are recorded as part of income tax expense. Related to the unrecognized tax benefits noted below, we recorded interest expense (benefit) of ($0.5) million and ($0.6) million for 2019 and 2018, respectively. We recorded penalty expense (benefit) of ($0.2) million and ($0.3) million during 2019 and 2018, respectively. Accrued interest and penalties at December 29, 2019 and December 30, 2018 were approximately $2.6 million and $3.3 million, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits consists of the following: Years Ended December 29, December 30, (in thousands) 2019 2018 Balance at beginning of fiscal year $ 13,822 $ 20,764 Increases based on tax positions in prior year 231 84 Decreases based on tax positions in prior year (2,296) (4,261) Increases based on tax positions in current year 801 1,124 Settlements — (511) Lapse of statute of limitations (1,277) (3,378) Balance at end of fiscal year $ 11,281 $ 13,822 As of December 29, 2019, the following tax years and related taxing jurisdictions were open: Open Years Under Taxing Jurisdiction Tax Year Exam Federal 2016-2019 — California 2015-2019 — Other States 2006-2019 2015-2017 |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 29, 2019 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 9. EMPLOYEE BENEFITS We maintain a qualified defined benefit pension plan (“Pension Plan”), which covers certain eligible employees. Benefits are based on years of service that continue to count toward early retirement calculations and vesting previously earned. No new participants may enter the Pension Plan and no further benefits will accrue. We also have a limited number of supplemental retirement plans to provide certain key employees and retirees with additional retirement benefits. These plans are funded on a pay‑as‑you‑go basis and the accrued pension obligation is largely included in pension and post retirement obligations. We paid $8.8 million and $8.9 million in 2019 and 2018, respectively, for these plans. We also provide or subsidize certain life insurance benefits for employees. The following tables provide reconciliations of the pension and post‑ retirement benefit plans’ benefit obligations, fair value of assets and funded status as of December 29, 2019, and December 30, 2018: Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Change in Benefit Obligation Benefit obligation, beginning of year $ 1,920,987 $ 2,080,013 $ 6,827 $ 7,625 Interest cost 79,309 79,154 262 256 Plan participants’ contributions — — 7 10 Actuarial (gain)/loss 181,506 (126,540) (1,020) (417) Gross benefits paid (149,859) (111,640) (584) (647) Special termination benefits 6,835 — — — Benefit obligation, end of year $ 2,038,778 $ 1,920,987 $ 5,492 $ 6,827 Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Change in Plan Assets Fair value of plan assets, beginning of year $ 1,259,979 $ 1,477,926 $ — $ — Actual return on plan assets 271,332 (115,192) — — Employer contribution 11,815 8,885 577 637 Plan participants’ contributions — — 7 10 Gross benefits paid (149,859) (111,640) (584) (647) Fair value of plan assets, end of year $ 1,393,267 $ 1,259,979 $ — $ — Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Funded Status Fair value of plan assets $ 1,393,267 $ 1,259,979 $ — $ — Benefit obligations (2,038,778) (1,920,987) (5,492) (6,827) Funded status and amount recognized, end of year $ (645,511) $ (661,008) $ (5,492) $ (6,827) Amounts recognized in the consolidated balance sheets at December 29, 2019, and December 30, 2018, consist of: Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Current liability $ (124,200) $ (11,510) $ (793) $ (1,015) Noncurrent liability (521,311) (649,498) (4,699) (5,812) $ (645,511) $ (661,008) $ (5,492) $ (6,827) Amounts recognized in accumulated other comprehensive income for the years ended December 29, 2019, and December 30, 2018, consist of: Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Net actuarial loss/(gain) $ 781,063 $ 811,063 $ (7,464) $ (7,334) Prior service cost/(credit) — — (2,482) (4,456) $ 781,063 $ 811,063 $ (9,946) $ (11,790) The elements of retirement and post‑retirement costs are as follows: Years Ended December 29, December 30, (in thousands) 2019 2018 Pension plans: Interest Cost $ 79,309 $ 79,154 Expected return on plan assets (83,820) (90,495) Prior service cost amortization 6,834 — Actuarial loss 23,995 25,181 Net pension expense 26,318 13,840 Net post-retirement benefit credit (2,603) (2,726) Net retirement expenses $ 23,715 $ 11,114 Our discount rate was determined by matching a portfolio of long‑term, non‑callable, high-quality bonds to the plans’ projected cash flows. Weighted average assumptions used for valuing benefit obligations were: Pension Benefit Post-retirement Obligations Obligations 2019 2018 2019 2018 Discount rate 3.48 % 4.42 % 3.15 % 4.15 % Weighted average assumptions used in calculating expense: Pension Benefit Expense Post-retirement Expense December 29, December 30, December 29, December 30, 2019 (1) 2018 2019 2018 Expected long-term return on plan assets 7.75 % 7.75 % N/A N/A Discount rate 4.42 % 3.91 % 4.15 % 3.60 % _____________________ (1) As discussed below, we performed an interim remeasurement of the Pension Plan on March 22, 2019, and used the assumptions described below. The expected long-term return on plan assets of 7.75% and discount rate of 4.42% presented in the table were used for the year end 2019 assumptions. Early Retirement Incentive Program In February 2019, we announced a one-time voluntary Early Retirement Incentive Program (“ERIP”) that was offered to approximately 450 employees. The ERIP allowed the employees to accept a special termination benefit based on years of continuous service and the option to take their vested benefits under our frozen Pension Plan in a lump sum payment. Nearly 50% of the eligible employees opted into the program. Lump sum pension and termination payments made under the ERIP totaled approximately $35.1 million, decreasing both the benefit obligation and the fair value of plan assets. Due to the significance of this program, we remeasured the retirement plan assets and benefit obligations as of March 22, 2019, using a discount rate of 4.10% and an expected return on plan assets of 7.75%. The remeasurement and the special termination benefits resulted in a net reduction to the pension liability and the recognition of a one-time non-cash charge of $6.8 million for the special termination benefits, presented in retirement benefit expense on the statement of operations during the three months ended March 31, 2019. These are included in pension and postretirement obligations on the statements of operations. Contributions and Cash Flows We made a required cash minimum contribution of $3.1 million to the Pension Plan in the fourth quarter of 2019. We did not have a required cash minimum contribution to the Pension Plan in 2018 and made no voluntary cash contributions. Minimum required contributions for fiscal year 2020 were estimated to be approximately $124.2 million , which would be paid in installments beginning in January 2020 with the majority of those payments due on or subsequent to September 2020. On January 14, 2020, we entered into a Standstill Agreement (“Agreement”) with the PBGC. The Agreement relates to our Pension Plan and the minimum required payments of approximately $4.0 million due on January 15, 2020 (“Payment Date”). Pursuant to the Agreement, the PBGC agreed not to exercise the remedies available to it despite the fact that we were not making our scheduled Pension Plan contribution on the Payment Date. Under the Agreement, the PBGC agreed to a forbearance period until February 18, 2020 (“Forbearance Period”), unless terminated earlier, subject to customary terms and conditions. During the Forbearance Period, we continued to work towards a permanent solution under which the PBGC would assume our Pension Plan and we filed for Chapter 11 Bankruptcy protection on February 13, 2020. See Note 2 related to the Chapter 11 Cases. As of December 29, 2019, the expected benefit payments to retirees under our retirement and post‑retirement plans over the next 10 years are summarized below: Retirement Post-retirement (in thousands) Plans (1) Plans 2020 $ 105,047 $ 806 2021 126,706 712 2022 118,914 629 2023 119,193 556 2024 120,023 488 2025-2029 612,922 1,663 Total $ 1,202,805 $ 4,854 (1) Largely to be paid from the qualified defined benefit pension plan. Pension Plan Assets Our investment policies are designed to maximize Pension Plan returns within reasonable and prudent levels of risk, with an investment horizon of greater than 10 years so that interim investment returns and fluctuations are viewed with appropriate perspective. The policy also aims to maintain sufficient liquid assets to provide for the payment of retirement benefits and plan expenses, hence, small portions of the equity and debt investments are held in marketable mutual funds. Our policy seeks to provide an appropriate level of diversification of assets, as reflected in its target allocations, as well as limits placed on concentrations of equities in specific sectors or industries. It uses a mix of active managers and passive index funds and a mix of separate accounts, mutual funds, common collective trusts and other investment vehicles. Our assumed long‑term return on assets was developed using a weighted average return based upon the Pension Plan’s portfolio of assets and expected returns for each asset class, considering projected inflation, interest rates and market returns. The assumed return was also reviewed in light of historical and recent returns in total and by asset class. As of December 29, 2019, and December 30, 2018, the target allocations for the Pension Plan assets were 61% equity securities, 33% debt securities and 6% real estate securities. The table below summarizes the Pension Plan’s financial instruments that are carried at fair value on a recurring basis by the fair value hierarchy levels discussed in Note 3, as of the year ended December 29, 2019 2019 Plan Assets (in thousands) Level 1 Level 2 Level 3 NAV Total Cash and cash equivalents $ 9,355 $ — $ — $ — $ 9,355 Mutual funds 139,021 — — — 139,021 Common collective trusts — — — 1,178,230 1,178,230 Real estate — — 55,874 — 55,874 Private equity funds — — 10,787 — 10,787 Total $ 148,376 $ — $ 66,661 $ 1,178,230 $ 1,393,267 The table below summarizes changes in the fair value of the Pension Plan’s Level 3 investment assets held for the year ended December 29, 2019: (in thousands) Real Estate Private Equity Total Beginning Balance, December 30, 2018 $ 55,398 $ 9,609 $ 65,007 Realized gains (losses), net 2,738 3 2,741 Transfer in or out of level 3 (4,953) — (4,953) Unrealized gains (losses), net 2,691 1,175 3,866 Ending Balance, December 29, 2019 $ 55,874 $ 10,787 $ 66,661 The table below summarizes the Pension Plan’s financial instruments that are carried at fair value on a recurring basis by the fair value hierarchy levels discussed in Note 3, as of the year ended December 30, 2018: 2018 Plan Assets (in thousands) Level 1 Level 2 Level 3 NAV Total Cash and cash equivalents $ 9,366 $ — $ — $ — $ 9,366 Mutual funds 139,978 — — — 139,978 Common collective trusts — — — 1,045,628 1,045,628 Real estate — — 55,398 — 55,398 Private equity funds — — 9,609 — 9,609 Total $ 149,344 $ — $ 65,007 $ 1,045,628 $ 1,259,979 The table below summarizes changes in the fair value of the Pension Plan’s Level 3 investment assets held for the year ended December 30, 2018: (in thousands) Real Estate Private Equity Total Beginning Balance, December 31, 2017 $ 58,050 $ 9,509 $ 67,559 Realized gains (losses), net 4,528 3 4,531 Transfer in or out of level 3 (8,601) — (8,601) Unrealized gains (losses), net 1,421 97 1,518 Ending Balance, December 30, 2018 $ 55,398 $ 9,609 $ 65,007 Cash and cash equivalents: Held primarily in a short-term investment fund (“STIF”) are categorized as Level 1. They are valued at the daily closing price as reported by the fund. These funds are required to publish their daily net asset value and to transact at that price. The STIF held by the Pension Plan is deemed to be actively traded. With a readily determinable fair market value. Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Pension Plan are open-ended mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily net asset value and to transact at that price. The mutual funds held by the Pension Plan are deemed to be actively traded. Common collective trusts: Stated at fair value as determined by the issuers of the funds on the fair market value of the underlying investments, which is valued at net asset value (“NAV”) as a practical expedient to estimate fair value. The practical expedient would not be used if it is determined to be probable that the funds will sell the investment for an amount different from the reported NAV. NAV for these funds represent the quoted price in a non-market environment. The attributes relating to the nature and risk of such investments are as follows: (in thousands) 2019 2018 Unfunded Commitments Redemption Frequency (if Currently Eligible) Redemption Notice Period Common collective trust funds: U.S equity funds (1) $ 358,088 $ 296,135 N/A Daily None International equity funds (2) 373,764 311,119 N/A Daily - Monthly None Emerging markets equity funds (3) 179,707 153,927 N/A Daily None - 5-Day Fixed income funds (4) 126,900 146,197 N/A Daily 2-Day Total common collective trust $ 1,038,459 $ 907,378 Fixed income credit fund (4) 139,771 138,250 N/A Weekly 2-Day Total investments measured at NAV $ 1,178,230 $ 1,045,628 ________________ (1) U.S. equity fund strategies - Investments in U.S. equities are defined as commitments to U.S. dollar-denominated, publicly traded common stocks of U.S. domiciled companies and securities convertible into common stock. The aggregate U.S. equity portfolio is expected to exhibit characteristics comparable to, but not necessarily equal to, that of the Russell 3000 Index. (2) International equity funds strategies - Investments in international developed markets equities are defined as commitments to publicly traded common stocks and securities convertible into common stock issued by companies primarily domiciled in countries outside of the U.S. (3) Emerging markets equity fund strategies - Investments in emerging equities may include commitments to publicly traded common stocks and securities convertible into common stock issued by companies domiciled in countries considered emerging by one or more benchmark providers. (4) Fixed income fund strategies - Fixed income investments may include debt instruments issued by both U.S. and non-U.S. governments, agencies, “quasi Government” agencies, corporations, and any other public or private regulated debt security. Real estate: In 2016 and 2011, we contributed certain of our real property to our Pension Plan, and we entered into leaseback arrangements for the contributed facilities. These contributions were measured at fair value using Level 3 inputs, which primarily consisted of expected cash flows and discount rate that we estimated market participants would seek for bearing the risk associated with such assets. The accounting treatment for both contributions is described below. The contributions and leasebacks of these properties are treated as financing transactions and, accordingly, we continue to depreciate the carrying value of the properties in our financial statements. No gain or loss will be recognized on the contributions of any property until the sale of the property by the Pension Plan. At the time of our contributions, our pension obligation was reduced, and our financing obligations were recorded equal to the fair market value of the properties. The financing obligations are reduced by a portion of the lease payments made to the Pension Plan each month and increased for imputed interest expense on the obligations to the extent imputed interest exceeds monthly payments. Certain of the contributed properties have been sold by the Pension Plan and others may be sold by the Pension Plan in the future. In August 2019, the Pension Plan sold real property in Macon, Georgia, for approximately $0.8 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 $0.6 million loss on the sale of the Macon property in other operating expenses on the consolidated statement of operations in 2019. In May 2018, the Pension Plan sold real property in the Lexington, Kentucky, 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 other operating expenses on the consolidated statement of operations in 2018. Private equity funds: Private equity funds represent investments in limited partnerships, which invest in start‑up or other private companies. Fair value is estimated based on valuations of comparable public companies, recent sales of comparable private and public companies, and discounted cash flow analysis of portfolio companies and is included as a Level 3 investment in the table above. 401(k) Plan We have a deferred compensation plan (“401(k) plan”), which enables eligible employees to defer compensation. In the year ended December 29, 2019, and December 30, 2018, our matching contributions were $2.1 million and $2.5 million, respectively. Matching contributions recorded in our compensation line item of our consolidated statement of operations. |
CASH FLOW INFORMATION
CASH FLOW INFORMATION | 12 Months Ended |
Dec. 29, 2019 | |
CASH FLOW INFORMATION | |
CASH FLOW INFORMATION | 10. CASH FLOW INFORMATION Reconciliation of cash, cash equivalents and restricted cash as reporting in the consolidated balance sheets to the total of the same such amounts show above: December 29, December 30, (in thousands) 2019 2018 Cash and equivalents $ 10,514 $ 21,906 Restricted cash included in other assets (1) 26,649 28,649 Total cash, cash equivalents and restricted cash $ 37,163 $ 50,555 (1) Restricted cash balances are time deposit accounts secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and one of our property leases. Cash paid for interest and income taxes and other non-cash activities consisted of the following: Year Ended December 29, December 30, (in thousands) 2019 2018 Interest paid (net of amount capitalized) $ 57,909 $ 43,313 Income taxes paid (net of refunds) 7,476 13,935 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 (1,037) (2,667) Reduction of PP&E due to sale of real properties by pension plan (1,593) (2,854) Other non-cash financing activities includes the issuance of $75.0 million of additional 2031 Notes in exchange for $75.0 million of our 2029 Debentures during March 2019. Other non-cash investing and financing activities related to pension plan transactions consists of the sale of properties by the Pension Plan in 2019 and 2018, described further in Note 9. During 2018, we completed a debt-for-debt exchange of a majority of the existing 2027 Debentures and 2029 Debentures for newly issued Tranche A Junior Term Loans and Tranche B Junior Term Loans. This transaction included a non-cash discount of $68.7 million recorded within the gain on extinguishment of debt. See Note 7 for definitions and further information. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 29, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES We have certain other obligations for various contractual agreements that secure future rights to goods and services to be used in the normal course of operations. These include purchase commitments for printing outsource agreements, planned capital expenditures, lease commitments and self‑insurance obligations. The following table summarizes our minimum annual contractual obligations as of December 29, 2019: Payments Due By Period (in thousands) 2020 2021 2022 2023 2024 Thereafter Total Purchase obligations (1) $ 33,237 $ 9,482 $ 3,751 $ 2,565 $ 3 $ 4 $ 49,042 Operating leases (2) Lease obligations 12,879 10,776 10,947 10,350 9,004 21,858 75,814 Sublease income (3,493) (1,498) (389) (211) (59) (10) (5,660) Net lease obligation 9,386 9,278 10,558 10,139 8,945 21,848 70,154 Workers’ compensation obligations (3) 1,994 1,371 1,039 826 665 5,785 11,680 Total $ 44,617 $ 20,131 $ 15,348 $ 13,530 $ 9,613 $ 27,637 $ 130,876 (1) Represents our purchase obligations primarily related to printing outsource agreements and capital expenditures for PP&E expiring at various dates through 2025. (2) Represents minimum rental commitments under operating leases with non‑cancelable terms in excess of one year and sublease income from leased space with non-cancelable terms in excess of one year. We rent certain facilities and equipment under operating leases expiring at various dates through 2028 and one parking lot through 2062. Total rental expense, included in other operating expenses, amounted to $17.6 million and $14.3 million in 2019 and 2018, respectively. Most of the leases provide that we pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased premises in addition to the minimum monthly payments. Some of the operating leases have built in escalation clauses. We sublease office space to other companies under non-cancellable agreements that expire at various dates through 2025. Sublease income from operating leases totaled $4.4 million and $5.0 million in 2019 and 2018, respectively. (3) We retain the risk for workers’ compensation resulting from uninsured deductibles per accident or occurrence that are subject to annual aggregate limits. Losses up to the deductible amounts are accrued based upon known claims incurred and an estimate of claims incurred but not reported. For the year ended December 29, 2019, we compiled our historical data pertaining to the self‑insurance experiences and actuarially developed the ultimate loss associated with our self‑insurance programs for workers’ compensation liability. We believe that the actuarial valuation provides the best estimate of the ultimate losses to be expected under these programs. At December 29, 2019, the undiscounted ultimate losses of all our self‑insurance reserves related to our workers’ compensation liabilities were $11.7 million, net of estimated insurance recoveries of approximately $1.6 million. At December 30, 2018, the undiscounted ultimate losses of all our self-insurance reserves related to workers’ compensation liabilities were $12.3 million, net of estimated insurance recoveries of approximately $1.9 million. We discount the net amounts above to present value using an approximate risk‑free rate over the average life of our insurance claims. For the years ended December 29, 2019, and December 30, 2018, the discount rate used was 1.6% and 3.1%, respectively. The present value of all self‑insurance reserves, net of estimated insurance recoveries, for our workers’ compensation liability recorded at December 29, 2019, and December 30, 2018, was $10.6 million and $10.7 million, respectively. Legal Proceedings and other contingent claims Chapter 11 Cases As discussed more fully in Note 2, on February 13, 2020, McClatchy and each of our 53 wholly owned subsidiaries filed voluntary petitions for reorganization (“Chapter 11 Cases”) under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Chapter 11 Cases are being jointly administered under the caption In re: The McClatchy Company, et al ., Case No. 20-10418. We and our 30 local media companies will continue to operate our businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtors-in-possession under the Bankruptcy Code, we are authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. Pursuant to first-day motions filed with the Bankruptcy Court, the Bankruptcy Court authorized us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to obtain debtor-in-possession financing, pay employee wages and benefits, and pay vendors and suppliers in the ordinary course for all go forward goods and services. We will continue to pursue approval of a proposed restructuring plan with our secured lenders, bondholders, and the PBGC. We have entered into a new $50.0 million DIP Credit Agreement with Encina which, coupled with our normal operating cash flows, is providing liquidity for McClatchy and all of our local news outlets to operate as usual and fulfill ongoing commitments to stakeholders. We are unable to predict when we will emerge from this Chapter 11 process. Other Legal Proceedings 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, The McClatchy Company was 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 began on June 20, 2019, and is ongoing. 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 will ultimately prevail. As a result, we have not established a reserve in connection with the cases. While we believe that a material impact on our 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 consolidated financial statements. No material amounts for any losses from litigation that may ultimately occur have been recorded in the 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 December 29, 2019, we had $26.7 million of standby letters of credit secured under the LOC Facility. |
SUPPLEMENTAL EQUITY INFORMATION
SUPPLEMENTAL EQUITY INFORMATION | 12 Months Ended |
Dec. 29, 2019 | |
SUPPLEMENTAL EQUITY INFORMATION | |
SUPPLEMENTAL EQUITY INFORMATION | 12. SUPPLEMENTAL EQUITY INFORMATION Accumulated other comprehensive loss We record changes in our net assets from non‑owner sources in our consolidated statements of stockholders’ deficit. Such changes relate primarily to valuing our pension liabilities, net of tax effects. 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 (153,414) (1,506) (154,920) Other comprehensive income (153,414) (1,506) (154,920) Balance at December 30, 2018 $ (595,820) $ (8,469) $ (604,289) Other comprehensive income (loss) before reclassifications 7,021 — 7,021 Amounts reclassified from AOCL 21,129 — 21,129 Other comprehensive income 28,150 — 28,150 Balance at December 29, 2019 $ (567,670) $ (8,469) $ (576,139) Amount Reclassified from AOCL (in thousands) Year Ended Year Ended December 29, December 30, Affected Line in the AOCL Component 2019 2018 Consolidated Statements of Operations Minimum pension and post-retirement liability $ 21,129 $ (56,530) Retirement benefit expense (1) Reclassification of AOCL tax effects — (98,390) Retained earnings (2) $ 21,129 $ (154,920) Net of tax _____________________ (1) There is no income tax benefit associated with the years ended December 29, 2019 and December 30, 2018, due to the recognition of a valuation allowance. (2) See Note 3, Income Taxes regarding the Tax Act. 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: Years Ended December 29, December 30, (shares in thousands) 2019 2018 Anti-dilutive common stock equivalents 471 199 Common Stock We have two classes of stock; Class A and Class B Common Stock. Both classes of stock participate equally in dividends. Holders of Class B are entitled to one vote per share and to elect as a class 75% of the Board of Directors, rounded down to the nearest whole number. Holders of Class A Common Stock are entitled to one-tenth of a vote per share and to elect as a class 25% of the Board of Directors, rounded up to the nearest whole number. Class B Common Stock is convertible at the option of the holder into Class A Common Stock on a share‑for‑share basis. The holders of shares of Class B Common Stock are parties to an agreement, the intent of which is to preserve control of the Company by the McClatchy family. Under the terms of the agreement, the Class B shareholders have agreed to restrict the transfer of any shares of Class B Common Stock to one or more “Permitted Transferees,” subject to certain exceptions. A “Permitted Transferee” is any of our current holders of shares of Class B Common Stock; any lineal descendant of Charles K. McClatchy (1858 to 1936); or a trust for the exclusive benefit of, or in which all of the remainder beneficial interests are owned by, one or more lineal descendants of Charles K. McClatchy. Generally, Class B shares can be converted into shares of Class A Common Stock and then transferred freely (unless, following conversion, the outstanding shares of Class B Common Stock would constitute less than 25% of the total number of all our outstanding shares of common stock). In the event that a Class B shareholder attempts to transfer any shares of Class B Common Stock in violation of the agreement, or upon the happening of certain other events enumerated in the agreement as “Option Events,” each of the remaining Class B shareholders has an option to purchase a percentage of the total number of shares of Class B Common Stock proposed to be transferred equal to such remaining Class B shareholder’s ownership percentage of the total number of outstanding shares of Class B Common Stock. If all the shares proposed to be transferred are not purchased by the remaining Class B shareholders, we have the option of purchasing the remaining shares. The agreement can be terminated by the vote of the holders of 80% of the outstanding shares of Class B Common Stock who are subject to the agreement. The agreement will terminate on September 17, 2047, unless terminated earlier in accordance with its terms. See discussion in Note 2 “ Ongoing Negotiations on Proposed Plan of Reorganization ” for potential impact on our existing Common Stock. Stock Plans During 2019, we had two stock‑based compensation plans, which are described below. We have suspended The McClatchy Company 2004 Stock Incentive Plan (“2004 Plan”) reserved 900,000 Class A Common shares for issuance to key employees and outside directors. The options vested in installments over four years, and once vested are exercisable up to 10 years from the date of grant. In addition, the 2004 Plan permitted the following type of incentive awards in addition to common stock, stock options and stock appreciation rights (“SARs”): restricted stock, unrestricted stock, stock units and dividend equivalent rights. The 2004 Plan was frozen in May 2012 so that no additional awards could be granted under the plan. The McClatchy Company 2012 Omnibus Incentive Plan (“2012 Plan”) was adopted in 2012 and 500,000 shares of Class A Common Stock were reserved for issuance under the 2012 Plan plus the number of shares available for future awards under the 2004 Plan as of the date of May 16, 2012 (the shareholder meeting date) plus the number of shares subject to awards outstanding under the 2004 Plan as of May 16, 2012, which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such shares. The 2012 Plan was further amended in May 2017 and May 2019, among other things, to increase the number of shares of Class A Common Stock reserved for issuance by 500,000 shares and 750,000 shares, respectively. The 2012 Plan, as amended, generally provides for granting of stock options or SARs only at an exercise price at least equal to fair market value on the grant date; a 10-year maximum term for stock options and SARs; no re-pricing of stock options or SARs without prior shareholder approval; and no reload or “evergreen” share replenishment features. Stock Plans Activity In 2019, no shares of the Class A Common Stock were granted to any non-employee director. In 2018, we granted 4,500 shares of Class A Common Stock to each non-employee director under the 2012 Plan. In accordance with The McClatchy Company Director Deferral Program (“Deferral Program”), five directors elected to defer issuance of their 2018 grants. As such, 27,000 shares were issued and 22,500 were deferred until the director terminates from the board of directors. We granted restricted stock units (“RSUs”) at the grant date fair value to certain key employees under the 2012 Plan as summarized in the table below. Fair value for RSUs is based on our Class A Common Stock closing price, as reported by the NYSE American, on the date of grant. The RSUs generally vest over three years after grant date but terms of each grant are at the discretion of the compensation committee of the board of directors. The following table summarizes the RSUs stock activity: Weighted Average Grant Date Fair RSUs Value Nonvested — December 31, 2017 245,794 $ 11.55 Granted 278,130 $ 8.90 Vested (167,722) $ 11.38 Forfeited (24,602) $ 9.54 Nonvested — December 30, 2018 331,600 $ 9.56 Granted 285,771 $ 5.58 Vested (172,297) $ 9.59 Forfeited (31,608) $ 6.96 Nonvested — December 29, 2019 413,466 $ 7.00 For the fiscal year ended December 29, 2019, the total fair value of the RSUs that vested was $1.0 million. As of December 29, 2019, there were $1.8 million of unrecognized compensation costs for non-vested RSUs, which are expected to be recognized over 1.7 years. As a result of the filing of our Chapter 11 Cases, we expect that all of these awards will be cancelled. When SARs are granted, they are granted at grant date fair value to certain key employees from the 2012 Plan. Fair value for SARs is determined using a Black-Scholes option valuation model that uses various assumptions, including expected life in years, volatility and risk-free interest rate. The SARs generally vest four years after grant date, but the terms of each grant are at the discretion of the compensation committee of the board of directors. Outstanding SARs are summarized as follows: Weighted Aggregate Average Intrinsic Value SARs Exercise Price (in thousands) Outstanding December 31, 2017 156,175 $ 32.12 $ — Expired (42,875) $ 32.09 Outstanding December 30, 2018 113,300 $ 32.13 $ — Expired (24,425) $ 34.02 Outstanding December 29, 2019 88,875 $ 31.61 $ — SARs exercisable: December 30, 2018 113,300 $ — December 29, 2019 88,875 $ — As of December 29, 2019, there were no unrecognized compensation costs related to SARs granted under our plans. The weighted average remaining contractual life of SARs vested and exercisable at December 29, 2019, was 1.5 years. As a result of the filing of our Chapter 11 Cases, we expect that all of these awards will be cancelled. The following tables summarize information about SARs outstanding in the stock plans at December 29, 2019: Average Remaining Weighted Weighted Range of Exercise SARs Contractual Average SARs Average Prices Outstanding Life Exercise Price Exercisable Exercise Price $24.60 – $40.80 88,875 1.50 $ 31.61 88,875 $ 31.61 Total 88,875 1.50 $ 31.61 88,875 $ 31.61 Stock‑Based Compensation Total stock‑based compensation expense consisted of the following: Years Ended December 29, December 30, (in thousands) 2019 2018 Stock-based compensation expense $ 1,504 $ 2,057 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 29, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
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. During 2018, as a result of the refinancing transactions discussed in Note 7, we transferred our Debentures (as defined in Note 7) from Level 2 to Level 3 in the fair value hierarchy. No similar transactions occurred in 2019. 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 December 29, 2019, and December 30, 2018, the carrying amount of these items approximates fair value because of the short maturity of these financial instruments. Long‑term debt. At December 29, 2019 the carrying value and the estimated fair value of our 2026 Notes (as defined in Note 7) was $249.8 million and $240.5 million, respectively. As of December 30, 2018, the carrying value and the estimated fair value of the 2026 Notes was $287.2 million and $302.4 million, respectively. The fair value of our 2026 Notes as described above was determined using quoted market prices. 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 December 29, 2019, the carrying value and the estimated fair value of our Debentures, Junior Term Loan and 2031 Notes (as defined in Note 7), was $357.9 million and $213.3 million, respectively. At December 30, 2018, the carrying value and the estimated fair value of our Debentures, Junior Term Loan and 2031 Notes, was $350.4 million and $296.5 million, respectively. Market evidence was not available or reliable to value our Debentures, Junior Term Loan and 2031 Notes. The fair value was based on the net present value of the future cash flows using interest rates derived from market inputs and a Treasury yield curve in effect at December 29, 2019. These are considered to be Level 3 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value. Pension plan. As of December 29, 2019, and December 30, 2018, we had assets related to our Pension Plan measured at fair value. The required disclosures, including assets valued with Level 3 inputs, are presented in Note 9. 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 are measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and cost or 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, but are not limited to, the expected cash flows and the discount rates that we estimate market participants would seek for bearing the risk associated with such assets. See goodwill and intangible asset discussion below regarding valuation inputs and impairments recorded during 2019. We incurred impairment charges during 2018 on our newspaper masthead intangible assets. See below in Note 3 and Note 6 for further information. |
Revenue recognition | Revenue recognition We recognize revenues when control of the promised goods is transferred to our customers or when the services are performed, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. All revenue recognized on the 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 outside the scope of Topic 606. See Note 4. |
Concentrations of credit risks | Concentrations of credit risks Financial instruments, which potentially subject us to concentrations of credit risks, are principally cash and cash equivalents and trade accounts receivables. Cash and cash equivalents are placed with major financial institutions. As of December 29, 2019, substantially all of our cash and cash equivalents are in excess of the FDIC insured limits. We have not experienced any losses related to amounts in excess of FDIC limits. We routinely assess the financial strength of significant customers and this assessment, combined with the large number and geographic diversity of our customers, limits our concentration of risk with respect to trade accounts receivable. |
Allowance for doubtful accounts | Allowance for doubtful accounts We maintain an allowance account for estimated losses resulting from the risk that our customers will not make required payments. At certain of our media companies, we establish our allowances based on collection experience, aging of our receivables and significant individual account credit risk. At the remaining media companies, we use the aging of accounts receivable, reserving for all accounts due 90 days or longer, to establish allowances for losses on accounts receivable; however, if we become aware that the financial condition of specific customers has deteriorated, additional allowances are provided. We provide an allowance for doubtful accounts as follows: Years Ended December 29, December 30, (in thousands) 2019 2018 Balance at beginning of year $ 3,008 $ 3,225 Charged to costs and expenses 7,134 8,995 Amounts written off (8,388) (9,212) Balance at end of year $ 1,754 $ 3,008 |
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. There have been no write-downs of newsprint, ink or other inventories during 2019 or 2018. |
Property, plant and equipment | Property, plant and equipment Property, plant and equipment (“PP&E”) are recorded at cost. Additions and substantial improvements, as well as interest expense incurred during construction, are capitalized. Capitalized interest was not material in 2019 or 2018. Expenditures for maintenance and repairs are charged to expense as incurred. When PP&E is sold or retired, the asset and related accumulated depreciation are removed from the accounts and the associated gain or loss is recognized. Property, plant and equipment consisted of the following: December 29, December 30, Estimated (in thousands) 2019 2018 Useful Lives Land $ 27,869 $ 32,335 Building and improvements 245,748 268,157 - years Equipment 462,449 506,307 - years (1) Construction in process 324 1,890 736,390 808,689 Less accumulated depreciation (532,815) (574,997) Property, plant and equipment, net $ 203,575 $ 233,692 (1) Presses are 9 - 25 years and other equipment is 2 - 15 years We record depreciation using the straight‑line method over estimated useful lives. The useful lives are estimated at the time the assets are acquired and are based on historical experience with similar assets and anticipated technological changes. Our depreciation expense was $21.9 million and $28.6 million in 2019 and 2018, respectively. During 2019 and 2018, we incurred $0.3 million and $0.6 million, respectively, in accelerated depreciation related to production equipment that was no longer needed due to outsourcing of our printing process at certain of our media companies. We review the carrying amount of long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events that result in an impairment review include the decision to close a location or a significant decrease in the operating performance of the long‑lived asset. Long‑lived assets are considered impaired if the estimated undiscounted future cash flows of the asset or asset group are less than the carrying amount. For impaired assets, we recognize a loss equal to the difference between the carrying amount of the asset or asset group and its estimated fair value, which is recorded in operating expenses in the consolidated statements of operations. The estimated fair value of the asset or asset group is based on the discounted future cash flows of the asset or asset group. The asset group is defined as the lowest level for which identifiable cash flows are available. |
Assets held for sale | Assets held for sale As of December 29, 2019, we have land and/or buildings classified as assets held for sale at five of our media companies compared to only three as of December 30, 2018. During 2019, we began to actively market for sale five properties, which includes land and/or buildings, at four of our media companies. In connection with classifying properties as assets held for the sale, we reduce the carrying value of the land and building to its estimated fair value less selling costs, if applicable. As a result, during 2019, we recorded a $0.7 million impairment charge at one of our properties which is included in goodwill and other asset write-downs on our consolidated statement of operations. During the year ended December 29, 2019, we sold land and buildings in Kennewick, Washington, Belleville, Illinois, and Miami, Florida. We recorded gains of $3.3 million, which are included in other operating expenses on our consolidated statements of operations. |
Goodwill and intangible impairment | Goodwill and intangible impairment Goodwill represents the excess of cost of a business acquisition over the fair value of the net assets acquired. In accordance with FASB ASC 350 " Intangibles - Goodwill and Other " goodwill is not amortized. An impairment loss is recognized when the carrying amount of the reporting unit's net assets exceed the estimated fair value of the reporting unit. 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. We perform this testing on operating segments, which are also considered our reporting units. One reporting unit (“Western” reporting unit) consists of operations in California, Washington and the Central region and the other reporting unit (“Eastern” reporting unit) consists of operations primarily in the Carolinas and the East and Southeast regions We test for goodwill impairment using an equal weighting of a market approach and an income approach. We use market multiples derived from a set of competitors or companies with comparable market characteristics to establish fair values for a reporting unit (market approach). We also estimate fair value using discounted projected cash flow analysis (income approach). This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, the long‑term rate of growth for our business, and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. We performed interim and annual impairment tests during 2019 and only annual impairment tests for 2018. See Note 6 for discussion of our goodwill impairment testing results. 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 a discounted cash flow model to determine the fair value of each newspaper masthead. Individual newspaper masthead fair values were estimated using the present value of expected future cash flows, using estimates, judgments and assumptions discussed above that we believe were appropriate in the circumstances. We performed interim and annual impairment tests during 2019 and 2018. See Note 6 for discussion of our newspaper masthead impairment testing results. 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 impairments of long‑lived assets subject to amortization during 2019 or 2018. |
Investments in unconsolidated companies | Investments in unconsolidated companies Investments in unconsolidated companies are accounted for using either the equity method or measurement alternative method. Investments through which we exercise significant influence but do not have control over the investee are accounted for under the equity method. Investments through which we are not able to exercise significant influence over the investee are accounted for under the measurement alternative method as these investments do not have readily determinable fair values. The measurement alternative method was elected for investments without readily determinable fair values formerly accounted for under the cost method. The measurement alternative value represents cost minus any impairments, if any, plus or minus any observable price changes. There were no impairments of our investments in unconsolidated companies during 2019 or 2018. In the year ended December 29, 2019, we received distributions totaling $1.3 million, which primarily relates to cost or equity method investees who are winding down their operations. On September 13, 2018, we sold our remaining 3.0% ownership interest in CareerBuilder, LLC (“CareerBuilder”) and received gross proceeds of $5.3 million. As a result of this sale, we recognized a gain on sale of investments in unconsolidated companies of $1.7 million in the year ended December 30, 2018. In the year ended December 30, 2018, we also received distributions totaling approximately $2.8 million from CareerBuilder, which relate to returns of earnings. Our 3.0% ownership interest in CareerBuilder was accounted for under the cost method. |
Financial obligations | Financial obligations Financial obligations (also known as failed sale and leaseback transactions) consist of contributions of real properties to the Pension Plan in 2016 and 2011 (see Note 9), real property previously owned by The Sacramento Bee in Sacramento, California that was sold and leased back during the third quarter of 2017, real property previously owned by The State in Columbia, South Carolina that we sold and leased back during the second quarter of 2018, and real property previously owned by The Kansas City Star in Kansas City, Missouri that was sold and leased back during the second quarter of 2019. |
Segment reporting | Segment reporting 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 during 2019 and 2018, both operating segments reported to the same segment manager. One of our operating segments (“Western Segment”) consists of our media companies’ operations in California, Washington and the Central region, while the other operating segment (“Eastern Segment”) consists primarily of media company operations in the Carolinas and the East and Southeast regions. |
Stock-based compensation | Stock‑based compensation All stock‑based compensation, including grants of stock appreciation rights, restricted stock units and common stock under equity incentive plans, is recognized in the financial statements based on their fair values. At December 29, 2019, we had two stock‑based compensation plans. See Note 12. |
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. During 2018, we elected to early adopt new guidance that allowed for certain stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (“Tax Act”) to be reclassified from accumulated other comprehensive income to retained earnings. As such, we recorded a reclass of $98.4 million of stranded tax effects from accumulated other comprehensive income to retained earnings in 2018. 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 considers 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 perform our assessment of the deferred tax assets quarterly, weighing the positive and negative evidence as outlined in ASC 740-10, Income Taxes . As we had 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. 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 also evaluate any uncertain tax positions and recognize a liability for the tax benefit associated with an uncertain tax position if it is more likely than not that the tax position will not be sustained on examination by the taxing authorities upon consideration of the technical merits of the position. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. We record a liability for uncertain tax positions taken or expected to be taken in a tax return. Any change in judgment related to the expected ultimate resolution of uncertain tax positions is recognized in earnings in the period in which such change occurs. We record accrued interest related to unrecognized tax benefits in interest expense. Accrued penalties are recorded as a component of income tax expense. |
Recently Adopted and Issued Not Yet Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “ Leases” (“Topic 842”) which replaces the existing guidance in ASC 840, “ Leases. ” Topic 842 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. We adopted Topic 842 as of December 31, 2018, without restating periods prior to the adoption date using a modified retrospective transition method, as allowed under ASU 2018-11, “Targeted Improvements to ASC 842.” As a result of the adoption of Topic 842, on December 31, 2018, we recorded operating lease right-of-use (“ROU”) assets of $51.6 million and lease liabilities of $61.2 million. Finance leases were not impacted by the adoption of Topic 842, as capital lease liabilities and the corresponding assets were already recorded in the balance sheet under the ASC 840 guidance. The adoption of Topic 842 had an inconsequential impact on our consolidated statement of operations and consolidated statement of cash flows in 2019. The new standard provides a number of optional practical expedients that we adopted. We elected the “package of practical expedients” which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides expedients for our ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. For those leases that qualified, we did not recognize ROU assets or liabilities. We also elected the practical expedient allowing us to combine lease and non-lease components for our real estate leases. Additional information and disclosures required by this new standard are contained in Note 5. In August 2018, the FASB issued ASU 2018-15, “ Intangibles-Goodwill and Other-Internal -Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). It is effective for us for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. We early adopted this standard as of April 1, 2019, and it did not have an impact on our consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted 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 measurement of expected credit losses is to be based upon a broad set of information to include historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 has been amended by ASU’s 2018-19, 2019-04 and 2019-05, which provide further guidance and clarification on specific items within the previously issued update. In November 2019, the FASB issued ASU 2019-11, that grants private companies, not-for-profit organizations and certain small public companies an effective date delay for its credit loss standard. As a result, ASU 2016-13 and the subsequent updates will be effective for us for interim and annual reporting periods beginning after December 15, 2022. We are currently in the process of evaluating the impact of the adoption on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, “ Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ” ASU 2018-13 adds, removes and modifies various disclosure requirements within Topic 820. It is effective for us for interim and annual reporting periods beginning after December 15, 2019. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this guidance and delay adoption of the additional disclosures until their effective date. We are currently in the process of evaluating the impact of the adoption on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-14, “ Compensation-Retirement Benefits-Defined Benefit Plan-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans. ” ASU 2018-14 adds, removes or clarifies various disclosure requirements within guidance. It is effective for us for annual reporting periods beginning after December 15, 2020, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of allowance for doubtful accounts | Years Ended December 29, December 30, (in thousands) 2019 2018 Balance at beginning of year $ 3,008 $ 3,225 Charged to costs and expenses 7,134 8,995 Amounts written off (8,388) (9,212) Balance at end of year $ 1,754 $ 3,008 |
Schedule of components of property, plant and equipment | December 29, December 30, Estimated (in thousands) 2019 2018 Useful Lives Land $ 27,869 $ 32,335 Building and improvements 245,748 268,157 - years Equipment 462,449 506,307 - years (1) Construction in process 324 1,890 736,390 808,689 Less accumulated depreciation (532,815) (574,997) Property, plant and equipment, net $ 203,575 $ 233,692 (1) Presses are 9 - 25 years and other equipment is 2 - 15 years |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
LEASES | |
Components of lease costs | Year Ended December 29, (in thousands) 2019 Financing lease costs: Amortization of ROU asset $ 96 Interest on lease liabilities 78 Operating lease costs 13,624 Short-term lease cost 2,119 Variable lease cost 2,444 Sublease income (5,931) Total lease costs $ 12,430 |
Aggregate future lease payments for operating leases | Operating (in thousands) Leases 2020 12,879 2021 10,776 2022 10,947 2023 10,350 2024 9,004 Thereafter 21,858 Total undiscounted cash flows 75,814 Less imputed interest (20,976) Total lease liability $ 54,838 |
Summary of minimum lease commitments, net of sub-lease rental income | Operating Sublease Net Lease (in thousands) Leases Income Obligation 2019 $ 16,408 $ (4,044) $ 12,364 2020 11,921 (1,306) 10,615 2021 9,797 (379) 9,418 2022 10,178 (334) 9,844 2023 10,160 (232) 9,928 Thereafter 31,139 — 31,139 Total $ 89,603 $ (6,295) $ 83,308 |
Summary of weighted average remaining lease terms and discount rates | December 29, 2019 Operating Financing Leases Lease Weighted average remaining lease term (years) 6.90 5.84 Weighted average discount rate 9.19 % 10.50 % |
Schedule of supplemental cash flow information related to operating leases | Year Ended December 29, (in thousands) 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 14,198 Operating cash outflow from financing lease 78 Financing cash outflow from financing lease 71 ROU assets obtained in exchange for new operating lease liabilities 3,154 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
INTANGIBLE ASSETS AND GOODWILL | |
Schedule of intangible assets and goodwill | December 30, Disposition Impairment Amortization December 29, (in thousands) 2018 Adjustment Charges Expense 2019 Intangible assets subject to amortization $ 838,336 $ — $ — $ — $ 838,336 Accumulated amortization (807,725) — — (24,153) (831,878) 30,611 — — (24,153) 6,458 Mastheads 112,736 — (49,941) — 62,795 Goodwill 705,174 — (284,996) — 420,178 Total $ 848,521 $ — $ (334,937) $ (24,153) $ 489,431 December 31, Disposition Impairment Amortization December 30, (in thousands) 2017 Adjustment Charges Expense 2018 Intangible assets subject to amortization $ 839,284 $ (948) $ — $ — $ 838,336 Accumulated amortization (761,013) 948 — (47,660) (807,725) 78,271 — — (47,660) 30,611 Mastheads 149,951 — (37,215) — 112,736 Goodwill 705,174 — — — 705,174 Total $ 933,396 $ — $ (37,215) $ (47,660) $ 848,521 |
Summary of accumulated changes in intangible assets and goodwill | December 29, 2019 December 30, 2018 Original Gross Accumulated Carrying Original Gross Accumulated Carrying (in thousands) Amount Impairment Amount Amount Impairment Amount Mastheads $ 684,500 $ (621,705) $ 62,795 $ 684,500 $ (571,764) $ 112,736 Goodwill 3,571,111 (3,150,933) 420,178 3,571,111 (2,865,937) 705,174 Total $ 4,255,611 $ (3,772,638) $ 482,973 $ 4,255,611 $ (3,437,701) $ 817,910 |
Amortization expense for the five succeeding fiscal years | Amortization Expense Year (in thousands) 2020 $ 803 2021 680 2022 655 2023 667 2024 640 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
LONG-TERM DEBT | |
Summary of company's long-term debt | Face Value at Carrying Value December 29, December 29, December 30, (in thousands) 2019 2019 2018 ABL Credit Agreement $ — $ — $ — Notes: 9.000% senior secured notes due in 2026 262,851 249,793 287,249 7.795% junior term loan due in 2030 157,083 126,148 123,213 6.875% senior secured junior lien notes due in 2031 268,423 217,392 141,447 7.150% debentures due in 2027 7,105 6,855 6,824 6.875% debentures due in 2029 7,807 7,484 78,962 Long-term debt $ 703,269 $ 607,672 $ 637,695 Less current portion — — 4,312 Total long-term debt, net of current $ 703,269 $ 607,672 $ 633,383 |
Annual maturities of debt | Payments Year (in thousands) 2020 $ — 2021 — 2022 — 2023 — 2024 — Thereafter 703,269 Debt principal $ 703,269 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
INCOME TAXES | |
Schedule of income tax provision (benefit) related to continuing operations | Years Ended December 29, December 30, (in thousands) 2019 2018 Current: Federal $ (24) $ 5,546 State (507) (429) Deferred: Federal (4,729) (961) State (1,019) (6,326) Income tax provision (benefit) $ (6,279) $ (2,170) |
Schedule of reconciliation of effective tax rate expense (benefit) for continuing operations and the statutory federal income tax rate | Years Ended December 29, December 30, 2019 2018 Statutory rate (21.0) % (21.0) % State taxes, net of federal benefit 0.1 (4.3) Changes in estimates — 0.8 Changes in unrecognized tax benefits (0.3) (4.3) Other 0.5 2.8 Impact of valuation allowance 6.5 23.0 Impact of tax rate changes — — Goodwill impairment 12.6 — Stock compensation 0.1 0.3 Effective tax rate (1.5) % (2.7) % |
Schedule of components of deferred tax assets and liabilities | December 29, December 30, (in thousands) 2019 2018 Deferred tax assets: Compensation benefits $ 150,893 $ 157,715 State taxes 1,533 1,909 State loss carryovers 9,398 4,006 Federal loss carryovers 4,899 — Investments in unconsolidated subsidiaries 4,478 4,242 Deferred interest expense 33,069 15,342 Leases 15,564 — Other 3,353 3,407 Total deferred tax assets 223,187 186,621 Valuation allowance (176,069) (143,764) Net deferred tax assets 47,118 42,857 Deferred tax liabilities: Depreciation and amortization 28,386 45,239 Debt discount 17,874 17,876 Leases ROU Asset 15,419 — Other 466 517 Total deferred tax liabilities 62,145 63,632 Net deferred tax liabilities $ (15,027) $ (20,775) |
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits | Years Ended December 29, December 30, (in thousands) 2019 2018 Balance at beginning of fiscal year $ 13,822 $ 20,764 Increases based on tax positions in prior year 231 84 Decreases based on tax positions in prior year (2,296) (4,261) Increases based on tax positions in current year 801 1,124 Settlements — (511) Lapse of statute of limitations (1,277) (3,378) Balance at end of fiscal year $ 11,281 $ 13,822 |
Schedule of tax years and related taxing jurisdictions that were open for audit | Open Years Under Taxing Jurisdiction Tax Year Exam Federal 2016-2019 — California 2015-2019 — Other States 2006-2019 2015-2017 |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
EMPLOYEE BENEFITS | |
Schedule of reconciliations of the pension and post-retirement benefit plans' benefit obligations, fair value of assets and funded status | Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Change in Benefit Obligation Benefit obligation, beginning of year $ 1,920,987 $ 2,080,013 $ 6,827 $ 7,625 Interest cost 79,309 79,154 262 256 Plan participants’ contributions — — 7 10 Actuarial (gain)/loss 181,506 (126,540) (1,020) (417) Gross benefits paid (149,859) (111,640) (584) (647) Special termination benefits 6,835 — — — Benefit obligation, end of year $ 2,038,778 $ 1,920,987 $ 5,492 $ 6,827 Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Change in Plan Assets Fair value of plan assets, beginning of year $ 1,259,979 $ 1,477,926 $ — $ — Actual return on plan assets 271,332 (115,192) — — Employer contribution 11,815 8,885 577 637 Plan participants’ contributions — — 7 10 Gross benefits paid (149,859) (111,640) (584) (647) Fair value of plan assets, end of year $ 1,393,267 $ 1,259,979 $ — $ — Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Funded Status Fair value of plan assets $ 1,393,267 $ 1,259,979 $ — $ — Benefit obligations (2,038,778) (1,920,987) (5,492) (6,827) Funded status and amount recognized, end of year $ (645,511) $ (661,008) $ (5,492) $ (6,827) |
Schedule of amounts recognized in the consolidated balance sheet | Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Current liability $ (124,200) $ (11,510) $ (793) $ (1,015) Noncurrent liability (521,311) (649,498) (4,699) (5,812) $ (645,511) $ (661,008) $ (5,492) $ (6,827) |
Schedule of amounts recognized in accumulated other comprehensive income | Pension Benefits Post-retirement Benefits (in thousands) 2019 2018 2019 2018 Net actuarial loss/(gain) $ 781,063 $ 811,063 $ (7,464) $ (7,334) Prior service cost/(credit) — — (2,482) (4,456) $ 781,063 $ 811,063 $ (9,946) $ (11,790) |
Schedule of elements of retirement and post-retirement costs | Years Ended December 29, December 30, (in thousands) 2019 2018 Pension plans: Interest Cost $ 79,309 $ 79,154 Expected return on plan assets (83,820) (90,495) Prior service cost amortization 6,834 — Actuarial loss 23,995 25,181 Net pension expense 26,318 13,840 Net post-retirement benefit credit (2,603) (2,726) Net retirement expenses $ 23,715 $ 11,114 |
Schedule of assumptions used | Weighted average assumptions used for valuing benefit obligations were: Pension Benefit Post-retirement Obligations Obligations 2019 2018 2019 2018 Discount rate 3.48 % 4.42 % 3.15 % 4.15 % Weighted average assumptions used in calculating expense: Pension Benefit Expense Post-retirement Expense December 29, December 30, December 29, December 30, 2019 (1) 2018 2019 2018 Expected long-term return on plan assets 7.75 % 7.75 % N/A N/A Discount rate 4.42 % 3.91 % 4.15 % 3.60 % _____________________ As discussed below, we performed an interim remeasurement of the Pension Plan on March 22, 2019, and used the assumptions described below. The expected long-term return on plan assets of 7.75% and discount rate of 4.42% presented in the table were used for the year end 2019 assumptions. |
Summary of expected benefit payments to retirees under the Company's retirement and post-retirement plans | Retirement Post-retirement (in thousands) Plans (1) Plans 2020 $ 105,047 $ 806 2021 126,706 712 2022 118,914 629 2023 119,193 556 2024 120,023 488 2025-2029 612,922 1,663 Total $ 1,202,805 $ 4,854 (1) Largely to be paid from the qualified defined benefit pension plan. |
Summary of pension plan's financial instruments that are carried at fair value on a recurring basis by the fair value hierarchy levels | 2019 Plan Assets (in thousands) Level 1 Level 2 Level 3 NAV Total Cash and cash equivalents $ 9,355 $ — $ — $ — $ 9,355 Mutual funds 139,021 — — — 139,021 Common collective trusts — — — 1,178,230 1,178,230 Real estate — — 55,874 — 55,874 Private equity funds — — 10,787 — 10,787 Total $ 148,376 $ — $ 66,661 $ 1,178,230 $ 1,393,267 2018 Plan Assets (in thousands) Level 1 Level 2 Level 3 NAV Total Cash and cash equivalents $ 9,366 $ — $ — $ — $ 9,366 Mutual funds 139,978 — — — 139,978 Common collective trusts — — — 1,045,628 1,045,628 Real estate — — 55,398 — 55,398 Private equity funds — — 9,609 — 9,609 Total $ 149,344 $ — $ 65,007 $ 1,045,628 $ 1,259,979 |
Summary of changes in the fair value of the pension plan's Level 3 investment assets | (in thousands) Real Estate Private Equity Total Beginning Balance, December 30, 2018 $ 55,398 $ 9,609 $ 65,007 Realized gains (losses), net 2,738 3 2,741 Transfer in or out of level 3 (4,953) — (4,953) Unrealized gains (losses), net 2,691 1,175 3,866 Ending Balance, December 29, 2019 $ 55,874 $ 10,787 $ 66,661 (in thousands) Real Estate Private Equity Total Beginning Balance, December 31, 2017 $ 58,050 $ 9,509 $ 67,559 Realized gains (losses), net 4,528 3 4,531 Transfer in or out of level 3 (8,601) — (8,601) Unrealized gains (losses), net 1,421 97 1,518 Ending Balance, December 30, 2018 $ 55,398 $ 9,609 $ 65,007 |
Schedule of common collective trusts | (in thousands) 2019 2018 Unfunded Commitments Redemption Frequency (if Currently Eligible) Redemption Notice Period Common collective trust funds: U.S equity funds (1) $ 358,088 $ 296,135 N/A Daily None International equity funds (2) 373,764 311,119 N/A Daily - Monthly None Emerging markets equity funds (3) 179,707 153,927 N/A Daily None - 5-Day Fixed income funds (4) 126,900 146,197 N/A Daily 2-Day Total common collective trust $ 1,038,459 $ 907,378 Fixed income credit fund (4) 139,771 138,250 N/A Weekly 2-Day Total investments measured at NAV $ 1,178,230 $ 1,045,628 ________________ (1) U.S. equity fund strategies - Investments in U.S. equities are defined as commitments to U.S. dollar-denominated, publicly traded common stocks of U.S. domiciled companies and securities convertible into common stock. The aggregate U.S. equity portfolio is expected to exhibit characteristics comparable to, but not necessarily equal to, that of the Russell 3000 Index. (2) International equity funds strategies - Investments in international developed markets equities are defined as commitments to publicly traded common stocks and securities convertible into common stock issued by companies primarily domiciled in countries outside of the U.S. (3) Emerging markets equity fund strategies - Investments in emerging equities may include commitments to publicly traded common stocks and securities convertible into common stock issued by companies domiciled in countries considered emerging by one or more benchmark providers. (4) Fixed income fund strategies - Fixed income investments may include debt instruments issued by both U.S. and non-U.S. governments, agencies, “quasi Government” agencies, corporations, and any other public or private regulated debt security. |
CASH FLOW INFORMATION (Tables)
CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
CASH FLOW INFORMATION | |
Reconciliation of cash, cash equivalents and restricted cash | December 29, December 30, (in thousands) 2019 2018 Cash and equivalents $ 10,514 $ 21,906 Restricted cash included in other assets (1) 26,649 28,649 Total cash, cash equivalents and restricted cash $ 37,163 $ 50,555 |
Schedule of cash paid for interest and income taxes and other non-cash activities | Year Ended December 29, December 30, (in thousands) 2019 2018 Interest paid (net of amount capitalized) $ 57,909 $ 43,313 Income taxes paid (net of refunds) 7,476 13,935 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 (1,037) (2,667) Reduction of PP&E due to sale of real properties by pension plan (1,593) (2,854) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of minimum annual contractual obligations | Payments Due By Period (in thousands) 2020 2021 2022 2023 2024 Thereafter Total Purchase obligations (1) $ 33,237 $ 9,482 $ 3,751 $ 2,565 $ 3 $ 4 $ 49,042 Operating leases (2) Lease obligations 12,879 10,776 10,947 10,350 9,004 21,858 75,814 Sublease income (3,493) (1,498) (389) (211) (59) (10) (5,660) Net lease obligation 9,386 9,278 10,558 10,139 8,945 21,848 70,154 Workers’ compensation obligations (3) 1,994 1,371 1,039 826 665 5,785 11,680 Total $ 44,617 $ 20,131 $ 15,348 $ 13,530 $ 9,613 $ 27,637 $ 130,876 (1) Represents our purchase obligations primarily related to printing outsource agreements and capital expenditures for PP&E expiring at various dates through 2025. (2) Represents minimum rental commitments under operating leases with non‑cancelable terms in excess of one year and sublease income from leased space with non-cancelable terms in excess of one year. We rent certain facilities and equipment under operating leases expiring at various dates through 2028 and one parking lot through 2062. Total rental expense, included in other operating expenses, amounted to $17.6 million and $14.3 million in 2019 and 2018, respectively. Most of the leases provide that we pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased premises in addition to the minimum monthly payments. Some of the operating leases have built in escalation clauses. We sublease office space to other companies under non-cancellable agreements that expire at various dates through 2025. Sublease income from operating leases totaled $4.4 million and $5.0 million in 2019 and 2018, respectively. (3) We retain the risk for workers’ compensation resulting from uninsured deductibles per accident or occurrence that are subject to annual aggregate limits. Losses up to the deductible amounts are accrued based upon known claims incurred and an estimate of claims incurred but not reported. For the year ended December 29, 2019, we compiled our historical data pertaining to the self‑insurance experiences and actuarially developed the ultimate loss associated with our self‑insurance programs for workers’ compensation liability. We believe that the actuarial valuation provides the best estimate of the ultimate losses to be expected under these programs. At December 29, 2019, the undiscounted ultimate losses of all our self‑insurance reserves related to our workers’ compensation liabilities were $11.7 million, net of estimated insurance recoveries of approximately $1.6 million. At December 30, 2018, the undiscounted ultimate losses of all our self-insurance reserves related to workers’ compensation liabilities were $12.3 million, net of estimated insurance recoveries of approximately $1.9 million. We discount the net amounts above to present value using an approximate risk‑free rate over the average life of our insurance claims. For the years ended December 29, 2019, and December 30, 2018, the discount rate used was 1.6% and 3.1%, respectively. The present value of all self‑insurance reserves, net of estimated insurance recoveries, for our workers’ compensation liability recorded at December 29, 2019, and December 30, 2018, was $10.6 million and $10.7 million, respectively. |
SUPPLEMENTAL EQUITY INFORMATI_2
SUPPLEMENTAL EQUITY INFORMATION (Tables) | 12 Months Ended |
Dec. 29, 2019 | |
SUPPLEMENTAL EQUITY INFORMATION | |
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 (153,414) (1,506) (154,920) Other comprehensive income (153,414) (1,506) (154,920) Balance at December 30, 2018 $ (595,820) $ (8,469) $ (604,289) Other comprehensive income (loss) before reclassifications 7,021 — 7,021 Amounts reclassified from AOCL 21,129 — 21,129 Other comprehensive income 28,150 — 28,150 Balance at December 29, 2019 $ (567,670) $ (8,469) $ (576,139) |
Schedule of reclassification out of accumulated other comprehensive income | Amount Reclassified from AOCL (in thousands) Year Ended Year Ended December 29, December 30, Affected Line in the AOCL Component 2019 2018 Consolidated Statements of Operations Minimum pension and post-retirement liability $ 21,129 $ (56,530) Retirement benefit expense (1) Reclassification of AOCL tax effects — (98,390) Retained earnings (2) $ 21,129 $ (154,920) Net of tax _____________________ (1) There is no income tax benefit associated with the years ended December 29, 2019 and December 30, 2018, due to the recognition of a valuation allowance. (2) See Note 3, Income Taxes regarding the Tax Act. |
Summary of anti-dilutive stock options | Years Ended December 29, December 30, (shares in thousands) 2019 2018 Anti-dilutive common stock equivalents 471 199 |
Summary of the restricted stock units ("RSUs") activity | Weighted Average Grant Date Fair RSUs Value Nonvested — December 31, 2017 245,794 $ 11.55 Granted 278,130 $ 8.90 Vested (167,722) $ 11.38 Forfeited (24,602) $ 9.54 Nonvested — December 30, 2018 331,600 $ 9.56 Granted 285,771 $ 5.58 Vested (172,297) $ 9.59 Forfeited (31,608) $ 6.96 Nonvested — December 29, 2019 413,466 $ 7.00 |
Summary of the stock appreciation rights ("SARs") activity | Weighted Aggregate Average Intrinsic Value SARs Exercise Price (in thousands) Outstanding December 31, 2017 156,175 $ 32.12 $ — Expired (42,875) $ 32.09 Outstanding December 30, 2018 113,300 $ 32.13 $ — Expired (24,425) $ 34.02 Outstanding December 29, 2019 88,875 $ 31.61 $ — SARs exercisable: December 30, 2018 113,300 $ — December 29, 2019 88,875 $ — |
Summary of information about SARs outstanding in the stock plans | Average Remaining Weighted Weighted Range of Exercise SARs Contractual Average SARs Average Prices Outstanding Life Exercise Price Exercisable Exercise Price $24.60 – $40.80 88,875 1.50 $ 31.61 88,875 $ 31.61 Total 88,875 1.50 $ 31.61 88,875 $ 31.61 |
Summary of stock-based compensation expense | Years Ended December 29, December 30, (in thousands) 2019 2018 Stock-based compensation expense $ 1,504 $ 2,057 |
BUSINESS AND BASIS OF ACCOUNT_2
BUSINESS AND BASIS OF ACCOUNTING (Details) $ in Thousands | 12 Months Ended | |||
Dec. 29, 2019USD ($)statecompany | Dec. 30, 2018 | Dec. 27, 2020USD ($) | Jan. 14, 2020USD ($) | |
Investments in Unconsolidated Companies Activity | ||||
Number of media companies | company | 30 | |||
Number of states | state | 14 | |||
Length of fiscal year | 364 days | 364 days | ||
Long-term debt | $ 703,269 | |||
Potential future federal tax refund due to 2020 CARES Act | 9,000 | |||
Subsequent event | ||||
Investments in Unconsolidated Companies Activity | ||||
Installment of contribution plan payable | $ 4,000 | |||
9.000% senior secured notes due in 2026 | ||||
Investments in Unconsolidated Companies Activity | ||||
Long-term debt | 262,851 | |||
7.795% junior term loan due in 2030 | ||||
Investments in Unconsolidated Companies Activity | ||||
Long-term debt | 157,083 | |||
6.875% senior secured junior lien notes due in 2031 | ||||
Investments in Unconsolidated Companies Activity | ||||
Long-term debt | 268,423 | |||
Debentures | ||||
Investments in Unconsolidated Companies Activity | ||||
Long-term debt | $ 14,900 | |||
Forecast | ||||
Investments in Unconsolidated Companies Activity | ||||
Estimated minimum required contributions | $ 124,200 |
CHAPTER 11 BANKRUPTCY FILING _2
CHAPTER 11 BANKRUPTCY FILING (Subsequent Event) (Details) $ in Thousands | Jul. 16, 2018USD ($) | Dec. 29, 2019USD ($)company | Dec. 30, 2018USD ($) | Feb. 13, 2020subsidiary |
Debt Instrument [Line Items] | ||||
Number of media companies | company | 30 | |||
Debtor-In-Possession Financing | ||||
Percentage of lenders considered for reorganization | 87.00% | |||
Loss on extinguishment of debt | $ (2,272) | $ 30,577 | ||
Creditors settled in pro rata pool | $ 3,000 | |||
Creditors converted into equity (Percentage) | 2.50% | |||
Pension plan liabilities installment | $ 3,300 | |||
Period of pension plan liabilities installment | 10 years | |||
Pension plan liabilities converted into equity (Percentage) | 3.00% | |||
Subsequent event | ||||
Debt Instrument [Line Items] | ||||
Number of wholly owned subsidiaries | subsidiary | 53 | |||
New First Lien Notes | ||||
Debtor-In-Possession Financing | ||||
Debt conversion amount | $ 217,900 | |||
Debt converted interest rate | 10.00% | |||
6.875% senior secured junior lien notes due in 2031 | ||||
Debtor-In-Possession Financing | ||||
Debt instrument, interest rate (as a percent) | 6.875% | 6.875% | 6.875% | |
Second Lien Term Loans and Third Lien Notes. | ||||
Debtor-In-Possession Financing | ||||
Secured debt | $ 81,000 | |||
Loss on extinguishment of debt | $ 30,000 | |||
Debt payment-in-kind interest rate | 12.50% | |||
Debt payment-in-cash interest rate | 10.00% | |||
Percentage of debt extinguished for equity ownership | 97.00% | |||
Percentage of debt extinguished, dilutive portion | 2.50% | |||
Encina Business Credit, LLC | DIP Credit Agreement | ||||
Debtor-In-Possession Financing | ||||
Debtor-in-possession financing under a credit agreement | $ 50,000 | |||
Debt Term | 18 months | |||
Encina Business Credit, LLC | DIP Credit Agreement | Revolving loan facility | ||||
Debtor-In-Possession Financing | ||||
Aggregate principal amount | $ 50,000 | |||
Encina Business Credit, LLC | DIP Credit Agreement | Letter of credit | ||||
Debtor-In-Possession Financing | ||||
Aggregate principal amount | $ 3,500 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Fair value of financial instruments (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Long-term debt fair value disclosure | ||
Long-term debt | $ 607,672 | $ 637,695 |
9.000% senior secured notes due in 2026 | ||
Long-term debt fair value disclosure | ||
Long-term debt | 249,793 | 287,249 |
Estimated fair value of long-term debt | 240,500 | 302,400 |
Debentures, Junior Term Loan, and 2031 Notes | ||
Long-term debt fair value disclosure | ||
Long-term debt | 357,900 | 350,400 |
Estimated fair value of long-term debt | $ 213,300 | $ 296,500 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Changes in allowance for doubtful accounts | ||
Balance at beginning of year | $ 3,008 | |
Charged to costs and expenses | 7,134 | $ 8,995 |
Amounts written off | (8,388) | (9,212) |
Balance at end of year | 1,754 | 3,008 |
Newsprint, ink and other inventories | ||
Inventory Write-down | $ 0 | $ 0 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - PP&E, Assets held for Sale, Intangibles, Investments, Segments and Compensation (Details) | Sep. 13, 2018USD ($) | Dec. 29, 2019USD ($)segmentcompanypropertyitem | Dec. 30, 2018USD ($)property |
Depreciation | |||
Property, plant and equipment, gross | $ 736,390,000 | $ 808,689,000 | |
Less accumulated depreciation | (532,815,000) | (574,997,000) | |
Property, plant and equipment, net | 203,575,000 | 233,692,000 | |
Depreciation expense | 21,900,000 | 28,600,000 | |
Accelerated depreciation incurred | $ 300,000 | $ 600,000 | |
Assets held for sale | |||
Number of properties with assets held for sale | property | 5 | 3 | |
Number of properties actively marketed to be sold | property | 5 | ||
Number of media companies with assets held for sale | company | 4 | ||
Facilities with reduced carrying value | property | 1 | ||
Impairment charge of assets held for sale | $ 700,000 | ||
Gain (loss) on sale of property | $ 3,300,000 | ||
Segment reporting | |||
Number of operating segments | segment | 2 | ||
Goodwill and intangible impairment | |||
Impairment of Intangible Assets, Finite-lived | $ 0 | $ 0 | |
Stock-based compensation | |||
Number of stock-based compensation plans | item | 2 | ||
Investments in unconsolidated companies | |||
Impairments related to investments in unconsolidated companies | $ 0 | 0 | |
Distributions received relates to cost or equity method investees | $ 1,295,000 | 2,876,000 | |
Gains related to investments in unconsolidated companies | 1,721,000 | ||
California, Washington and the Central region | |||
Segment reporting | |||
Number of operating segments | segment | 1 | ||
Career Builder LLC | |||
Investments in unconsolidated companies | |||
Distributions received relates to cost or equity method investees | $ 2,800,000 | ||
Ownership interest (as a percent) | 3.00% | 3.00% | |
Proceeds from sale | $ 5,300,000 | ||
Land | |||
Depreciation | |||
Property, plant and equipment, gross | $ 27,869,000 | $ 32,335,000 | |
Buildings and improvements | |||
Depreciation | |||
Property, plant and equipment, gross | $ 245,748,000 | 268,157,000 | |
Buildings and improvements | Minimum | |||
Depreciation | |||
Estimated Useful Lives | 5 years | ||
Buildings and improvements | Maximum | |||
Depreciation | |||
Estimated Useful Lives | 60 years | ||
Equipment | |||
Depreciation | |||
Property, plant and equipment, gross | $ 462,449,000 | 506,307,000 | |
Equipment | Minimum | |||
Depreciation | |||
Estimated Useful Lives | 2 years | ||
Equipment | Maximum | |||
Depreciation | |||
Estimated Useful Lives | 25 years | ||
Construction in process | |||
Depreciation | |||
Property, plant and equipment, gross | $ 324,000 | $ 1,890,000 | |
Presses | Minimum | |||
Depreciation | |||
Estimated Useful Lives | 9 years | ||
Presses | Maximum | |||
Depreciation | |||
Estimated Useful Lives | 25 years | ||
Other equipment | Minimum | |||
Depreciation | |||
Estimated Useful Lives | 2 years | ||
Other equipment | Maximum | |||
Depreciation | |||
Estimated Useful Lives | 15 years |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Number of years of pre-tax losses | 3 years | 3 years |
Retained earnings | $ (2,365,216) | $ (1,954,132) |
Amount Reclassified from AOCL | ||
Retained earnings | $ 98,390 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Adopted Pronouncements (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease liabilities | $ 54,838 | |
ROU assets | $ 45,128 | |
ASU 2016-02 | Restatement Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease liabilities | $ 61,200 | |
ROU assets | $ 51,600 |
REVENUES (Details)
REVENUES (Details) | 12 Months Ended |
Dec. 29, 2019 | |
Maximum | |
Revenues | |
Contract duration | 1 year |
REVENUES - Unearned Revenues (D
REVENUES - Unearned Revenues (Details) | 12 Months Ended |
Dec. 29, 2019 | |
REVENUES | |
Subscribers advance payment term (in years) | 1 year |
Advertiser maximum payment (in days) | 30 days |
LEASES (Details)
LEASES (Details) $ in Millions | 12 Months Ended | |
Dec. 29, 2019USD ($)item | Dec. 30, 2018USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Number of asset classes | 3 | |
Number of leases with contingent provisions, concessions, or restrictive covenants | 0 | |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | |
Lessee, Operating Lease, Existence of Option to Terminate [true false] | true | |
Lease, Practical Expedient, Lessor Single Lease Component [true false] | true | |
Number of parking lot leases | 1 | |
Tenure for certain lease contracts | 8 years | |
Number of financing leases | 1 | |
Financing lease payments | $ | $ 1 | $ 1.1 |
Remaining finance lease term | 5 years 10 months 24 days | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining operating lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining operating lease term | 9 years | |
Parking Lot | ||
Lessee, Lease, Description [Line Items] | ||
Remaining operating lease term | 43 years |
LEASES - Components of lease co
LEASES - Components of lease cost (Details) $ in Thousands | 12 Months Ended |
Dec. 29, 2019USD ($)item | |
LEASES | |
Amortization of ROU asset | $ 96 |
Interest on lease liabilities | 78 |
Operating lease costs | 13,624 |
Short-term lease cost | 2,119 |
Variable lease cost | 2,444 |
Sublease income | (5,931) |
Total lease costs | $ 12,430 |
Restrictions, covenants or guarantees on sublease arrangements. | item | 0 |
LEASES - Aggregate future lease
LEASES - Aggregate future lease payments (Details) $ in Thousands | Dec. 29, 2019USD ($) |
Operating leases | |
2020 | $ 12,879 |
2021 | 10,776 |
2022 | 10,947 |
2023 | 10,350 |
2024 | 9,004 |
Thereafter | 21,858 |
Total undiscounted cash flows | 75,814 |
Less: imputed interest | (20,976) |
Total lease liability | $ 54,838 |
LEASES - Obligations under ASC
LEASES - Obligations under ASC 840 (Details) $ in Thousands | Dec. 30, 2018USD ($) |
Lease Obligation | |
2019 | $ 16,408 |
2020 | 11,921 |
2021 | 9,797 |
2022 | 10,178 |
2023 | 10,160 |
Thereafter | 31,139 |
Total | 89,603 |
Sublease Income | |
2019 | (4,044) |
2020 | (1,306) |
2021 | (379) |
2022 | (334) |
2023 | (232) |
Total | (6,295) |
Net lease obligation | |
2019 | 12,364 |
2020 | 10,615 |
2021 | 9,418 |
2022 | 9,844 |
2023 | 9,928 |
Thereafter | 31,139 |
Total | $ 83,308 |
LEASES - Remaining lease terms
LEASES - Remaining lease terms and discount rates (Details) | Dec. 29, 2019 |
LEASES | |
Weighted average remaining lease term (years), operating leases | 6 years 10 months 24 days |
Weighted average remaining lease term (years), financing leases | 5 years 10 months 2 days |
Weighted average discount rate, operating leases | 9.19% |
Weighted average discount rate, financing leases | 10.50% |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information (Details) $ in Thousands | 12 Months Ended |
Dec. 29, 2019USD ($) | |
LEASES | |
Operating cash outflow from operating leases | $ 14,198 |
Operating cash outflow from financing leases | 78 |
Financing cash outflow from financing leases | 71 |
ROU assets obtained in exchange for new operating lease liabilities | $ 3,154 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 29, 2019 | Sep. 30, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | |
Intangible assets subject to amortization, gross | ||||
Balance at the beginning of the period | $ 838,336 | $ 839,284 | ||
Disposition Adjustment | (948) | |||
Balance at the end of the period | 838,336 | 838,336 | ||
Accumulated amortization | ||||
Balance at the beginning of the period | (807,725) | (761,013) | ||
Disposition Adjustment | 948 | |||
Amortization Expense | (24,153) | (47,660) | ||
Balance at the end of the period | (831,878) | (807,725) | ||
Intangible assets subject to amortization, net | ||||
Balance at the beginning of the period | 30,611 | 78,271 | ||
Amortization Expense | (24,153) | (47,660) | ||
Balance at the end of the period | 6,458 | 30,611 | ||
Mastheads | ||||
Balance at the beginning of the period | 112,736 | 149,951 | ||
Impairment Charges | $ 37,200 | $ 14,100 | (49,941) | (37,215) |
Balance at the end of the period | 62,795 | 112,736 | ||
Goodwill [Roll Forward] | ||||
Balance at the beginning of the period | 705,174 | 705,174 | ||
Impairment charges | $ (258,100) | (284,996) | ||
Balance at the end of the period | 420,178 | 705,174 | ||
Total | ||||
Balance at the beginning of the period | 848,521 | 933,396 | ||
Impairment Charges | (334,937) | (37,215) | ||
Amortization Expense | (24,153) | (47,660) | ||
Balance at the end of the period | $ 489,431 | $ 848,521 |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Indefinite-lived (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 |
Indefinite lived intangible assets and goodwill | |||
Goodwill, Gross | $ 3,571,111 | $ 3,571,111 | |
Original Gross Amount | 4,255,611 | 4,255,611 | |
Accumulated Impairment, Goodwill | (3,150,933) | (2,865,937) | |
Accumulated Impairment, Amount | (3,772,638) | (3,437,701) | |
Carrying Amount, Mastheads | 62,795 | 112,736 | $ 149,951 |
Goodwill | 420,178 | 705,174 | $ 705,174 |
Carrying Amount, Total | 482,973 | 817,910 | |
Newspaper mastheads | |||
Indefinite lived intangible assets and goodwill | |||
Original Gross Amount, Mastheads | 684,500 | 684,500 | |
Accumulated Impairment, Mastheads | (621,705) | (571,764) | |
Carrying Amount, Mastheads | $ 62,795 | $ 112,736 |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL - Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Estimated amortization expense | ||
Amortization expense | $ 24,153 | $ 47,660 |
2020 | 803 | |
2021 | 680 | |
2022 | 655 | |
2023 | 667 | |
2024 | $ 640 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 | Jul. 16, 2018 |
Long-term debt disclosures | |||
Face Value | $ 703,269 | ||
Total long-term debt, net of current | 703,269 | ||
Carrying value | 607,672 | $ 637,695 | |
Less current portion | 4,312 | ||
Total long-term debt, net of current | 607,672 | 633,383 | |
ABL Credit Agreement | |||
Long-term debt disclosures | |||
Unamortized debt issuance costs and discounts | 1,400 | 1,800 | |
Outstanding notes | |||
Long-term debt disclosures | |||
Unamortized debt issuance costs and discounts | $ 95,600 | $ 107,400 | |
9.000% senior secured notes due in 2026 | |||
Long-term debt disclosures | |||
Interest rate (as a percent) | 9.00% | 9.00% | |
Face Value | $ 262,851 | ||
Carrying value | $ 249,793 | $ 287,249 | |
7.795% junior term loan due in 2030 | |||
Long-term debt disclosures | |||
Interest rate (as a percent) | 7.795% | 7.795% | 7.795% |
Face Value | $ 157,083 | ||
Carrying value | $ 126,148 | $ 123,213 | |
6.875% senior secured junior lien notes due in 2031 | |||
Long-term debt disclosures | |||
Interest rate (as a percent) | 6.875% | 6.875% | 6.875% |
Face Value | $ 268,423 | ||
Carrying value | $ 217,392 | $ 141,447 | |
7.150% debentures due in 2027 | |||
Long-term debt disclosures | |||
Interest rate (as a percent) | 7.15% | 7.15% | |
Face Value | $ 7,105 | ||
Carrying value | $ 6,855 | $ 6,824 | |
6.875% debentures due in 2029 | |||
Long-term debt disclosures | |||
Interest rate (as a percent) | 6.875% | 6.875% | |
Face Value | $ 7,807 | ||
Carrying value | $ 7,484 | $ 78,962 |
LONG-TERM DEBT - Debt Redemptio
LONG-TERM DEBT - Debt Redemptions, Repurchases and Extinguishment of Debt (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Sep. 30, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | Jul. 16, 2018 | |
LONG-TERM DEBT | |||||
Gain (loss) on extinguishment of debt, net | $ (2,272) | $ 30,577 | |||
Gross gain on extinguishment of debt | $ 68,700 | ||||
6.875% senior secured junior lien notes due in 2031 | |||||
LONG-TERM DEBT | |||||
Aggregate principal amount of notes issued | $ 75,000 | ||||
Interest rate (as a percent) | 6.875% | 6.875% | 6.875% | ||
Gain (loss) from debt exchange | $ 0 | ||||
9.000% senior secured notes due in 2022 | |||||
LONG-TERM DEBT | |||||
Debt redeemed through tender offer | $ 344,100 | $ 500 | |||
Amount of debt redeemed | 75,000 | ||||
Debt repurchased | 20,000 | ||||
9.000% senior secured notes due in 2026 | |||||
LONG-TERM DEBT | |||||
Amount of debt redeemed | $ 41,800 | 5,300 | |||
Debentures | |||||
LONG-TERM DEBT | |||||
Gross gain on extinguishment of debt | 68,700 | ||||
Write off of unamortized discounts | $ 32,300 |
LONG-TERM DEBT - Credit Agreeme
LONG-TERM DEBT - Credit Agreement (Details) - ABL Credit Agreement $ in Millions | Jul. 16, 2018USD ($) | Dec. 29, 2019USD ($) |
LONG-TERM DEBT | ||
Maximum borrowing capacity | $ 36.6 | |
LIBOR | ||
LONG-TERM DEBT | ||
Basis spread on variable rate (as a percent) | 1.00% | |
Federal funds rate | ||
LONG-TERM DEBT | ||
Basis spread on variable rate (as a percent) | 0.50% | |
Minimum | LIBOR | ||
LONG-TERM DEBT | ||
Basis spread on variable rate (as a percent) | 1.75% | |
Minimum | Base rate | ||
LONG-TERM DEBT | ||
Basis spread on variable rate (as a percent) | 0.75% | |
Maximum | ||
LONG-TERM DEBT | ||
Interest payable period | 3 months | |
Maximum | LIBOR | ||
LONG-TERM DEBT | ||
Basis spread on variable rate (as a percent) | 2.25% | |
Maximum | Base rate | ||
LONG-TERM DEBT | ||
Basis spread on variable rate (as a percent) | 1.25% | |
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 | |
Letter of credit | ||
LONG-TERM DEBT | ||
Outstanding letters of credit | $ 26.7 | |
Percentage of aggregate undrawn amount of letter of credit required to provide cash collateral | 100.00% | |
Wells Fargo | Revolving credit facility | ||
LONG-TERM DEBT | ||
Maximum borrowing capacity | $ 65 | |
Wells Fargo | Letter of credit | ||
LONG-TERM DEBT | ||
Maximum borrowing capacity | $ 35 |
LONG-TERM DEBT - Senior Secured
LONG-TERM DEBT - Senior Secured Notes (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Dec. 29, 2019 | Dec. 30, 2018 |
Debt Instrument [Line Items] | |||
Current portion of long-term debt | $ 4,312 | ||
Excess cash flow due | $ 4,600 | ||
9.000% senior secured notes due in 2026 | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount of notes issued | $ 310,000 | ||
Interest rate (as a percent) | 9.00% | 9.00% | |
Repurchase price (as percent) | 101.00% | ||
Minimum percentage of loan amount maintain | 25.00% |
LONG-TERM DEBT - Senior Secur_2
LONG-TERM DEBT - Senior Secured Junior Lien Notes (Details) - 6.875% senior secured junior lien notes due in 2031 - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Jul. 16, 2018 | |
Debt Instrument [Line Items] | |||
Interest rate (as a percent) | 6.875% | 6.875% | 6.875% |
Percentage of premium and accrued and unpaid interest | 100.00% | ||
Tranche B | |||
Debt Instrument [Line Items] | |||
Debt conversion amount | $ 75 |
LONG-TERM DEBT - Junior Lien Te
LONG-TERM DEBT - Junior Lien Term Loan Agreement (Details) - USD ($) $ in Thousands | Jul. 16, 2018 | Dec. 30, 2018 | Dec. 29, 2019 |
LONG-TERM DEBT | |||
Proceeds from Issuance of Long-term debt | $ 361,449 | ||
Long-term debt | $ 703,269 | ||
Junior Lien Term Loan Credit Agreement | |||
LONG-TERM DEBT | |||
Principal amount of debt (as a percent) | 100.00% | ||
7.795% junior term loan due in 2030 | |||
LONG-TERM DEBT | |||
Interest rate (as a percent) | 7.795% | 7.795% | 7.795% |
Long-term debt | $ 157,083 | ||
7.150% debentures due in 2027 | |||
LONG-TERM DEBT | |||
Interest rate (as a percent) | 7.15% | 7.15% | |
Long-term debt | $ 7,105 | ||
6.875% debentures due in 2029 | |||
LONG-TERM DEBT | |||
Interest rate (as a percent) | 6.875% | 6.875% | |
Long-term debt | $ 7,807 |
LONG-TERM DEBT - Maturities (De
LONG-TERM DEBT - Maturities (Details) $ in Thousands | Dec. 29, 2019USD ($) |
Annual maturities of debt for the next five years and thereafter | |
Thereafter | $ 703,269 |
Face Value | $ 703,269 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Current: | ||
Federal | $ (24) | $ 5,546 |
State | (507) | (429) |
Deferred: | ||
Federal | (4,729) | (961) |
State | (1,019) | (6,326) |
Income tax provision (benefit) | $ (6,279) | $ (2,170) |
Reconciliation of effective tax rate expense (benefit) and the statutory federal income tax rate | ||
Statutory rate (as a percent) | (21.00%) | (21.00%) |
State taxes, net of federal benefit (as a percent) | 0.10% | (4.30%) |
Changes in estimates (as a percent) | 0.80% | |
Changes in unrecognized tax benefits (as a percent) | (0.30%) | (4.30%) |
Other (as a percent) | 0.50% | 2.80% |
Impact of valuation allowance | 6.50% | 23.00% |
Goodwill impairment (as a percent) | 12.60% | |
Stock compensation (as a percent) | 0.10% | 0.30% |
Effective tax rate (as a percent) | (1.50%) | (2.70%) |
Deferred tax assets: | ||
Compensation benefits | $ 150,893 | $ 157,715 |
State taxes | 1,533 | 1,909 |
State loss carryovers | 9,398 | 4,006 |
Federal loss carryovers | 4,899 | |
Investments in unconsolidated subsidiaries | 4,478 | 4,242 |
Deferred interest expense | 33,069 | 15,342 |
Leases | 15,564 | |
Other | 3,353 | 3,407 |
Total deferred tax assets | 223,187 | 186,621 |
Valuation allowance | (176,069) | (143,764) |
Net deferred tax assets | 47,118 | 42,857 |
Deferred tax liabilities: | ||
Depreciation and amortization | 28,386 | 45,239 |
Debt discount | 17,874 | 17,876 |
Leases ROU Asset | 15,419 | |
Other | 466 | 517 |
Total deferred tax liabilities | 62,145 | 63,632 |
Net deferred tax liabilities | (15,027) | (20,775) |
Valuation allowance | ||
Increase in valuation allowance | $ 32,300 | $ 34,000 |
Number of years of pre-tax losses | 3 years | 3 years |
Valuation allowance against majority of deferred tax assets | $ 143,800 | |
Valuation allowance charge | $ 32,300 | |
Other Comprehensive Income (Loss) | ||
Valuation allowance | ||
Increase in valuation allowance | 3,800 | |
Income Tax Expense | ||
Valuation allowance | ||
Increase in valuation allowance | $ 28,500 |
INCOME TAXES - Credits (Details
INCOME TAXES - Credits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
Tax credit carryovers | |||
Operating Loss Carryforwards | $ 23,300 | ||
Long-term liabilities relating to uncertain tax positions | 13,900 | ||
Unrecognized tax benefits | 11,281 | $ 13,822 | $ 20,764 |
Gross accrued interest and penalties | 2,600 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 5,400 | ||
Decreases in unrecognized tax benefits | 2,200 | ||
Unrecognized Tax Benefits, Interest on Income Taxes Expense | (500) | (600) | |
Unrecognized Tax Benefits, Income Tax Penalties Expense | (200) | (300) | |
Net accrued interest and penalties | 2,600 | $ 3,300 | |
State | |||
Tax credit carryovers | |||
Operating Loss Carryforwards | 395,200 | ||
Amount of tax credit carryovers | $ 400 |
INCOME TAXES - Unrecognized (De
INCOME TAXES - Unrecognized (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ||
Balance at beginning of fiscal year | $ 13,822 | $ 20,764 |
Increases based on tax positions in prior year | 231 | 84 |
Decreases based on tax positions in prior year | (2,296) | (4,261) |
Increases based on tax positions in current year | 801 | 1,124 |
Settlements | (511) | |
Lapse of statute of limitations | (1,277) | (3,378) |
Balance at end of fiscal year | $ 11,281 | $ 13,822 |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) $ in Thousands | Mar. 22, 2019 | Feb. 28, 2019USD ($)employee | Dec. 29, 2019USD ($)person | Dec. 30, 2018USD ($) |
EMPLOYEE BENEFITS | ||||
Matching contributions | $ 2,100 | $ 2,500 | ||
Pension plan | ||||
EMPLOYEE BENEFITS | ||||
Number of new participants | person | 0 | |||
Further benefits | $ 0 | |||
Discount rate (as a percent) | 3.48% | 4.42% | ||
Expected long-term return on plan assets (as a percent) | 7.75% | 7.75% | ||
Special termination benefits | $ 6,835 | |||
ERIP | ||||
EMPLOYEE BENEFITS | ||||
Number of employee offered with voluntary early retirement incentive Program | employee | 450 | |||
Percentage of employees opted for voluntary early retirement incentive Program | 50.00% | |||
Lump sum pension and termination payments | $ 35,100 | |||
Discount rate (as a percent) | 4.10% | |||
Expected long-term return on plan assets (as a percent) | 7.75% |
EMPLOYEE BENEFITS - Reconciliat
EMPLOYEE BENEFITS - Reconciliations (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 29, 2019 | Dec. 30, 2018 | |
Amounts recognized in the statement of financial position consist of: | ||||
Noncurrent liability | $ (526,010) | $ (655,310) | ||
Pension plan | ||||
Change in Benefit Obligation | ||||
Benefit obligation, beginning of year | $ 1,920,987 | $ 2,080,013 | ||
Interest cost | 79,309 | 79,154 | ||
Actuarial (gain)/loss | 181,506 | (126,540) | ||
Gross benefits paid | (149,859) | (111,640) | ||
Special termination benefits | 6,835 | |||
Benefit obligation, end of year | 2,038,778 | 1,920,987 | ||
Changes in the fair value of the plan's Level 3 investment assets | ||||
Fair value of plan assets, beginning of year | 1,259,979 | 1,477,926 | ||
Actual return on plan assets | 271,332 | (115,192) | ||
Employer contribution | 11,815 | 8,885 | ||
Gross benefits paid | (149,859) | (111,640) | ||
Fair value of plan assets, end of year | 1,393,267 | 1,259,979 | ||
Funded Status | ||||
Fair value of plan assets | 1,393,267 | 1,259,979 | 1,393,267 | 1,259,979 |
Benefit obligations | (2,038,778) | (1,920,987) | (2,038,778) | (1,920,987) |
Funded status and amount recognized, end of year | (645,511) | (661,008) | ||
Amounts recognized in the statement of financial position consist of: | ||||
Current liability | (124,200) | (11,510) | ||
Noncurrent liability | (521,311) | (649,498) | ||
Amounts recognized in the statement of financial position | (645,511) | (661,008) | ||
Amounts recognized in accumulated other comprehensive income consist of: | ||||
Net actuarial loss/(gain) | 781,063 | 811,063 | ||
Amounts recognized in accumulated other comprehensive income | 781,063 | 811,063 | ||
Supplemental retirement plans | ||||
Changes in the fair value of the plan's Level 3 investment assets | ||||
Employer contribution | 8,800 | 8,900 | ||
Post-retirement plans | ||||
Change in Benefit Obligation | ||||
Benefit obligation, beginning of year | 6,827 | 7,625 | ||
Interest cost | 262 | 256 | ||
Plan participants' contributions | 7 | 10 | ||
Actuarial (gain)/loss | (1,020) | (417) | ||
Gross benefits paid | (584) | (647) | ||
Benefit obligation, end of year | 5,492 | 6,827 | ||
Changes in the fair value of the plan's Level 3 investment assets | ||||
Employer contribution | 577 | 637 | ||
Plan participants' contributions | 7 | 10 | ||
Gross benefits paid | (584) | (647) | ||
Funded Status | ||||
Benefit obligations | $ (5,492) | $ (6,827) | (5,492) | (6,827) |
Funded status and amount recognized, end of year | (5,492) | (6,827) | ||
Amounts recognized in the statement of financial position consist of: | ||||
Current liability | (793) | (1,015) | ||
Noncurrent liability | (4,699) | (5,812) | ||
Amounts recognized in the statement of financial position | (5,492) | (6,827) | ||
Amounts recognized in accumulated other comprehensive income consist of: | ||||
Net actuarial loss/(gain) | (7,464) | (7,334) | ||
Prior service cost/(credit) | (2,482) | (4,456) | ||
Amounts recognized in accumulated other comprehensive income | $ (9,946) | $ (11,790) |
EMPLOYEE BENEFITS - Retirement
EMPLOYEE BENEFITS - Retirement and Post retirement costs - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Retirement expense for continuing operations | ||
Net pension expense | $ 23,715 | $ 11,114 |
Pension plan | ||
Retirement expense for continuing operations | ||
Interest cost | 79,309 | 79,154 |
Expected return on plan assets | (83,820) | (90,495) |
Prior service cost amortization | 6,834 | |
Actuarial loss | 23,995 | 25,181 |
Net pension expense | 26,318 | 13,840 |
Post-retirement plans | ||
Retirement expense for continuing operations | ||
Interest cost | 262 | 256 |
Net pension expense | $ (2,603) | $ (2,726) |
EMPLOYEE BENEFITS - Contributio
EMPLOYEE BENEFITS - Contributions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Aug. 31, 2019 | May 31, 2018 | Dec. 29, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 27, 2020 | Jan. 14, 2020 | |
Subsequent event | |||||||
Medical cost trend rates | |||||||
Installment of contribution plan payable | $ 4,000,000 | ||||||
Pension plan | |||||||
Weighted average assumptions used for valuing benefit obligations | |||||||
Discount rate (as a percent) | 3.48% | 3.48% | 4.42% | ||||
Weighted average assumptions used in calculating expense | |||||||
Expected long-term return on plan assets (as a percent) | 7.75% | 7.75% | |||||
Discount rate (as a percent) | 4.42% | 3.91% | |||||
Medical cost trend rates | |||||||
Voluntary cash contribution | $ 0 | $ 0 | |||||
Gain or loss recognized on the contribution of property | 0 | ||||||
Proceeds from sale of real property location | $ 800,000 | $ 4,100,000 | |||||
Loss on sale of real property location | 600,000 | $ 200,000 | |||||
Minimum cash contribution | $ 3,100,000 | ||||||
Expected benefit payments | |||||||
2020 | 105,047,000 | 105,047,000 | |||||
2021 | 126,706,000 | 126,706,000 | |||||
2022 | 118,914,000 | 118,914,000 | |||||
2023 | 119,193,000 | 119,193,000 | |||||
2024 | 120,023,000 | 120,023,000 | |||||
2025-2029 | 612,922,000 | 612,922,000 | |||||
Total | $ 1,202,805,000 | $ 1,202,805,000 | |||||
Post-retirement plans | |||||||
Weighted average assumptions used for valuing benefit obligations | |||||||
Discount rate (as a percent) | 3.15% | 3.15% | 4.15% | ||||
Weighted average assumptions used in calculating expense | |||||||
Discount rate (as a percent) | 4.15% | 3.60% | |||||
Expected benefit payments | |||||||
2020 | $ 806,000 | $ 806,000 | |||||
2021 | 712,000 | 712,000 | |||||
2022 | 629,000 | 629,000 | |||||
2023 | 556,000 | 556,000 | |||||
2024 | 488,000 | 488,000 | |||||
2025-2029 | 1,663,000 | 1,663,000 | |||||
Total | $ 4,854,000 | $ 4,854,000 | |||||
Forecast | |||||||
Medical cost trend rates | |||||||
Estimated minimum required contributions | $ 124,200,000 |
EMPLOYEE BENEFITS - Pension Pla
EMPLOYEE BENEFITS - Pension Plan Assets (Details) - Pension plan | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Equity securities | ||
Contributions and Cash Flows [Line Items] | ||
Target Allocation (as a percent) | 61.00% | 61.00% |
Debt securities | ||
Contributions and Cash Flows [Line Items] | ||
Target Allocation (as a percent) | 33.00% | 33.00% |
Real Estate | ||
Contributions and Cash Flows [Line Items] | ||
Target Allocation (as a percent) | 6.00% | 6.00% |
Minimum | ||
Contributions and Cash Flows [Line Items] | ||
Investment horizon of plan assets | 10 years |
EMPLOYEE BENEFITS - Fair value
EMPLOYEE BENEFITS - Fair value (Details) - Pension plan - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 | |
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 1,393,267 | $ 1,259,979 | $ 1,477,926 |
Cash and cash equivalents | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 9,355 | 9,366 | |
Mutual funds | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 139,021 | 139,978 | |
Common collective trust | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 1,178,230 | 1,045,628 | |
U.S. equity funds | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 358,088 | $ 296,135 | |
Redemption notice period | 0 days | 0 days | |
International equity funds | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 373,764 | $ 311,119 | |
Redemption notice period | 0 days | 0 days | |
Emerging markets equity funds | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 179,707 | $ 153,927 | |
Fixed income funds | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 126,900 | $ 146,197 | |
Redemption notice period | 2 days | 2 days | |
Fixed income credit fund | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 139,771 | $ 138,250 | |
Redemption notice period | 2 days | 2 days | |
Total Common collective trust | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 1,038,459 | $ 907,378 | |
Real Estate | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 55,874 | 55,398 | |
Private Equity | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 10,787 | $ 9,609 | |
Minimum | Emerging markets equity funds | |||
EMPLOYEE BENEFITS | |||
Redemption notice period | 0 days | 0 days | |
Maximum | Emerging markets equity funds | |||
EMPLOYEE BENEFITS | |||
Redemption notice period | 5 days | 5 days | |
Level 1 | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 148,376 | $ 149,344 | |
Level 1 | Cash and cash equivalents | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 9,355 | 9,366 | |
Level 1 | Mutual funds | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 139,021 | 139,978 | |
Level 3 | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 66,661 | 65,007 | 67,559 |
Level 3 | Real Estate | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 55,874 | 55,398 | 58,050 |
Level 3 | Private Equity | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 10,787 | 9,609 | $ 9,509 |
NAV | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | 1,178,230 | 1,045,628 | |
NAV | Common collective trust | |||
EMPLOYEE BENEFITS | |||
Fair value of plan assets | $ 1,178,230 | $ 1,045,628 |
EMPLOYEE BENEFITS - Investment
EMPLOYEE BENEFITS - Investment assets (Details) - Pension plan - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Changes in the fair value of the plan's Level 3 investment assets | ||
Fair value of plan assets, beginning of year | $ 1,259,979 | $ 1,477,926 |
Fair value of plan assets, end of year | 1,393,267 | 1,259,979 |
Level 3 | ||
Changes in the fair value of the plan's Level 3 investment assets | ||
Fair value of plan assets, beginning of year | 65,007 | 67,559 |
Realized gains (losses), net | 2,741 | 4,531 |
Transfer in or out of level 3 | (4,953) | (8,601) |
Unrealized gains (losses), net | 3,866 | 1,518 |
Fair value of plan assets, end of year | 66,661 | 65,007 |
Real Estate | ||
Changes in the fair value of the plan's Level 3 investment assets | ||
Fair value of plan assets, beginning of year | 55,398 | |
Fair value of plan assets, end of year | 55,874 | 55,398 |
Real Estate | Level 3 | ||
Changes in the fair value of the plan's Level 3 investment assets | ||
Fair value of plan assets, beginning of year | 55,398 | 58,050 |
Realized gains (losses), net | 2,738 | 4,528 |
Transfer in or out of level 3 | (4,953) | (8,601) |
Unrealized gains (losses), net | 2,691 | 1,421 |
Fair value of plan assets, end of year | 55,874 | 55,398 |
Private Equity | ||
Changes in the fair value of the plan's Level 3 investment assets | ||
Fair value of plan assets, beginning of year | 9,609 | |
Fair value of plan assets, end of year | 10,787 | 9,609 |
Private Equity | Level 3 | ||
Changes in the fair value of the plan's Level 3 investment assets | ||
Fair value of plan assets, beginning of year | 9,609 | 9,509 |
Realized gains (losses), net | 3 | 3 |
Unrealized gains (losses), net | 1,175 | 97 |
Fair value of plan assets, end of year | $ 10,787 | $ 9,609 |
CASH FLOW INFORMATION - Cash, C
CASH FLOW INFORMATION - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 | Dec. 31, 2017 |
Reconciliation of cash, cash equivalents and restricted cash as reported in the consolidated balance sheets to the total of the same such amounts shown above: | |||
Cash and equivalents | $ 10,514 | $ 21,906 | |
Restricted cash included in other assets | 26,649 | 28,649 | |
Total cash, cash equivalents and restricted cash | $ 37,163 | $ 50,555 | $ 131,354 |
CASH FLOW INFORMATION - Non-cas
CASH FLOW INFORMATION - Non-cash activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | |
Cash paid for interest and income taxes | |||
Interest paid (net of amount capitalized) | $ 57,909 | $ 43,313 | |
Income taxes paid (net of refunds) | 7,476 | 13,935 | |
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 | (1,037) | (2,667) | |
Reduction of PP&E due to sale of real properties by pension plan | $ (1,593) | (2,854) | |
Gross gain on extinguishment of debt | $ 68,700 | ||
6.875% senior secured junior lien notes due in 2031 | |||
Other non-cash investing and financing activities related to pension plan transactions: | |||
Aggregate principal amount of notes issued | $ 75,000 | ||
6.875% debentures due in 2029 | |||
Other non-cash investing and financing activities related to pension plan transactions: | |||
Debt exchanged | $ 75,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Obligations by year (Details) - USD ($) $ in Thousands | Dec. 29, 2019 | Dec. 30, 2018 |
Purchase obligations | ||
2020 | $ 33,237 | |
2021 | 9,482 | |
2022 | 3,751 | |
2023 | 2,565 | |
2024 | 3 | |
Thereafter | 4 | |
Total | 49,042 | |
Lease obligations | ||
2020 | 12,879 | |
2021 | 10,776 | |
2022 | 10,947 | |
2023 | 10,350 | |
2024 | 9,004 | |
Thereafter | 21,858 | |
Total undiscounted cash flows | 75,814 | |
Sublease income | ||
2020 | (3,493) | |
2021 | (1,498) | |
2022 | (389) | |
2023 | (211) | |
2024 | (59) | |
Thereafter | (10) | |
Total | (5,660) | |
Net lease obligation | ||
2020 | 9,386 | |
2021 | 9,278 | |
2022 | 10,558 | |
2023 | 10,139 | |
2024 | 8,945 | |
Thereafter | 21,848 | |
Total | 70,154 | |
Total | ||
2020 | 44,617 | |
2021 | 20,131 | |
2022 | 15,348 | |
2023 | 13,530 | |
2024 | 9,613 | |
Thereafter | 27,637 | |
Total | 130,876 | |
Self-Insurance | ||
Workers' compensation obligations | ||
2020 | 1,994 | |
2021 | 1,371 | |
2022 | 1,039 | |
2023 | 826 | |
2024 | 665 | |
Thereafter | 5,785 | |
Total | $ 11,680 | $ 12,300 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Purchases and Leases (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Operating leases | ||
Total rental expense, included in other operating expenses | $ 17.6 | |
Total rental expense, included in other operating expenses | $ 14.3 | |
Sublease income from operating leases | $ 4.4 | |
Sublease income from operating leases | $ 5 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Obligations disclosures (Details) - Self-Insurance - USD ($) $ in Millions | Dec. 29, 2019 | Dec. 30, 2018 |
Loss Contingencies [Line Items] | ||
Estimated Insurance Recoveries | $ 1.6 | $ 1.9 |
Additional disclosures | ||
Undiscounted ultimate losses of all self-insurance reserves related to our workers' compensation liabilities, net of insurance recoveries | $ 11.7 | $ 12.3 |
Discount rate of ultimate losses (as a percent) | 1.60% | 3.10% |
Present value of self-insurance reserves | $ 10.6 | $ 10.7 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Legal Proceedings (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2009item | Dec. 31, 2008item | Dec. 29, 2019USD ($)companyitem | Feb. 13, 2020subsidiary | |
Contingencies | ||||
Number of media companies | company | 30 | |||
Subsequent event | ||||
Contingencies | ||||
Number of wholly owned subsidiaries | subsidiary | 53 | |||
"Sacramento Case" | ||||
Contingencies | ||||
Number of carriers | item | 5,000 | |||
Number of phases | item | 3 | |||
"Fresno Case" | ||||
Contingencies | ||||
Number of carriers | item | 3,500 | |||
Number of phases | item | 2 | |||
ABL Credit Agreement | ||||
Contingencies | ||||
Aggregate principal amount | $ | $ 36.6 | |||
ABL Credit Agreement | Letter of credit | ||||
Contingencies | ||||
Outstanding letters of credit | $ | 26.7 | |||
DIP Credit Agreement | Letter of credit | Encina Business Credit, LLC | ||||
Contingencies | ||||
Aggregate principal amount | $ | 3.5 | |||
DIP Credit Agreement | Revolving loan facility | Encina Business Credit, LLC | ||||
Contingencies | ||||
Aggregate principal amount | $ | $ 50 |
SUPPLEMENTAL EQUITY INFORMATI_3
SUPPLEMENTAL EQUITY INFORMATION - AOCL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Changes in stockholders' equity | ||
Balance at the beginning of the period | $ (604,289) | $ (449,369) |
Other comprehensive income (loss) before reclassifications | 7,021 | |
Amounts reclassified from AOCL | 21,129 | (154,920) |
Other comprehensive income | (154,920) | |
Other comprehensive income | 28,150 | (56,530) |
Balance at the end of the period | (576,139) | (604,289) |
Amount Reclassified from AOCL | ||
Retirement benefit expense | 23,715 | 11,114 |
Retained earnings | (2,365,216) | (1,954,132) |
Net income loss | (411,107) | (79,757) |
Amount Reclassified from AOCL | ||
Amount Reclassified from AOCL | ||
Retained earnings | 98,390 | |
Net income loss | (21,129) | 154,920 |
Minimum Pension and Post-Retirement Liability | ||
Changes in stockholders' equity | ||
Balance at the beginning of the period | (595,820) | (442,406) |
Other comprehensive income (loss) before reclassifications | 7,021 | |
Amounts reclassified from AOCL | 21,129 | (153,414) |
Other comprehensive income | (153,414) | |
Other comprehensive income | 28,150 | |
Balance at the end of the period | (567,670) | (595,820) |
Minimum Pension and Post-Retirement Liability | Amount Reclassified from AOCL | ||
Amount Reclassified from AOCL | ||
Retirement benefit expense | 21,129 | (56,530) |
Other Comprehensive Loss Related to Equity Investments | ||
Changes in stockholders' equity | ||
Balance at the beginning of the period | (8,469) | (6,963) |
Amounts reclassified from AOCL | (1,506) | |
Other comprehensive income | (1,506) | |
Balance at the end of the period | $ (8,469) | $ (8,469) |
SUPPLEMENTAL EQUITY INFORMATI_4
SUPPLEMENTAL EQUITY INFORMATION - EPS (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Anti-dilutive stock options | ||
Weighted average anti-dilutive stock options | ||
Anti-dilutive common stock equivalents (in shares) | 471 | 199 |
SUPPLEMENTAL EQUITY INFORMATI_5
SUPPLEMENTAL EQUITY INFORMATION - Common stock and Stock Plans (Details) | 12 Months Ended |
Dec. 29, 2019item | |
Class of Stock [Line Items] | |
Number of classes of common stock | 2 |
Minimum number of "Permitted Transferees" | 1 |
Minimum number of lineal descendants of Charles K. McClatchy who owns the beneficial interests of "Permitted Transferees" | 1 |
Common Class A | |
Class of Stock [Line Items] | |
Number of votes per share | 0.1 |
Percentage of Board of Directors selected from voting | 25.00% |
Common Class B | |
Class of Stock [Line Items] | |
Number of votes per share | 1 |
Percentage of Board of Directors selected from voting | 75.00% |
Minimum percentage of common stock outstanding before conversion | 25.00% |
Vote of the holders as a percentage of outstanding shares required for termination of the agreement | 80.00% |
SUPPLEMENTAL EQUITY INFORMATI_6
SUPPLEMENTAL EQUITY INFORMATION - Plans and RSUs and SARs activity (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
May 31, 2019shares | May 31, 2017shares | May 31, 2012shares | Dec. 29, 2019USD ($)item$ / sharesshares | Dec. 30, 2018director$ / sharesshares | |
Stock Plans Activity | |||||
Number of stock-based compensation plans | item | 2 | ||||
Options/SARs | |||||
Outstanding at the beginning of the period (in shares) | 113,300 | 156,175 | |||
Expired (in shares) | (24,425) | (42,875) | |||
Outstanding at the end of the period (in shares) | 88,875 | 113,300 | |||
Options exercisable (in shares) | 88,875 | 113,300 | |||
Weighted Average Exercise Price | |||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 32.13 | $ 32.12 | |||
Expired (in dollars per share) | $ / shares | 34.02 | 32.09 | |||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 31.61 | $ 32.13 | |||
2004 Plan | |||||
Stock Plans Activity | |||||
Vesting period | 4 years | ||||
Terms of award | 10 years | ||||
RSU's | |||||
Granted (in shares) | 0 | ||||
2012 Plan | Maximum | |||||
Stock Plans Activity | |||||
Terms of award | 10 years | ||||
Director Deferral Program | |||||
Stock Plans Activity | |||||
Number of directors | director | 5 | ||||
Deferred (in shares) | 22,500 | ||||
Issued (in shares) | 27,000 | ||||
SARs | |||||
Stock Plans Activity | |||||
Vesting period | 4 years | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | |||||
Unrecognized compensation costs | $ | $ 0 | ||||
RSUs | |||||
RSU's | |||||
Nonvested at the beginning of the period (in shares) | 331,600 | 245,794 | |||
Granted (in shares) | 285,771 | 278,130 | |||
Vested (in shares) | (172,297) | (167,722) | |||
Forfeited (in shares) | (31,608) | (24,602) | |||
Nonvested at the end of the period (in shares) | 413,466 | 331,600 | |||
Weighted Average Grant Date Fair Value | |||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 9.56 | $ 11.55 | |||
Granted (in dollars per share) | $ / shares | 5.58 | 8.90 | |||
Vested (in dollars per share) | $ / shares | 9.59 | 11.38 | |||
Forfeited (in dollars per share) | $ / shares | 6.96 | 9.54 | |||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 7 | $ 9.56 | |||
Additional disclosures | |||||
Total fair value | $ | $ 1,000 | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | |||||
Unrecognized compensation costs | $ | $ 1,800 | ||||
Period in which compensation costs will be recognized | 1 year 8 months 12 days | ||||
RSUs | Maximum | |||||
Stock Plans Activity | |||||
Vesting period | 3 years | ||||
Common Class A | 2004 Plan | |||||
Stock Plans Activity | |||||
Shares reserved for issuance to employees | 900,000 | ||||
Common Class A | 2012 Plan | |||||
Stock Plans Activity | |||||
Shares reserved for issuance to employees | 500,000 | ||||
Additional shares authorized | 750,000 | 500,000 | |||
Common Class A | Non-employee director | 2012 Plan | |||||
Stock Plans Activity | |||||
Outstanding grants (in shares) | 4,500 | ||||
RSU's | |||||
Granted (in shares) | 0 |
SUPPLEMENTAL EQUITY INFORMATI_7
SUPPLEMENTAL EQUITY INFORMATION - Outstanding SARs (Details) - SARs | 12 Months Ended |
Dec. 29, 2019$ / sharesshares | |
Share Based Compensation Shares Authorized under Stock Option and SARs Exercise Price Range Outstanding Options [Abstract] | |
Number of Options/SARs (in shares) | shares | 88,875 |
Average Remaining Contractual Life | 1 year 6 months |
Weighted Average Exercise Price (in dollars per share) | $ 31.61 |
Options/SARs Exercisable | |
Number of Options/SARs (in shares) | shares | 88,875 |
Weighted Average Exercise Price (in dollars per share) | $ 31.61 |
Weighted average remaining contractual life | 1 year 6 months |
$24.60 - $40.80 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, low end of range (in dollars per share) | $ 24.60 |
Exercise price, high end of range (in dollars per share) | $ 40.80 |
Share Based Compensation Shares Authorized under Stock Option and SARs Exercise Price Range Outstanding Options [Abstract] | |
Number of Options/SARs (in shares) | shares | 88,875 |
Average Remaining Contractual Life | 1 year 6 months |
Weighted Average Exercise Price (in dollars per share) | $ 31.61 |
Options/SARs Exercisable | |
Number of Options/SARs (in shares) | shares | 88,875 |
Weighted Average Exercise Price (in dollars per share) | $ 31.61 |
SUPPLEMENTAL EQUITY INFORMATI_8
SUPPLEMENTAL EQUITY INFORMATION - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
SUPPLEMENTAL EQUITY INFORMATION | ||
Stock-based compensation expense | $ 1,504 | $ 2,057 |