Tribune Publishing (TPCO) 10-K 2020 FY Annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 27, 2020

 OR

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

Commission File No. 001-36230

TRIBUNE PUBLISHING COMPANY

(Exact name of registrant as specified in its charter)

Delaware	38-3919441
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)
560 W. Grand Avenue, Chicago, Illinois	60654
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (312) 222-9100

Former name, former address and former fiscal year, if changed since last report.

160 N. Stetson Avenue, Chicago, Illinois 60601

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

Title of Class	Trading Symbol	Name of Exchange on Which Registered
Common Stock, par value $.01 per share	TPCO	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐  No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☑  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☑   No ☐ 

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

Large accelerated filer ☐ Accelerated filer ☑ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐   No ☑

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant was approximately $153,739,291 on the closing market price of $9.88 per share of Common Stock on the Nasdaq Global Select Market as of June 28, 2020.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at March 5, 2021
Common Stock, par value $0.01 per share	36,794,401

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement of the registrant to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, for the 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

	TRIBUNE PUBLISHING COMPANY
	FORM 10-K
	TABLE OF CONTENTS
		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	23
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	23
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 8.	Financial Statements and Supplementary Data	36
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	36
Item 9A.	Controls and Procedures	36
Item 9B.	Other Information	38
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	38
Item 11.	Executive Compensation	38
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	38
Item 13.	Certain Relationships and Related Transactions, and Director Independence	38
Item 14.	Principal Accountant Fees and Services	39
PART IV
Item 15.	Exhibits and Financial Statement Schedules	39
Item 16.	Form 10K Summary	42
	SIGNATURES	43
	Financial Statements	F-1

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PART I

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The statements contained in this Annual Report on Form 10-K, as well as the information contained in the notes to our Consolidated Financial Statements, include certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based largely on our current expectations and reflect various estimates and assumptions by us. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, include, without limitation, the acquisition of the Company by Alden Global Capital may not be completed in a timely manner or at all; the effect of the novel coronavirus ("COVID-19") and related governmental and economic responses; changes in advertising demand, circulation levels and audience shares; competition and other economic conditions; our ability to develop and grow our online businesses; changes in newsprint price and availability; our ability to maintain data security and comply with privacy-related laws; economic and market conditions that could impact the level of our required contributions to the defined benefit pension plans to which we contribute; decisions by trustees under rehabilitation plans (if applicable) or other contributing employers with respect to multiemployer plans to which we contribute which could impact the level of our contributions; our ability to maintain effective internal control over financial reporting; concentration of stock ownership among our principal stockholders whose interest may differ from those of other stockholders; and other events beyond our control that may result in unexpected adverse operating results. For specific risks related to the COVID-19 pandemic and more information about these and other risks, see Item 1A. — Risk Factors in this filing.

The words “believe,” “expect,” “anticipate,” “estimate,” “could,” “should,” “intend,” “may,” “will,” “plan,” “seek” and similar expressions generally identify forward-looking statements. However, such words are not the exclusive means for identifying forward-looking statements, and their absence does not mean that the statement is not forward looking. Whether or not any such forward-looking statements, in fact occur will depend on future events, some of which are beyond our control. Readers are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this Annual Report on Form 10-K. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 1. Business

Overview

Tribune Publishing Company, together with its subsidiaries (collectively, the “Company” or “Tribune”), is a media company rooted in award-winning journalism. Headquartered in Chicago, Illinois, Tribune operates local media businesses in eight markets with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Hartford Courant, South Florida’s Sun Sentinel, Orlando Sentinel, Virginia’s Daily Press and The Virginian-Pilot, and The Morning Call of Lehigh Valley, Pennsylvania. Tribune also operates Tribune Content Agency (“TCA”). Tribune’s major daily newspapers have served their respective communities with local, regional, national and international news and information for more than 150 years. The Hartford Courant is the nation’s oldest continuously published newspaper and celebrated its 256th anniversary in October 2020.

Tribune’s unique and valuable content across its brands have earned a combined 65 Pulitzer Prizes and are committed to informing, inspiring and engaging local communities. Tribune’s brands create and distribute content across our media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities.

The Company’s results of operations, when examined on a quarterly basis, reflect the seasonality of Tribune’s revenues. Second and fourth quarter advertising revenues are typically higher than first and third quarter revenues. Results for the second quarter reflect spring advertising revenues, while the fourth quarter includes advertising revenues related to the holiday season.

Agreement and Plan of Merger

On February 16, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Tribune Enterprises, LLC, a Delaware limited liability company (“TELLC”), Tribune Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of TELLC (“Merger Sub”), and the Company, pursuant to which Merger Sub will merge (the “Merger”) with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC. TELLC is the acquirer and is an affiliate of Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery

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Master Fund, L.P. (collectively, “Alden”), the Company’s largest shareholder. Upon completion of the transaction the Company will become a privately held company, and its common stock will no longer be listed on any public market.

Subject to the terms and conditions set forth in the Merger Agreement, at the closing of the Merger, each share of common stock, par value $0.01 per share (other than treasury stock or common stock held by TELLC or any of its affiliates) issued and outstanding immediately as of the closing (other than dissenting shares) will be converted into the right to receive $17.25 in cash, without interest (the “Merger Consideration”).

The consummation of the Merger (the “Closing”) is subject to certain customary mutual conditions, including (i) the approval of the Company’s stockholders holding two-thirds of the outstanding shares of Company Common Stock not owned by TELLC and its affiliates, (ii) the expiration or termination of any waiting period applicable to the closing of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and (iii) the absence of any order of any U.S. court that prohibits, renders illegal or permanently enjoins the consummation of the Merger. The obligation of each party to consummate the Merger is also conditioned upon (i) the accuracy of the representations and warranties of the other party as of the date of the Merger Agreement and as of the Closing (subject to customary materiality qualifiers), (ii) compliance by the other party in all material respects with its pre-Closing obligations under the Merger Agreement and (iii) in TELLC’s case, the absence of a material adverse effect with respect to the Company.

The Company and TELLC have each made customary representations, warranties and covenants in the Merger Agreement. Subject to certain exceptions, the Company has agreed, among other things, to covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and the consummation of the Merger. The parties have also agreed to use their respective reasonable best efforts to obtain governmental and regulatory approvals. In addition, subject to certain exceptions, the Company has agreed to covenants relating to (i) the submission of the Merger Agreement to the Company’s stockholders at a special meeting thereof for approval, (ii) the recommendation by the board of directors of the Company in favor of the adoption by the Company’s stockholders of the Merger Agreement and (iii) non-solicitation obligations of the Company relating to alternative acquisition proposals.

Either the Company or TELLC may terminate the Merger Agreement if (i) TELLC, Merger Sub and the Company agree by mutual written consent to do so, (ii) the Merger has not been consummated on or before December 31, 2021 (the “End Date”), (iii) any court has issued an order permanently restraining, enjoining or otherwise prohibiting the Merger and such order or other action is, or has become, final and non-appealable, (iv) the approval of the Company’s stockholders is not obtained at a meeting of the Company’s stockholders called for the purpose of adopting the Merger Agreement or (v) the other party breaches any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances. In addition, the Company may, under certain circumstances, terminate the Merger Agreement in order for the Company to enter concurrently into a definitive written agreement with respect to an unsolicited superior acquisition proposal, subject to the Company having first complied with certain matching rights and other obligations set forth in the Merger Agreement. Additionally, TELLC may, under certain circumstances, terminate the Merger Agreement if (i) the board of directors of the Company changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (ii) the Company materially breaches its non-solicitation obligations and such breach results in an alternative transaction proposal.

If the Merger Agreement is terminated (i) by the Company in order for the Company to enter into a definitive written agreement with respect to an unsolicited superior acquisition proposal, (ii) by TELLC because (a) the board of directors of the Company changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (b) the Company materially breaches its non-solicitation obligations and such breach results in an alternative transaction proposal, or (iii) by (x) either party because the Merger was not consummated on or before the End Date (as it may be extended) or approval of the Company’s stockholders was not obtained or (y) by TELLC if the Company commits a breach of any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied (subject to a cure period in certain circumstances), but only if, in the case of this clause (iii), an alternative acquisition proposal was previously made and, within 12 months after termination of the Merger Agreement, the Company enters into an agreement for an alternative transaction or an acquisition transaction is consummated, then, in each case, the Company will be obligated to pay to TELLC a one-time fee equal to $20 million in cash.

If the Merger Agreement is terminated by the Company (i) if TELLC breaches any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances or (ii) if the conditions to TELLC’s obligations to consummate the Merger are satisfied or waived, and TELLC does not consummate the Merger when required by the Merger Agreement, then TELLC will be obligated to pay to the Company a one-time liquidated damages amount equal to $50 million in cash.

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Pursuant to the Merger Agreement, TELLC agreed to vote all of its shares of common stock in favor of the adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger, so long as the board of directors of the Company has not changed or adversely modified its recommendation in favor of the Merger Agreement. The Merger Agreement also prohibits TELLC from transferring any of its shares of common stock, subject to certain exceptions.

Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (each, a “Guarantor”) have entered into a Limited Guarantee dated February 16, 2021 (the “Limited Guarantee”) with the Company to guarantee TELLC’s obligation to pay the liquidated damages amount to the Company and certain other specified payments to the Company, subject to the terms and obligations set forth in the Limited Guarantee.

The Guarantors have also entered into an equity commitment letter dated as of February 16, 2021 (the “Equity Commitment Letter”) with TELLC pursuant to which the Guarantors have made an equity commitment of $375 million to TELLC to fund the payment of the aggregate Merger Consideration. The Company is a third-party beneficiary of the Equity Commitment Letter and has the right to specifically enforce the Guarantors’ obligations thereunder, if the conditions to TELLC’s obligations to consummate the Merger are satisfied or waived, and the Merger is consummated substantially simultaneously.

Concurrent with the signing of the merger agreement, Alden has signed a non-binding term sheet to sell The Baltimore Sun to Sunlight for All Institute, a public charity formed by Stewart Bainum Jr.

COVID-19

With the global outbreak of COVID-19 and the declaration of a pandemic by the World Health Organization on March 11, 2020, the governments in the states in which Tribune operates have deemed news publishing and media services as “critical infrastructure” providing essential services and information during this global emergency. As a provider of critical infrastructure, Tribune is not subject to business closure requirements and has taken steps to keep employees working safely and news and information being distributed. Tribune remains focused on protecting the health and well-being of its employees and the communities in which it operates while assuring the continuity of its business operations. See Item 7 - Management’s Discussion and Analysis for additional information on the Company’s response to COVID-19.

In response to the COVID-19 pandemic, the Company negotiated rent relief from lessors in various forms, including lease restructuring, rent abatement, deferrals or lease terminations. During the year ended December 27, 2020, the Company permanently vacated 972,699 square feet of office, production and distribution space. The space was vacated as some of our locations have transitioned to long-term remote working arrangements and the Company outsourced printing at two of our locations. See Note 4 to the Consolidated Financial Statements for additional information on leases.

On May 8, 2020, the Board of Directors of the Company (the “Board”) suspended the Company's quarterly cash dividend program until further notice given the unprecedented economic disruption caused by COVID-19.

Significant transactions and recent events

On July 23, 2019, the Company entered into an agreement to sell real property located in Norfolk, Virginia, for a sales price of $9.5 million. The sale closed on January 22, 2020. Additionally, on November 2, 2020, the Company completed the sale of real property located in Virginia Beach, Virginia for a cash sales price of $5.2 million. The Company leased back 39,975 square feet of the Virginia Beach property for a distribution center at $0.2 million per year for an initial term of two years with an option to renew for an additional two years. See Note 10 to the Consolidated Financial Statements for additional information on the property sales.

On February 19, 2020, the Company declared dividends of $0.25 per common share, to be paid to shareholders of record as of March 2, 2020. The cash dividend totaling $9.3 million was paid on March 16, 2020. See Note 20 to the Consolidated Financial Statements for additional information on dividends declared.

In the first quarter of 2020, the Company offered a Voluntary Severance Incentive Plan (“2020 VSIP”) which provided enhanced separation benefits to eligible employees with more than eight years of service. See Note 6 to the Consolidated Financial Statements for additional information on the 2020 VSIP.

In the second quarter of 2020, the Company entered a contract with a third party to outsource the printing and packaging of The Virginian-Pilot. The services were fully transitioned to the third party at the end of the third quarter. In the fourth quarter of 2020, the Company contracted with a third party to outsource the printing and packaging of the Hartford

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Courant. The services were fully transitioned to the third party at the end of 2020. See Note 6 to the Consolidated Financial Statements for additional information on changes in operations.

In 2018, the Company’s last employee that was a member of the CWA/ITU Union at the Company’s Baltimore location retired. This retirement effected a partial withdrawal from the CWA/ITU Negotiated Pension Plan. During the year ended December 27, 2020, the Company accrued $1.0 million to reflect this obligation. See Note 16 to the Consolidated Financial Statements for additional information on the Company’s multiemployer pension plans.

On July 27, 2020, the Board declared a dividend of one preferred stock purchase right (a “Right”) for each of the Company’s outstanding shares of common stock, $0.01 par value. The dividend Right was issued on August 7, 2020, to holders of record as of the close of business on that date. The Rights will expire on July 27, 2021, unless earlier exercised, exchanged, amended or redeemed. See Note 20 to the Consolidated Financial Statements for additional information on the Rights Agreement.

On December 11, 2020, the Company, entered into a Membership Unit Purchase Agreement (the “BR Agreement”), by and among the Company and BR Holding Company, Inc. (collectively the "Sellers"), BestReviews LLC (“BestReviews”) and Nexstar Inc. (“Nexstar”), pursuant to which the Sellers will sell 100% of BestReviews to Nexstar (the “BR Transaction”). BestReviews is a company engaged in the business of testing, researching and reviewing consumer products and generates referral fee revenue by directing online traffic from their published reviews to websites where the products can be purchased. BestReviews has affiliate agreements with online sellers, of which the largest is Amazon.com. BestReviews receives a referral fee once the product is purchased. The sale closed on December 29, 2020, subsequent to the Company’s fiscal year-end, for a cash sales price of $160.0 million plus a $9.4 million working capital adjustment. As of the balance sheet date, BestReviews was owned 60% by the Company and 40% by BR Holding Company, Inc. Under the terms of the BR Transaction, the Company received 60% of the cash selling price net of transaction fees upon the closing on December 29, 2020. BestReviews is presented under discontinued operations in the accompanying financial statements. All prior periods have been adjusted. See Note 8 to the Consolidated Financial Statements for additional information on the related discontinued operations.

Segments

In the first quarter of 2020, the Company realigned its operations by combining the print and digital operations of its media groups together under the leadership of the Chief Executive Officer, who is also the chief operating decision maker for Tribune, as defined in Accounting Standards Codification (“ASC”) Topic 280. As a result of the realignment, the Company no longer reports separate segment results for its print and digital operations. The Company now manages its business as nine operating segments that are aggregated into one reportable segment, comprised of the Company’s media groups, digital revenues, third-party and affiliate websites, mobile applications, digital only subscriptions and TCA.

Revenue Sources

The Company’s three primary revenue streams are circulation, advertising and marketing services, and third-party printing and distribution. In the year ended December 27, 2020, 47.3% of the Company’s operating revenues were derived from circulation revenue. Circulation revenue results from the sale of print and digital editions of the newspapers and other owned publications to individual subscribers, the sale of print editions of newspapers to sales outlets that re-sell the newspapers, and the sale of digital subscription access to the Company’s websites.

In the year ended December 27, 2020, 35.0% of the Company’s operating revenues were derived from advertising. These revenues were generated from the sale of advertising space in published issues of the newspapers, and on interactive websites, from the delivery of preprinted advertising supplements and from marketing services.

Newspaper print advertising is typically in the form of display, classified or preprint advertising. Advertising and marketing services revenues are comprised of three basic categories: retail, national and classified. Retail is a category of customers who tend to do business directly with the general public, National is a category of customers who tend to do business directly with other businesses. Classified is a type of advertising which is other than display or preprint.

Digital advertising can be in the form of display, banner ads, advertising widgets, coupon ads, video, search advertising and linear ads placed on Tribune and affiliated websites. Digital marketing services include development of mobile websites, search engine marketing and optimization, social media account management and content marketing for its customer’s web presence for small to medium-sized businesses.

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In the year ended December 27, 2020, 17.7% of the Company’s operating revenues were derived from other revenues. Other revenues are derived from commercial printing and delivery services provided to other newspapers, direct mail advertising and services, content syndication and licensing, referral fees and other related activities. The Company contracts with a number of national and local newspapers to both print and distribute their respective publications in local markets where it is a newspaper publisher. In some instances where it prints publications, it also manages and procures newsprint, ink and plates on their behalf. These arrangements allow the Company to leverage its investment in infrastructure in those markets that support its own publications. As a result, these arrangements tend to contribute incremental profitability and revenues. The Company currently distributes national newspapers (including The New York Times, USA Today, and The Wall Street Journal) in its local markets under multiple agreements. Additionally, in New York, Chicago, and South Florida, the Company provides some or all of these services to other local publications.

Products and Services

The Company’s product mix consists of three primary publication types: (i) daily newspapers, (ii) weekly newspapers and (iii) niche publications and direct mail. The key characteristics of each of these types of publications are summarized in the table below.

	Daily Newspapers	Weekly Newspapers	Niche Publications
Cost:	Paid	Paid and free	Paid and free
Distribution:	Distributed four to seven days per week	Distributed one to three days per week	Distributed weekly, monthly or on an annual basis
Income:	Revenue from advertisers, subscribers, rack/box sales	Paid: Revenue from advertising, subscribers, rack/box sales	Paid: Revenue from advertising, rack/box sales
		Free: Advertising revenue only	Free: Advertising revenue only

As of December 27, 2020, the Company’s prominent print publications and websites included:

Media Group	City	Masthead	Website	Circulation Type	Paid or Free
Chicago Tribune Media Group
	Chicago, IL	Chicago Tribune	www.chicagotribune.com	Daily	Paid
	Chicago, IL	Chicago Magazine	www.chicagomag.com	Monthly	Paid
New York Daily News Media Group
	New York, NY	New York Daily News	www.nydailynews.com	Daily	Paid
The Baltimore Sun Media Group
	Baltimore, MD	The Baltimore Sun	www.baltimoresun.com	Daily	Paid
	Annapolis, MD	The Capital Gazette	www.capitalgazette.com	Daily	Paid
	Westminster, MD	Carroll County Times	www.carrollcountytimes.com	Daily	Paid
Hartford Courant Media Group
	Hartford County, CT Middlesex County, CT Tolland County, CT	Hartford Courant	www.courant.com	Daily	Paid
Sun Sentinel Media Group
	Broward County, FL Palm Beach County, FL	Sun Sentinel	www.sun-sentinel.com	Daily	Paid
	Broward County, FL Palm Beach County, FL	el Sentinel	www.sun-sentinel/elsentinel.com	Weekly	Free
Orlando Sentinel Media Group
	Orlando, FL	Orlando Sentinel	www.orlandosentinel.com	Daily	Paid
	Orlando, FL	el Sentinel	www.orlandosentinel/elsentinel.com	Weekly	Free
Virginia Media Group
	Newport News, VA (Peninsula)	Daily Press	www.dailypress.com	Daily	Paid
	Norfolk, VA	The Virginian-Pilot	www.pilotonline.com	Daily	Paid
The Morning Call Media Group
	Lehigh Valley, PA	The Morning Call	www.themorningcall.com	Daily	Paid

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TCA is a syndication and licensing business providing quality content solutions for publishers around the globe that traces its roots to 1918.  Working with a vast collection of the world’s best news and information sources, TCA delivers a daily news service and syndicated premium content to more than 2,000 media and digital information publishers in nearly 70 countries. Tribune News Service delivers the best material from 70 leading publishers, including Chicago Tribune, Bloomberg News, Miami Herald, The Dallas Morning News, Seattle Times, The Philadelphia Inquirer, and the Los Angeles Times. Tribune Premium Content syndicates columnists such as Leonard Pitts, Cal Thomas, Clarence Page, Ask Amy and Rick Steves. TCA manages the licensing of premium content from publications such as Rolling Stone, The Atlantic, Fast Company, Mayo Clinic, Inc. and many more.

Competition

Each of the Company’s nine major daily newspapers holds a leading market position in their respective designated market areas as determined by Nielsen and competes for readership and advertising with both local or community newspapers as well as national newspapers and other traditional and web-based media sources. Increasingly, the Company is facing competition from digital platforms that have content, search, aggregation and social media functionality, magazines, broadcast, cable and satellite television, over-the-top video services, radio, direct mail, yellow pages, outdoor, and other media as advertisers adjust their spending based on the perceived value of the audience reached and the cost to reach that audience.  Over time, less competition for advertising dollars is coming from the traditional local, regional and national newspapers.

The secular shift of how content is consumed, including the ubiquity of mobile platforms, has led to increased competition from a wide variety of new digital content offerings, many of which are often free to users. Besides price, variables impacting customer acquisition and retention include the quality and nature of the user experience and the quality of the content offered.

To address the structural shift to digital media, the Company provides editorial content on a wide variety of platforms and formats - from the printed daily newspaper to the Company’s leading local websites; on social network sites such as Facebook, Apple News and Twitter; on smartphones, tablets and e-readers; on websites and blogs; in niche online publications and in e-mail newsletters.

Raw Materials

As a publisher of newspapers, Tribune utilizes substantial quantities of various types of paper. During 2020, we consumed approximately 106 thousand metric tons of newsprint. Our earnings are sensitive to changes in newsprint prices. The Company currently obtains substantially all of its newsprint under a long-term contract with a national purchasing aggregator who then draws upon U.S. and internationally based newsprint producers. We believe that our current source of paper supply is adequate. Newsprint and ink expense accounted for 4.2% of total operating expenses in the year ended December 27, 2020.

Human Capital

As of December 27, 2020, we had approximately 2,865 full-time and part-time employees, including approximately 1,143 employees represented by various employee unions. Of our full-time employees, we have 896 editorial staff including journalists, 369 advertising staff and 1,270 printing and production staff. These numbers reflect a 30.4% decrease in total headcount as a result of the Company’s strategy to flatten its management organization. Additionally, there was a decrease of 36.8% in printing and production staff primarily associated with the outsourcing of the printing and packaging at The Virginian-Pilot and the Hartford Courant.

During 2020, the Company implemented strategic pillars around our employees to attract and retain top talent and drive our business through supporting the success of our employees. Initiatives were implemented to increase employee engagement, encourage open communication with employees, support employee learning and development and focus on employee diversity and inclusion.

To increase employee engagement and retention, the Company has implemented recognition programs, team building and appreciation programs and a brand ambassador program. The Company has committed to open communication with employees, including informal business updates and quarterly town hall meetings. To support employee learning and development, the Company has rolled out additional learning support with an emphasis on leadership in a diverse and inclusive environment, coaching for success, a new manager playbook and managing in today’s remote and virtual work team environment. The Company increased its commitment to diversity and inclusion initiatives throughout 2020. In addition to the leadership training noted above, the Company aims to achieve its diversity and inclusion goals through initiatives including:

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•publishing an enhanced newsletter that focuses on diversity and highlights diverse employees throughout the organization;

•setting goals with an emphasis on increasing diverse representation in management roles;

•holding panel discussions on relevant topics throughout the year;

•supporting our Employee Resource Groups (ERGs), including new ERG development;

•providing industry-leading training for our newsrooms to promote accurate and equitable reporting on the diverse communities we serve;

•providing a discussion guide for managers to promote a continued dialogue on these topics;

•revising our diverse talent acquisition strategy; and

•establishing a steering committee that oversees this important work.

Intellectual Property

Currently, our operations are generally not reliant on patents owned by third parties. However, because we operate a large number of websites and mobile applications in high-visibility markets, we do defend patent litigation, from time to time, brought primarily by non-practicing entities, as opposed to marketplace competitors. We have sought patent protection in certain instances; however, we do not consider patents to be material to our business as a whole. Of greater importance to our overall business are the federal, international and state trademark registrations and applications that protect, along with our common law rights, our brands, certain of which are long-standing and well known, such as Chicago Tribune, New York Daily News and Hartford Courant. Generally, the duration of a trademark registration is perpetual if it is renewed on a timely basis and continues to be used properly as a trademark. We also own a large number of copyrights, none of which individually is material to the business. We maintain certain licensing and content sharing relationships with third-party content providers that allow us to produce the particular content mix we provide to our customers in our markets. The Company entered into a number of agreements with Tribune Media Company, formerly Tribune Company, or its subsidiaries (collectively, “TCO”) that provide for licenses to certain intellectual property, and in particular, we entered into a license agreement with TCO that provides a non-exclusive, royalty-free license for us to use certain trademarks, service marks and trade names, including the Tribune name. Other than the foregoing and commercially available software licenses, we do not believe that any of our licenses to third-party intellectual property are material to our business as a whole.

Available Information

Tribune maintains its corporate website at www.tribpub.com. The Company makes available free of charge on www.tribpub.com this Annual Report on Form 10-K, the Company’s Quarterly Reports on Form 10-Q, the Company’s Current Reports on Form 8-K, and amendments to all those reports, all as filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).

Item 1A. Risk Factors

Investors should carefully consider each of the following risks, together with all of the other information in this Annual Report on Form 10-K, in evaluating an investment in the Company’s common stock. The following risks relate to the Company’s business, the securities markets and ownership of the Company’s common stock. If any of the following risks and uncertainties develop into actual events, the Company could be materially and adversely affected. If this occurs, the trading price of the Company’s common stock could decline, and investors may lose all or part of their investment.

Risks Relating to the Proposed Merger

There are a number of risks and uncertainties associated with the proposed merger.

The Closing of the Merger is subject to customary closing conditions as described above in Item 1. Business, under the heading “Agreement and Plan of Merger”, including approval of the Company’s stockholders holding two-thirds of the outstanding shares of Company Common Stock not owned by TELLC and its affiliates and the expiration or termination of any applicable HSR Act waiting period. The proposed Merger is subject to various risks and uncertainties, including the following:

•risks that the Merger may not be completed in a timely manner or at all;

•uncertainties as to the percentages of our stockholders that will support the Merger;

•the possibility that competing offers or acquisition proposals for the Company will be made;

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•the possibility that any or all of the various conditions to the consummation of the Merger may not be satisfied or waived, including the failure to receive any regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals);

•the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement including circumstances that would require us to pay a termination fee;

•the effect of the announcement or pendency of the Merger on our ability to retain and hire key personnel, our ability to maintain relationships with our customers, subscribers and others with whom we do business, or otherwise on our operating results and business generally;

•risks related to diverting management’s attention from our ongoing future business operations; and

•the risk that stockholder litigation in connection with the Merger may result in significant costs of defense, indemnification and liability.

If the Merger is not consummated for any reason, our stockholders will not receive the consideration that Alden has agreed to pay upon the consummation of the Merger, and the price of our common stock may decline to the extent that its current market price reflects an assumption that the Merger will be consummated. Such decline could be significant.

Risks Relating to Our Business

The outbreak of the novel coronavirus has adversely affected our results of operations and could materially impact our business, financial condition, results of operations and cash flows in the future.

The outbreak of COVID-19 and ensuing pandemic has created significant volatility, uncertainty and economic disruption as federal, state and local governments take increasingly broad actions to mitigate this public health crisis. We have experienced significant disruption to our business, both in our operations and from the adverse effect on overall economic conditions. We have seen a decrease in demand for advertising as our customers cope with the uncertainties related to the pandemic and its related business closures, particularly in the retail and consumer services sectors. The volume under our commercial production and distribution contracts has also decreased. Additionally, the Company has closed many of its facilities and implemented widespread remote working arrangements which has changed our normal processes.

Additionally, our liquidity could be negatively impacted if these conditions continue for a significant period of time. We have taken extensive steps to mitigate the economic impact COVID-19 has had on our results of operations. These steps include salary reductions, elimination of staff positions, employee furloughs, revisions to manufacturing and distribution processes, reducing third-party spending, freezing discretionary spending, eliminating incentive and discretionary bonuses and delaying non-essential repairs and maintenance. However, these measures may not be sufficient to prevent adverse impacts on our business and financial condition from COVID-19. The COVID-19 pandemic has highlighted existing impediments to operational flexibility that have slowed our financial response to the decrease in revenue. These include a number of significant longer-term leases, multiemployer pension plans and collective bargaining issues which limit our ability to respond quickly to the rapidly changing economic environment. Our mitigation steps may also exacerbate certain existing operational risks such as retaining senior management or key employees given the salary reductions, and potential disputes with third parties. Capital and credit markets have been disrupted by the crisis and our ability to obtain any required financing is not guaranteed and largely dependent upon evolving market conditions and other factors. Depending on the continued impact of the crisis, further actions may be required to improve the Company’s cash position and capital structure.

A sustained economic downturn may also result in the carrying value of our goodwill or other intangible assets exceeding their fair value, which may require us to recognize an impairment to those assets in future periods, as we did in 2020. A sustained downturn in the financial markets and related pension asset values may have the effect of increasing our pension funding obligations in order to ensure that our qualified pension plan continues to be adequately funded, which may divert cash flow from other uses.

The extent to which the COVID-19 outbreak ultimately impacts our business, sales, results of operations and financial condition will depend on future developments which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, we may continue to experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future.

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Our efforts to protect the health and safety of our employees may not be adequate, which could materially impact our business, financial condition and results of operations.

We rely on our employees’ ability to interact with the public. The COVID-19 pandemic, and the restrictions placed on social interaction, has impacted our ability to protect the health and safety of our employees. Though most of our employees are able to work remotely, we have certain employees who must physically work together in our production facilities to produce our products, employees that interact with personnel in distribution locations to deliver such products and reporters who must interact with the public to gather information. We have to date and may in the future incur costs to ensure the safety of our employees, including medical testing, additional facility and equipment cleaning, process changes to ensure social distancing is maintained, and purchases of personal protective equipment, including masks, gloves, etc. Additionally, we could incur workers’ compensation or medical costs if our employees contract the virus. If we cannot adequately protect the health and safety of our employees, our business, financial condition and results of operations could be adversely affected.

Decreases, or slow growth, in print circulation may adversely affect our print circulation and advertising revenues.

Our newspapers, and the newspaper industry as a whole, are experiencing reduced consumer demand for print circulation and decreased print circulation revenue. This results from, among other factors, increased competition from other media, particularly the online media outlets (which are often free to users), changing newspaper readership demographics and shifting preferences among some consumers to receive all or a portion of their news from sources other than a newspaper. These factors could affect our ability to implement circulation price increases, or even maintain current pricing for our print products. As a result, our print circulation and circulation revenue may decline or may decline at a faster rate than anticipated.

In addition, our circulation revenue is sensitive to discretionary spending available to subscribers in the markets we serve, as well as their perceptions of economic trends and uncertainty. Weak economic indicators in various regions across the nation may adversely impact subscriber sentiment and therefore impair our ability to maintain and grow our circulation.

A continued decline in print circulation could affect the rate and volume of advertising revenue. To maintain a certain level of our circulation base, we may incur additional costs, and may not be able to recover these costs through circulation and advertising revenue. To address declining print circulation, we may increase spending on marketing designed to retain our existing subscriber base and continue or create niche publications targeted at specific market groups. We may also increase marketing efforts to drive traffic to our proprietary websites.

Slow growth in digital circulation may adversely affect our digital circulation and advertising revenues

The increasing number of digital media options available on the Internet, through social networking tools and through mobile and other devices distributing news and other content, is expanding consumer choice significantly. Faced with a multitude of media choices and a dramatic increase in accessible information, consumers may place greater value on when, where, how and at what price they consume digital content than they do on the source or reliability of such content. Further, as existing newspaper readers get older, younger generations may not develop similar readership habits. News aggregation websites and customized news feeds (often free to users) may reduce our traffic levels by driving interaction away from our websites or our digital applications. If traffic levels stagnate or decline, we may not be able to create sufficient advertiser interest in our digital businesses or to maintain or increase the advertising rates of the inventory on our digital platforms.

In addition, the range of advertising choices across digital products and platforms and the large inventory of available digital advertising space have historically resulted in significantly lower rates for digital advertising than for print advertising. Digital advertising networks and exchanges, real-time bidding and other programmatic buying channels that allow advertisers to buy audiences at scale are also playing a significant role in the advertising marketplace, which may cause downward pricing pressure. In addition, evolving standards for delivery of digital advertising, such as viewability, could adversely affect advertising revenues. Consequently, our digital advertising revenue may not be able to replace print advertising revenue lost as a result of the shift to digital consumption. A decrease in our customers’ advertising expenditures, reduced demand for our offerings or a surplus of advertising inventory could lead to a reduction in pricing and advertising revenue, which could have an adverse effect on our businesses and assets. Our inability to maintain and/or improve the performance of our customers’ advertising results on our digital properties may negatively influence rates we achieve in the marketplace for our advertising inventory.

Paywalls on our newspaper websites require users to pay for content after accessing a limited number of pages or news articles for free over a specified period of time. Our ability to build a subscriber base on our digital platforms depends on market acceptance, consumer habits, pricing, terms of delivery, platforms and other factors. Stagnation or a decline in website traffic levels may adversely affect our advertiser base and advertising rates and result in a decline in digital revenue. In order to

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retain and grow our digital subscription base and audience, we may have to further evolve our digital subscription model, address changing consumer requirements and develop and improve our digital products while continuing to deliver high-quality journalism and content that is interesting and relevant to our audience. There can be no assurance that we will be able to successfully maintain and increase our digital subscription base and audience or that we will be able to do so without taking steps such as reducing pricing or increasing costs that would affect our financial condition and results of operations.

Advertising demand is expected to continue to be affected by changes in economic conditions and fragmentation of the media landscape.

Advertising revenue is our second largest source of revenue. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. National and local economic conditions, particularly in major metropolitan markets, affect the levels of retail, national and classified newspaper advertising revenue. Changes in gross domestic product, consumer spending, auto sales, fuel prices, housing sales, unemployment rates, job creation, and circulation levels and rates, as well as federal, state and local election cycles and customers reactions to health epidemics, all affect demand for advertising. For example, the impact of widespread health emergencies may adversely impact the demand for advertising, such as the potential impact from the recent outbreak of the coronavirus, which originated in Wuhan, Hubei Province, China but has now spread to other countries.

The trend towards online shopping has negatively impacted retailers, which constitute a primary advertising channel of the Company. A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities. Consolidation across various industries, such as large department store and telecommunications companies, may also reduce overall advertising revenue.

Competition from other media, including other metropolitan, suburban and national newspapers, websites, including news aggregation websites, social media websites and search engines, broadcasters, cable systems and networks, satellite television and radio, magazines, direct marketing and solo and shared mail programs, affects our ability to retain advertising clients and maintain or raise rates. In recent years, Internet sites devoted to recruitment, automotive and real estate have become significant competitors of our newspapers and websites for classified advertising and have significantly eroded our share of classified advertising revenue.

Seasonal variations in consumer spending cause our quarterly advertising revenue to fluctuate. Second and fourth quarter advertising revenue is typically higher than first and third quarter advertising revenue, reflecting the slower economic activity in the winter and summer and the stronger fourth quarter holiday season.

Demand for our products is also one of many factors in determining advertising rates. For example, circulation levels for our newspapers have been declining which could affect the rate and volume of advertising revenue.

All of these factors continue to contribute to a difficult advertising sales environment and may further adversely affect our ability to grow or maintain our advertising revenue. Our advertising revenues may decline or may decline at a faster rate than anticipated.

Increasing popularity of digital media and the shift in newspaper readership demographics, consumer habits and advertising expenditures from traditional print to digital media have adversely affected and may continue to adversely affect our operating revenues and may require significant capital investments due to changes in technology.

Technology in the media industry continues to evolve rapidly. Advances in technology have led to an increasing number of methods for delivery of news and other content and have resulted in a wide variety of consumer demands and expectations, which are also rapidly evolving. If we are unable to exploit new and existing technologies to distinguish our products and services from those of our competitors or adapt to new distribution methods that provide optimal user experiences, our business and financial results may be adversely affected.

Any changes we make to our business model to address these challenges may require significant capital investments. We have invested, and expect to continue to invest, in digital technologies. However, we may be limited in our ability to invest funds and resources in digital products, services or opportunities and we may incur costs of research and development in building and maintaining the necessary and continually evolving technology infrastructure. Some of our competitors may have greater operational, financial and other resources or may otherwise be better positioned to compete for opportunities and as a result, our digital businesses may be less successful, which may adversely affect our business and financial results.

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Our business operates in highly competitive markets and our ability to maintain market share and generate operating revenues depends on how effectively we compete with our competition.

Our business operates in highly competitive markets. Our newspapers often times compete for audiences and advertising revenue with other newspapers as well as with other media such as the Internet, magazines, broadcast, cable and satellite television, radio, direct mail, and yellow pages. Some of our competitors have greater financial and other resources than we do.

Our operating revenues primarily consist of advertising and paid circulation. Competition for advertising expenditures and paid circulation comes from a variety of sources, including local, regional and national newspapers, the Internet, including news aggregation websites, social media websites and search engines, magazines, broadcast, cable and satellite television, radio, direct mail, yellow pages, outdoor billboards, and other media. Free daily newspapers are available in several metropolitan markets, and there can be no assurance that free daily publications, or other publications, will not be introduced in any markets in which we publish newspapers. Competition for newspaper advertising revenue is based largely upon advertiser results, advertising rates, readership, demographics, and circulation levels. Competition for circulation is based largely upon the content of the newspaper, its price, editorial quality, customer service, and other sources of news and information. Circulation revenue and our ability to achieve price increases for, or even maintain prices for, our print products may be affected by competition from other publications and other forms of media available in our various markets, declining consumer spending on discretionary items like newspapers, decreasing amounts of free time, and declining frequency of regular newspaper buying among certain demographics. We may incur higher costs competing for advertising dollars and paid circulation. If we are not able to compete effectively for advertising dollars and paid circulation, our operating revenues may decline and our financial condition and results of operations may be adversely affected.

Our primary strategy is to transition from a print-focused media company to a digital platform media company, and if we are not successful in our transition, our business, financial condition and prospects will be adversely affected.

Our ability to successfully transition from a print-focused media company to a digital platform media company depends on various factors, including, among other things, the ability to:

•increase digital audiences;

•increase the amount of time spent on our websites, the likelihood of users returning to our websites, and their level of engagement;

•attract advertisers to our websites;

•serve and monetize increasingly mobile news readers with product enhancements, advertising revenue capabilities and subscription conversion rates that are as strong as those of our desktop products;

•maintain or increase online advertising rates;

•exploit new and existing technologies to distinguish our products and services from those of competitors and develop new content, products and services; and

•invest funds and resources in digital opportunities.

There are no assurances that we will be able to attract and retain employees with skill sets and knowledge base needed to successfully operate in a digital business structure, that our sales force will be able to effectively sell advertising in the digital advertising arena versus our historical print advertising business, or that we will be able to effect the operational changes necessary to transition from a print-focused business to a digital-focused business. We may be limited in our ability to invest funds and resources in digital products, services or opportunities, and we may incur research and development costs in building, maintaining and evolving our technology infrastructure.

We rely on revenue from the printing and distribution of publications for third parties that may be subject to many of the same business and industry risks that we are.

In 2020, we generated approximately 9.9% of our revenue from printing and distributing third-party publications. As a result, if macroeconomic and industry trends described herein, such as the sensitivity to perceived economic weakness of discretionary spending available to advertisers and subscribers, circulation declines, shifts in consumer habits and the increasing popularity of digital media affect those third parties, we may lose, in whole or in part, a substantial source of revenue, which may adversely impact our results of operations.

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Our business, operating results and reputation may be negatively impacted, and we may be subject to legal and regulatory claims if there is a loss, destruction, disclosure, misappropriation or alteration of or unauthorized access to data owned or maintained by us, or if we are the subject of a significant data breach or cyberattack.

We rely on our information technology and communications systems to manage our business data, including communications, news and advertising content, digital products, order entry, fulfillment and other business processes. These technologies and systems also help us manage many of our internal controls over financial reporting, disclosure controls and procedures and financial systems. Attempts to compromise information technology and communications systems occur regularly across many industries and sectors, and we may be vulnerable to security breaches resulting from accidental events (such as human error) or deliberate attacks. Moreover, the techniques used to attempt attacks and the perpetrators of such attacks are constantly expanding. We face threats both from use of malicious code (such as malware, viruses and ransomware), employee theft or misuse, advanced persistent threats, and phishing and denial-of-service attacks. For example, in December 2018, the Company was attacked by a ransomware virus, which locked up certain Company systems and data, requiring implementation of components of the Company’s business continuity plans and restoration of data from backups. The Company investigated the incident and determined that it did not result in any unauthorized access to or acquisition of sensitive data stored within its systems. Additionally, between late 2018 and mid-2019, the Company identified and investigated unrelated activity involving unauthorized access gained to certain Company staff email accounts and payroll-related user accounts, which was the result of email phishing attacks. The Company has complied with all applicable legal requirements relating to this activity and is taking steps to implement additional safeguards to reduce the risk of successful email phishing attacks. Neither the malware infection nor the email phishing attacks resulted in any material costs to the Company. As cyberattacks become increasingly sophisticated, and as tools and resources become more readily available to malicious third parties, the Company will incur increased costs to secure its technology environment and there can be no guarantee that the Company’s and our third-party vendors’ actions, security measures and controls designed to prevent, detect or respond to security breaches, to limit access to data, to prevent destruction, alteration, or exfiltration of data, or to limit the negative impact from such attacks, can provide absolute security against compromise. As a result, our business data, communications, news and advertising content, digital products, order entry, fulfillment and other business processes may be lost, destroyed, disclosed, misappropriated, altered or accessed without consent and various controls, automated procedures and financial systems could be compromised.

A significant security breach or other successful attack could result in significant remediation costs, including repairing system damage, engaging third-party experts, deploying additional personnel or vendor support, training employees, and compensation or incentives offered to third parties whose data has been compromised. These incidents may also lead to lost revenues resulting from a loss in competitive advantage due to the unauthorized disclosure, alteration, destruction or use of business data, the failure to retain or attract customers, the disruption of critical business processes or systems, and the diversion of management’s attention and resources. Moreover, such incidents may result in adverse media coverage, which may harm our reputation. These incidents may also lead to legal claims or proceedings, including regulatory investigations and actions and private lawsuits, and related legal fees, as well as potential settlements, judgments and fines. We maintain insurance, but the coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches.

Our possession and use of personal information, including payment methods of our customers, present risks and expenses that could harm our business. A security breach involving such data, whether through breach of our security measures or otherwise, could expose us to liabilities and costly litigation and damage our reputation.

Our information technology and communications systems store and process subscriber, employee and other personal information, such as names, email addresses, payment method information, addresses, personal health information, social security numbers, and other personal information. Maintaining the security of this information and our systems is critical. Additionally, we depend on the security of our third-party service providers. Unauthorized use of or inappropriate access to our, or our third-party service providers’, information technology and communications systems could jeopardize the security of this personal information. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage information technology and communications systems change frequently and often are not recognized until launched against a target, we or our third-party service providers may be unable to anticipate these techniques or to implement adequate preventative measures. Non-technical means, for example, actions or omissions by an employee, can also result in a security breach. A party that is able to circumvent our security measures could misappropriate the personal information relating to our customers, users or employees. As a result of any such breaches, we may be subject to legal claims, and these events may adversely impact our reputation and interfere with our ability to provide our products and services, all of which may have a material adverse effect on our business, financial condition and results of operations. The coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches.

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A significant number of our customers authorize us to bill their payment card accounts directly for all amounts charged by us. These customers provide payment card information and other personal information which, depending on the particular payment plan, may be maintained to facilitate future payment card transactions. Under payment card rules and our contracts with our card processors, if there is a breach of payment card information that we store, we could be liable to the banks that issue the payment cards for their related expenses and penalties. In addition, if we or our third-party vendors fail to follow payment card industry data security standards, even if there is no compromise of customer information, we could incur significant fines or lose our ability to give our customers the option of using payment cards. If we were unable to accept payment cards, our business would be seriously harmed.

There can be no assurance that any security measures we, or our third-party service providers, take will be effective in preventing a security breach or that we or our third-party service providers may make some other act or omission that could result in a security breach. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. If an actual or perceived breach of our security occurs, the perception of the effectiveness of our security measures could be harmed and we could lose customers or users. Failure to protect personal information of our customers and employees or to provide affected individuals with adequate notice of any security breach where required by law could also subject us to liabilities imposed by United States federal and state regulatory agencies or courts.

Privacy-related laws are constantly evolving and may increase our compliance costs and potential for liability, either of which may have an adverse effect on our business, financial condition and results of operations.

Many jurisdictions have enacted or are considering enacting privacy or data protection laws and regulations that apply to the processing or protection of personal information, including laws at the city, state and federal level in the United States. For instance, these laws and regulations may impose additional security breach notification requirements, notice and consent requirements and specific data security obligations, and may also provide for a private right of action or statutory damages. The compliance costs and operational burdens imposed by these laws and regulations could be significant. Additionally, as these laws and regulations continue to evolve and continue to be interpreted by courts and regulators, compliance may result in increasing regulatory and public scrutiny and escalating levels of enforcement, litigation, damages and sanctions and may necessitate shifts in business practices that could impact revenue. For example, California enacted the California Consumer Privacy Act (“CCPA”) which came into effect on January 1, 2020. The CCPA gives California residents several additional rights, including the right to access and delete their personal information, restrict certain personal information sharing, and receive greater transparency about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a limited private right of action for security breaches that is expected to increase security breach litigation. The CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and compliance costs and adversely affect our business. The law has already been amended and may be amended again. Additionally, the California Attorney General’s office has issued proposed rules, which may be further adjusted before becoming final. These changes make it difficult to predict how the CCPA will affect our business or operations. Aside from actions by state legislatures, the Federal Trade Commission and state attorneys general are active in enforcing against alleged privacy and data protection failures through authority granted to them under broad consumer protection laws, which could also create potential liability and adversely affect our business.

If in the future, we decide to expand any existing or future lines of our business outside of the United States, we may become subject to additional privacy and data protection obligations by other nations’ privacy laws. For example, an expansion into European Union countries may subject us to the European Union’s existing data protection law, the General Data Protection Regulation (“GDPR”). The GDPR has several very specific and often burdensome compliance requirements that apply to the processing of personal data, including stringent conditions for consent when relied upon for processing, granting of rights for individuals (including erasure, access, portability and rectification), conditions applicable to the trans-border flow of such data, more burdensome security breach reporting and other requirements. The GDPR also has significant penalties for non-compliance (up to 20 million euros, or approximately 23 million U.S. dollars, or 4% of an entity’s worldwide annual turnover in the preceding financial year, whichever is higher) and increases the enforcement powers of the data protection authorities and private citizens. The European Union is also considering an update to its Privacy and Electronic Communication (e-Privacy) Directive with a regulation to, among other things, amend the current directive’s rules on the use of cookies and email marketing.

Our failure to comply with any of these laws or regulations, foreign or domestic, may have an adverse effect on our business, financial condition and results of operations. Any failure, or perceived failure, by us to comply with laws and regulations that govern our business operations, as well as any failure, or perceived failure, by us to comply with our own posted policies, could result in claims against us by governmental entities or others and/or increased costs to change our practices. They could also result in negative publicity and a loss of confidence in us by our users and advertisers. All of these potential consequences could adversely affect our business and results of operations.

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If we are unable to execute cost-control measures successfully, our total operating costs may be greater than expected, which would adversely affect our profitability.

We continually assess our operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. These activities have in the past included, and could include in the future, outsourcing of various functions or operations, additional abandonment of leased space, offering employee buyouts, amending retirement benefits and other activities that may result in changes to employee headcount. See Note 6 to the Consolidated Financial Statements for more information on changes in operations during 2020. The Company expects to continue to take actions deemed appropriate to control expenses and enhance profitability but does not currently know whether or when any such actions will occur or the potential costs and expected savings. If we do not achieve expected savings, are unable to implement additional cost-control measures, or our operating costs increase as a result of investments in strategic initiatives, our total operating costs would be greater than anticipated. In addition, if we do not manage our costs properly, such efforts may affect the quality of our products and our ability to generate future revenues. Reductions in staff and employee benefits and changes to our compensation structure could also adversely affect our ability to attract and retain key employees. Finally, depending on the actions taken and the timing of any such actions, the anticipated cost savings could be recognized in fiscal periods that do not correspond to the fiscal period(s) in which the charges are recognized. As a result, our net income trends could be impacted and more difficult to predict.

Significant portions of our expenses are fixed costs that neither increase nor decrease proportionately with revenues. If we are not able to implement further cost-control efforts or reduce our fixed costs sufficiently in response to a decline in our revenues, this could adversely affect our results of operations.

Newsprint prices and availability may continue to be volatile and difficult to predict and control.

Newsprint and ink expense was 4.2% of our total operating expenses for the year ended December 27, 2020. The price of newsprint has historically been subject to change, and the consolidation of North American newsprint mills over the years has reduced the number of suppliers and the available supply of newsprint. We have historically been able to realize favorable newsprint pricing by virtue of our company-wide volume and a long-term contract with a significant supplier. Failure to maintain our current consumption levels, further supplier consolidation or the inability to maintain our existing relationships with our newsprint suppliers may adversely affect newsprint prices in the future.

We may not be able to adapt to technological changes.

Advances in technologies or alternative methods of content delivery or changes in consumer behavior driven by these or other technologies have had and could continue to have a negative effect on our business. New delivery platforms may lead to pricing restrictions, the loss of distribution control and the loss of a direct relationship with consumers. Our advertising and circulation revenues have declined, reflecting general trends in the newspaper industry, including declining newspaper buying (by young people in particular) and the migration to other available forms of media for news. We may also be adversely affected if the use of technology developed to block the display of advertising on websites and mobile devices, fraudulent traffic generated by “bots,” or malware proliferate. We cannot predict the effect such technologies will have on our operations. In addition, the expenditures necessary to implement these new technologies could be substantial and other companies employing such technologies before we are able to do so could aggressively compete with our business.

We rely on third-party service providers for various services.

We rely on third-party service providers for various services. We do not control the operation of these service providers. If any of these third-party service providers terminate their relationship with us, or do not provide an adequate level of service, it could be disruptive to our business as we seek to replace the service provider or remedy the inadequate level of service. This disruption may adversely affect our operating results.

Significant problems with our key systems or those of our third-party service providers could have a material adverse effect on our operating results.

The systems underlying the operations of each of our businesses are complex and diverse, and must efficiently integrate with third-party systems, such as wire feeds, video playback systems and credit card processors. Key systems include, without limitation, billing, website and database management, customer support, editorial content management, advertisement and circulation serving and management systems, information technology and communications systems, print and insert production systems, and internal financial systems. Some of these systems and/or support thereof are outsourced to third parties. We or our third-party service providers may experience problems with these systems. All information technology and

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communication systems are subject to reliability issues, integration and compatibility concerns, and security-threatening intrusions. The continued and uninterrupted performance of our key systems is critical to our success. Unanticipated problems affecting these systems could cause interruptions in our services. In addition, if our third-party service providers face financial or other difficulties, our business could be adversely impacted. Any significant errors, damage, failures, interruptions, delays, or other problems with our systems, our backup systems or our third-party service providers or their systems could adversely impact our ability to satisfy our customers or operate our businesses and could have a material adverse effect on our operating results.

Our brands and reputation are key assets, and negative perceptions or publicity could adversely affect our business, financial condition and results of operations.

Our brands are key assets of the Company, and our success depends on our ability to preserve, grow and leverage the value of our brands. We believe that our brands are trusted by consumers and have excellent reputations for high-quality journalism and content. To the extent consumers perceive the quality of our products to be less reliable or our reputation is damaged, our business, financial condition or results of operations may be adversely affected.

We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business, or to defend successfully against intellectual property infringement claims by third parties.

Our ability to compete effectively depends in part upon our intellectual property rights, including our trademarks, copyrights and proprietary technology. Protecting our intellectual property rights and proprietary technology requires us to continually police against the unauthorized use of our products and services and related intellectual property and rely on our contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws, all which may not be adequate.

Despite our best efforts to enforce our intellectual property rights, developments in technology may increase the threat of content piracy by making it easier to duplicate and widely distribute pirated material. Protection of our intellectual property rights is dependent on the scope and duration of our rights as defined by applicable laws in the U.S. and abroad and the manner in which those laws are construed. If those laws are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from intellectual property may decrease, or the cost of obtaining and maintaining rights may increase. There can be no assurance that our efforts to enforce our rights and protect our products, services and intellectual property will be successful in preventing content piracy.

Litigation may be necessary to enforce our intellectual property rights and protect our proprietary technology, or to defend against claims by third parties that the conduct of our businesses or our use of intellectual property infringes upon such third-party’s intellectual property rights. Any intellectual property litigation or claims brought against us, whether or not meritorious, could result in substantial costs and diversion of our resources, and there can be no assurances that favorable final outcomes will be obtained in all cases. The terms of any settlement or judgment may require us to pay substantial amounts to the other party or cease exercising our rights in such intellectual property. In addition, we may have to seek a license to continue practices found to be in violation of a third-party’s rights, which may not be available on reasonable terms, or at all. Our business, financial condition or results of operations may be adversely affected as a result.

Adverse results from litigation or governmental investigations can impact our business practices and operating results.

From time to time, we are party to litigation, including matters relating to alleged libel or defamation, breaches of fiduciary duties by our Board, employment-related matters or claims that may provide for statutory damages, in addition to regulatory, environmental and other proceedings with governmental authorities and administrative agencies. The coverage, if any, and limits of our insurance policies may not be adequate to reimburse us for all costs and/or losses associated with lawsuits or investigations. If we are not successful in our defense of any claims that may be asserted against us and/or those claims are not covered by insurance or exceed our insurance coverage, we may have to pay damage awards, indemnify our officers and directors from damage awards that may be entered against them and pay the costs and expenses incurred in defense of, or in any settlement of, such claims. Any such payments or settlement arrangements could be significant and have a material adverse effect on our business, financial condition, results of operations or cash flows if the claims are not covered by our insurance carriers or if damages exceed the limits of our insurance coverage. Furthermore, regardless of the outcome of any claims that may be filed against us, defending litigation itself could result in substantial costs and divert management’s attention and resources, which could have a material adverse effect on our business, operating results, financial condition and ability to finance our operations.

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In some instances, we may have an obligation to indemnify a third-party for liabilities related to litigation or governmental investigations. It is possible that the resolution of one or more such legal matters could result in significant monetary damages, which could adversely affect our financial condition and cash flow. For example, as part of the Nant Transaction, the Company provided Nant Capital indemnification with respect to certain legal matters which were at various states of adjudication at the date of the sale. On August 19, 2019, the Los Angeles Times received an unfavorable jury verdict in an indemnified employment litigation matter. On December 27, 2019, the judge in this case overturned the jury verdict on the grounds that the monetary damages were excessive and could not be justified by the evidence. A new trial will be held solely for the purpose of determining damages. This future award could adversely affect our financial condition.

In other instances, third parties may have an obligation to indemnify us for liabilities related to litigation or governmental investigations, and may be unable to, or fail to fulfill such obligations. It is possible that the resolution of one or more such legal matters could result in significant monetary damages. If such third parties were to fail to indemnify us, we would be responsible for the monetary damages, which could adversely affect our financial condition and cash flow.

We may not achieve the acquisition component of our business strategy, or successfully complete strategic acquisitions, investments or divestitures.

We continuously evaluate our businesses and make strategic acquisitions, investments and divestitures as part of our strategic plan. These transactions involve challenges and risks in negotiation, execution, valuation and integration. There can be no assurance that any such acquisitions, investments or divestitures can be completed.

Acquisitions are an important component of our business strategy; however, there can be no assurance that we will be able to grow our business through acquisitions, that any businesses acquired will perform in accordance with expectations or that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove to be correct.

Acquisitions involve a number of risks, including (i) the challenges in achieving strategic objectives, cost savings and other anticipated benefits; (ii) potential adverse short-term effects on operating results through increased costs or otherwise; (iii) diversion of management’s attention and failure to recruit new, and retain existing, key personnel of the acquired business; (iv) stockholder dilution if an acquisition is consummated (in whole or in part) through an issuance of our securities; (v) failure to successfully implement systems integration; (vi) potential future impairments of goodwill associated with the acquired business; (vii) the risks inherent in the systems of the acquired business and risks associated with unanticipated events or liabilities, any of which could have a material adverse effect on our business, financial condition and results of operations (viii) exceeding the capability of our systems; (ix) problems implementing disclosure controls and procedures for the newly acquired business; and (x) unforeseen difficulties extending internal control over financial reporting and performing the required assessment at the newly acquired business.

Our ability to execute an acquisition strategy may also encounter limitations in completing transactions.  Among other considerations, we may not be able to obtain necessary financing on attractive terms or at all, and we may face regulatory considerations that limit the candidates with whom we are permitted to proceed or may impose transaction execution delays. Future acquisitions may result in the Company incurring debt and contingent liabilities, pension obligations, an increase in interest and amortization expense and significant charges relative to integration costs. Our strategy could be impeded if we do not identify suitable acquisition candidates and our financial condition and results of operations will be adversely affected if we overpay for acquisitions. Even if successfully negotiated, closed and integrated, certain acquisitions may prove not to advance our business strategy and may fall short of expected returns.

Strategic investments are an important component of our business strategy as well. Investments in other companies expose us to the risk that we may not be able to control the operations of the companies we have invested in, which could decrease the benefits we realize from a particular relationship. The success of these investments is dependent on the companies we invest in, as well as other investors. We also are exposed to the risk that a company in which we have made an investment may encounter financial difficulties, which could lead to disruption of that company’s business or operations. Further, our ability to monetize the investments and/or the value we may receive upon any disposition may depend on the actions of the companies we have invested in and other investors. As a result, our ability to control the timing or process relating to a disposition may be limited, which could adversely affect the liquidity of these investments or the value we may ultimately attain upon disposition. If the value of the companies in which we invest declines, we may be required to record a charge to earnings. There can be no assurances that we will receive a return on these investments or that they will result in revenue growth or will produce equity income or capital gains in future years.

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If we are unable to successfully operate our business in new markets we may enter, our business, financial condition, and results of operations could be adversely affected.

Part of our strategy is to expand through both organic and inorganic growth. Our future financial results will depend in part on our ability to profitably manage our business in these and any other new markets that we may enter. In order to successfully execute on our growth initiatives, we will need to, among other things, anticipate and react to market conditions and develop expertise in areas outside of our business’s traditional core competencies. If we are unable to do so, our business, financial condition, and results of operations could be adversely affected.

Continued economic uncertainty and the impact on our business or changes to our business and operations may result in goodwill and masthead impairment charges.

Because we have grown in part through acquisitions, goodwill and other acquired intangible assets represent a substantial portion of our assets. We also have long-lived assets consisting of property and equipment, right of use lease assets and other identifiable intangible assets which we review both on an annual basis as well as when events or circumstances indicate that the carrying amount of an asset may not be recoverable. Erosion of general economic, market or business conditions could have a negative impact on our business and stock price, which may require that we record impairment charges in the future, which negatively affects our results of operations. If a determination is made that a significant impairment in value of goodwill, other intangible assets or long-lived assets has occurred, such determination could require us to impair a substantial portion of our assets. Asset impairments could have a material adverse effect on our financial condition and results of operations.

We assumed underfunded pension liabilities as part of the New York Daily News acquisition and our pension obligations under this plan, or other pension plans we may assume in future acquisitions, could increase.

In connection with acquisitions, we have in the past assumed, and may in the future assume, single-employer and/or multiemployer pension obligations of the acquired entity(ies) which may or may not be fully funded at the time of acquisition.  In connection with our acquisition of the New York Daily News, we assumed the Daily News Retirement Plan (“NYDN Pension Plan”) which is currently underfunded.  The Company’s contributions to the NYDN Pension Plan were $2.6 million in fiscal 2020. There are no unfunded commitments of the NYDN Pension Plan as of December 27, 2020. Our pension funding requirements could increase due to a reduction in the plan’s funded status. The extent of underfunding of this plan is directly affected by a variety of factors, including performance of financial markets, changing interest rates, changes in assumptions or investments that do not achieve adequate or expected returns, and liquidity of the plan’s investments. It also is affected by the rate and age of employee retirements, along with actual experience compared to actuarial projections. These items affect pension plan assets and the calculation of pension obligations and expenses. Such changes could increase the cost to our obligations, which could have a material adverse effect on our results and our ability to meet those obligations. In addition, changes in the law, rules, or governmental regulations with respect to pension funding could also materially and adversely affect cash flow and our ability to meet our pension obligations.

Our annual pension funding obligations could also further increase if we assume additional pension plans (whether or not unfunded) in connection with future acquisitions. No assurances can be made regarding whether we will assume other pension plan obligations and, if we do, the level of any underfunded status, if any.

We may be obligated to make greater contributions to multiemployer defined benefit pension plans that cover our union-represented employees in the next several years than previously required, placing greater liquidity needs upon our operations.

As of December 27, 2020, we participate in, and make periodic contributions to, nine multiemployer pension plans that cover many of our current and former union employees. The risks of participating in multiemployer plans are different from single-employer plans in that assets contributed are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer withdraws from or otherwise ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. Our required contribution to these plans could increase because of a shrinking contribution base as a result of the insolvency or withdrawal of other companies that currently contribute to these plans, the inability or failure of withdrawing companies to pay their withdrawal liability, low interest rates, lower than expected returns on pension fund assets or the other funding deficiencies. Our withdrawal liability for any multiemployer pension plan will depend on the nature and timing of any triggering event and the extent of that plan’s funding of vested benefits.

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Under federal pension law, special funding rules apply to multiemployer pension plans that are classified as “endangered,” “critical” or “critical and declining.” If plans in which we participate are in one of these statuses, benefit reductions may apply and/or we could be required to make additional contributions.

Three of the multiemployer plans that we contribute to are in critical and declining status and project insolvency at various dates within the next 10 years. All three of these plans have adopted rehabilitation plans designed to forestall the plans’ insolvency dates. A fourth plan, the IAM National Pension Fund, is in critical status, but not critical and declining status. This plan adopted a rehabilitation plan designed to enable it to emerge from critical status within the time frame stipulated by the Internal Revenue Code.

Rehabilitation plans are required to be reviewed annually and modified if necessary to meet federal requirements. Therefore, there can be no assurances that the funding obligations under the rehabilitation plans will not increase in the future or that the rehabilitation plans will be successful in preventing or forestalling the projected insolvency of the multiemployer plans.

Given the critical and declining status of the three plans, the trustees may amend the current, or adopt new, rehabilitation plans with increased funding obligations. Trustees of a plan or the PBGC also may decide to terminate a multiemployer plan rather than permit it to become insolvent, and a termination would result in additional liabilities for the participating employers.

With respect to three of the nine multiemployer defined benefit pension plans to which we are obligated to contribute, we are among only a limited number of participating employers. As a result, if one or more of the other contributing employers withdraws from, or ceases to contribute to, such plans, our required contributions to such plans could increase. A withdrawal by a significant percentage of participating employers may result in a mass withdrawal, which would require us to record additional withdrawal liabilities. Additionally, if we are the last remaining participating employer in such plan, we may become obligated to fund the plan’s future liabilities more quickly as if it were a single employer plan and the unfunded liability could reside on our financial statements which would impact our financial condition.

If, in the future, we elect to withdraw from an underfunded multiemployer plan, or if we trigger a partial withdrawal due to declines in contribution base units or a partial cessation of our obligation to contribute, additional liabilities would be required to be recorded that could have an adverse effect on our business, results of operations, financial condition or cash flows. We are not currently able to quantify such potential increased contributions or withdrawal liabilities. See Note 16 to the Consolidated Financial Statements for additional information on individual multiemployer plans.

Labor strikes, lockouts and protracted negotiations can lead to business interruptions and increased operating costs.

As of December 27, 2020, union employees comprised approximately 39.9% of our workforce. We are required to negotiate collective bargaining agreements across our business units on an ongoing basis. Complications in labor negotiations can lead to work slowdowns or other business interruptions and greater overall employee costs. Additionally, certain of our employee groups could elect to unionize in the future. If we or our suppliers are unable to negotiate new or renew expiring collective bargaining agreements, it is possible that the affected unions or others could take action in the form of strikes or work stoppages. Such actions, higher costs in connection with these agreements or a significant labor dispute could adversely affect our business by disrupting our ability to provide customers with our products or services. Depending on its duration, any lockout, strike or work stoppage may have an adverse effect on our operating revenues, cash flows or operating income or the timing thereof.

Our revenues and operating results fluctuate on a seasonal basis and may suffer if revenues during the peak season do not meet our expectations.

Our advertising business is seasonal, and our quarterly revenues and operating results typically exhibit this seasonality. Our revenues and operating results tend to be higher in the second and fourth quarters than the first and third quarters. Results for the second quarter reflect spring advertising revenues, while the fourth quarter includes advertising revenues related to the holiday season. Our operating results may suffer if advertising revenues during the second and fourth quarters do not meet expectations. Our working capital and cash flows also fluctuate as a result of this seasonality. Moreover, the operational risks described elsewhere in these risk factors may be significantly exacerbated if those risks were to occur during the fourth quarter.

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Our ability to operate effectively could be impaired if we fail to attract, integrate and retain our senior management team.

We rely heavily on the skills and expertise of our senior management team and therefore, our success depends, in part, upon the services they provide us. For example, in January 2020, we appointed a new Chief Executive Officer, new Interim Chief Financial Officer and new Chairman of the Board. If we are unable to assimilate these new senior managers, if they or our other leaders fail to perform effectively, if we are unable to retain them, or if we are unable to attract additional qualified senior managers as needed, our strategic initiatives could be adversely impacted which could adversely affect our business, financial condition and results of operations.

We may not be able to access the credit and capital markets at the times and in the amounts needed and on acceptable terms.

From time to time we may need to access the long-term and short-term capital markets to obtain financing. Our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including: (i) our financial performance, (ii) our credit ratings or absence of a credit rating, (iii) the liquidity of the overall capital markets and (iv) the state of the economy. There can be no assurance that we will have access to the capital markets on terms acceptable to us.

We may incur significant costs to address contamination issues at certain sites operated or used by our publishing businesses.

We may incur costs in connection with the investigation or remediation of contamination at sites currently or formerly owned or operated by us. Issues generally relate to sites previously owned, operated or used by the Company’s publishing businesses and in some cases, continue to be used for our publishing businesses at which contaminations were identified. Historically, our publishing business was obligated to investigate and remediate contamination at certain of these sites. We were also required to contribute to cleanup costs at certain of these sites that were third-party waste disposal facilities at which it disposed of its wastes. In addition, we acquired real property in connection with our acquisitions of the New York Daily News and The Virginian-Pilot, which includes sites at which contaminations were identified. The sellers in these acquisitions have agreed to indemnify us for certain environmental liabilities, but we may have additional investigation and remediation obligations and be required to contribute to cleanup costs at these facilities. We could have additional investigation and remediation obligations and be required to contribute to cleanup costs at these facilities. Environmental liabilities, including investigation and remediation obligations, could adversely affect our operating results or financial condition.

Macroeconomic trends may adversely impact our business, financial condition and results of operations.

Our operating revenues are sensitive to discretionary spending available to advertisers and subscribers in the markets we serve, as well as their perceptions of economic trends and uncertainty. Weak economic indicators, such as high unemployment rates, weakness in housing, fuel prices and uncertainty regarding the national and state governments’ ability to resolve fiscal issues, may adversely impact advertiser and subscriber sentiment. These types of conditions could impair our ability to maintain and grow our advertiser and subscriber bases.

Events beyond our control may result in unexpected adverse operating results.

Our results could be affected in various ways by global or domestic events beyond our control, such as wars, political unrest, acts of terrorism, natural disasters, Internet outages or disruption caused by health epidemics, such as the coronavirus outbreak. Such events can quickly result in significant declines in advertising revenue and significant increases in news gathering costs. There are no assurances that our business continuity or disaster recovery plans are adequate or that they will be implemented successfully if any such events were to occur.

Risks Relating to our Common Stock and the Securities Market

Concentration of ownership among our existing directors and principal stockholders may prevent new investors from influencing significant corporate decisions.

As of March 5, 2021, our two largest shareholders are (i) Alden Funds which beneficially owned approximately 31.6% of our outstanding common stock, and (ii) Nant Capital, together with Dr. Patrick Soon-Shiong, which beneficially owned approximately 23.9% of our outstanding common stock. Dr. Patrick Soon-Shiong is the indirect sole owner of Nant Capital. The interests of the Alden Funds and Nant Capital may differ from those of the Company’s other stockholders. The Alden

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Funds and Nant Capital are in the business of making investments in companies and maximizing the return on those investments. They currently may have and may from time to time in the future acquire, interests in businesses that directly or indirectly compete with certain aspects of our business or that supply us with goods and services.

Due to their significant stockholdings, the Alden Funds and Nant Capital and their affiliates may be able to significantly influence matters requiring approval of stockholders, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions. For additional information on the purchase agreements under which the Alden Funds and Nant Capital acquired their shares, see Note 20 to the Consolidated Financial Statements.

The Adoption of the Rights Agreement reduces the likelihood that a potential acquirer could gain, or seek to gain, influence or control the Company.

The Board has adopted the Rights Agreement to reduce the likelihood that a potential acquirer would gain (or seek to influence or change) control of the Company through acquisitions from other stockholders, open market accumulation or other tactics without paying an appropriate premium for the Company’s shares. In general terms and subject to certain exceptions, it works by imposing a significant penalty upon any person or group (including a group of persons that are acting in concert with each other) that acquires 10% or more of the outstanding Common Stock of the Company without the approval of the Board.

The Rights Agreement includes antidilution provisions designed to prevent efforts to diminish the effectiveness of the Rights.

Certain provisions of our certificate of incorporation, by-laws, and Delaware law may discourage takeovers.

Our amended and restated certificate of incorporation and amended and restated by-laws contain certain provisions that may discourage, delay or prevent a change in our management or control over us. For example, our amended and restated certificate of incorporation and amended and restated by-laws, collectively:

•authorize the issuance of “blank check” preferred stock that could be issued by our Board to thwart a takeover attempt;

•provide that vacancies on our Board, including vacancies resulting from an enlargement of our Board, may be filled only by a majority vote of directors then in office;

•prohibit stockholders from calling special meetings of stockholders;

•prohibit stockholder action by written consent;

•establish advance notice requirements for nominations of candidates for elections as directors or to bring other business before an annual meeting of our stockholders; and

•require the approval of holders of at least 66 2/3% of the outstanding shares of our common stock to amend certain provisions of our amended and restated certificate of incorporation or to amend our amended and restated by-laws.

Additionally, Section 203 of the General Corporation Law of the State of Delaware (“DGCL”) restricts certain business combinations with interested stockholders in certain situations. In general, this statute prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction by which that person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an interested stockholder is a person who, together with affiliates and associates, owns, or within three years prior, did own, 15% or more of voting stock.

These provisions could discourage potential acquisition proposals and could delay or prevent a change in control, even though a majority of stockholders may consider such proposal, if effected, desirable. Such provisions could also make it more difficult for third parties to remove and replace the members of the Board. Moreover, these provisions may inhibit increases in the trading price of our common stock that may result from takeover attempts or speculation.

Substantial sales, or stock issuances by us, of our common stock or the perception that such sales or issuances might occur, could depress the market price of our common stock.

Any sales of substantial amounts of our common stock in the public market, including resales by our investors such as those to whom we have granted registration rights, or the perception that such sales might occur, could depress the market price of our common stock. Pursuant to the purchase agreement under which Nant Capital acquired shares from us, certain of the

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restrictions on resales of those shares expired and, therefore, Nant Capital could sell a significant number of shares either in the open market or in privately negotiated transactions. There is no assurance that there will be sufficient buying interest to offset any such public market sales, and, accordingly, the price of our common stock may be depressed by those sales and have periods of volatility.

In addition, we could from time to time issue new securities (debt or equity) or use treasury stock to fund potential acquisitions. Any issuance of common stock by us could dilute the ownership of current stockholders and could impact the price per share of our common stock. In addition, if we were to issue debt and/or preferred equity, the holders of such securities would have rights senior to those of our common stockholders. There can be no assurances whether we will issue additional securities in the future and, if so, how many and how such issuance could impact our current stockholders and our share price.

The market price for our common stock may be volatile.

Many factors could cause the trading price of our common stock to rise and fall, including the following: (i) declining newspaper print circulation; (ii) declining operating revenues derived from our core business; (iii) variations in quarterly results; (iv) announcements regarding dividends; (v) announcements of technological innovations by us or by competitors; (vi) introductions of new products or services or new pricing policies by us or by competitors; (vii) acquisitions or strategic alliances by us or by competitors; (viii) recruitment or departure of key personnel or key groups of personnel; (ix) the gain or loss of significant advertisers or other customers; (x) changes in the estimates of our operating performance or changes in recommendations by any securities analysts that elect to follow our stock; and (xi) market conditions in the newspaper industry, the media industry, the industries of our customers, and the economy as a whole.

We may be subject to the actions of activist shareholders, which could adversely impact our business.

Activist shareholders and other third parties have made, or may in the future make, strategic proposals, including unsolicited takeover proposals, suggestions or requested changes concerning the Company’s operations, strategy, governance, management, business or other matters. Responding to these campaigns or proposals can be costly and time-consuming, disrupt our operations, and divert the attention of management and our employees from our strategic initiatives. These activities can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the loss of potential business opportunities, harm our ability to attract new investors and customers, and cause the price of our common stock to be depressed and have periods of volatility. We cannot predict, and no assurances can be given, as to the outcome or timing of any matters relating to the foregoing, and such matters may adversely affect our ability to effectively and timely implement our current initiatives, retain and attract key employees, and execute on our business strategy.

Our ability to pay regular dividends to our stockholders is subject to the discretion of our Board.

We have previously paid quarterly cash dividends on our common stock. On May 8, 2020, the Board suspended the Company’s quarterly dividend program until further notice given the unprecedented economic disruption caused by COVID-19. Our Board may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. The declaration and payment of dividends to holders of our common stock is at the discretion of our Board in accordance with applicable law after taking into account various factors, including actual results of operations, liquidity and financial condition, restrictions imposed by applicable law, our taxable income, our operating expenses, changes in our business needs, including working capital and funding for business initiatives or acquisitions, changes in corporate strategy, and other factors our Board deems relevant. In addition, because we are a holding company with no material direct operations, we are dependent on loans, dividends and other payments from our operating subsidiaries to generate the funds necessary to pay dividends on our common stock. We expect to cause our subsidiaries to make distributions to us in an amount sufficient for us to pay dividends. However, their ability to make such distributions will be subject to their operating results, cash requirements and financial condition and the applicable provisions of Delaware law that may limit the amount of funds available for distribution, and our ability to pay cash dividends will be subject to covenants and financial ratios related to existing or future indebtedness and other agreements with third parties.

In addition, each of the companies in our corporate chain must manage its assets, liabilities and working capital in order to meet all of its cash obligations, including the payment of dividends or distributions. As a consequence of these various limitations and restrictions, we may not be able to make, or may have to reduce or eliminate, the payment of dividends on our common stock. Any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our common stock.

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If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the security or industry analysts downgrades our stock, ceases coverage of our company, fails to publish reports on us regularly, or publishes misleading or unfavorable research about our business, demand for our stock may decrease, which could cause our stock price or trading volume to decline.

Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation or our amended and restated by-laws or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. By becoming a stockholder in our company, you will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of incorporation related to choice of forum. The choice of forum provision in our amended and restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our owned facilities are approximately 0.2 million square feet, which primarily includes a former printing plant in Virginia. Our leased facilities are approximately 4.0 million square feet in the aggregate. The Company currently has leased office and newspaper production facilities in Connecticut, Florida, Illinois, Maryland, New Jersey, Pennsylvania, Texas and Virginia, however approximately 1.0 million square feet of the leased space has been permanently vacated. The Company also leases numerous small warehouse facilities for use as distribution centers in the regions of its newspapers. Tribune owns substantially all of the production equipment at locations where the Company continues to print newspapers. See Note 4 to the Consolidated Financial Statements for additional information about the Company’s leases.

We believe that our current facilities, including the terms and conditions of the relevant lease agreements, are adequate to operate our businesses as currently conducted.

Item 3. Legal Proceedings

We are subject to various legal proceedings and claims that have arisen in the ordinary course of business. The legal entities comprising our operations are defendants from time to time in actions for matters arising out of their business operations. In addition, the legal entities comprising our operations are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies.

The Company does not believe that any matters or proceedings presently pending will have a material adverse effect, individually or in the aggregate, on our consolidated financial position, results of operations or liquidity. However, legal matters and proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. As such, there can be no assurance that the final outcome of these matters and proceedings will not materially and adversely affect our consolidated financial position, results of operations or liquidity.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The common stock of Tribune is traded on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “TPCO.” On March 5, 2021, the closing price for the Company’s common stock as reported on Nasdaq was $16.99. The approximate number of stockholders of record of the common stock at the close of business on such date was 20. A substantially greater number of holders of Tribune’s common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions.

On May 8, 2020, the Board suspended the Company's quarterly cash dividend program until further notice given the unprecedented economic disruption caused by COVID-19. This action, along with many other operational actions taken at the Company, will help preserve liquidity. Future cash dividends, if any, will be at the discretion of our Board and the amount of cash dividends per share will depend upon, among other things, our future earnings, financial condition, results of operations, level of indebtedness, capital requirements and surplus, contractual restrictions, number of shares of common stock outstanding, as well as legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.

Tribune Stock Comparative Performance Graph

The following graph compares the cumulative total stockholder return on our common stock for the period commencing December 24, 2015 through December 24, 2020 (the last trading day of fiscal 2020) with the cumulative total return on the Standard & Poor’s 500 Stock Index (“S&P 500”) and the Standard & Poor’s Publishing Stock Index (“S&P Publishing Index”).

Total return values were calculated based on cumulative total return assuming (i) the investment of $100 in our common stock, the S&P 500 and the S&P Publishing Index and (ii) reinvestment of dividends.

The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor should such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference in such filing.

Item 6. Selected Financial Data

The Company has early adopted the removal of the disclosure required by this item, as permitted by SEC rule changes effective February 10, 2021.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the other sections of this Annual Report on Form 10-K, including the Consolidated Financial Statements and related Notes thereto and “Cautionary Statement Concerning Forward-Looking Statements.” Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and other factors described throughout this Form 10-K, including the factors disclosed under “Item 1A. — Risk Factors.”

We believe that the assumptions underlying the Consolidated Financial Statements included in this Annual Report are reasonable. However, the Consolidated Financial Statements may not necessarily reflect our results of operations, financial position and cash flows for future periods.

Overview

Tribune is a media company rooted in award-winning journalism. Headquartered in Chicago, Tribune operates local media businesses in eight markets, with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Hartford Courant, South Florida’s Sun Sentinel, Orlando Sentinel, Virginia’s Daily Press and The Virginian-Pilot, and The

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Morning Call of Lehigh Valley, Pennsylvania. Tribune also operates TCA.

Tribune’s unique and valuable content across its brands have earned a combined 65 Pulitzer Prizes and are committed to informing, inspiring and engaging local communities. Tribune’s brands create and distribute content across our media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities.

The Company continually assesses its operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. These activities have in the past included, and could include in the future, outsourcing of various functions or operations, additional abandonment of leased space and other activities which may result in changes to employee headcount. See Note 6 to the Consolidated Financial Statements for further information on changes in operations during fiscal year 2020. The Company expects to continue to take actions deemed appropriate to enhance profitability but does not currently know whether or when any such actions will occur or the potential costs and expected savings. Depending on the actions taken and the timing of any such actions, the anticipated cost savings could be recognized in fiscal periods that do not correspond to the fiscal period(s) in which the charges are recognized.

COVID-19

As discussed in Item - 1. Business, Tribune remains focused on protecting the health and well-being of its employees and the communities in which it operates while assuring the continuity of its business operations. The Company has proactively implemented its business continuity plans and has taken a variety of measures to ensure the ongoing availability of its newspapers and information, while taking appropriate health and safety measures, including implementing remote work policies, where possible, and implementing enhanced cleaning and hygiene protocols in its production facilities. To date, as a result of these business continuity measures, the Company has not experienced disruptions in the distribution of news and information through the Company’s newspapers and websites.

Until fiscal 2019, advertising revenue was historically Tribune’s largest source of revenue. The Company’s advertising customers are typically local and regional, small and mid-sized businesses that purchase advertising to drive traffic to their businesses. These are the businesses that have been hit particularly hard by the widespread closures of businesses, government facilities and schools, cancellation of events and sports leagues, restriction on gathering and a significant reduction in economic activity. The decrease in advertising revenue and ongoing disruptions in Tribune’s operations due to the COVID-19 pandemic have adversely impacted its business, results of operations, financial condition and cash flows. The degree to which COVID-19 may impact Tribune’s results of operations and financial condition in the future is unknown at this time and will depend on future developments, including the severity and the duration of the pandemic.

The Company has taken extensive steps to mitigate the economic impact COVID-19 has had on its results of operations. These steps include evaluation of and adjustments to manufacturing and distribution processes, delaying non-essential repairs and maintenance, reducing third-party spending, freezing discretionary spending, eliminating incentive and discretionary bonuses and salary reductions and employee furloughs. These mitigation measures may not be sufficient to prevent adverse impacts on our business and financial condition from COVID-19.

As part of the Company’s reduction in spending, it withheld payment of rent for a majority of its leased facilities in April, May and June and requested rent relief in various forms, as described in Note 4 to the Consolidated Financial Statements. Tribune has been notified by a number of lessors that it is in default under the terms of its respective leases. Certain of such lessors have formally filed complaints in their local jurisdictions. The Company is negotiating with such lessors on the terms of the potential rent relief and the lessors’ remedies and is responding timely to all filed complaints.

2020 Highlights and Recent Events

•In response to the COVID-19 pandemic, the Company negotiated rent relief from lessors in various forms, including lease restructuring, rent abatement, deferrals or lease terminations. Additionally, during the year ended December 27, 2020, the Company permanently vacated 972,699 square feet of office, production and distribution space. The space was vacated as some of our locations have transitioned to long-term remote working arrangements and outsourced printing at the Hartford Courant. See Note 4 to the Consolidated Financial Statements for additional information on leases.

•On July 23, 2019, the Company entered into an agreement to sell real property located in Norfolk, Virginia, for a sales price of $9.5 million. The sale closed on January 22, 2020. Additionally, on November 2, 2020, the Company completed the sale of real property located in Virginia Beach, Virginia for a cash sales price of $5.2

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million. The Company leased back 39,975 square feet of the Virginia Beach property for a distribution center at $0.2 million per year for an initial term of two years with an option to renew for an additional two years. See Note 10 to the Consolidated Financial Statements for additional information on the property sales.

•On February 19, 2020, the Company declared dividends of $0.25 per common share, to be paid to shareholders of record as of March 2, 2020. The cash dividend totaling $9.3 million was paid on March 16, 2020. On May 8, 2020, the Board of Directors of the Company (the “Board”) suspended the Company's quarterly cash dividend program until further notice given the unprecedented economic disruption caused by COVID-19. See Note 20 to the Consolidated Financial Statements for additional information on dividends declared.

•In the first quarter of 2020, the Company offered a the 2020 VSIP which provided enhanced separation benefits to eligible employees with more than eight years of service. See Note 6 to the Consolidated Financial Statements for additional information on the 2020 VSIP.

•In the second quarter of 2020, the Company entered a contract with a third party to outsource the printing and packaging of The Virginian-Pilot. The services were fully transitioned to the third party at the end of the third quarter. In the fourth quarter of 2020, the Company contracted with a third party to outsource the printing and packaging of the Hartford Courant. The services were fully transitioned to the third party at the end of 2020. See Note 6 to the Consolidated Financial Statements for additional information on changes in operations.

•In 2018, the Company’s last employee that was a member of the CWA/ITU Union at the Company’s Baltimore location retired. This retirement effected a partial withdrawal from the CWA/ITU Negotiated Pension Plan. During the year ended December 27, 2020, the Company accrued $1.0 million to reflect this obligation. See Note 16 to the Consolidated Financial Statements for additional information on the Company’s multiemployer pension plans.

•On July 27, 2020, the Board declared a dividend of one preferred stock purchase right (a “Right”) for each of the Company’s outstanding shares of common stock, $0.01 par value. The dividend Right was issued on August 7, 2020, to holders of record as of the close of business on that date. The Rights will expire on July 27, 2021, unless earlier exercised, exchanged, amended or redeemed. See Note 20 to the Consolidated Financial Statements for additional information on the Rights Agreement.

•On December 11, 2020, the Company, entered into the BR Agreement, by and among the Sellers, BestReviews and Nexstar, pursuant to which the Sellers will sell 100% of BestReviews to Nexstar. The sale closed on December 29, 2020, subsequent to the Company’s fiscal year-end, for a cash sales price of $160.0 million plus a $9.4 million working capital adjustment. As of the balance sheet date, BestReviews was owned 60% by the Company and 40% by BR Holding Company, Inc. Under the terms of the BR Transaction the Company received 60% of the cash selling price net of transaction fees upon the closing on December 29, 2020. BestReviews is presented as discontinued operations in the accompanying financial statements. All prior periods have been adjusted. See Note 8 to the Consolidated Financial Statements for additional information on the related discontinued operations.

•On February 16, 2021, the Company entered into a Merger Agreement by and among TELLC, Merger Sub and the Company, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC. TELLC is the acquirer and is an affiliate of Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P., the Company’s largest shareholder. Upon completion of the transaction the Company will become a privately held company, and its common stock will no longer be listed on any public market. See Note 20 to the Consolidated Financial Statements for additional information on the Merger Agreement.

Results of Operations

The Company intends for the following discussion of its financial condition and results of operations to provide information that will assist in understanding the Company’s Consolidated Financial Statements, the changes in certain key items in those statements from period to period and the primary factors that accounted for those changes as well as how certain accounting principles, policies and estimates affect the Company’s Consolidated Financial Statements.

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Operating results for the years ended December 27, 2020, December 29, 2019, and December 30, 2018, are shown in the table below (in thousands). References in this discussion to individual markets include daily newspapers in those markets and their related businesses.

	Year ended						Year ended
	December 27, 2020		December 29, 2019		% Change		December 29, 2019		December 30, 2018		% Change
Operating revenues	$	746,250	$	945,777	(21.1	%)	$	945,777	$	1,005,662	(6.0	%)
Compensation	303,027		360,779		(16.0	%)	360,779		441,558		(18.3	%)
Newsprint and ink	33,777		56,785		(40.5	%)	56,785		66,134		(14.1	%)
Outside services	267,644		326,807		(18.1	%)	326,807		347,551		(6.0	%)
Other operating expenses	95,753		147,415		(35.0	%)	147,415		145,858		1.1	%
Depreciation and amortization	33,834		44,615		(24.2	%)	44,615		51,055		(12.6	%)
Impairment	78,739		14,496		*		14,496		1,872		*
Operating expenses	812,774		950,897		(14.5	%)	950,897		1,054,028		(9.8	%)
Loss from operations	(66,524)		(5,120)		*		(5,120)		(48,366)		(89.4	%)
Interest income (expense), net	(773)		499		*		499		(11,338)		*
Loss on early extinguishment of debt	—		—		*		—		(7,666)		*
Loss on equity investments, net	(817)		(2,988)		(72.7	%)	(2,988)		(1,868)		60.0	%
Other income (expense), net	1,368		45		*		45		14,513		(99.7	%)
Loss from continuing operations before income taxes	(66,746)		(7,564)		*		(7,564)		(54,725)		(86.2	%)
Income tax benefit	(19,930)		(434)		*		(434)		(13,078)		(96.7	%)
Loss from continuing operations	(46,816)		(7,130)		*		(7,130)		(41,647)		(82.9	%)
Plus: Income from discontinued operations, net of tax	15,320		6,886		*		6,886		291,294		(97.6	%)
Net income (loss)	(31,496)		(244)		*		$	(244)	$	249,647	*
Less: Income attributable to noncontrolling interest	7,516		4,825		55.8	%	$	4,825	$	856	*
Net income (loss) attributable to Tribune common stockholders	$	(39,012)	$	(5,069)	*		$	(5,069)	$	248,791	*

* Represents positive or negative change in excess of 100%

Year ended December 27, 2020 compared to the year ended December 29, 2019

Circulation Revenue—Circulation revenues decreased 3.4%, or $12.6 million, in the year ended December 27, 2020, compared to the year ended December 29, 2019. Home delivery revenue decreased $20.1 million and single copy sales decreased $9.0 million. These decreases were partially offset by an increase of $16.5 million in digital subscription revenue as consumers turn to digital delivery.

Advertising Revenue—Advertising revenues decreased 34.6%, or $138.1 million, in the year ended December 27, 2020, compared to the year ended December 29, 2019, due to decreases in all revenue categories. Year over year retail advertising decreased $113.4 million, classified advertising decreased $15.1 million and national advertising decreased $10.7 million. The COVID-19 pandemic continues to exacerbate the decline in advertising revenue.

Other Revenue—Other revenues consist of commercial print and delivery, direct mail and marketing, and content syndication and licensing, and other revenue. Other revenues decreased 27.0%, or $48.8 million, in the year ended December 27, 2020, compared to the year ended December 29, 2019. Commercial print and delivery revenue decreased $20.2 million, direct mail revenue decreased $11.8 million, and revenue from the TSA agreement decreased $17.0 million.

In response to these continuing revenue declines which have been accelerated by the COVID-19 pandemic, the Company has taken significant cost management measures as we work to position the Company for a post-pandemic digital future. While we are aggressively managing all expenses, our efforts are particularly focused on our fixed-cost infrastructure, including flattening

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our management structure, reductions in leased facilities and outsourcing of production, all of which are reflected in the following comparisons.

Compensation Expense—Compensation expense decreased 16.0%, or $57.8 million, in the year ended December 27, 2020, compared to the prior period. This decrease was due primarily to a decrease in salary and payroll tax expense of $49.8 million, a decrease in incentive compensation of $13.0 million, a decrease in stock-based compensation of $8.0 million, a decrease in workers compensation insurance expense of $2.8 million, and a decrease in multiemployer pension expense of $3.2 million. These decreases were partially offset by increased severance costs of $21.2 million related to personnel restructuring and production outsourcing.

Newsprint and Ink Expense—Newsprint and ink expense decreased 40.5%, or $23.0 million, in the year ended December 27, 2020, compared to the prior year. This decrease was due primarily to a decrease in the average cost per ton of newsprint related to the repeal of the tariff on certain newsprint products sourced from Canada and a decrease in volume.

Outside Services Expense—Outside services expense decreased 18.1%, or $59.2 million, in the year ended December 27, 2020, compared to the prior year. This decrease was primarily due to a reduction of $23.7 million in third-party delivery expense, $8.7 million in outside printing and production costs, $7.1 million in consulting costs, $4.0 million in legal expense, $4.0 million in temporary help and a decrease of $3.3 million in freelance purchased content.

Other Operating Expenses—Other operating expenses include occupancy costs, promotion and marketing costs, affiliate fees and other miscellaneous expenses. These expenses decreased 35.0%, or $51.7 million, in the year ended December 27, 2020, compared to the prior year primarily due to decreases in almost all categories. The largest decreases were a decrease of $12.7 million in promotion expenses, an $8.4 million decrease in occupancy costs, an $8.2 million decrease in supplies and repairs and maintenance and a $4.3 million decrease in travel, entertainment and other employee expenses. Additionally, other operating expenses include gains of $13.0 million related to lease terminations and $6.4 million related to the sale of real estate in Virginia. Although the Company has withheld payment for a number of its leased facilities, as discussed in Note 4 to the Consolidated Financial Statements, the Company has continued to recognize rent expense pursuant to the contractual terms of its lease agreements and has accrued $4.9 million as of December 27, 2020 for withheld rent payments.

Depreciation and Amortization Expense—Depreciation and amortization expense decreased 24.2%, or $10.8 million, for the year ended December 27, 2020, compared to the prior year. This decrease was due primarily to decreased depreciation related to asset retirements in previous periods partially offset by accelerated depreciation on equipment related to printing and packaging outsourcing at The Virginian-Pilot and the Hartford Courant.

Impairment Expense—The Company recorded a non-cash impairment charge of $78.7 million with $69.2 million related to the long-lived assets, $7.1 million related to mastheads, and $2.5 million related to goodwill. Long-lived asset impairments include $34.7 million associated with the lease right of use asset and leasehold improvements of abandoned lease space. See Notes 4, 10 and 11 to the Consolidated Financial Statements for additional information on impairments.

Loss on Equity Investments, Net—Loss on equity investments, net decreased $2.2 million due primarily to additional reserves for certain of the Company’s investments recorded in the prior year.

Income Tax Expense (Benefit)—Income tax expense decreased $19.5 million for the year ended December 27, 2020, over the prior year period primarily due to a decrease in taxable income. For the year ended December 27, 2020, the Company recorded an income tax benefit of $19.9 million including a $1.7 million benefit from the CARES Act relating to the carryback of the Company’s 2019 net operating loss to a period with a higher tax rate. The effective tax rate on pretax income was 29.9% in the year ended December 27, 2020. This rate differs from the U.S. federal statutory rate of 21.0% due primarily to state income taxes, net of federal benefit, tax expense related to vesting of stock-based compensation and non-deductible expenses.

For the year ended December 29, 2019, the Company recorded income tax benefit of $0.4 million. The effective tax rate on pretax income was 5.7% in the year ended December 29, 2019. This rate differs from the U.S. federal statutory rate of 21.0% due primarily to state income taxes, net of federal benefit and non-deductible expenses.

Year ended December 29, 2019 compared to the year ended December 30, 2018

Circulation Revenue—Circulation revenues decreased 0.6%, or $2.4 million in the year ended December 29, 2019, compared to the year ended December 30, 2018. Single copy sales decreased $11.6 million and home delivery revenue decreased $7.6 million. These decreases were partially offset by an increase of $10.1 million in digital subscription revenue as customers turn to digital delivery. These decreases were partially offset by revenues attributable to the acquisition of The Virginian-Pilot

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which contributed $16.5 million in the year ended December 29, 2019, compared to $9.8 million in the year ended December 30, 2018.

Advertising Revenue—Advertising revenues decreased 12.0%, or $54.6 million, in the year ended December 29, 2019, compared to the year ended December 30, 2018, due decreases in all revenue categories. Retail advertising revenue decreased $54.8 million, national advertising decreased $6.0 million and classified advertising decreased $4.0 million. These decreases were partially offset by contributions from the acquisition of The Virginian-Pilot in the second quarter of 2018 which contributed $35.8 million in revenue during the year ended December 29, 2019, compared to $24.7 million during the year ended December 30, 2018.

Other Revenue—Other revenues consist of commercial print and delivery, direct mail and marketing, and content syndication and licensing, and other revenue. Other revenues decreased 1.6%, or $2.9 million, in the year ended December 29, 2019, compared to the year ended December 30, 2018. Commercial print and delivery revenue decreased $9.2 million. This decrease was partially offset by an increase in direct mail revenue of $3.1 million and an increase in the revenue from the TSA agreement of $2.3 million and by revenues attributable to the acquisition of The Virginian-Pilot which contributed $3.9 million in the year ended December 29, 2019, compared to $2.3 million in the year ended December 30, 2018.

Compensation Expense—Compensation expense decreased 18.3%, or $80.8 million, in the year ended December 29, 2019, compared to the prior period. This decrease was due primarily to a decrease in salary and payroll tax expense of $57.7 million, a decrease in severance expense of $34.5 million and a decrease in medical insurance expense of $9.3 million as a result of the reduction in headcount related to personnel restructuring in prior periods. This decrease was partially offset by increased pension expense of $8.3 million due primarily to contributions to the Drivers' Plan, and increased compensation expense due to the acquisitions which contributed $17.6 million in the year ended December 29, 2019, compared to $16.6 million in the year ended year ended December 30, 2018.

Newsprint and Ink Expense—Newsprint and ink expense decreased 14.1%, or $9.3 million, in the year ended December 29, 2019, compared to the prior year. This decrease was due primarily to a decrease in the average cost per ton of newsprint related to the repeal of the tariff on certain newsprint products sourced from Canada and a decrease in volume. The decreases in price and volume were partially offset by increased newsprint and ink expense from the acquisition of The Virginian-Pilot which contributed $4.0 million in the year ended December 29, 2019, compared to $3.0 million during the year ended December 30, 2018.

Outside Services Expense—Outside services expense decreased 6.0%, or $20.7 million in the year ended December 29, 2019 compared to the prior year. This decrease was due primarily to $12.5 million of expense recorded in 2018 related to the Consulting Agreement described in Note 7 to the Consolidated Financial Statements. Additionally, there was a reduction of $5.2 million in third-party delivery expense, $4.2 million in temporary help, $2.9 million in outside printing and production costs, and $2.0 million in consulting costs. The decreases were partially offset by increases due to the acquisitions which contributed $17.8 million in the year ended December 29, 2019, compared to $10.2 million during the year ended December 30, 2018.

Other Operating Expenses—Other operating expenses include occupancy costs, promotion and marketing costs, affiliate fees and other miscellaneous expenses. These expenses increased 1.1%, or $1.6 million, in the year ended December 29, 2019, compared to the prior year. This increase was due primarily to $23.9 million of operating expense previously allocated to the California Properties in the prior year. These allocated operating expenses are recovered as a component of TSA revenue in periods subsequent to the sale. Additionally, acquisitions contributed $12.9 million in other operating expenses for the year ended December 29, 2019, compared to $6.5 million for the year ended December 30, 2018. These increases were partially offset by decreases in all categories, primarily a $7.4 million decrease in occupancy costs, a $5.2 million decrease in insurance expense, a $3.9 million decrease in bad debt expense and a $2.3 million decrease in travel, entertainment and other employee expenses.

Depreciation and Amortization Expense—Depreciation and amortization expense decreased 12.6%, or $6.4 million, for the year ended December 29, 2019, compared to the prior year. This decrease was due primarily to accelerated depreciation in 2018 related to the shortened lives for certain assets removed from service. This decrease was partially offset by increases due to the acquisitions which contributed $4.7 million in the year ended December 29, 2019, compared to $0.5 million during the year ended December 30, 2018.

Impairment Expense—In the fourth quarter of 2019, the Company recorded a non-cash impairment charge of $14.5 million related to the goodwill associated with The Baltimore Sun Media Group and Virginia Media Group.

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Interest Expense, Net—Interest expense, net decreased as the Senior Term Facility was repaid in full in June 2018.

Loss on Early Extinguishment of Debt—In June 2018, the Company repaid the outstanding principal balance under the Senior Term Facility and terminated the agreement. As a result of the early extinguishment of debt, the Company incurred a $7.7 million loss in 2018 to expense the remaining balance of original issue discount and debt origination fees.

Loss on Equity Investments, net—Loss on equity investments, net increased $1.1 million due primarily to additional reserves for certain of the Company’s investments.

Other Income (Expense), Net—The decrease in other non-operating income, net is primarily due to credits related to periodic benefit costs, In 2018, the Company terminated the non-union post-retirement medial plan. As such, remaining amounts in accumulated other comprehensive income were amortized to expense during 2018.

Income Tax Expense (Benefit)—Income tax expense increased by $12.6 million for the year ended December 29, 2019, over the prior year period. For the year ended December 29, 2019, the Company recorded an income tax expense of $0.4 million including a discrete item which resulted in a tax benefit of $1.5 million relating to an adjustment in state tax expense for the treatment of the Nant Transaction gain for state apportionment in selected states. The effective tax rate on pretax income was 5.7% in the year ended December 29, 2019. This rate differs from the U.S. federal statutory rate of 21.0% due primarily to state income taxes, net of federal benefit, tax expense related to vesting of stock-based compensation and non-deductible expenses.

For the year ended December 30, 2018, the effective Company recorded income tax benefit of $13.1 million. The effective tax rate on pretax income (loss) was 23.9% in the year ended December 30, 2018. This rate differs from the U.S. federal statutory rate of 21.0% due primarily to state income taxes, net of federal benefit and non-deductible expenses.

Liquidity and Capital Resources

The Company believes that its working capital and future cash from operations will provide adequate resources to fund its operating and financing needs for the foreseeable future. The Company’s access to, and the availability of, financing in the future will be impacted by many factors, including its credit rating, the liquidity of the overall capital markets, the current state of the economy and other risks described in Part 1, Item 1A of this report. There can be no assurances that the Company will have access to capital markets on acceptable terms.

Sources and Uses

The Company expects to fund capital expenditures, pension payments, dividend payments, and other operating requirements through a combination of existing cash balances and cash flows from operations. The Company’s financial and operating performance remains subject to prevailing economic and industry conditions, and to financial, business and other factors, some of which are beyond the control of the Company and, despite the Company’s current liquidity position, no assurances can be made that existing cash balances, cash flows from operations, or dispositions of assets or operations will be sufficient to satisfy the Company’s future liquidity needs.

The table below summarizes the total operating, investing and financing activity cash flows from operations for the years ended December 27, 2020, December 29, 2019, and December 30, 2018 (in thousands):

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Net cash provided by operating activities	$	32,493	$	44,425	$	47,552
Net cash provided by (used for) investing activities	11,181		(18,707)		(95,125)
Net cash used for financing activities	(17,438)		(65,075)		(357,420)
Increase (decrease) in cash attributable to continuing operations	26,236		(39,357)		(404,993)
Increase in cash attributable to discontinued operations	10,421		72		351,057
Net increase (decrease) in cash	$	36,657	$	(39,285)	$	(53,936)

Cash flow generated from operations is the Company’s primary source of liquidity. Net cash provided by continuing operations was $32.5 million for the year ended December 27, 2020, a decrease of $11.9 million from $44.4 million for the year ended December 29, 2019. The decrease in cash provided by operating activities was primarily driven by a decrease in

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operating results of $6.4 million (defined as net income (loss) adjusted for non-working capital items) as well as a decrease in cash from working capital of $5.5 million primarily related to unfavorable changes in accounts receivable and accounts payable, partially offset by favorable changes in prepaid expenses. For the year ended December 29, 2019, net cash provided by continuing operations was $44.4 million, a decrease of $3.1 million from $47.6 million for the year ended December 30, 2018. The decrease in cash provided by operating activities was primarily driven by an increase in operating results of $48.2 million, partially offset by a decrease in cash from working capital of $51.3 million related to unfavorable changes in accounts payable and prepaid expenses, partially offset by favorable changes in accounts receivable.

Net cash provided by investing activities totaled $11.2 million in the year ended December 27, 2020, due primarily to the net proceeds of $17.9 million related to the sale of the Virginia properties, partially offset by $10.1 million used for capital expenditures. For the year ended December 29, 2019, net cash used for investing activities totaled $18.7 million, due primarily to $18.6 million used for capital expenditures. We anticipate that capital expenditures for the year ended December 26, 2021, will be approximately $6.0 million to $10.0 million.

Net cash used for financing activities totaled $17.4 million in the year ended December 27, 2020, due primarily to payment of cash dividends to the Company’s common stockholders of $9.1 million and repayment of the capital lease obligation of $7.0 million. For the year ended December 29, 2019, net cash used for financing activities totaled $65.1 million, due primarily the payment of cash dividends to the Company’s common stockholders of $62.9 million.

Net cash provided by discontinued operations totaled $10.4 million for the year ended December 27, 2020 related to BestReviews operating results partially offset by the payment of dividends to noncontrolling interests of $9.8 million. For the year ended December 29, 2019, net cash used for discontinued operations totaled $0.1 million, primarily related to BestReviews operating results partially offset by the payment of dividends to noncontrolling interests of $6.6 million and the final tax payment of $6.0 million associated with the sale of the California Properties.

Dividends

On February 19, 2020, the Board declared a cash dividend of $0.25 per share of common stock outstanding. The cash dividend of $9.1 million was paid on March 16, 2020, to shareholders of record as of March 2, 2020. Additionally, the Company accrued dividend equivalents of $0.2 million for restricted stock units (“RSUs”) outstanding as of the record date.

On May 8, 2020, the Board suspended the Company's quarterly cash dividend program until further notice given the unprecedented economic disruption caused by COVID-19. This action, along with many other operational actions taken at the Company, will help preserve liquidity. The Board will continue to monitor liquidity needs and capital allocation in the future.

Multiemployer pension

During 2018, the trustees of the Drivers’ Plan agreed to a plan of merger with the Teamsters Fund. On December 13, 2018, the Drivers’ Plan adopted an amendment to its prior rehabilitation plan under which the Company will make contributions of $68.4 million over seven years. During the year ended December 27, 2020, the Company made contributions of $7.3 million to the Drivers’ Plan and the Teamsters Fund under the amended rehabilitation plan. During the year ended December 26, 2021, the Company expects to contribute $9.1 million under the rehabilitation plan.

In 2018, the Company’s last employee that was a member of the CWA/ITU Union at the Company’s Baltimore location retired. This retirement effected a partial withdrawal from the CWA/ITU Negotiated Pension Plan. The partial withdrawal creates a liability for which the Company is required to pay quarterly installments over a 20-year period. The Company accrued $1.0 million to reflect this obligation which is reflected in other long-term obligations in the Consolidated Balance Sheets. See Note 16 to the Consolidated Financial Statements for additional information on the Company’s multiemployer pension plans.

Stock Repurchases

On March 13, 2019, the Company announced that the Board authorized a stock repurchase program. Under the program, the Company may purchase up to $25.0 million of its outstanding common stock over the next 24 months. The purchases may be made in open-market transactions or privately negotiated transactions and may be made from time to time depending on market conditions, share price, trading volume, cash needs and other business factors. As of December 27, 2020, no repurchases had been made under the program.

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Acquisitions

Virginian-Pilot

On May 28, 2018, the Company acquired Virginian-Pilot Media Companies, LLC (“Virginian-Pilot”), the owner of The Virginian-Pilot daily newspaper based in Norfolk, Virginia, pursuant to a Securities Purchase Agreement, entered into on the same date, by and among the Company, Virginian-Pilot and Landmark Media Enterprises, LLC for a cash purchase price of $34.0 million, less a post-closing working capital adjustment of $0.1 million received from the seller.

Debt

In June 2018, the Company used a portion of the proceeds received from the Nant Transaction to repay the outstanding principal amount under the Senior Term Facility and to terminate the Senior ABL Facility. Refer to Note 13 of the Consolidated Financial Statements for detailed information related to the Company’s Term Loan Credit Agreement, Senior Term Facility, ABL Credit Agreement, Senior ABL Facility and Letter of Credit Agreement.

Employee Reductions

See Note 6 to the Consolidated Financial Statements for information related to the Company’s charges and payments for employee reductions.

Critical Accounting Policies

The Company’s significant accounting policies are summarized in Note 2 to the Consolidated Financial Statements. These policies conform with United States generally accepted accounting principles (“U.S. GAAP”) and reflect practices appropriate to Tribune’s businesses. The preparation of the Company’s Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes thereto. The Company bases its estimates on past experience and assumptions that management believes are reasonable under the circumstances and evaluates its policies, estimates and assumptions on an ongoing basis.

Leases—Tribune determines if an arrangement is a lease at inception. Operating leases are included in lease ROU assets, current portion of long-term lease liabilities, and long-term lease liabilities on the Consolidated Balance Sheets. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt on the Consolidated Balance Sheets. Amortization of the operating leases ROU assets is included in other operating expenses. Amortization of finance lease assets is included in depreciation expense. Sublease income is included as an offset to lease expense in other operating expenses.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, Tribune uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The recorded operating lease ROU assets on the balance sheet reflects lease payments made to date and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Certain lease agreements have lease and non-lease components, which are generally accounted for together. See Note 4 to the Consolidated Financial Statements for additional information related to leases.

Revenue Recognition—Tribune’s primary sources of revenue are from the sales of newspapers, digital subscriptions and other publications to distributors and individual subscribers; sales of advertising space in published issues of its newspapers and other publications and on websites owned by, or affiliated with, Tribune; distribution of preprinted advertising inserts; the provision of commercial printing and delivery services to third parties, primarily other newspaper companies; and ecommerce referral fee revenue. Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. Revenues are recognized as performance obligations that are satisfied either at a point in time, such as when an advertisement is published or referral fee revenue is earned, or over time, such as for content licensing. See Note 5 to the Consolidated Financial Statements for additional revenue recognition disclosures.

Goodwill and Other Intangible Assets—Goodwill and other intangible assets are summarized in Note 11 to the

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Consolidated Financial Statements. The Company reviews goodwill and other indefinite-lived intangible assets, which include only newspaper mastheads, for impairment annually, or more frequently if events or changes in circumstances indicate that an asset may be impaired. In the first quarter of 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator of a potential impairment of goodwill and determined that an interim evaluation was required. Under ASC Topic 350, the impairment review of goodwill and other intangible assets not subject to amortization must be based on estimated fair values. Impairment would occur when the carrying amount of a reporting unit with recorded goodwill or an individual masthead is greater than its fair value. The Company has determined that, following its segment realignment in the first quarter of 2020, the reporting units at which goodwill will be evaluated are the eight newspaper media groups, TCA and BestReviews.

The Company’s annual impairment review measurement date is in the beginning of the fourth quarter of each year. The estimated fair value of goodwill is determined using many critical factors, including projected future operating cash flows, revenue and market growth, market multiples, discount rates and consideration of market valuations of comparable companies. The estimated fair values of other intangible assets subject to the annual impairment review are calculated based on projected future discounted cash flow analysis. The development of estimated fair values requires the use of assumptions, including assumptions regarding revenue and market growth as well as specific economic factors in the publishing industry such as operating margins and royalty rates for newspaper mastheads. These assumptions reflect Tribune’s best estimates, but these items involve inherent uncertainties based on market conditions generally outside of Tribune’s control. See Note 11 to the Consolidated Financial Statements for additional information related to the goodwill and other intangible impairment charges related to the Orlando Sentinel, New York Daily News and Sun Sentinel Media Groups.

Impairment Review of Long-Lived Assets—Tribune evaluates the carrying value of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset or asset group may be impaired. The carrying value of a long-lived asset or asset group may be impaired when the projected future undiscounted cash flows to be generated from the asset or asset group over its remaining depreciable life are less than its current carrying value. In the first quarter of 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator of a potential impairment of long-lived assets and determined that an interim evaluation was required for certain asset groups. Under ASC Topic 360, an impairment exists if the carrying value of an asset group exceeds its fair value and is considered not recoverable. See Note 10 for additional information related to long-lived asset impairment charges.

Pension Plans—The Company is the sponsor of a single employer pension plan, the NYDN Pension Plan. The Company follows accounting guidance under ASC Topic 715 for single employer defined benefit plans. Plan assets and the projected benefit obligation are measured each December 31, and the Company records as an asset or liability the net funded or underfunded position of the plans. Certain changes in actuarial valuations related to returns on plan assets and projected benefit obligations are recorded to other comprehensive income (loss) and are amortized to net periodic pension expense over the weighted average remaining life of plan participants. Net periodic pension expense is recognized each period by accruing interest expense on the projected benefit obligation and accruing a return on assets associated with the plan assets.

Multiemployer Pension Plans—Contributions made to union-sponsored plans are based upon collective bargaining agreements and are accounted for under guidance related to multiemployer plans. See Note 16 to the Consolidated Financial Statements for further information.

New Accounting Standards

See Note 2 to the Consolidated Financial Statements for a description of new accounting standards issued and/or adopted in the year ended December 27, 2020.

Non-GAAP Measures

Adjusted EBITDA—The Company defines Adjusted EBITDA as income (loss) from continuing operations before equity in earnings of unconsolidated affiliates, income taxes, loss on early debt extinguishment, interest income (expense), other (expense) income, realized gain (loss) on investments, reorganization items, depreciation and amortization, impairment, net income attributable to noncontrolling interest, and other items that the Company does not consider in the evaluation of ongoing operating performance. These items include stock-based compensation expense, restructuring charges, transaction expenses,

34

and certain other charges and gains that the Company does not believe reflects the underlying business performance as detailed below.

	Year ended
(In thousands)	December 27, 2020		% Change		December 29, 2019		% Change		December 30, 2018
Loss from continuing operations	$	(46,816)	*		$	(7,130)	(82.9	%)	$	(41,647)
Income tax benefit	(19,930)		*		(434)		(96.7	%)	(13,078)
Interest expense (income), net	773		*		(499)		*		11,338
Loss on early extinguishment of debt	—		*		—		*		7,666
Loss on equity investments, net	817		(72.7	%)	2,988		60.0	%	1,868
Other expense (income), net	(1,368)		*		(45)		(99.7	%)	(14,513)
Loss from operations	(66,524)		*		(5,120)		(89.4	%)	(48,366)
Depreciation and amortization	33,834		(24.2	%)	44,615		(12.6	%)	51,055
Impairment	78,739		*		14,496		*		1,872
Restructuring and transaction costs (1)	20,556		7.1	%	19,191		(74.4	%)	75,024
Stock-based compensation	5,198		(60.5	%)	13,170		26.0	%	10,453
Adjusted EBITDA	$	71,803	(16.8	%)	$	86,352	(4.1	%)	$	90,038

* Represents positive or negative change in excess of 100%

(1) - Restructuring and transaction costs include costs related to Tribune’s internal restructuring, such as severance, charges associated with vacated space, costs related to completed and potential acquisitions and a one-time charge related to the Consulting Agreement in 2018. See Note 7 for further information on the Consulting Agreement.

Adjusted EBITDA is a financial measure that is not calculated in accordance with U.S. GAAP. Management believes that because Adjusted EBITDA excludes (i) certain non-cash expenses (such as depreciation, amortization, impairment, stock-based compensation, and gain/loss on equity investments) and (ii) expenses that are not reflective of the Company’s core operating results over time (such as restructuring costs, including the employee voluntary separation program and gain/losses on employee benefit plan terminations, litigation or dispute settlement charges or gains, premiums on stock buybacks and transaction-related costs), this measure provides investors with additional useful information to measure the Company’s financial performance, particularly with respect to changes in performance from period to period.  The Company’s management uses Adjusted EBITDA (a) as a measure of operating performance; (b) for planning and forecasting in future periods; and (c) in communications with the Company’s Board of Directors concerning the Company’s financial performance. In addition, Adjusted EBITDA, or a similarly calculated measure, has been used as the basis for certain financial maintenance covenants that the Company was subject to in connection with certain credit facilities. Since not all companies use identical calculations, the Company’s presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies and should not be used by investors as a substitute or alternative to net income or any measure of financial performance calculated and presented in accordance with U.S. GAAP. Instead, management believes Adjusted EBITDA should be used to supplement the Company’s financial measures derived in accordance with U.S. GAAP to provide a more complete understanding of the trends affecting the business.

Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for, or more meaningful than, amounts determined in accordance with U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical tool are:

•they do not reflect the Company’s interest income and expense, or the requirements necessary to service interest or principal payments on the Company’s debt;

•they do not reflect future requirements for capital expenditures or contractual commitments; and

•although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and non-GAAP measures do not reflect any cash requirements for such replacements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

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Item 8. Financial Statements and Supplementary Data

The Consolidated Financial Statements, together with the Reports of Independent Registered Public Accounting Firm, are included elsewhere in this Annual Report on Form 10-K. Financial statement schedules have been omitted because the required information is contained in the Consolidated Financial Statements or related Notes, or because such information is not applicable.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company conducted an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Interim Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Interim Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Interim Chief Financial Officer, to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, including our Chief Executive Officer and our Interim Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 27, 2020 based on the framework established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Management has concluded that the Company’s internal control over financial reporting was effective as of December 27, 2020.

The effectiveness of our internal control over financial reporting as of December 27, 2020, has been audited by Ernst & Young LLP, the independent registered public accounting firm that has also audited the Company’s consolidated financial statements as of and for the year ended December 27, 2020. Ernst & Young’s report on the Company’s internal control over financial reporting appears below.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the fourth quarter of the fiscal year covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

We have not experienced any material change in our internal controls over financial reporting despite most of our employees working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 impact on our internal controls to minimize the impact on their design and operating effectiveness

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Tribune Publishing Company

Opinion on Internal Control Over Financial Reporting

We have audited the internal control over financial reporting of Tribune Publishing Company (the Company) as of December 27, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as December 27, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2020 consolidated financial statements of the Company, and our report dated March 8, 2021, expressed an unqualified opinion thereon.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Dallas, Texas

March 8, 2021

37

Item 9B. Other Information

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to information under the captions “Corporate Governance,” “Board Composition,” “Executive Officers” and “Consideration of Stockholder-Recommended Director Nominees” in our definitive proxy statement relating to the 2021 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2020 fiscal year.

Tribune has a Code of Ethics and Business Conduct that applies to all directors, officers and employees, and a Code of Ethics and Business Conduct for CEO and Senior Financial Officers which can be found at the Company’s website, www.tribpub.com. The Company will post any amendments to the Code of Ethics and Business Conduct, as well as any waivers that are required to be disclosed by the rules of either the SEC or Nasdaq, on the Company’s website. Information on Tribune’s website is not incorporated by reference to the Annual Report on Form 10-K.

The Company’s Board has adopted Corporate Governance Guidelines and charters for the Audit and Compensation, Nominating and Corporate Governance Committees of the Board. These documents can be found at the Company’s website, www.tribpub.com.

A stockholder can also obtain, without charge, a printed copy of any of the materials referred to above by contacting the Company at the following address:

Tribune Publishing Company

560 W. Grand Avenue

Illinois 60654

Attn: Corporate Secretary

Telephone: (312) 222-9100

Item 11. Executive Compensation

The information required by this item is incorporated by reference to information under the captions “Compensation Discussion and Analysis,” “Compensation, Nominating and Corporate Governance Committee Report,” “CNCG Committee Interlocks and Insider Participation,” “Named Executive Officer Compensation” and “Director Compensation” in our definitive proxy statement relating to the 2021 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2020 fiscal year.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference to information under the caption “Security Ownership of Certain Beneficial Owners, Directors, and Management” in our definitive proxy statement relating to the 2021 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2020 fiscal year.

Securities Authorized for Issuance under Equity Compensation Plans

The information required by this item is incorporated by reference to information under the caption “Security Ownership of Certain Beneficial Owners, Directors, and Management” in our definitive proxy statement relating to the 2021 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2020 fiscal year.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference to information under the captions “Policies and Procedures for the Review and Approval or Ratification of Transactions with Related Persons” and “Corporate Governance” in

38

our definitive proxy statement relating to the 2021 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2020 fiscal year.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated by reference to information under the caption “Independent Registered Public Accounting Firm’s Fees Report” in our definitive proxy statement relating to the 2021 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2020 fiscal year.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)    The following documents are filed as part of this Form 10-K:

(1) Index and Consolidated Financial Statements

The list of Consolidated Financial Statements set forth in the accompanying Index to Financial Statements at page F-1 herein is incorporated herein by reference. Such Consolidated Financial Statements are filed as part of this Form 10-K.

(2) The financial schedules required by Regulation S-X are either not applicable or are included in the information provided in the Consolidated Financial Statements or related Notes, which are filed as part of this Form 10-K.

(b)    Exhibits

Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by the Company with the Securities and Exchange Commission, as indicated. All other documents are filed as part of this Form 10-K. Exhibits marked with a tilde (~) are management contracts, compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. Certain agreements are included as exhibits to this Annual Report on Form 10-K to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the parties to the agreement. Each agreement may contain representations and warranties by the parties to the agreement. These representations and warranties have been made solely for the benefit of the other party or parties to the agreement and (1) should not in all instances be treated as categorical statements of fact, but rather as a means of allocating the risk to one of the parties if those statements prove to be inaccurate; (2) may have been qualified by disclosures that were made to the other party or parties in connection with the negotiation of the attached agreement, which disclosures are not necessarily reflected in the agreement; (3) may apply standards of materiality in a manner that is different from what may be viewed as material to you or other investors; and (4) were made only as of the date of the agreement or other date or dates that may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

Exhibit	Description
Number

2.1*    Partnership Interest Purchase Agreement, dated September 3, 2017, by and among Daily News, L.P., TRX Pubco,     LLC, Tribune Publishing Company, LLC, Mortimer B. Zuckerman, New DN Company, The Mortimer B. Zuckerman 1983 Family Trust, New DN Company (as the Sellers’ Representative) and the Management Trust defined in the Purchase Agreement (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on September 5, 2017).

2.2*    Acquisition Agreement, dated February 6, 2018, by and among Best Reviews Inc., Best Reviews LLC, Tribune Publishing Company, LLC, and Tronc, Inc., and Denis Grosz (as the Sellers’ Representative), and the Stockholders defined in the Purchase Agreement (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on February 7, 2018).

2.3*    Membership Interest Purchase Agreement, dated February 7, 2018, by and among Nant Capital, LLC, and Tronc, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on February 7, 2018).

39

2.4*    Asset Purchase Agreement, dated March 13, 2018, by and among ForSaleByOwner.com, LLC, In-House Realty LLC and Tribune Publishing company, LLC (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on May 23, 2018).

2.5*    Securities Purchase Agreement, dated May 28, 2018, by and among Tribune Publishing Company, LLC, Virginian-Pilot Media Companies, LLC and Landmark Media Enterprises, LLC (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on May 29, 2018).

2.6*    Membership Unit Purchase Agreement, dated December 11, 2020, by and among Nexstar Inc., BestReviews LLC, and Tribune Publishing Company, LLC and BR Holding Company, Inc. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on December 17, 2020).

2.7**    Agreement and Plan of Merger by and among Tribune Enterprises, LLC, Tribune Merger Sub, Inc., and Tribune Publishing Company, dated as of February 16, 2021 (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on February 17, 2021).

2.8*    Limited Guarantee by Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. in favor of Tribune Publishing Company, dated February 16, 2021 (incorporated by reference to Exhibit 2.2 to the Form 8-K filed on February 17, 2021).

3.1*    Amended and Restated Certificate of Incorporation of Tribune Publishing Company, as amended (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 filed on November 8, 2018).

3.2*    Certificate of Designation of Series A Participating Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on July 28, 2020).

3.3*    Amended and Restated By-laws of Tribune Publishing Company (incorporated by reference to Exhibit 3.2 to the Form 8-K filed on October 9, 2018).

4.1    Description of the Company’s Securities (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K filed on March 11, 2020).

4.2* Rights Agreement, dated as of July 28, 2020, between Tribune Publishing Company and Computershare Trust Company, N.A., as Rights Agent (incorporated by reference to Exhibit 4.1 to the Form 8-K filed on July 28, 2020).

4.3* Amendment No. 1 to Rights Agreement by and between Tribune Publishing Company and Computershare Trust Company, N.A., dated as of February 16, 2021 (incorporated by reference to Exhibit 4.1 to the Form 8-K filed on February 17, 2021).

10.1*    Tax Matters Agreement, by and between Tribune Media Company and Tribune Publishing Company, dated as of August 4, 2014 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on August 7, 2014).

10.2*    Securities Purchase Agreement, by and among Tribune Publishing Company, Nant Capital, LLC and Dr. Patrick Soon-Shiong, dated as of May 22, 2016 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on May 23, 2016).

10.3*    Registration Rights Agreement, by and between Tribune Publishing Company and Nant Capital, LLC, dated as of May 22, 2016 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on May 23, 2016).

10.4*    Amended and Restated Cooperation Agreement, dated as of July 1, 2020, by and among Tribune Publishing Company, Alden Global Opportunities Master Fund, L.P., Alden Global Value Recovery Master Fund, L.P., and Alden Global Capital LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 2, 2020).

10.5*~    tronc, Inc. 2014 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q for the quarterly period ended June 26, 2016 filed on August 5, 2016).

10.6*~    Form of Restricted Stock Unit Award Agreement (Non-Employee Director Form) (incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q/A for the quarterly period ended September 28, 2014 filed November 19, 2014).

40

10.7*~    Form of Restricted Stock Award Agreement (Non-Employee Director) for awards made beginning in 2017 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarterly period ended September 24, 2017 filed November 3, 2017).

10.8*~    Form of Stock Option Agreement (Employee Form) (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q for the quarterly period ended June 26, 2016 filed on August 5, 2016).

10.9*~    Form of Restricted Stock Unit Award Agreement (Employee Form) (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q for the quarterly period ended June 26, 2016 filed on August 5, 2016).

10.10*~    Form of Annual Performance Incentive Award Notice (incorporated by reference to Exhibit 10.9 to the Annual Report on Form 10-K for the fiscal year ended December 28, 2014 filed March 25, 2015).

10.11*~    Form of Annual Performance Incentive Award Notice (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarterly period ended March 26, 2017 filed May 3, 2017).

10.12~    Form of Director Compensation Conversion Election Form (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K filed on March 14, 2016).

10.13*~    Executive Employment Agreement by and between Terry Jimenez and Tribune Publishing Company, LLC, dated April 4, 2018 (incorporated by reference to Exhibit 10.25 to the Annual Report on Form 10-K filed on March 28, 2018).

10.14*~    Executive Employment Agreement by and between Julie K. Xanders and Tribune Publishing Company, LLC, dated December 20, 2017 and effective January 4, 2018 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on December 22, 2017).

10.15~ Executive Employment Agreement by and between Mike Lavey and Tribune Publishing Company, LLC, dated April 4, 2018 (incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K filed on March 11, 2020).

10.16*~    Form of Indemnification Agreement (Directors) (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q for the quarterly period ended March 27, 2016 filed on May 5, 2016).

10.17*~    Form of Director Restricted Stock Award Agreement for awards in May 2018 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form-Q for the quarterly period ended July 1, 2018 filed on August 10, 2018).

10.18    Amendment to Executive Employment Agreement by and between Terry Jimenez and Tribune Publishing Company, LLC, dated February 15, 2021 and effective April 3, 2021.

21.1    Subsidiaries.

23.1    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.

24.1    Power of Attorney (see signature page to this Annual Report on Form 10-K).

31.1    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS        Inline XBRL Instance Document

101.SCH    Inline XBRL Taxonomy Extension Scheme Document

101.CAL    Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF    Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB    Inline XBRL Taxonomy Extension Labels Linkbase Document

41

101.PRE        Inline XBRL Taxonomy Extension Presentation Linkbase Document

104        Cover Page formatted as Inline XBRL and contained Exhibit 101

** Schedules omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule to the Securities and Exchange Commission upon request.

Item 16 . Form 10-K Summary

None.

42

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	TRIBUNE PUBLISHING COMPANY
By:	/s/ Michael N. Lavey
	Michael N. Lavey
	Interim Chief Financial Officer, Chief Accounting Officer and Controller
Date:	March 8, 2021

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Terry Jimenez and Michael N. Lavey, as his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendment to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Name	Capacity	Date
/s/ Terry Jimenez	Chief Executive Officer, President and Director	March 8, 2021
Terry Jimenez	(Principal Executive Officer)
/s/ Michael N. Lavey	Interim Chief Financial Officer, Chief Accounting Officer and Controller	March 8, 2021
Michael N. Lavey	(Principal Financial Officer and Principal Accounting Officer)
/s/ Philip G. Franklin	Chairman and Director	March 8, 2021
Philip G. Franklin
/s/ Carol Crenshaw	Director	March 8, 2021
Carol Crenshaw
/s/ Christopher Minnetian	Director	March 8, 2021
Christopher Minnetian
/s/ Dana Goldsmith Needleman	Director	March 8, 2021
Dana Goldsmith Needleman
/s/ Richard A. Reck	Director	March 8, 2021
Richard A. Reck
/s/ Randall D. Smith	Director	March 8, 2021
Randall D. Smith

43

INDEX TO FINANCIAL STATEMENTS

	Page
Tribune Publishing Company Consolidated Financial Statements:
Reports of Independent Registered Public Accounting Firms	F-2
Consolidated Financial Statements:
Statements of Income	F-4
Statements of Comprehensive Income	F-5
Balance Sheets	F-6
Statements of Equity (Deficit)	F-8
Statements of Cash Flows	F-9
Notes to the Consolidated Financial Statements	F-11

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Tribune Publishing Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Tribune Publishing Company (the Company) as of December 27, 2020 and December 29, 2019, the related consolidated statements of income (loss), comprehensive income (loss), equity (deficit) and cash flows for each of the three fiscal years in the period ended December 27, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 27, 2020 and December 29, 2019, and the results of its operations and its cash flows for each of the three fiscal years in the period ended December 27, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 27, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 8, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters do not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill and Intangible Assets with Indefinite Lives Impairment Assessment

Description of the Matter

At December 27, 2020, the Company’s goodwill and intangible assets with indefinite lives, which consist of newspaper mastheads, were $28.2 million and $27.7 million, respectively. Goodwill and intangible assets with indefinite lives are tested for impairment at least annually or when events occur that indicate impairment could exist. As more fully described in Note 11 to the consolidated financial statements, during the first quarter of fiscal 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator that an interim assessment was required. As a result of this assessment, the Company recognized impairments of $9.5 million during the year ended December 27, 2020. Auditing management’s impairment tests of goodwill and newspaper masthead intangible assets was complex and judgmental due to the estimation required in determining the fair value of the reporting units and newspaper mastheads. In particular, the estimates of the fair value of the reporting units are sensitive to significant assumptions such as the revenue growth rates, discount rates and projected EBITDA margins. The estimates of fair value of the newspaper masthead intangible assets are sensitive to significant assumptions including the revenue growth rates, royalty rates, and discount rates. These assumptions are affected by expectations about future economic and industry factors.

F-2

How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and intangible assets with indefinite lives impairment review process. For example, we tested management’s review controls over the significant assumptions described above as well as over the reasonableness of the underlying data used in the valuation analyses. To test the estimated fair value of the Company’s reporting units and newspaper masthead intangible assets, we performed audit procedures that included, among others, assessing the valuation methodologies used, testing the significant assumptions described above and testing the completeness and accuracy of the underlying data the Company used in its analyses. For example, we compared the revenue growth rates and projected EBITDA margins used in the valuations to current industry and economic trends and assessed the historical accuracy of management’s estimates. With the assistance of our internal valuation specialists, we also developed an independent range of the discount rate and royalty rate assumptions and compared them to the rates determined by management. We performed sensitivity analyses of the significant assumptions to evaluate the changes in the fair value of the reporting units and the newspaper masthead intangible assets that would result from changes in the assumptions. In addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company.
	Measurement of Long-lived Assets
Description of the Matter	As more fully described in Note 10 to the consolidated financial statements, during 2020, the Company identified a triggering event, which resulted in the Company assessing certain of its asset groups for recoverability. As a result of these assessments, the Company determined that certain long-lived assets, including plant, property and equipment, operating lease right-of-use assets and finite-lived intangible assets, were not recoverable. As a result, the Company recognized $34.6 million of impairment charges. Auditing management’s impairment analysis involved subjectivity as estimates underlying the determination of the asset group’s fair value were based on assumptions that are sensitive to and affected by expected future market or economic conditions, and industry and company-specific qualitative factors. Significant assumptions used in the Company’s fair value estimate included projected cash flows, discount rates, and terminal values.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's processes to determine the fair value of the asset group. This included evaluating controls over the Company’s budgetary and forecasting process used to develop the estimated future cash flows. We also tested management’s review controls over the data used in their impairment analysis and the significant assumptions such as estimation of the discount rate and terminal value. To test the estimated fair value of the Company’s asset group, we performed audit procedures that included, among others, assessing the valuation methodologies used, testing the significant assumptions described above and testing the completeness and accuracy of the underlying data the Company used in its analyses. We compared the projected cash flows to the Company’s historical cash flows and other available industry and market forecast information. We involved our valuation specialists to assist in assessing the valuation methodology and testing the discount rate and terminal value. We assessed the historical accuracy of management’s estimates and where appropriate, assessed whether the assumptions used were consistent with those used in the goodwill impairment analysis.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2016.

Dallas, Texas

March 8, 2021

F-3

TRIBUNE PUBLISHING COMPANY

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share data)

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Operating revenues	$	746,250	$	945,777	$	1,005,662
Operating expenses:
Compensation	303,027		360,779		441,558
Newsprint and ink	33,777		56,785		66,134
Outside services	267,644		326,807		347,551
Other operating expenses	95,753		147,415		145,858
Depreciation and amortization	33,834		44,615		51,055
Impairment	78,739		14,496		1,872
Operating expenses	812,774		950,897		1,054,028
Loss from operations	(66,524)		(5,120)		(48,366)
Interest income (expense), net	(773)		499		(11,338)
Loss on early extinguishment of debt	0		0		(7,666)
Loss on equity investments, net	(817)		(2,988)		(1,868)
Other income (expense), net	1,368		45		14,513
Loss from continuing operations before income taxes	(66,746)		(7,564)		(54,725)
Income tax benefit	(19,930)		(434)		(13,078)
Loss from continuing operations	(46,816)		(7,130)		(41,647)
Plus: Income from discontinued operations, net of tax	15,320		6,886		291,294
Net income (loss)	$	(31,496)	$	(244)	$	249,647
Less: Income attributable to noncontrolling interest	$	7,516	$	4,825	$	856
Net income (loss) attributable to Tribune common stockholders	$	(39,012)	$	(5,069)	$	248,791
Net loss from continuing operations, per common share:
Basic	$	(1.28)	$	(0.20)	$	(1.18)
Diluted	$	(1.28)	$	(0.20)	$	(1.18)
Net income (loss) attributable to Tribune common stockholders, per common share:
Basic	$	(1.08)	$	(0.85)	$	7.05
Diluted	$	(1.08)	$	(0.85)	$	7.05
Weighted average shares outstanding
Basic	36,456		35,810		35,268
Diluted	36,456		35,810		35,268

F-4

TRIBUNE PUBLISHING COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Net income (loss)	$	(31,496)	$	(244)	$	249,647
Comprehensive income (loss), net of taxes:
Unrecognized benefit plan gains (losses):
Change in unrecognized benefit plan gain (loss) arising during the period, net of taxes of $130, $908 and $900, respectively	(438)		(2,458)		(2,337)
Amortization of items to periodic pension and other post-employment benefit costs during the period, net of taxes of $39, $39 and $3,657, respectively	121		100		(9,498)
Foreign currency translation, net	(23)		(21)		(8)
Other comprehensive loss recognized in continuing operations, net of taxes	(340)		(2,379)		(11,843)
Other comprehensive income (loss) recognized in discontinued operations, net of taxes of $6,784	0		0		25,397
Comprehensive income (loss)	(31,836)		(2,623)		263,201
Less: Comprehensive income attributable to NCI	7,516		4,825		856
Comprehensive income (loss) attributable to Tribune common stockholders	$	(39,352)	$	(7,448)	$	262,345

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

F-5

TRIBUNE PUBLISHING COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	December 27, 2020		December 29, 2019
Assets
Current assets:
Cash	$	98,862	$	54,840
Accounts receivable, net	73,866		99,340
Inventories	4,055		4,820
Prepaid expenses	18,344		15,114
Current assets related to discontinued operations	111,239		19,537
Total current assets	306,366		193,651
Property, plant and equipment
Machinery, equipment and furniture	100,625		119,823
Buildings and leasehold improvements	42,361		86,404
	142,986		206,227
Accumulated depreciation	(96,527)		(84,517)
	46,459		121,710
Advanced payments on property, plant and equipment	1,866		2,181
Property, plant and equipment, net	48,325		123,891
Other assets
Goodwill	28,146		30,624
Intangible assets, net	50,148		61,517
Software, net	17,503		20,736
Lease right-of-use asset	36,705		99,480
Restricted cash	29,925		37,290
Deferred income taxes	11,294		6,911
Equity investments	11,354		2,655
Other long-term assets	8,388		10,802
Assets related to discontinued operations	0		94,721
Total other assets	193,463		364,736
Total assets	$	548,154	$	682,278

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

F-6

TRIBUNE PUBLISHING COMPANY

CONSOLIDATED BALANCE SHEETS, (continued)

(In thousands, except per share data)

	December 27, 2020		December 29, 2019
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	28,022	$	43,674
Employee compensation and benefits	33,495		36,238
Deferred revenue	34,620		42,773
Current portion of long-term lease liability	23,914		25,380
Other current liabilities	23,329		24,412
Current liabilities associated with discontinued operations	4,759		2,885
Total current liabilities	148,139		175,362
Non-current liabilities
Long-term lease liability	49,182		98,847
Pension and postretirement benefits payable	16,803		20,338
Deferred revenue	1,921		2,504
Long-term debt	0		6,857
Workers’ compensation, general liability and auto insurance payable	20,120		24,192
Other obligations	10,587		5,851
Total non-current liabilities	98,613		158,589
Commitments and contingencies (Note 14)	0		0
Noncontrolling interest	0		63,501
Stockholders' equity
Preferred stock, $0.01 par value. Authorized 30,000 shares; 0 shares issued or outstanding at December 27, 2020 and December 29, 2019	0		0
Common stock, $0.01 par value. Authorized 300,000 shares, 38,524 shares issued and 36,570 shares outstanding at December 27, 2020; 38,017 shares issued and 36,064 shares outstanding at December 29, 2019	385		380
Additional paid-in capital	181,839		177,957
Retained earnings	86,491		135,001
Noncontrolling interest	61,539		0
Accumulated other comprehensive income	(2,692)		(2,352)
Treasury stock, at cost - 1,954 shares at December 27, 2020 and December 29, 2019	(26,160)		(26,160)
Total stockholders' equity	301,402		284,826
Total liabilities and stockholders’ equity	$	548,154	$	682,278

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

F-7

TRIBUNE PUBLISHING COMPANY

CONSOLIDATED STATEMENT OF EQUITY

(In thousands)

	Common Stock			Additional Paid in Capital		Retained Earnings (Deficit)		Non controlling Interest		AOCI		Treasury Stock		Total Equity
	Shares	Amount
Balance at December 31, 2017	37,551	$	376	$	150,229	$	(16,390)	$	—	$	(13,527)	$	(51,526)	$	69,162
Comprehensive income (loss)	—	—		—		248,791		—		(11,843)		—		236,948
AOCI recognized in discontinued operations	—	—		—		—		—		25,397		—		25,397
Issuance from treasury stock for acquisition	—	—		9,229		—		—		—		25,366		34,595
Issuance of stock from restricted stock and restricted stock unit ("RSU") conversions	443	5		(5)		—		—		—		—		0
Exercise of stock options	7	—		134		—		—		—		—		134
Stock-based compensation	—	—		11,118		—		—		—		—		11,118
Withholding for taxes on RSU conversions	��	—		(4,042)		—		—		—		—		(4,042)
Forfeited restricted stock	(450)	(5)		5		—		—		—		—		0
Balance at December 30, 2018	37,551	376		166,668		232,401		—		27		(26,160)		373,312
Cumulative effect of adoption of leasing standard	—	—		—		(1,787)		—		—		—		(1,787)
Adjusted balance at December 30, 2018	37,551	376		166,668		230,614		—		27		(26,160)		371,525
Comprehensive loss	—	—		—		(5,069)				(2,379)		—		(7,448)
Dividends declared to common stockholders	—	—		—		(65,024)		—		—		—		(65,024)
NCI carrying value adjustment	—	—		—		(25,520)		—		—		—		(25,520)
Issuance of stock from restricted stock and RSU conversions	467	4		(4)		—		—		—		—		—
Stock-based compensation	—	—		13,203		—		—		—		—		13,203
Withholding for taxes on RSU conversions	—	—		(1,910)		—		—		—		—		(1,910)
Balance at December 29, 2019	38,018	380		177,957		135,001		—		(2,352)		(26,160)		284,826
Reclassification of NCI from temporary equity	—	—		—		—		64,133		—		—		64,133
Comprehensive income (loss)	—	—		—		(39,012)		7,206		(340)		—		(32,146)
Dividends declared to common stockholders	—	—		—		(9,176)		—				—		(9,176)
Dividends paid to NCI	—	—		—		—		(9,800)		—		—		(9,800)
NCI carrying value adjustment	—	—		—		(322)		—		—		—		(322)
Issuance of stock from restricted stock and RSU conversions	506	5		(5)		—		—		—		—		0
Stock-based compensation	—	—		5,198		—		—		—		—		5,198
Withholding for taxes on restricted RSU conversions	—	—		(1,311)		—		—		—		—		(1,311)
Balance at December 27, 2020	38,524	$	385	$	181,839	$	86,491	$	61,539	$	(2,692)	$	(26,160)	$	301,402

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

F-8

TRIBUNE PUBLISHING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Operating Activities
Loss from continuing operations	$	(46,816)	$	(7,130)	$	(41,647)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,834		44,615		51,055
Impairment	78,739		14,496		1,872
Stock compensation expense	5,198		13,170		10,453
Loss on early extinguishment of debt	0		0		7,666
Loss on equity investments, net	817		2,988		1,868
(Gain) loss on sale of property	(7,070)		155		0
Deferred income taxes	(4,261)		(2,581)		(390)
Non-current deferred revenue	(583)		(353)		(1,961)
Pension contribution	(2,598)		(2,484)		(3,918)
Postretirement benefits expense	(1,423)		(593)		(10,932)
Changes in working capital items, excluding acquisitions:
Accounts receivable, net	27,764		32,918		(3,167)
Prepaid expenses, inventories and other current assets	687		(6,164)		24,704
Accounts payable, employee compensation and benefits, deferred revenue and other current liabilities	(51,860)		(44,597)		8,718
Other, net	65		(15)		3,231
Net cash provided by operating activities	32,493		44,425		47,552
Investing Activities
Capital expenditures, including software additions	(10,131)		(18,552)		(53,168)
Proceeds from sale of property, plant and equipment	17,885		0		0
Acquisitions, net of cash acquired	0		0		(37,782)
Other, net	3,427		(155)		(4,175)
Net cash provided by (used for) investing activities	11,181		(18,707)		(95,125)
Financing Activities
Repayment of long-term debt	0		0		(353,253)
Withholding for taxes on RSU vesting	(1,311)		(1,910)		(4,042)
Repayments of capital lease obligations	(7,036)		(305)		(259)
Proceeds from exercise of stock options	0		0		134
Dividends paid to common stockholders	(9,091)		(62,860)		0
Net cash used for financing activities	(17,438)		(65,075)		(357,420)
Increase (decrease) in cash attributable to continuing operations	$	26,236	$	(39,357)	$	(404,993)

Consolidated Statements of Cash Flows continued on following page

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

F-9

TRIBUNE PUBLISHING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS, (continued)

(In thousands)

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Cash Flows From Discontinued Operations
Cash flows provided by (used for) operating activities of discontinued operations, net	$	20,237	$	6,672	$	(92,181)
Cash flows provided by (used for) investing activities of discontinued operations, net	(16)		0		445,555
Cash flows used for financing activities of discontinued operations, net	(9,800)		(6,600)		(2,317)
Increase in cash attributable to discontinued operations	10,421		72		351,057
Net increase (decrease) in cash	36,657		(39,285)		(53,936)
Cash, cash equivalents and restricted cash beginning of period	92,130		131,415		185,351
Cash, cash equivalents and restricted cash, end of period	$	128,787	$	92,130	$	131,415

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

F-10

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business—Tribune Publishing Company was formed as a Delaware corporation on November 21, 2013. Tribune Publishing Company, together with its subsidiaries (collectively, the “Company” or “Tribune”) is a media company rooted in award-winning journalism. Headquartered in Chicago, Illinois, Tribune operates local media businesses in 8 markets with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Hartford Courant, South Florida’s Sun Sentinel,and Orlando Sentinel, Virginia’s Daily Press and The Virginian-Pilot, and The Morning Call of Lehigh Valley, Pennsylvania. Tribune also operates Tribune Content Agency (“TCA”).

On December 11, 2020, the Company entered into a Membership Unit Purchase Agreement (the “BR Agreement”), by and among the Company and BR Holding Company, Inc. (collectively the "Sellers") to sell 100% of BestReviews LLC (“BestReviews”) to Nexstar, Inc. (“Nexstar”), BestReviews was owned 60% by the Company and 40% by BR Holding Conpany, Inc. On December 29, 2020, subsequent to Company’s fiscal year-end, the Company completed the sale of its majority ownership of BestReviews. See Note 8 to the Consolidated Financial Statements for information on the Company’s purchase of 60% of BestReviews in 2018 and for additional information on the related discontinued operations.

On February 16, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Tribune Enterprises, LLC, a Delaware limited liability company (“TELLC”), Tribune Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of TELLC (“Merger Sub”), and the Company, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC. TELLC is an affiliate of Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (collectively, “Alden”), the Company’s largest shareholder. Upon completion of the transaction the Company will become a privately held company, and its common stock will no longer be listed on any public market. See Note 20 for additional information related to the Merger Agreement.

Basis of Presentation—The accompanying Consolidated Financial Statements and notes of the Company have been prepared in accordance with U.S. GAAP. All intercompany accounts within Tribune have been eliminated in consolidation.

The Company has operations reported as discontinued operations for all periods presented in the accompanying Consolidated Statements of Income and Consolidated Statements of Cash Flows. Additionally, assets and liabilities related to the divested properties are classified as such in all prior periods in the Consolidated Balance Sheets. Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate to continuing operations and exclude all discontinued operations. See Note 8 to the Consolidated Financial Statements for information on dispositions and discontinued operations.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year—The Company’s fiscal year ends on the last Sunday in December. Fiscal years 2020, 2019, and 2018 ended on December 27, 2020, December 29, 2019, and December 30, 2018, respectively, and consisted of 52 weeks with 13 weeks in each quarter.

Use of Estimates—The preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and certain financial statement disclosures. Some of the significant estimates in these consolidated financial statements include the right-of-use asset (“ROU”) assets, lease liabilities, valuation assumptions used in allowances for credit losses, useful lives of property and identifiable intangible assets, the evaluation of recoverability of property, goodwill and identifiable intangible assets, income tax, self-insurance, pension and other postretirement benefits, stock-based compensation and purchase accounting. Actual results could differ from these estimates.

Segment Presentation—The Company assesses its operating segments in accordance with Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting.” In the first quarter of 2020, the Company realigned its operations, combining the print and digital operations of its media groups together under the leadership of the Chief Executive Officer, who is also the chief operating decision maker for Tribune, as defined in ASC Topic 280. As a result of the realignment, beginning in the first quarter of 2020, the Company no longer reports separate segment results for its print and digital operations. The

F-11

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Company aggregates the 9 operating segments into 1 reportable segment. Prior to the first quarter of fiscal 2020, Tribune was managed by its chief operating decision maker as 2 segments.

Business Combinations—The allocation of the purchase consideration for acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase consideration to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. The excess of the fair value of purchase consideration over the values of the identifiable assets and liabilities is recorded as goodwill. Critical estimates in valuing certain identifiable assets include but are not limited to expected long term revenues; future expected operating expenses; cost of capital; appropriate attrition and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Leases—Tribune determines if an arrangement is a lease at inception. Operating leases are included in lease ROU assets, current portion of long-term lease liabilities, and long-term lease liabilities on the Consolidated Balance Sheets. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt on theConsolidated Balance Sheets. Amortization of the operating leases ROU assets is included in other operating expenses. Amortization of finance leases is included in depreciation expense. Sublease income is included as an offset to lease expense in other operating expenses.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The ROU asset is adjusted to include lease payments made to date and initial direct costs incurred and to deduct for lease incentives received and impairments recognized. As most of the Company’s leases do not provide an implicit rate, Tribune uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Certain lease agreements have lease and non-lease components, which are generally accounted for together. See Note 4 for additional information related to leases.

Revenue Recognition—Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. Revenues are recognized as performance obligations are satisfied either at a point in time, such as when an advertisement is published, or over time, such as for content licensing. See Note 5 for additional information related to revenue recognition.

Cash—Cash is stated at cost, which approximates market value. Cash includes cash equivalents which are investments with original maturities of three months or less at the time of purchase.

Restricted Cash—Restricted cash is stated at cost, which approximates market value. The Company has cash held in a specified cash collateral account to secure letters of credit relating to workers compensation self-insurance. Restricted cash balances are included within cash and cash equivalents for purposes of the statements of cash flows.

Accounts Receivable and Allowance for Credit Losses—Tribune’s accounts receivable consist primarily of amounts due from advertisers, circulation-related revenues and commercial print and delivery revenues. Payment terms vary by revenue stream including prepayment for classified advertising and home delivery circulation, and 30-60 day terms for advertising, whereby credit is evaluated in advance. Credit is extended based on an evaluation of each customer’s financial condition, and generally collateral is not required. The allowance for credit losses is determined based on an expected credit losses method that includes forward-looking qualitative factors when they arise and any known specific collectability exposures. As customer balances are determined to be uncollectible, the balances are written off against the allowance for credit losses. Accounts receivable balances outstanding for a year or more and balances for customers in bankruptcy are reserved at 100%. See Note 3 for additional information related to the expected credit losses.

F-12

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the activity with respect to the allowances for credit losses is as follows (in thousands):

Balance at December 31, 2017	$	8,988
2018 additions	24,564
2018 deductions	(22,094)
Balance at December 30, 2018	11,458
2019 additions	16,780
2019 deductions	(18,914)
Balance at December 29, 2019	9,324
2020 additions	10,426
2020 deductions	(11,438)
Balance at December 27, 2020	$	8,312

Trade Transactions—Tribune, in the ordinary course of business, enters into trade transactions whereby advertising in a Tribune publication is exchanged for products or services or advertising, including advertising at an event or venue. Trade transactions are generally reported at the estimated fair value of the product or services received. Revenues are recorded when the advertisement runs in a Tribune publication and expenses are generally recorded when the products or services are utilized or the advertisement runs.

Inventories—Inventories consist primarily of newsprint for publishing operations. Newsprint cost is determined using the first-in, first-out (“FIFO”) basis.

Properties—Property, plant and equipment are stated at cost less accumulated depreciation. The Company computes depreciation using the straight-line method over the following estimated useful lives:

Building and building improvements	8 years - 40 years
Leasehold improvements	3 years - 15 years
Machinery and equipment	2 years - 15 years
Computer hardware	3 years - 8 years
Vehicles	2 years - 8 years
Furniture, fixtures and other	3 years - 10 years

Leasehold improvements are recorded as an asset and amortized over the shorter of the useful life or the remaining term of the lease. Expenditures for repairs and maintenance of existing assets are charged to expense as incurred. Property, plant and equipment assets that are financed under a finance lease are amortized over the shorter of the term of the lease or the useful lives of the assets. See Note 4 for additional information related to leases.

For the years ended December 27, 2020, December 29, 2019, and December 30, 2018, total depreciation expense was $29.5 million, $39.9 million and $46.4 million, respectively.

Goodwill and Other Intangible Assets—Goodwill and other intangible assets are summarized in Note 11. Tribune tests goodwill and other indefinite-lived intangible assets, which include only newspaper mastheads, for impairment annually as of the first day of the fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that an asset may be impaired, in accordance with ASC Topic 350, “Intangibles–Goodwill and Other.” Under ASC Topic 350, the impairment test for goodwill and other intangible assets not subject to amortization must be based on estimated fair values. Impairment would occur when the carrying amount of a reporting unit with recorded goodwill or an individual masthead is greater than its fair value. The Company has determined that, following the segment realignment discussed above, the reporting units at which goodwill will be evaluated are the 8 newspaper media groups, TCA and BestReviews.

In the first quarter of 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator of a potential impairment of goodwill and newspaper mastheads and determined that an interim evaluation was required. In the first quarter of 2020, the Company performed a full quantitative analysis of both goodwill and mastheads. See Note 11 for additional information on the goodwill and newspaper masthead impairments. For the annual impairment test for both goodwill and mastheads, the Company performed a qualitative assessment that took into consideration changes in the

F-13

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

broader economy, the publishing industry and Tribune’s business since the quantitative impairment tests completed in the first quarter of 2020. Based on our assessment, the Company concluded that it was not more likely than not that the carrying value of our goodwill or newspaper mastheads exceeded their fair values.

Impairment Review of Long-Lived Assets—In accordance with ASC Topic 360, “Property, Plant and Equipment,” Tribune evaluates the carrying value of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset or asset group may be impaired. The carrying value of a long-lived asset or asset group may be impaired when the projected future undiscounted cash flows to be generated from the asset or asset group over its remaining depreciable life are less than its current carrying value. The Company measures impairment based on the amount by which the carrying value exceeds the estimated fair value of the long-lived asset or asset group. The fair value is determined primarily by using the projected future cash flows discounted at a rate commensurate with the risk involved as well as market valuations. Losses on long-lived assets to be disposed of are determined in a similar manner, except that the fair values are reduced for an estimate of the cost to dispose or abandon. Adverse changes in expected operating results and/or unfavorable changes in other economic factors used to estimate future undiscounted cash flows could result in non-cash impairment charges in the future under ASC Topic 360. In the first quarter of 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator of a potential impairment of long-lived assets and determined that an interim evaluation was required for certain asset groups. See Note 10 for additional information on the long-lived asset impairments.

Fair Value Measurements—The Company measures and records in its consolidated financial statements certain assets and liabilities at fair value. ASC Topic 820, “Fair Value Measurements and Disclosures,” establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and Tribune’s own assumptions (unobservable inputs). This hierarchy consists of the following three levels:

•Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market.

•Level 2 – Assets and liabilities whose values are based on inputs other than those included in Level 1, including quoted market prices in markets that are not active; quoted prices of assets or liabilities with similar attributes in active markets; or valuation models whose inputs are observable or unobservable but corroborated by market data.

•Level 3 – Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement.

An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The carrying values of cash, trade accounts receivable and trade accounts payable approximate fair value due to their short term nature.

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Investments—Investments in unconsolidated affiliates over which Tribune exercises significant influence, but does not control, are accounted for by the equity method. Under this method, an investment account for each unconsolidated affiliate is increased by contributions made and by Tribune’s share of net income of the unconsolidated affiliate, and decreased by the share of net losses of and distributions from the unconsolidated affiliate.

F-14

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pension Plans—The Company is the sponsor of the Daily News Retirement Plan (“NYDN Pension Plan”) for the New York Daily News. The Company follows accounting guidance under ASC Topic 715, “Compensation—Retirement Benefits” for single employer defined benefit plans. Plan assets and the projected benefit obligation are measured each December 31, and the Company records as an asset or liability the net funded or underfunded position of the plans. Certain changes in actuarial valuations related to returns on plan assets and projected benefit obligations are recorded to other comprehensive income (loss) and are amortized to net periodic pension expense over the weighted average remaining life of plan participants. Net periodic pension expense is recognized each period by accruing interest expense on the projected benefit obligation and accruing a return on assets associated with the plan assets. In measuring the funded status of the plans, the Company has elected to measure the single employer defined benefit plan assets and obligations as of the end of the month closest to the Company’s fiscal year-end. See Note 16 for further information on the Company’s pension plans.

The projected benefit obligation of the pension plan is estimated using a theoretical zero-coupon spot curve representing the yields on high-quality corporate bonds with maturities that correlate to the timing of benefit payments to the plan’s participants. Future benefit payments are discounted to their present value at the appropriate yield curve rate to determine the projected benefit obligation outstanding at each year end. Interest expense included in net periodic pension expense was established at the beginning of the fiscal year. The long-term rate of return on the plan’s assets is based upon the investments strategies determined by the Company, less administrative expenses. Investment strategies for the plan’s assets are based upon factors such as the remaining useful life expectancy of participants and market risks.

Other Postretirement Benefits—Tribune provides certain health care and life insurance benefits for certain retired Tribune union employees through postretirement benefit plans. The plans are frozen to new participants. The expected cost of providing these benefits is accrued over the years that the employees render services. It is the Company’s policy to fund postretirement benefits as claims are incurred. In measuring the funded status of the plan, the Company has elected to measure the single employer defined benefit plan assets and obligations as of the end of the month closest to the Company’s fiscal year-end.

The Company recognizes the overfunded or underfunded status of its postretirement benefit plans as an asset or liability in its consolidated balance sheets and recognizes changes in that funded status in the year in which changes occur through comprehensive income. The amounts included within these consolidated financial statements were actuarially determined based on amounts allocable to eligible Tribune union employees. During the year ended December 30, 2018, the Company recognized other non-operating income of $13.1 million from the amortization of actuarial gains and prior service credits related to its other postretirement benefit plans. Amounts recognized in the consolidated financial statements for years ended December 27, 2020 and December 29, 2019 are not material.

Contributions made to union-sponsored plans are based upon collective bargaining agreements.

Multiemployer Pension Plans—The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover certain of the Company’s union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in that assets contributed are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer withdraws from or otherwise ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. Alternatively, if Tribune chooses to stop participating in one of its multiemployer plans, it may incur a withdrawal liability based on its actuarially determined share of the unfunded status of the plan.

Contributions made to multiemployer plans are based on collective bargaining agreements and are accounted for under guidance related to multiemployer plans, which essentially provides that contributions to such plans are expensed when due. Any withdrawal liability would be recognized at the point withdrawal from the plan becomes probable. See Note 16 for further information.

Self-Insurance—The Company self-insures for certain employee medical and disability income benefits, and insures with a high deductible for workers’ compensation, automobile and general liability claims. The recorded liabilities for self-insured risks are calculated using actuarial methods and are not discounted. The Company carries insurance coverage to limit exposure for the self-insured portions of workers’ compensation costs and automobile and general liability claims. The Company’s deductibles for the insured coverages are generally $1.0 million per occurrence, depending on the applicable policy period. The recorded liabilities for self-insured risks at December 27, 2020 and December 29, 2019, totaled $26.5 million and $32.3 million, respectively.

F-15

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred Revenue—Deferred revenue arises in the normal course of business from advance subscription payments for newspapers, digital subscriptions and other publications, and interactive advertising sales. Deferred revenue is recognized in the period it is earned.

Stock-Based Compensation—Stock-based compensation cost is measured at the grant date of the awards based on the estimated fair value of the awards. The stock-based compensation expense is recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service. Forfeitures are credited to stock-based compensation expense when incurred.

Income Taxes—Provisions for federal and state income taxes are calculated on reported pretax earnings based on current tax laws and also include, in the current period, the cumulative effect of any changes in tax rates, due to changes in tax laws, from those used previously in determining deferred income tax assets and liabilities. Taxable income reported to the taxing jurisdictions in which Tribune operates often differs from pretax earnings because some items of income and expense are recognized in different time periods for income tax purposes. The Company provides deferred taxes calculated on these temporary differences. Taxable income also may differ from pretax earnings due to statutory provisions under which specific revenues are exempt from taxation and specific expenses are not allowable as deductions.

The Company evaluates uncertain tax positions. The Company may recognize the tax benefit of an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. If a tax benefit was recognized the Company would measure the tax benefit based on the largest benefit that has a greater than 50.0% likelihood of being realized upon ultimate settlement.

Accounting standards adopted in 2020—In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Topic 326, Financial Instruments – Credit Losses (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and requires the use of an “expected loss” model for instruments measured at amortized cost. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard effective the beginning of fiscal year 2020 and the adoption did not have a material effect on the Company’s Consolidated Financial Statements. See Note 3 for additional information related to the expected credit losses.

In December 2019, the FASB issued ASU 2019-12, Topic 740, Income Taxes, which simplifies accounting for income taxes (“ASU 2019-12”). ASU 2019-12 eliminates certain exceptions related to intraperiod tax allocation, the interim period tax calculation and deferred tax liabilities. ASU 2019-12 is applied prospectively and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted the standard effective the beginning of fiscal year 2020 and the adoption did not affect the fiscal year end Consolidated Financial Statements.

NOTE 3: EXPECTED CREDIT LOSSES

Tribune holds financial assets in the form of accounts receivable that are primarily generated from advertising revenues, certain circulation-related revenues and commercial print and delivery revenues, and are grouped as such. The accounts receivable and allowance for credit losses are analyzed under the expected credit losses method. Payment terms vary by revenue stream. Classified advertising and home delivery circulation terms are usually prepaid with advertising having terms of 30 to 60 days. Credit is extended based on an evaluation of each customer’s financial condition, and generally collateral is not required.

For accounts receivable, Tribune uses an expected credit losses method that includes forward-looking qualitative factors when they arise. The Company has identified the market effects of the COVID-19 pandemic as a forward-looking qualitative factor to be considered. The Company uses an analysis of 24-months of collection and write off history to calculate historical loss percentages by aging group, which are applied to all accounts within the aging group. Specific reserves are reviewed and handled on a case by case basis. Accounts receivable balances outstanding for a year or more and balances for customers in bankruptcy are reserved at 100%. As customer balances are determined to be uncollectible, the balances are written off against the allowance for credit losses. Included in the allowance for credit losses are amounts for sales adjustments not related to expected credit losses such as, rebates, billing adjustments, and returns. The credit loss expense was $5.4 million for the year ended December 27, 2020 and is included in other operating expenses on the Consolidated Statements of Income (Loss).

F-16

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the activity with respect to the allowance for credit losses for the year ended December 27, 2020 is as follows (in thousands):

Balance at December 29, 2019	$	9,324
Current period provision	5,389
Write offs	(7,471)
Sales adjustments, net	1,070
Balance at December 27, 2020	$	8,312

Accounts receivable, net, at December 27, 2020 and December 29, 2019, consisted of the following (in thousands):

	December 27, 2020		December 29, 2019
Accounts receivable	$	82,178	$	108,664
Less: Allowance for credit losses	8,312		9,324
Accounts receivable, net	$	73,866	$	99,340

NOTE 4: LEASES

Tribune’s leased facilities total approximately 4.0 million square feet in the aggregate. The Company currently has leased newspaper production facilities in Connecticut, Florida, Illinois, Maryland, New Jersey, Pennsylvania and Virginia, however Tribune owns substantially all of the production equipment. For printing plants, the initial lease term is ten years with 2 options to renew for additional ten year terms. For distribution facilities, the initial lease term is generally five years, with options to renew either 2 or 3 additional five year terms. For office space, lease terms range from two to thirteen years. The Company has rent escalations, rent holidays and leasehold improvement incentives which are included in the determination of the ROU assets and the lease liabilities.

Tribune subleases certain facilities that in aggregate are immaterial. The terms of these subleases are from five to seven years and expire between 2021 and 2023.

Effective April 1, 2020, and in light of the COVID-19 pandemic, the Company withheld payment of rent related to a majority of its facilities and requested rent relief from the lessors in various forms, including rent abatement and deferrals, lease restructuring, or lease terminations. Payments have generally resumed as the Company completes the rent relief discussions as discussed below. The terms of the Company’s facility leases generally provide the lessors a number of remedies for late payment, including late fees, interest on amounts past due, the right to draw on any letter of credit supporting the lease, the right to terminate the lease with termination payments, including acceleration of certain future rents net of landlord mitigation amounts, or the right to terminate our possession of the facility, among others. The Company has been notified by a number of lessors that it is in default and certain of such lessors have formally filed complaints in their local jurisdictions. The Company

F-17

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

is negotiating with such lessors on terms of the potential rent relief and the lessors’ remedies and is responding timely to all filed complaints.

Below is a summary of information related to the Company’s leases (in thousands):

	December 27, 2020		December 29, 2019
Lease Cost:
Finance lease cost:
Amortization of ROU assets	$	131	$	313
Interest on lease liabilities	134		114
Operating lease cost	25,542		28,649
Short-term lease costs	128		612
Variable lease costs	4,652		7,180
Sublease income	(2,771)		(3,259)
Total lease cost	$	27,816	$	33,609

Below is a summary of the supplemental cash flow information related to leases (in thousands):

	December 27, 2020		December 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	39,908	$	29,848
Operating cash flows used for finance leases	$	0	$	109
Financing cash flows used for finance leases	$	7,036	$	305
ROU assets obtained in exchange for new operating lease liabilities	$	4,329	$	4,830

Below is a summary of the weighted average remaining lease terms and weighted average discount rates related to leases for the year ended December 27, 2020:

Weighted average remaining lease term - operating leases (in years)	3.8
Weighted average discount rate - operating leases	3.9	%

Future minimum lease payments under noncancelable operating lease arrangements having initial terms of one year or more as of year ended December 27, 2020, are as follows (in thousands):

	Operating Leases
2021	$	25,858
2022	21,208
2023	11,454
2024	4,010
2025	3,187
Thereafter	13,924
Total future lease payments	79,641
Less: Imputed interest	6,545
Net future minimum lease payments	$	73,096

Rent Abatements and Deferrals

In April 2020, the FASB staff issued interpretive guidance on the accounting for lease concessions that are related to the effects of the COVID-19 pandemic. Tribune has elected to apply the guidance to lease concessions that have been secured.

F-18

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Beginning in April 2020, the Company began recognizing rent abatements or deferrals received from landlords as reductions in variable lease payments. This election will continue while these rent abatements or deferrals are in effect. Through December 27, 2020, the Company has secured rent abatements and deferrals for approximately 17 leases. The impact of these rent abatements and deferrals is not material.

Lease Restructuring

For the year ended December 27, 2020, the Company has completed modifications for 14 leases. These modifications included various changes to the terms of the leases including rent abatements and deferrals in exchange for term extensions for periods of 3 months to 50 months. The impact of these modifications is not material.

Lease Terminations

The Company has negotiated lease terminations on 14 leases. These terminations include a lease for which the termination agreement was executed in the third quarter of 2020 but has a lease termination date subsequent to December 27, 2020. For the year ended December 27, 2020, the Company paid $11.3 million in connection with lease terminations, including forfeiture of deposits, past due rents, repairs, and early termination payments, and recognized net gains of $13.0 million, which are included in other operating expense on the Consolidated Statements of Income (Loss).

Lease Abandonment and Impairment

During the year ended December 27, 2020, the Company permanently vacated 972,699 square feet of office and distribution space related to a total of 11 leases. The space was vacated as some of our locations have transitioned to long-term remote working arrangements. The abandonment of leased space is an indicator of impairment and the Company assessed the lease ROU assets and leasehold improvements for impairment. Estimates of fair value include Level 3 inputs which are subjective in nature, involve uncertainties and matters of significant judgment and are made at a specific point in time. To calculate the fair value of the vacated space, the Company used the discounted cash flows from estimated sublease payments, if any, and compared the result to the sum of the carrying values of the lease ROU asset and the leasehold improvements. The discount rate used is a marketplace lessor's expected rate of return. During the year ended December 27, 2020, the Company recorded non-cash impairment charges related to the impairment of the lease ROU assets of $20.3 million. For the year ended December 27, 2020, the Company recorded non-cash impairment charges of $14.4 million related to the impairment of the leasehold improvements associated to the vacated office space.

Financing Lease

As discussed in detail in Note 12, the Company purchased the property in New Jersey that related to the Company’s only significant financing lease for $6.9 million.

NOTE 5: REVENUE RECOGNITION

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. Revenues are recognized as performance obligations are satisfied either at a point in time, such as when an advertisement is published, or over time, such as for content licensing. No single customer represented 10% or more of the Company’s net revenue in any fiscal period presented.

Circulation revenue

Circulation revenue results from the sale of print editions of newspapers to individual subscribers and to sales outlets that resell the newspapers. For individual subscribers, revenue is recognized at a point in time when the newspapers are delivered to the subscribers. For sales outlets, revenue is recognized at a point in time when the newspapers are delivered to the sales outlets or to an intermediary that has purchased the newspapers to resell to the sales outlets.

F-19

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Advertising revenue

Print advertising revenue is typically in the form of print display appearing in Tribune newspapers and other owned publications and preprinted advertising inserted into Tribune newspapers. Digital advertising consists of website display, banner ads, advertising widgets, coupon ads, video, search advertising and linear ads placed by customers on Tribune or other third-party websites. Customers submit ads to appear either in the print newspapers or on websites. Advertising revenue is recognized when the Company satisfies the performance obligation by transferring the promised goods or services to the customer in an amount that reflects the consideration the Company is entitled to receive. For print advertising, classified and preprint advertising, this transfer, which occurs at a point in time, occurs when the advertising appears in the newspaper.

Digital advertising is typically sold on a cost-per-impression basis. An advertiser pays an amount based on the number of times the ad is displayed on the Company’s websites. Revenue is recognized at a point in time when the ad is displayed on the websites.

Advertising revenue also includes digital marketing services which include development of mobile websites, search engine marketing and optimization, social media account management and content marketing for customers’ web presence for small to medium size businesses. For mobile website development, revenue is recognized when the website is live. For search engine marketing and optimization, social account management and content marketing, revenue is recognized over the period of time the service is performed for the customer.

Certain customers receive cash-based incentives or credits, which are accounted for as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and reduces revenues recognized. The Company expects there will be no significant changes to our estimates of variable consideration.

Other revenue

Other revenues are derived from commercial printing and delivery services provided to other newspapers, direct mail advertising and services, syndication and licensing revenue, ecommerce lead generation revenue and digital-only subscriptions.

Digital circulation revenue results from the provision of online content to subscribers. Tribune recognizes revenue daily, per the contract term, as the customer receives access to digital content.

For commercial printing and delivery services, the Company contracts with a number of national and local newspapers to both print and/or distribute their respective publications in local markets where it is a newspaper publisher. For commercial printing, revenue is recognized as the papers are printed and available for delivery. For commercial delivery, the Company operates under two models, the buy/sell model and the fee-for-delivery model. Under the buy/sell model, the Company buys the customers’ newspapers and resells them to subscribers and sales outlets. Revenue the Company receives for the sale of the newspapers is recognized when the newspapers are delivered to subscribers or sales outlets. Under the fee-for-delivery model, the Company receives a fee for each newspaper delivered. Revenue is recognized at the time the newspaper is delivered either to the subscriber or to the sales outlet.

For direct mail advertising and services, the Company enters into an arrangement with customers to design, print and distribute advertising materials. Revenue is recognized when the items are delivered to the postage courier.

For licensing and syndication revenue, the Company enters into a sales-based royalty arrangement with the customer to provide a license to Tribune content. The Company receives a periodic royalty payment based on usage of the content or derived sales of the content. Revenue is recognized based on royalties earned.

F-20

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s revenues disaggregated by type of revenue is as follows (in thousands):

	December 27, 2020		December 29, 2019		December 30, 2018
Print	$	190,527	$	307,116	$	356,301
Digital	70,652		92,184		97,565
Advertising	261,179		399,300		453,866
Print	307,724		336,835		349,897
Digital	45,565		29,017		18,338
Circulation	353,289		365,852		368,235
Commercial print & delivery	73,725		93,944		102,669
Direct mail	23,764		35,613		32,348
Content syndication & other	34,293		51,068		48,544
Other	131,782		180,625		183,561
Total operating revenues	$	746,250	$	945,777	$	1,005,662

Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. Therefore, the Company has no contract assets as defined under ASC Topic 606, “Revenue from Contracts with Customers.” The Company receives a significant portion of the payments from its circulation subscribers in advance of the delivery of the content either in print or digitally. These up-front payments and fees are recorded as deferred revenue upon receipt and generally require deferral of revenue recognition to a future period until the Company performs its obligations under the subscription agreement. The deferred revenue is recognized as revenue as the content is delivered. The deferred revenue is considered a contract liability under ASC Topic 606.

The following table presents changes to the Company’s contract liabilities during the years ended December 27, 2020, and December 29, 2019 (in thousands):

Balance at December 30, 2018	$	53,970
2019 Additions	37,730
2019 Deductions	(46,423)
Balance at December 29, 2019	45,277
2020 Additions	31,843
2020 Deductions	(40,579)
Balance at December 27, 2020	$	36,541

The Company expenses sales commissions when incurred because the amortization period would generally have been one year or less. These costs are recorded within cost of sales. Additionally, the Company does not disclose the value of unsatisfied performance obligations because the vast majority of contracts have original expected lengths of one year or less and payment terms are generally short-term in nature unless a customer is in bankruptcy.

NOTE 6: CHANGES IN OPERATIONS

The Company continually assesses its operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. In the past these activities have included, and could include in the future, outsourcing of various functions or operations, abandonment of leased space and other activities which may result in changes to employee headcount. The discussion and amounts below represent activity in the Company’s continuing operations and exclude any

F-21

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

amounts in the Company’s assets, liabilities or operations from discontinued operations. Charges for severance and related expenses are included in compensation expense in the Consolidated Statements of Income (Loss).

Employee Reductions

2020

During the year ended December 27, 2020, the Company implemented reductions in staffing levels in its operations of 855 positions for which the Company recorded pretax charges related to these reductions and executive separations totaling $30.6 million.

The severance charge included reductions of 214 positions related to the 2020 VSIP initiated in the first quarter of 2020. The 2020 VSIP provided enhanced separation benefits to eligible employees with more than 8 years of service. The Company is funding the 2020 VSIP ratably over the payout period through salary continuation. The related salary continuation payments began during the first quarter of 2020 and are expected to continue through the first quarter of 2022.

The 2020 severance charge also included reductions for 291 positions related to the Company’s decision to contract with third parties to outsource the printing and packaging of The Virginian-Pilot and the Hartford Courant. For The Virginian-Pilot, the services were fully transitioned to the third party at the end of the third quarter and the related salary continuation payments began during the second quarter of 2020 and are expected to continue through the third quarter of 2021. For the Hartford Courant, the services were fully transitioned to the third party at the end of the fourth quarter and the related salary continuation payments began in the first quarter of 2021 and are expected to continue through the third quarter of 2021.

Also included in the 2020 severance charge is approximately $0.6 million related to the separation of the Company’s former CEO, which included continuation of his base salary for one year through February 2021, his bonus for 2019, and certain benefit continuation.

2019

During the year ended December 29, 2019, the Company implemented reductions in staffing levels in its operations of 138 positions for which the Company recorded pretax charges related to these reductions and executive separations totaling $8.5 million. These reductions include 23 positions related to the voluntary severance incentive plan initiated in the fourth quarter of 2018. The related salary continuation payments began during the first quarter of 2019 and ended during the first quarter of 2020.

Included in the 2019 severance charge is approximately $4.0 million related to the separation of the Company’s former CEO and 2 senior executives in the digital space. Each of these employees had employment contracts which provided for immediate payout of any contractual compensation under the employment agreement in the event of separation. These employment agreements were amended to permit payment of the severance as salary continuation throughout 2019. The severance payments to these executives, including compensation and medical benefits, if any, were accrued in the first quarter of 2019. During the salary continuation period any time-based equity awards continued to vest which, as a result of the separation, the Company recognized accelerated stock-based compensation expense of $1.5 million.

F-22

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the activity with respect to Tribune’s severance accrual for the years ended December 27, 2020, and December 29, 2019, is as follows (in thousands):

Balance at December 30, 2018	$	28,845
2019 Provision	8,482
2019 Payments	(34,747)
Balance at December 29, 2019	2,580
2020 Provision	30,551
2020 Payments	(24,810)
Balance at December 27, 2020	8,321

Charges for severance and related expenses are included in compensation expense in the accompanying Consolidated Statements of Income (Loss).

NOTE 7: RELATED PARTY TRANSACTIONS

Transition Services Agreement with NantMedia Holdings, LLC

On February 7, 2018, the Company entered into an agreement to sell the Los Angeles Times, The San Diego Union-Tribune and various other titles of the Company’s California properties (“California Properties”). In connection with the closing of the sale of the California Properties, the Company entered into a transition services agreement (“TSA”) with NantMedia Holdings, LLC (“NantMedia”), providing for up to twelve months of transition services between the parties at negotiated rates approximating cost. On January 17, 2019, this agreement was amended to extend the date of the TSA to June 30, 2020, settled the working capital adjustment from the sale of the California Properties and provided an indemnity related to certain receivables. See Note 8 to the Consolidated Financial Statements for information on the sale of the California Properties.

During the years ended December 27, 2020 and December 29, 2019, the Company paid certain costs on behalf of NantMedia due to shared contracts and processes. Such costs include newsprint, rent, payroll, benefits, and other operating activities. The TSA provides for reimbursement to the Company for such charges until the contracts and processes can be separated. Additionally, the Company received certain customer payments related to comingled revenue billings and receipts that include the California Properties. These relevant amounts of such payments are reimbursed to NantMedia. A summary of the activity with respect to the TSA and Amended TSA for the years ended December 27, 2020, and December 29, 2019, is as follows (in thousands):

	December 27, 2020		December 29, 2019
Accounts receivable from NantMedia beginning balance	$	6,118	$	17,909
Revenue for TSA services	2,497		19,473
Reimbursable costs	27,252		50,610
Amounts received for TSA services	(3,112)		(20,583)
Amounts received for reimbursable costs	(32,312)		(63,114)
Amounts reimbursed to Nant for amounts collected from third parties under commingled revenue contracts	1,179		18,371
Amounts collected from third parties under commingled revenue contracts	(1,604)		(16,548)
Accounts receivable balance from NantMedia(1)	$	18	$	6,118

(1) - The accounts receivable from NantMedia balance consists of charges which have been billed as of December 27, 2020.

Merrick Consulting Agreement

On December 20, 2017, the Company entered into a Consulting Agreement with Merrick Ventures LLC (“Merrick Ventures”) and solely for certain sections thereof, Michael W. Ferro, Jr. and Merrick Media, LLC (“Merrick Media”). Mr. Ferro is (1) Chairman and Chief Executive Officer of Merrick Ventures and (2) the manager of Merrick Venture Management,

F-23

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

LLC which is the sole manager of Merrick Media. At the time the agreement was signed, Mr. Ferro was also Chairman of Tribune’s Board of Directors (the “Board”) and, together with Merrick Ventures and Merrick Media, a significant stockholder. The Consulting Agreement provided for the engagement of Merrick Ventures on a non-exclusive basis to provide certain management expertise and technical services for an annual fee of $5.0 million in cash, payable in advance on the first business day of each calendar year. The Consulting Agreement provided for a rolling three year term, with the initial term continuing through December 31, 2020. The Company made the initial $5.0 million payment in early January 2018. During the term of the Consulting Agreement, Merrick Ventures and Mr. Ferro agreed to certain non-competition covenants relating to engaging in certain other daily printed newspaper businesses, subject to certain exceptions.

On March 18, 2018, Mr. Ferro retired from the Company’s Board. As Mr. Ferro was no longer actively engaged in the business and the Company remained contractually committed for the future payments due under the Consulting Agreement, the Company recognized expense of $12.5 million due under the Consulting Agreement in 2018. The total expense reflects reduced fees negotiated in an amendment to the Consulting Agreement. The Consulting Agreement terminated on December 31, 2020. Additionally in 2018, the Company agreed to pay $0.3 million in legal fees incurred by Mr. Ferro while conducting the Company’s business. Such legal fees were paid directly to the legal firm. On November 15, 2019, Mr. Ferro sold all of the shares he controlled to funds Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. See Note 20 for further information concerning the sale.

NOTE 8: DISCONTINUED OPERATIONS

BestReviews

The Company acquired a 60.0% membership interest in BestReviews on February 6, 2018, pursuant to an Acquisition Agreement entered into on the same date (“BR Acquisition Agreement”), among the Company, BestReviews Inc., a Delaware corporation (“BR Parent”), BestReviews and the stockholders of BR Parent. BestReviews is a company engaged in the business of testing, researching and reviewing consumer products and generates referral fee revenue by directing online traffic from their published reviews to websites where the products can be purchased. BestReviews has affiliate agreements with online sellers, of which the largest is Amazon.com. BestReviews receives a referral fee once the product is purchased.

Upon the terms and subject to the conditions set forth in the BR Acquisition Agreement, the Company acquired 60.0% of BR Parent’s membership interest in BestReviews for a total purchase price of $68.3 million, consisting of $33.7 million in cash, less a post-closing working capital adjustment from the seller of $0.6 million, and $34.6 million in common stock of the Company (“BR Acquisition”). The Company issued 1,913,438 shares of common stock in connection with the closing (“Stock Consideration”). The BR Acquisition Agreement also contained representations, warranties, covenants and indemnities of the parties thereto.

On December 11, 2020, the Company entered into the BR Agreement, by and among the Sellers, BestReviews and Nexstar”), pursuant to which the Sellers would sell 100% of BestReviews to Nexstar (the “BR Transaction”). The sale closed on December 29, 2020, subsequent to the Company’s fiscal year-end, for a cash sales price of $160.0 million plus a $9.4 million working capital adjustment. Under the terms of the BR Transaction, the Company received 60% of the cash selling price net of transaction fees, totaling $99.9 million, resulting in a pre-tax gain of $36.4 million that will be recognized upon the closing in fiscal 2021. As of the balance sheet date, BestReviews was owned 60% by the Company and 40% by BR Holding Company, Inc. BR Holding Company, Inc. is a 5.2% shareholder in the Company.

With the sale of BestReviews, the Company is exiting that line of business. The sale of BestReviews represented a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, BestReviews is reflected as discontinued operations on the Consolidated Balance Sheets and the results of operations of BestReviews are presented as discontinued operations in the Consolidated Statements of Income (Loss) for all periods presented.

BestReviews Acquisition

In connection with the BR Acquisition the Company and BR Parent also entered into an amended and restated limited liability company agreement of BestReviews (“BR LLC Agreement”). The BR LLC Agreement granted the Company the right to purchase all (but not less than all) of the remaining 40.0% of the membership interests of BestReviews (“Call Option”) using, at the Company’s election, cash, shares of common stock of the Company, or a combination thereof, at a purchase price to be

F-24

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

based on a pre-determined multiple of BestReviews’ trailing 12-month EBITDA, with such purchase price capped per the BR LLC Agreement if the Call Option was exercised prior to the third anniversary of the closing of the BR Acquisition.

BR Parent also had the right, beginning three years after closing of the BR Acquisition, to cause the Company to purchase all (but not less than all) of the remaining 40.0% of the membership interests of BestReviews (“Put Option”) using, at the Company’s election, cash, shares of common stock of the Company, or a combination thereof, at a purchase price to be determined in the same manner as if the Call Option was exercised.

On February 3, 2020, the Company and BR Parent amended the BR LLC Agreement to, among other things, remove the Put Option and Call Option sections of the BR LLC Agreement. See Note 17 for additional information related to the amendment.

The BR LLC Agreement contained other terms and conditions, including transfer restrictions, tag-along and drag-along rights, and indemnification obligations.

California Properties

On February 7, 2018, the Company entered into a Membership Interest Purchase Agreement (“MIPA”) by and between the Company and Nant Capital, LLC (“Nant Capital”) pursuant to which the Company agreed to sell the Los Angeles Times, The San Diego Union-Tribune and various other titles of the Company’s California properties (“California Properties”) to Nant Capital for an aggregate purchase price of $500.0 million in cash; plus the assumption of unfunded pension liabilities related to the San Diego Pension Plan, less a post-closing working capital adjustment to the buyer of $9.7 million (“Nant Transaction”). The Nant Transaction closed on June 18, 2018, and resulted in a pre-tax gain of $404.8 million.

The sale of the California Properties represented a strategic shift that has had a major effect on our operations and financial results. As a result, effective as of the date of the sale, the California Properties are reflected as discontinued operations on the Consolidated Balance Sheets and the results of operations of the California Properties are presented as discontinued operations in the Consolidated Statements of Income (Loss) for all periods presented.

As part of the Nant Transaction, the Company provided Nant Capital indemnification with respect to certain legal matters which were at various states of adjudication at the date of the sale. On August 19, 2019, the Los Angeles Times received an unfavorable jury verdict in an indemnified employment litigation matter. The Company successfully challenged the jury verdict by post-trial motions, and as a result, the verdict has been set aside and a new trial has been ordered.

Dr. Patrick Soon-Shiong, a former director of the Company, together with Nant Capital, beneficially own 8,743,619 shares of Tribune common stock, which represents 23.9% of the outstanding shares of Tribune common stock as of December 27, 2020.

forsalebyowner.com

On May 23, 2018, the Company sold substantially all of the assets of forsalebyowner.com in an asset sale for $2.5 million, less a post-closing working capital payment to the buyer of $0.1 million, plus an advertising sales commitment of $4.5 million over a term of two years.

The forsalebyowner.com results of operations are included in discontinued operations in the Consolidated Statements of Income (Loss) for 2018.

F-25

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Discontinued Operations

Earnings from discontinued operations through the respective transaction dates, included in the Consolidated Statements of Income (Loss), are comprised of the following (in thousands):

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Operating revenues	$	53,149	$	37,371	$	236,528
Operating expenses:
Compensation	2,127		1,671		60,346
Newsprint and ink	0		0		14,357
Outside services	2,078		2,643		63,167
Other operating expenses	28,098		22,703		75,135
Depreciation and amortization	2,605		2,699		5,736
Operating expenses	34,908		29,716		218,741
Income from operations	18,241		7,655		17,787
Gain on sale	0		0		404,783
Interest expense, net	0		0		(67)
Other income (expense), net	0		0		1,338
Income tax expense (benefit)	2,921		769		132,547
Income from discontinued operations, net of tax	15,320		6,886		291,294
Less: Income from discontinued operations attributable to noncontrolling interest	7,516		4,825		856
Income from discontinued operations, net of tax available to common stockholders	$	7,804	$	2,061	$	290,438

The following table presents the aggregate carrying amounts of assets and liabilities related to discontinued operations in the Consolidated Balance Sheets (in thousands):

	December 27, 2020		December 29, 2019
Carrying amount of assets related to discontinued operations:
Cash	$	1,159	$	6,124
Accounts receivable, (net of allowances of $396 and $350, respectively)	17,888		13,414
All other current assets	57		(1)
Property, plant and equipment, net	16		23
Goodwill	87,052		87,052
Intangible assets, net	5,053		7,649
Software, net	13		0
Other long-term assets	1		(3)
Total assets related to discontinued operations	$	111,239	$	114,258
Carrying amount of liabilities associated with discontinued operations:
Accounts payable and employee compensation and benefits	4,734		2,874
Other current liabilities	25		11
Total liabilities associated with discontinued operations	$	4,759	$	2,885

F-26

NOTE 9: INVENTORIES

Inventories at December 27, 2020, and December 29, 2019, consisted of the following (in thousands):

	December 27, 2020		December 29, 2019
Newsprint	$	3,914	$	4,510
Supplies and other	141		310
Total inventories	$	4,055	$	4,820

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

NOTE 10: LONG-LIVED ASSETS

As discussed in Note 2, Tribune evaluates the carrying value of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset or asset group may be impaired, in accordance with ASC Topic 360, “Property, Plant and Equipment.” In the first quarter of 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator of a potential impairment of long-lived assets and determined that an interim evaluation was required for certain asset groups. Under ASC Topic 360, an impairment exists if the carrying value of an asset group exceeds its fair value and is considered not recoverable.

As a result of the Company’s evaluation, the Company determined the carrying value for the long-lived assets for the New York Daily News Media Group were impaired. To determine the fair value of the long-lived assets for the New York Daily News, the Company valued the production assets and real estate using the market approach. The remaining assets were valued under an income approach. Estimates of fair value include Level 3 inputs as they are subjective in nature, involve uncertainties and matters of significant judgment and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimates of fair value. During the year ended December 27, 2020, the Company recorded non-cash impairment charges of $16.1 million related to property, plant and equipment, $14.5 million related to lease ROU assets, and $4.0 million related to other long-lived assets. The impairment charges resulted primarily from a decline in the fair value due to lower projected cash flows versus historical estimates.

On May 28, 2018, Tribune Publishing Company, LLC, a wholly-owned subsidiary of the Company, acquired Virginian-Pilot Media Companies, LLC (“Virginian-Pilot”), the owner of The Virginian-Pilot daily newspaper based in Norfolk, Virginia, pursuant to a Securities Purchase Agreement, entered into on the same date (“VP Purchase Agreement”), by and among the Company, Virginian-Pilot and Landmark Media Enterprises, LLC (“Seller”).

Upon the terms and subject to the conditions set forth in the VP Purchase Agreement, the Company acquired all of the issued and outstanding membership interests in Virginian-Pilot from Seller for a cash purchase price of $34.0 million, less a post-closing working capital adjustment of $0.1 million (“VP Acquisition”). As part of the VP Acquisition, the Company also acquired Virginian-Pilot’s real estate portfolio (comprised of approximately 460,000 square feet), including its headquarters building in downtown Norfolk, its printing and distribution facilities in Virginia Beach and a number of satellite offices in Norfolk and North Carolina. The VP Purchase Agreement also contains representations, warranties, covenants, and indemnities of the parties thereto.

On July 23, 2019, the Company entered into an agreement to sell real property located in Norfolk, Virginia, for a sales price of $9.5 million. The sale closed on January 22, 2020. The Company received net proceeds of $9.0 million and recorded a pre-tax gain of $5.2 million related to the sale. The gain is included as a reduction in other operating expenses in the accompanying Consolidated Statements of Income (Loss).

On November 2, 2020, the Company completed the sale of real property located in Virginia Beach, Virginia for a cash sales price of $5.2 million. The Company received net proceeds of $4.9 million and recorded a pre-tax gain of $1.3 million related to the sale in the fourth quarter of 2020. Additionally, the Company leased back 39,975 square feet for a distribution center at $0.2 million per year for an initial term of two years with an option to renew for an additional two years.

F-27

As a result of the printing and packaging outsourcing at The Virginian-Pilot and the Hartford Courant discussed in Note 6, certain assets required to print and package The Virginian-Pilot and the Hartford Courant will no longer be used as of the transition date. Therefore, the Company recognized accelerated depreciation on the equipment of $4.5 million and $1.2 million, respectively. These charges are included in depreciation and amortization expenses in the accompanying Consolidated Statements of Income (Loss).

NOTE 11: GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets at December 27, 2020, and December 29, 2019, consisted of the following (in thousands):

	December 27, 2020						December 29, 2019
	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Goodwill	$	28,146			$	28,146	$	30,624			$	30,624
Newspaper mastheads (1)	$	27,735	$	—	$	27,735	$	34,826	$	—	$	34,826
Subscribers (useful life of 2 to 10 years)	7,312		(6,326)		986		7,312		(5,642)		1,670
Advertiser relationships (useful life of 2 to 13 years)	27,648		(17,515)		10,133		27,648		(15,002)		12,646
Trade names (useful life of 20 years)	15,100		(4,848)		10,252		15,100		(4,093)		11,007
Other (useful life of 1 to 20 years)	3,641		(2,599)		1,042		3,641		(2,273)		1,368
Total intangible assets	$	81,436	$	(31,288)	$	50,148	$	88,527	$	(27,010)	$	61,517
Software (useful life of 2 to 10 years)	$	141,720	$	(124,217)	$	17,503	$	140,727	$	(119,991)	$	20,736

(1) - Intangible assets not subject to amortization.

As discussed in Note 2, Tribune reviews goodwill and other indefinite-lived intangible assets for impairment annually on the first day of the fourth quarter, or more frequently if events or changes in circumstances indicate that an asset may be impaired, in accordance with ASC Topic 350. In the first quarter of 2020, the Company identified the market effects of the COVID-19 pandemic as an economic indicator of a potential impairment of goodwill and determined that an interim evaluation was required.

For goodwill, the calculated fair value exceeded the carrying value, except as noted below. For goodwill, the calculated fair value was determined using the income approach. Estimates of fair value include Level 3 inputs as they are subjective in nature, involve uncertainties and matters of significant judgment and are made at a specific point in time. Thus, changes in key assumptions from period to period could significantly affect the estimates of fair value. Significant assumptions used in the fair value estimates as of March 29, 2020, include projected revenues and related growth rates over time (for the first quarter of 2020 impairment test, the perpetuity growth (decline) rates used ranged from (22.1%) to 2.4%), forecasted revenue growth rates (for the first quarter of 2020 impairment test, forecasted revenue growth (decline) ranged from (29.0%) to 17.9%), projected operating cash flow margins, estimated tax rates, depreciation expense, capital expenditures, required working capital needs, and an appropriate risk-adjusted weighted-average cost of capital (for the first quarter of 2020, the weighted average cost of capital used was 10.0% for print and ranged from 12.3% to 13.3% for digital properties). For goodwill as of March 29, 2020, the calculated fair value exceeded the carrying value by at least 85.0% for all reporting units except the Orlando Sentinel, the Sun Sentinel and the New York Daily News Media Groups. For the Orlando Sentinel and the Sun Sentinel Media Groups, the carrying value exceeded the fair value and the Company recorded a non-cash impairment charges of $1.3 million and $1.1 million, respectively, reflecting the reduction in fair value. The New York Daily News Media Group has a negative carrying value and goodwill of $1.4 million.The impairment charges resulted primarily from a decline in the fair value due to lower projected cash flows versus historical estimates.

F-28

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For mastheads, the calculated fair value includes Level 3 inputs and was determined using the royalty savings method. The key assumptions used in the fair value estimates under the royalty savings method are revenue and market growth, royalty rates for newspaper mastheads (for the first quarter of 2020, the royalty rate used ranged from 0.8% to 4.9%), estimated tax rates, an appropriate risk-adjusted weighted-average cost of capital (for the first quarter of 2020, the weighted average cost of capital used was 10.0% for print and ranged from 12.3% to 13.3% for digital properties). These assumptions reflect Tribune’s best estimates, but these items involve inherent uncertainties based on market conditions generally outside of Tribune’s control. For mastheads as of March 29, 2020, the calculated fair value exceeded the carrying value by more than 100.0% in all instances, except for the Sun Sentinel and the New York Daily News Media Groups. As of March 29, 2020, the Sun Sentinel and the New York Daily News Media Groups masthead carrying value exceeded their fair values and the Company recorded non-cash impairment charges of $6.3 million and $0.8 million, respectively.

For the 2019 annual impairment test, the Company performed a full quantitative analysis of both goodwill and mastheads. For both goodwill and mastheads, the calculated fair value exceeded the carrying value, except as noted below. For goodwill, the calculated fair value was determined using the income approach. Significant assumptions used in the fair value estimates included projected revenues and related growth rates over time (for the 2019 impairment test, the perpetuity growth (decline) rates used ranged from (15.0)% to 1.8%), forecasted revenue growth rates (for the 2019 impairment test, forecasted revenue growth (decline) ranged from (11.5)% to 18.5%), projected operating cash flow margins, estimated tax rates, depreciation expense, capital expenditures, required working capital needs, and an appropriate risk-adjusted weighted-average cost of capital (for 2019, the weighted average cost of capital used was 8.5% for print and ranged from 11.3% to 12.3% for digital properties). For goodwill as of the measurement date, the calculated fair value exceeded the carrying value by more than 65.0% for all reporting units except the Baltimore Sun and Virginia Media Groups. For The Baltimore Sun Media Group and Virginia Media Group reporting units, the carrying value exceeded the fair value and the Company recorded a non-cash goodwill impairment charge of $14.5 million. The impairment charges resulted primarily from a decline in the fair value due to lower projected cash flows versus historical estimates.

The changes in the carrying amounts of goodwill during the years ended December 27, 2020, and December 29, 2019 were as follows (in thousands):

Balance at December 30, 2018	$	45,095
Impairment	(14,496)
Other	25
Balance at December 29, 2019	30,624
Impairment	(2,478)
Balance at December 27, 2020	$	28,146

The changes in the carrying amounts of intangible assets excluding goodwill during the years ended December 27, 2020, and December 29, 2019, were as follows (in thousands):

	Intangible assets subject to amortization		Other intangible assets not subject to amortization		Total
Balance at December 30, 2018	$	32,063	$	34,826	$	66,889
Amortization	(4,494)		—		(4,494)
Net lease right-of-use asset reclassed	(878)		0		(878)
Balance at December 29, 2019	26,691		34,826		61,517
Amortization	(4,278)		—		(4,278)
Impairment	0		(7,091)		(7,091)
Balance at December 27, 2020	$	22,413	$	27,735	$	50,148

F-29

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The changes in the carrying amounts of software during the years ended December 27, 2020, and December 29, 2019, were as follows (in thousands):

Balance at December 30, 2018	$	27,117
Purchases and capitalized development costs	10,593
Retirements	(21)
Amortization	(16,953)
Balance at December 29, 2019	20,736
Purchases and capitalized development costs	6,548
Amortization	(9,781)
Balance at December 27, 2020	$	17,503

The estimated amortization expense relating to amortizable intangible assets and software for the next five years are approximately (in thousands):

Year Ended	Intangible assets subject to amortization		Software
2021	$	4,284	$	7,421
2022	3,688		5,481
2023	2,909		2,525
2024	2,297		962
2025	2,343		454
Total	$	15,521	$	16,843

NOTE 12: INVESTMENTS

DN Property Company, LLC

In 2017, the Company completed the acquisition of 100% of the partnership interests in Daily News, L.P. (“DNLP”), the owner of the the New York Daily News (the “NYDN Transaction”). As part of the NYDN Transaction, DNLP retained its lease with the New Jersey Economic Development Authority with respect to approximately 18 acres of real property on which its printing facilities are located (the “New Jersey Lease”). Under the New Jersey Lease, DNLP was required to purchase the real property at the end of the lease term.

Additionally, DNLP owned approximately 4 acres of real property contiguous to the New Jersey Lease property, currently used as parking facilities. Per the terms of the NYDN Transaction, DNLP was obligated to transfer ownership of the four acres to DN Property Company, LLC (“DNPC”) either prior to or concurrent with the exercise of the purchase option under the New Jersey Lease. DNPC is owned 49.9% by DNLP and 50.1% by New DN Company, an affiliate of the sellers in the NYDN Transaction. New DN Company controls the management of DNPC. In the fourth quarter of 2018, the Company completed the transfer of the 4 acres to DNPC. The 4 acres are leased by DNLP under the same terms as the real property discussed below.

On December 10, 2020, DNLP completed the purchase of the real property under the New Jersey Lease for $6.9 million and sold the property to DNPC for 1 dollar. New DN Company reimbursed the Company for 50.1% of the $6.9 million purchase price or $3.5 million. After the transfer of the real property to DNPC, DNLP entered a lease agreement with DN Property Company, LLC, with a term of ten years and a five-year renewal option at an annual rent of 1 dollar per year. In the event there is a direct or indirect change in control or sale of DNLP, the rent will adjust to the fair market value of the premises as determined by the sellers in the NYDN Transaction, the later of September 3, 2024 or the date of the change in control or sale. DNLP is responsible to pay all of the operating costs of the property. At any time subsequent to the commencement date of the lease, DNLP, at its option, may require the sellers in the NYDN Transaction to acquire DNLP’s 49.9% interest in DNPC based on its then-current fair market value. In the event the property ceases to be used as a major daily

F-30

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

newspaper production facility, the sellers in the NYDN Transaction shall be entitled to acquire DNLP’s 49.9% interest in DNPC based on its then-current fair market value.

Equity investments at December 27, 2020, and December 29, 2019, consisted of the following (in thousands):

	December 27, 2020		December 29, 2019		% Owned
DN Property Company, LLC	$	10,838	$	1,996	49.9%
Matter Ventures, Inc	516		659		11.1%
Total	$	11,354	$	2,655

Nucleus Marketing Solutions, LLC

In April 2016, Tribune, along with other leading media companies McClatchy, Gannett and Hearst, formed Nucleus Marketing Solutions, LLC (“Nucleus”). This network connected national advertisers to audiences across existing and emerging digital platforms. Nucleus worked with its marketing partners to address their goals by offering integrated services across all platforms. The Company owned 25.0% of Nucleus. The Company’s interest in Nucleus was recorded as an equity method investment. In July 2019, Nucleus announced the shut-down of the ads sales operations, resulting in a $1.0 million loss on the investment. The revenue recorded related to the Nucleus agreement during the years ended December 29, 2019 and December 30, 2018 was immaterial.

Following is the summarized financial information for the equity investments for the years ended December 29, 2019, and December 30, 2018 (in thousands):

	December 29, 2019		December 30, 2018
Revenues	$	886	$	6,815
Expenses	5,242		13,238
Net loss	$	(4,356)	$	(6,423)
Tribune’s portion of Nucleus net loss	$	(1,089)	$	(1,605)

NOTE 13: DEBT

On August 4, 2014, the Company entered into a credit agreement (as amended, amended and restated or supplemented) with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the lenders party thereto (“Senior Term Facility”). The Senior Term Facility originally provided for secured loans (“Term Loans”) in an aggregate principal amount of $350.0 million, which were issued at a discount of $3.5 million. On May 21, 2015, the Company entered into a lender joinder agreement with Citicorp North America, Inc. and JPMorgan Chase Bank, N.A. to partially finance an acquisition. This joinder agreement expanded the borrowings under the Senior Term Facility by $70.0 million issued at a discount of $1.1 million. This borrowing had the same interest rate and had the same maturity date as the existing loans under the Senior Term Facility. The interest rates applicable to the Term Loans were based on a fluctuating rate of interest measured by reference to either, at the Company’s option, (i) the greater of (x) an adjusted London inter-bank offered rate (adjusted for reserve requirements) and (y) 1.00%, plus a borrowing margin of 4.75%, or (ii) an alternate base rate, plus a borrowing margin of 3.75%. On June 21, 2018, the Company repaid the outstanding principal balance of $348.0 million under the Senior Term Facility and terminated the agreement. As a result of the early extinguishment of debt, the Company incurred a $7.7 million loss to expense the remaining balance of original issue discount and debt origination fees.

NOTE 14: COMMITMENTS AND CONTINGENT LIABILITIES

Legal Proceedings

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business. The legal entities comprising the Company’s operations are defendants from time to time in actions for matters arising out of their business operations. In addition, the legal entities comprising our operations are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies.

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 15: INCOME TAXES

The following is a reconciliation of income taxes computed at the U.S. federal statutory rate to income tax expense reported in the Consolidated Statements of Income (in thousands):

	Year ended
	December 27, 2020			December 29, 2019			December 30, 2018
Income (loss) from continuing operations before income taxes	$	(66,746)		$	(7,564)		$	(54,725)
Federal income taxes at the statutory rate	(14,017)			(1,588)			(11,492)
State and local income taxes, net of federal tax benefit	(6,128)			(1,413)			(3,034)
Net operating losses carrybacks	(1,738)			0			0
Impact of U.S. tax reform	0			0			212
Tax on stock-based equity exercised	1,352			747			(79)
Nondeductible meals and entertainment expenses	86			530			628
Research and development credits	(332)			(193)			(639)
Nondeductible executive compensation	257			1,302			912
Other, net	590			181			414
Income tax expense (benefit)	$	(19,930)		$	(434)		$	(13,078)
Effective tax rate	29.9		%	5.7		%	23.9		%

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act permits deferral of the payment of certain taxes due in 2020 including the employer portion of social security tax. The Company elected to defer payment of the employer portion of social security tax totaling $8.9 million which is recorded in non-current liabilities. The CARES Act also included tax law changes such as net operating loss carryback changes and changes in depreciation of qualified improvement property that impact the Company. The CARES Act allowed net operating losses to be carried back 5 years. In the prior years the tax rate was 35.0%. The Company carried back its 2019 net operating loss to 2014 which resulted in a $1.7 million tax benefit. The Company will continue to assess the effect of the CARES Act and ongoing other government legislation related to COVID-19 that may be issued.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but were not limited to, a corporate tax rate decrease from 35.0% to 21.0%, effective for tax years beginning after December 31, 2017. During the year ended December 31, 2017, the Company recorded $10.8 million as additional income tax expense, which was the Company’s provisional estimate of the impact of the Act. The Company completed calculating the impact of the Act in 2018 and recorded an additional $0.2 million of expense during the year ended December 30, 2018, to bring the total expense to $11.0 million.

During the year ended December 29, 2019, the Company recorded a discrete item which resulted in a tax benefit of $1.5 million relating to an adjustment in state tax expense for the treatment of the Nant Transaction gain for state apportionment in selected states.

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Components of income tax expense (benefit) were as follows (in thousands):

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Current:
U.S. federal	$	(10,319)	$	3,095	$	(8,876)
State and local	(5,383)		(983)		(3,851)
Foreign	33		35		39
Subtotal current	(15,669)		2,147		(12,688)
Deferred:
U.S. federal	(2,252)		(2,045)		(331)
State and local	(2,009)		(536)		(59)
Subtotal deferred	(4,261)		(2,581)		(390)
Total income tax expense (benefit)	$	(19,930)	$	(434)	$	(13,078)

Significant components of Tribune’s net deferred tax assets and liabilities were as follows (in thousands):

	December 27, 2020		December 29, 2019
Deferred tax assets:
Long-term lease liability	$	18,971	$	34,535
Employee compensation and benefits	10,672		13,640
Pension	4,199		5,085
Other future deductible items	4,360		2,600
Accounts receivable	2,785		3,268
Net operating losses carryforwards	265		317
Net intangibles	480		0
Postretirement and postemployment benefits other than pensions	280		287
Total deferred tax assets	42,012		59,732
Deferred tax liabilities:
Lease right-of-use asset	9,946		27,254
Net properties	11,252		19,345
Net intangibles	0		835
Tax basis in TPC, LLC	4,909		4,909
Investments	3,013		478
Prepaid assets	1,598		0
Total deferred tax liabilities	30,718		52,821
Net deferred tax assets	$	11,294	$	6,911

As of December 27, 2020, we have Internal Revenue Code §382 limited net operating loss carryforwards totaling approximately $0.9 million, which expire in 2033 if not used. In the normal course of business, the Company is subject to examination by taxing authorities. The tax years that are open to examination are: U.S. Federal taxes - 2017 to current, and State taxes - 2016 to current.

Accounting for Uncertain Tax Positions

Tribune accounts for uncertain tax positions in accordance with ASC Topic 740, “Income Taxes,” which addresses the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Under ASC Topic 740, a company may recognize the tax benefit of an uncertain tax position only if it is more likely than not that the tax

F-33

TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

position will be sustained on examination by the taxing authorities, based on the technical merits of the position. ASC Topic 740 requires the tax benefit recognized in the financial statements to be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC Topic 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure.

The following table summarizes the activity related to unrecognized tax benefits, excluding the federal tax benefit of state tax deductions for the years ended December 27, 2020 and December 29, 2019 (in thousands):

Balance at December 30, 2018	$	0
Additions for tax positions of prior years	679
Balance at December 29, 2019	679
Additions for tax positions taken in the current year	9,311
Reductions for tax positions of prior years	(548)
Balance at December 27, 2020	$	9,442

We recognize interest related to unrecognized tax benefits as a component of income tax expense. We also recognize interest income attributable to overpayment of income taxes and from the reversal of interest expense previously recorded for uncertain tax positions which are subsequently released as a component of income tax expense. The amount of accrued interest and payables related to unrecognized tax benefits was immaterial for the years ended December 27, 2020 and December 29, 2019. There were 0 uncertain tax positions for the year ended December 30, 2018.

NOTE 16: DEFINED BENEFIT PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Defined Benefit Plans

The Company is the sponsor of a single-employer defined benefit plan, the NYDN Pension Plan, which provides benefits to certain current and former employees of the New York Daily News. The NYDN Pension Plan is frozen to any new participants and effective in March 2018 the accrual of new benefits to participants was frozen. Summarized information for the NYDN Pension Plan is provided below (in thousands):

	December 27, 2020		December 29, 2019
Change in benefit obligations:
Projected benefit obligations, beginning of year	$	88,285	$	96,407
Interest cost	2,200		3,516
Actuarial (gain) loss	5,976		7,841
Benefits paid	(13,732)		(19,479)
Projected benefit obligations, end of year	82,729		88,285
Change in plan assets:
Fair value of plan assets, beginning of year	68,865		77,177
Return on plan assets	9,153		8,683
Employer contributions	2,598		2,484
Benefits paid	(13,732)		(19,479)
Fair value of plan assets, end of year	66,884		68,865
Underfunded status of the plan	$	15,845	$	19,420

The Company contributed $2.6 million to the NYDN Pension Plan during the year ending December 27, 2020, and expects to contribute $2.4 million during the year ending December 26, 2021.

During the year ended December 27, 2020, as part of the pension de-risking strategy for the NYDN Pension Plan, the Company transferred $6.5 million of the pension assets and liability to a third party insurance company. As a result of the transfer, the Company recorded a settlement charge of $0.3 million.

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the year ended December 29, 2019, as part of the pension de-risking strategy for the NYDN Pension Plan, the Company offered lump sum settlements to all participants who were current retirees or vested terminated employees and had a monthly annuity of $500 or less. Approximately 34.3% of the total eligible participants accepted the offer. The NYDN Pension Plan paid out $11.8 million in lump sum payments and the Company recorded a settlement charge of $0.5 million.

The amounts recognized in the Company’s Consolidated Balance Sheets for the NYDN Pension Plan as of December 27, 2020, and December 29, 2019, consist of (in thousands):

	December 27, 2020		December 29, 2019
Pension and postretirement benefits payable	$	15,845	$	19,420
Accumulated other comprehensive loss, net of tax	$	2,565	$	2,334

The components of net periodic benefit cost (credit) for the NYDN Pension Plan were as follows (in thousands):

	Year ended						Affected Line Items in the Consolidated Statements of Income (Loss)
	December 27, 2020		December 29, 2019		December 30, 2018
Service cost	$	0	$	0	$	72	Compensation
Interest cost	2,200		3,516		3,272		Other income (expense), net
Expected return on plan assets	(3,784)		(4,212)		(4,667)		Other income (expense), net
Settlement charge	287		466		0		Other income (expense), net
Net periodic benefit cost (credit)	$	(1,297)	$	(230)	$	(1,323)

Pension Assets—The primary investment objective of the NYDN Pension Plan is to ensure, over the long-term life of the plan, an adequate pool of assets to support the benefit obligations to participants, retirees and beneficiaries. A secondary objective of the plan is to achieve a level of investment return consistent with the prudent level of portfolio risk that will minimize the financial effect of the pension plans on the Company. The investments in the pension plans largely consist of low-cost, broad-market index funds to mitigate risks of concentration within market sectors. Each of the funds is diversified across a wide number of securities within its stated asset class.

At December 27, 2020, the NYDN Pension Plan investments are in commingled funds which are recorded at fair value as determined by the sponsor of the respective funds primarily based upon closing market quotes of the underlying assets. The following table sets forth by level, within the fair value hierarchy, the NYDN Pension Plan’s assets at fair value as of December 27, 2020 (in thousands):

	Level 1		Level 2		Level 3		Total
Global public equity	$	619	$	0	$	0	$	619
Fixed income	2,370		0		0		2,370
Group annuity contract	0		0		13		13
	$	2,989	$	0	$	13
Investments valued at net asset value:
Cash and cash equivalents							825
Global public equity							36,202
Fixed income							13,878
Absolute return							8,459
Real assets							4,518
Total assets at fair value							$	66,884

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table sets forth by level, within the fair value hierarchy, the NYDN Pension Plan’s assets at fair value as of December 29, 2019 (in thousands):

	Level 1		Level 2		Level 3		Total
Global public equity	$	2,269	$	0	$	0	$	2,269
Fixed income	1,769		0		0		1,769
Group annuity contract	0		0		13		13
	$	4,038	$	0	$	13
Investments valued at net asset value:
Cash and cash equivalents							755
Global public equity							34,990
Fixed income							14,072
Absolute return							8,986
Real assets							6,006
Pending trades and other receivables							5
Total assets at fair value							$	68,865

For the investments in the NYDN Pension Plan valued at net asset value, there are 0 unfunded commitments for the year ended December 27, 2020. See the table below for the redemption information:

	Redemption Frequency	Redemption Notice Period
Cash and cash equivalents	Daily	0 days
Global public equity	Monthly	16 days
Absolute return	Quarterly	90 days
Real assets	Quarterly	30 - 90 days

The NYDN Pension Plan’s weighted average target allocation and actual allocations at December 27, 2020, by asset category are as follows:

Asset category:	Target Allocation		2020 Actual Allocation		2019 Actual Allocation
Global public equity	52.0	%	55.0	%	54.2	%
Absolute return	12.0	%	12.6	%	13.0	%
Fixed income	23.5	%	24.3	%	23.0	%
Real assets	10.0	%	6.8	%	8.7	%
Cash and cash equivalents	2.5	%	1.3	%	1.1	%
	100.0	%	100.0	%	100.0	%

Global Public Equity—Equity investments that will have a global orientation and may include U.S., international, emerging market and global mandates. Convertible securities may also be a component, as well as absolute return strategies that invest in equities.

Absolute Return—Commonly known as “hedge funds,” these controlled market risk strategies seek to exploit inefficiencies in the equity markets that may be outside of the universe of traditional long only public equity managers.  Absolute return strategies attempt to generate attractive risk-adjusted returns relative to the total equity market, with lower risk of large drawdown and lower volatility.

Fixed Income—The bond portfolio will contribute to the income needs of the Plan.  Fixed income generally provides a diversified portfolio with deflation protection during periods of financial duress.  Bonds dampen the overall volatility of total Plan results, which is important to help mitigate losses in periods of falling equity markets.  Bond markets suffer declines, but they are generally not as severe as those experienced in the equity market.  Bond returns are steadier than those of equities

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

because of income received and because bonds have greater precedence in a company’s capital structure.  Bonds typically do not fare well in periods of rising inflation.

Real Assets—Real Assets are assets that provide investors with a better hedge against loss of purchasing power than equities and fixed income, and moderate long-term growth.  Real Assets can include TIPS, private real estate, REITs, commodities, floating rate loans, currencies, Master Limited Partnerships (MLPs), timber, infrastructure and other inflation protection assets.  These assets are included to provide protection against inflation, thus preserving the real value of the portfolio over the long term.  These assets may exhibit low correlations to other asset classes, thus diversifying the total portfolio.

Assumptions—The weighted average assumptions used to determine the NYDN Pension Plan defined benefit obligations are as follows:

	December 27, 2020		December 29, 2019
Discount rate	2.2	%	3.0	%

The weighted average assumptions used to determine the NYDN Pension Plan net periodic benefit cost are as follows:

	December 27, 2020		December 29, 2019		December 30, 2018
Discount rate	3.0	%	4.1	%	3.6	%
Rate of return on assets	5.4	%	5.7	%	5.7	%
Rate of compensation increase	0	%	0	%	2.0	%

Expected Future Benefit Payments—Benefit payments expected to be paid under the NYDN Pension Plan are summarized below (in thousands):

2021	$	6,284
2022	6,127
2023	5,944
2024	5,744
2025	5,515
2026-2029	$	24,427

Employees’ Defined Contribution Plan

The Company sponsors defined contribution plans that were established effective June 13, 2014. The defined contribution plans cover substantially all full-time employees of the Company. Participants may elect to contribute a portion of their pretax compensation as provided by the plans and Internal Revenue Service (“IRS”) regulations. The maximum pretax contribution an employee can make is 100% of his or her annual eligible compensation (less required withholdings and deductions) up to the statutory limit which was $19,500 for 2020. The Company matches contributions to its defined contribution plan at a rate of 100% of salary deferrals for the first 2% of compensation and 50% of salary deferrals that exceed 2% of compensation up to 6% of compensation for each participating employee. The Company’s contributions to its defined contribution plans totaled $6.1 million, $7.5 million and $8.1 million in the years ended December 27, 2020, December 29, 2019, and December 30, 2018, respectively.

Multiemployer Pension Plans

The Company’s participation in multiemployer pension plans at December 27, 2020, December 29, 2019, and December 30, 2018, is outlined in the table below. Unless otherwise noted, the most recent Pension Protection Act (“PPA”) Zone Status available in 2020 and 2019 is for the plan’s year-end at December 29, 2019 and December 30, 2018, respectively. The PPA Zone Status is based on information that Tribune received from the plan and is certified by the plan’s actuary. Among other factors, plans in the Critical and Declining Zone are typically projected to have a funding deficiency as defined in the Internal Revenue Code (“IRC”) within four years and projected to become insolvent within 20 years; plans in the Critical Zone are typically projected to have a funding deficiency as defined in IRC within four years (but not projected to become insolvent

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

within 20 years), plans in the Endangered Zone are less than 80% funded (but not the Critical or Critical and Declining zones), and plans in the Healthy Zone are at least 80% funded (as determined in accordance with the PPA). The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented.

(in thousands)	EIN/Pension Plan Number	PPA Zone Status		FIP/RP Status Pending/ Implemented	Tribune Contributions						Surcharge Imposed	Expiration Dates of Collective Bargaining Agreements
Pension Fund		2020	2019		2020		2019		2018
Teamsters Local Union No. 727 Pension Fund	36-6012397	Healthy	Healthy	N/A	$	8,079	$	12,595	$	0	No	June 14, 2021
Chicago Newspaper Publishers Drivers Union Pension Plan (1)	36-6019539	N/A	N/A	Implemented	0		0		3,568		Yes	N/A
GCIU—Employer Retirement Benefit Plan	91-6024903	Critical and declining	Critical and declining	Implemented	683		664		637		Yes	May 31, 2017 to April 30, 2023 (2)
Truck Drivers and Helpers Local No. 355 Pension Plan	52-6043608	Healthy	Healthy	Implemented	177		165		152		Yes	January 1, 2018 to December 31, 2022 (3)
Newspaper and Mail Deliverers’ - Publishers’ Pension Fund	13-6122251	Healthy	Healthy	N/A	316		475		787		No	November 15, 2024
Pressmen’s Publishers’ Pension Fund	13-6121627	Healthy	Healthy	N/A	380		440		430		No	July 11, 2020
Paper Handlers’ - Publishers' Pension Fund	13-6104795	Critical and declining	Critical and declining	Implemented	149		46		53		Yes	July 11, 2020
IAM National Pension Fund, National Pension Plan	51-6031295	Critical	Critical	Implemented	432		554		428		Yes	March 31, 2020 and January 21, 2022
CWA/ITU Negotiated Pension Plan	13-6212879	Critical and declining	Critical and declining	Implemented	170		169		252		No	July 31, 2018 to March 31, 2022 (4)
Pension Hospitalization & Benefit Plan of the Electrical Industry - Pension Trust Account	13-6123601	Healthy	Healthy	N/A	193		303		428		No	April 30, 2020
					$	10,579	$	15,411	$	6,735

(1) The previous Chicago Newspaper Publishers Drivers’ Union Pension Plan merged into the Teamsters Local Union No. 727 Pension Fund effective August 1, 2019. All contributions to both plans are presented under the Teamsters Plan.

(2) Tribune is party to 2 collective bargaining agreements that require contributions to the GCIU—Employer Retirement Benefit Plan, one of which expired May 31, 2017 and the other April 30, 2018. The parties are operating under the terms of these agreements while the terms of successor collective bargaining agreements are negotiated.

(3) The collective bargaining agreement expired on June 14, 2016. The parties are operating under the terms of this agreement while the terms of a successor collective bargaining agreement are negotiated.

(4) The Company is party to 2 collective bargaining agreements requiring contributions to this plan, New York Mailers Union No. 6 which expired March 31, 2017 and New York Typographical Union (Control Room) which expired July 31, 2017. The parties are operating under the terms of these agreements while the terms of successor collective bargaining agreements are negotiated.

For the plan year ended December 29, 2018, the Chicago Tribune Company was listed in the GCIU Employer Retirement Benefit Plan’s (“GCIU Plan”) Form 5500 as contributing more than 5 percent of the total contributions to the plan, Daily News L.P. was listed in the Newspaper and Mail Deliverer’s Publishers’ Pension Fund’s Form 5500 as contributing more than 5 percent of the total contributions to the plan for the plan year ended March 31, 2018. The New York Daily News was listed in the Pressman’s Publishers Pension Fund and the Paper Handlers’ Publishers’ Pension Fund Form 5500s as contributing more than 5 percent of the total contributions to the plans for the plans’ year ended March 31, 2018. The Company did not provide more than 5 percent of the total contributions for any of the other multiemployer pension plans in which it participated in those years. At the date the financial statements were issued, Forms 5500s were not available for the plan years ending in 2020.

On March 31, 2010, the Chicago Newspaper Publishers Drivers’ Union Pension Plan (“Drivers’ Plan”) was certified by its actuary to be in critical status for the plan year beginning January 1, 2010. As a result, the trustees of the Drivers’ Plan

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

were required to adopt and implement a rehabilitation plan as of January 1, 2011, designed to enable the Drivers’ Plan to cease being in critical status within the period of time stipulated by the IRC. The terms of the rehabilitation plan adopted by the trustees required Tribune to make increased contributions beginning on January 1, 2011, through December 31, 2025, and the trustees of the Drivers’ Plan projected that it would emerge from critical status on January 1, 2026. As of its 2017 plan year, the actuary for the Drivers’ Plan certified the plan to be in critical and declining status with projected insolvency in 2026. During 2018, the Board of Trustees of the Drivers’ Plan agreed to a plan merger with the Teamsters Local Union No. 727 Pension Fund (“Teamsters Fund”), a plan with a healthy status. On December 13, 2018, the Drivers’ Plan adopted an amendment to its prior rehabilitation plan where the Company will make future contributions of $68.4 million paid over seven years, beginning in April of 2019 through June of 2025. The merger with the Teamsters Plan became effective on August 1, 2019, after approval by the Pension Benefit Guaranty Corporation (“PBGC”). In addition to the committed future contributions under the amended rehabilitation plan, the Company’s funding obligation will be subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations. The Company expects to contribute $9.1 million under the rehab plan during the year ended December 26, 2021.

In 2009, the GCIU Plan was certified by its actuary to be in critical status (within the meaning of section 432 of the IRC) as of its plan year beginning January 1, 2009. As a result, the trustees of the GCIU Plan implemented a rehabilitation plan on November 1, 2009, and amended it in May 2012 to cease the plan’s critical status within the period of time stipulated by the IRC. However, the GCIU Plan was unable to adopt a rehabilitation plan that would enable the GCIU Plan to emerge from critical status and avoid insolvency using reasonable assumptions. Therefore, the GCIU Plan adopted a rehabilitation plan that reflects reasonable measures to forestall insolvency. As of its 2019 plan year, the GCIU Plan has been certified by its actuary to be in critical and declining status with projected insolvency in 2030. As of December 27, 2020, assuming Tribune’s contributions from January 1, 2020, through the projected insolvency date of 2030, it is estimated that Tribune’s contributions to the plan will total $5.7 million, based on the actuarial assumptions utilized to develop the rehabilitation plan and assuming Tribune’s staffing levels as of December 27, 2020, remain unchanged. The funding obligation is subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations.

In 2010, the CWA/ITU Negotiated Pension Plan was certified by its actuary to be in critical status (within the meaning of section 432 of the IRC) as of its plan year beginning January 1, 2010. As a result, the trustees of the CWA/ITU Negotiated Pension Plan implemented a rehabilitation plan on March 8, 2010. However, the CWA/ITU Negotiated Pension Plan was unable to adopt a rehabilitation plan that would enable the CWA/ITU Negotiated Pension Plan to emerge from critical status and avoid insolvency using reasonable assumptions. Therefore, the CWA/ITU Negotiated Pension Plan adopted a rehabilitation plan that reflects reasonable measures to forestall insolvency. As of its 2019 plan year, the CWA/ITU Negotiated Pension Plan has been certified by its actuary to be in critical and declining status with projected insolvency in 2028. As of December 27, 2020, assuming Tribune’s contributions from January 1, 2020 through the projected insolvency date of 2028, it is estimated that Tribune’s contributions to the plan will total $1.8 million, based on the actuarial assumptions utilized to develop the rehabilitation plan and assuming Tribune’s staffing levels as of December 27, 2020, remain unchanged. The funding obligation is subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations.

In 2018, the Company’s last employee that was a member of the CWA/ITU Union at the Company’s Baltimore location retired. This retirement effected a partial withdrawal from the CWA/ITU Negotiated Pension Plan. The partial withdrawal creates a liability for which the Company is required to pay quarterly installments over a 20-year period. The Company accrued $1.0 million to reflect this obligation which is reflected in other long-term obligations in the Consolidated Balance Sheets.

In 2016, the Paper Handlers’ - Publishers’ Pension Fund was certified by its actuary to be in critical status (within the meaning of section 432 of the IRC) as of its plan year beginning January 1, 2010. As a result, the trustees of the Paper Handlers’ - Publishers’ Pension Fund implemented a rehabilitation plan on February 25, 2016. As of its 2019-2020 plan year, the Paper Handlers’ - Publishers’ Pension Fund has been certified by its actuary to be in critical and declining status with

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

projected insolvency in the 2024-2025 plan year. As of December 27, 2020, assuming Tribune’s contributions from January 1, 2020 through the projected insolvency date of 2033, it is estimated that Tribune’s contributions to the plan will total $0.7 million, based on the actuarial assumptions utilized to develop the rehabilitation plan and assuming Tribune’s staffing levels as of December 27, 2020, remain unchanged. The funding obligation is subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations.

In 2019, the IAM National Pension Fund was certified by its actuary to be in critical status (within the meaning of section 432 of the IRC) as of its plan year beginning January 1, 2019. As a result, the trustees of the IAM National Pension Fund implemented a rehabilitation plan on April 17, 2019. The Rehabilitation Plan is designed to allow the plan to exit critical status within the period of time stipulated by the IRC.

NOTE 17: NONCONTROLLING INTEREST

Noncontrolling interest represents the 40.0% membership interest in BestReviews not owned by the Company. As of December 27, 2020, BestReviews is considered held for sale and is reflected as discontinued operations on the Consolidated Balance Sheets in accordance with ASC Topic 360 and the results of its operations are presented as discontinued operations in the Consolidated Statements of Income (Loss) and the Consolidated Statements of Cash Flows for all periods presented.

As discussed in Note 8, the BR LLC Agreement included a Put Option which could, upon exercise, have required the Company, under certain circumstances, to pay cash to purchase the noncontrolling interest. The Put Option required the noncontrolling interest to be presented between liabilities and stockholders’ equity within the Consolidated Balance Sheets. Each quarter, the carrying value of the noncontrolling interest was adjusted to the amount the Company would have been required to pay the noncontrolling interest holders as if the Put Option had been exercised as of the balance sheet date, with an offsetting adjustment to stockholders’ equity. The adjustments to increase (decrease) the carrying value of the of noncontrolling interest also reduced (increased) the amount of net income or loss attributable to Tribune common stockholders for purposes of determining both basic and diluted earnings per share.

On February 3, 2020, the Company and the BR Parent amended the BR LLC Agreement to, among other things, remove the Put Option and Call Option sections of the BR LLC Agreement. This amendment eliminated the requirement as of that date and for future periods to adjust the carrying value of the noncontrolling interest as there is no longer a required purchase option. Additionally, as a result of the elimination of the Put Option, the noncontrolling interest was reclassified equity and is presented in the Stockholders’ Equity section of the Consolidated Balance Sheets for the year ended December 27, 2020.

In the year ended December 27, 2020, BestReviews declared $24.5 million in dividends to its shareholders. The Company’s portion of these dividends was $14.7 million and the noncontrolling shareholders portion was $9.8 million. In the year ended December 29, 2019, BestReviews declared a $16.5 million dividend to its shareholders. The Company’s portion of this dividend was $9.9 million and the noncontrolling shareholders’ portion was $6.6 million.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the activity with respect to noncontrolling interest is as follows (in thousands):

Balance at December 31, 2017	$	0
Acquisition of BestReviews	40,900
Dividends paid to noncontrolling interest	(2,000)
Income attributable to noncontrolling interest	856
Balance at December 30, 2018	39,756
Dividends paid to noncontrolling interest	(6,600)
Carrying value adjustment	25,520
Income attributable to noncontrolling interest	4,825
Balance at December 29, 2019	63,501
Carrying value adjustment	322
Income attributable to noncontrolling interest	310
Reclassification of noncontrolling interest ("NCI") from temporary equity	(64,133)
Balance at December 27, 2020	$	0

The income attributable to the noncontrolling interest for the year ended December 27, 2020, was $7.5 million with $0.3 million attributed to the noncontrolling interest before the February 3, 2020, amendment as presented above and $7.2 million attributed to the noncontrolling interest after the February 3, 2020, amendment as presented in the Consolidated Statement of Equity.

NOTE 18: STOCK-BASED COMPENSATION

The Company has a long-term incentive plan, the Company’s 2014 Omnibus Incentive Plan (together with amendments, the “Tribune Equity Plan”). The Tribune Equity Plan is a long-term incentive plan under which awards may be granted to employees and outside directors in the form of stock options, stock appreciation rights, RSUs, performance share units, restricted and unrestricted stock awards, dividend equivalents and cash awards. The Company measures stock-based compensation costs based on the estimated grant date fair value of the award and recognizes compensation costs on a straight-line basis over the requisite service period for the entire award. The Tribune Equity Plan permits the Company to withhold shares of vested common stock upon vesting of employee stock awards or at the time they exercise their Options in lieu of their payment of the required withholdings for employee taxes. The Company does not withhold taxes in excess of minimum required statutory requirements. Shares of common stock reserved for future grants under the Tribune Equity Plan were 1,757,386 at December 27, 2020.

Stock-based compensation expense related to Tribune’s employees during the years ended December 27, 2020, December 29, 2019, and December 30, 2018, totaled $5.2 million, $13.2 million and $10.5 million, respectively.

Options

Non-qualified stock options (“Options”) granted to directors, officers and employees under the Tribune Equity Plan generally become exercisable in cumulative installments over a period of either 3 or 4 years and expire between 7 and 10 years. Under the Tribune Equity Plan, the exercise price of an Option cannot be less than the market price of Tribune common stock at the time the Option is granted and the maximum contractual term cannot exceed 10 years. The fair value of each Option is estimated on the date of grant using the Black-Scholes-Merton valuation model that uses the assumptions noted in the following table. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is calculated based on a blended method using historical and implied volatility of a select peer group of entities operating in similar industry sectors as the Company. Expected life was calculated using the simplified method, as described under Staff Accounting Bulletin Topic 14, “Share-Based Payment,” as the Tribune Equity Plan wasn’t in existence for a sufficient period of time for the use of company-specific historical experience in the calculation.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides the weighted average assumptions used to determine the fair value of Options granted to Tribune employees during the year ended December 30, 2018. There were 0 Options granted during the years ended December 27, 2020 and December 29, 2019.

	2018
Weighted average grant date fair value	$	17.36
Weighted average assumptions used:
Expected volatility	55.2		%
Expected lives (in years)	4.8
Risk Free interest rates	2.2		%

A summary of activity related to Tribune employees for Options under the Tribune Equity Plan for the years ended December 27, 2020, December 29, 2019, and December 30, 2018, is included in the following table:

	2020			2019			2018
	Number of Options (in thousands)	Weighted Average Exercise Price		Number of Options (in thousands)	Weighted Average Exercise Price		Number of Options (in thousands)	Weighted Average Exercise Price
Outstanding, beginning of year	813	$	14.59	925	$	14.51	1,029	$	14.56
Granted	0	$	0	0	$	0	20	$	17.36
Exercised	0	$	0	0	$	0	(7)	$	19.20
Canceled/Forfeited	(510)	$	14.36	(112)	$	13.94	(117)	$	15.11
Outstanding, end of year	303	$	14.98	813	$	14.59	925	$	14.51
Vested and exercisable at end of year	290	$	14.99	746	$	14.57	467	$	14.61
Weighted average remaining contractual term (in years)	2.2			1.9			5.1

For Options granted under the Tribune Equity Plan the exercise price of options granted equals the closing stock price on the day of grant. For each of the years ended December 27, 2020, December 29, 2019, and December 30, 2018, the intrinsic value of options exercised was negligible. The grant date fair value of options vested during the year ended December 27, 2020, was $0.4 million.

The following table summarizes information related to stock options outstanding at December 27, 2020:

Range of Exercises Prices	Number of Options Outstanding (in thousands)	Weighted Average Remaining Life (years)	Weighted Average Exercise Price		Number of Options Exercisable (in thousands)	Weighted Average Exercise Price
14.02-14.65	64	0.3	$	14.59	51	$	14.57
14.87-14.87	113	2.6	$	14.87	113	$	14.87
14.89-14.89	112	1.3	$	14.89	112	$	14.89
17.41-17.41	7	0.7	$	17.41	7	$	17.41
19.2-19.20	7	0.7	$	19.20	7	$	19.20
14.02-19.20	303	2.2	$	14.98	290	$	14.99

Restricted Stock Units

RSUs granted to directors, officers and employees under the Tribune Equity Plan have service conditions and generally vest over 1 to 4 years. Upon vesting, the RSUs are redeemed with common stock. The RSUs do not have voting rights. The fair value of the RSU is determined on the grant date using the closing trading price of the Company’s shares. The weighted average grant date fair value of the RSUs granted during the years ended December 27, 2020, December 29, 2019, and December 30, 2018 was $11.88, $11.92, and $17.41, respectively.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of activity related to Tribune employees for RSUs under the Tribune Equity Plan for the years ended December 27, 2020, December 29, 2019, and December 30, 2018 is included in the following table:

	2020			2019			2018
	Number of RSUs (in thousands)	Weighted Average Grant Date Fair Value		Number of RSUs (in thousands)	Weighted Average Grant Date Fair Value		Number of RSUs (in thousands)	Weighted Average Grant Date Fair Value
Outstanding, beginning of year	834	$	13.41	1,254	$	14.83	2,013	$	14.60
Granted	444	$	11.88	469	$	11.92	286	$	17.41
Vested	(443)	$	13.87	(636)	$	14.87	(685)	$	14.86
Canceled/forfeited	(117)	$	13.17	(253)	$	14.43	(360)	$	15.48
Outstanding, end of year	718	$	10.99	834	$	13.41	1,254	$	14.83
Vested at end of year	1	$	11.83	1	$	12.05	1	$	12.31

As of December 27, 2020, Tribune had unrecognized compensation cost on nonvested awards as follows (in thousands):

	Unrecognized Compensation Cost		Weighted Average Remaining Recognition Period (in years)
Nonvested stock options	$	74	0.9
Nonvested restricted stock units	$	196	2.4

NOTE 19: EARNINGS PER SHARE

Basic earnings per common share is calculated by dividing net income (loss) attributable to Tribune common stockholders by the weighted average number of shares of common stock outstanding. Diluted earnings per common share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of common shares under equity-based compensation plans except where the inclusion of such common shares would have an anti-dilutive impact. In accordance with ASC Topic 260-10-55, “Earnings per Share”, net income (loss) from continuing operations is the control number in determining whether potential common shares are dilutive. If there is net loss from continuing operations, all potential common shares are considered anti-dilutive.

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the years ended December 27, 2020, December 29, 2019, and December 30, 2018, basic and diluted earnings per common share were as follows (in thousands, except per share amounts):

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Income (loss) - Numerator:
Net loss available to Tribune common stockholders before discontinued operations	$	(46,816)	$	(7,130)	$	(41,647)
Income from discontinued operations, net of tax	15,320		6,886		291,294
Less: Income attributable to noncontrolling interest	7,516		4,825		856
Less: Noncontrolling interest carrying value adjustment	322		25,520		0
Income available to common shareholders from discontinued operations, net of taxes	7,482		(23,459)		290,438
Net income (loss) attributable to Tribune common stockholders	$	(39,334)	$	(30,589)	$	248,791
Shares - Denominator:
Weighted average number of common shares outstanding (basic)	36,456		35,810		35,268
Dilutive effect of employee stock options and RSUs	0		0		0
Adjusted weighted average common shares outstanding (diluted)	36,456		35,810		35,268
Basic net income (loss) attributable to Tribune per common share:
Income (loss) from continuing operations	$	(1.28)	$	(0.20)	$	(1.18)
Income (loss) from discontinued operations	0.20		(0.65)		8.23
Basic net income (loss) attributable to Tribune per common share	$	(1.08)	$	(0.85)	$	7.05
Diluted net income (loss) attributable to Tribune per common share:
Income (loss) from continuing operations	$	(1.28)	$	(0.20)	$	(1.18)
Income (loss) from discontinued operations	0.20		(0.65)		8.23
Diluted net income (loss) attributable to Tribune per common share	$	(1.08)	$	(0.85)	$	7.05

The number of stock options that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts for the years ended December 27, 2020, December 29, 2019, and December 30, 2018, was 302,801, 813,219, and 924,887, respectively. The number of RSUs that were excluded from the computation of diluted earnings per share because their inclusion would result in an anti-dilutive effect on per share amounts was 802,623, 1,007,733, and 1,273,268 for the years ended December 27, 2020, December 29, 2019, and December 30, 2018.

NOTE 20: STOCKHOLDERS’ EQUITY

The holders of common stock are entitled to 1 vote per share on all matters to be voted on by stockholders. Holders of common stock will share in any dividend declared by the Board. In the event of the Company’s liquidation, dissolution or winding up, all holders of common stock are entitled to share ratably in any assets available for distribution to holders of common stock.

Agreement and Plan of Merger

On February 16, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Tribune Enterprises, LLC, a Delaware limited liability company (“TELLC”), Tribune Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of TELLC (“Merger Sub”), and the Company, pursuant to which Merger Sub will merge (the “Merger”) with and into the Company, with the Company surviving as a wholly owned subsidiary of TELLC.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

TELLC is the acquirer and is an affiliate of Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (collectively, “Alden”), the Company’s largest shareholder.

Subject to the terms and conditions set forth in the Merger Agreement, at the closing of the Merger, each share of common stock, par value $0.01 per share (other than treasury stock or common stock held by TELLC or any of its affiliates) issued and outstanding immediately as of the closing (other than dissenting shares) will be converted into the right to receive $17.25 in cash, without interest (the “Merger Consideration”).

The consummation of the Merger (the “Closing”) is subject to certain customary mutual conditions, including (i) the approval of the Company’s stockholders holding two-thirds of the outstanding shares of Company Common Stock not owned by TELLC and its affiliates, (ii) the expiration or termination of any waiting period applicable to the closing of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and (iii) the absence of any order of any U.S. court that prohibits, renders illegal or permanently enjoins the consummation of the Merger. The obligation of each party to consummate the Merger is also conditioned upon (i) the accuracy of the representations and warranties of the other party as of the date of the Merger Agreement and as of the Closing (subject to customary materiality qualifiers), (ii) compliance by the other party in all material respects with its pre-Closing obligations under the Merger Agreement and (iii) in TELLC’s case, the absence of a material adverse effect with respect to the Company.

The Company and TELLC have each made customary representations, warranties and covenants in the Merger Agreement. Subject to certain exceptions, the Company has agreed, among other things, to covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and the consummation of the Merger. The parties have also agreed to use their respective reasonable best efforts to obtain governmental and regulatory approvals. In addition, subject to certain exceptions, the Company has agreed to covenants relating to (i) the submission of the Merger Agreement to the Company’s stockholders at a special meeting thereof for approval, (ii) the recommendation by the board of directors of the Company in favor of the adoption by the Company’s stockholders of the Merger Agreement and (iii) non-solicitation obligations of the Company relating to alternative acquisition proposals.

Either the Company or TELLC may terminate the Merger Agreement if (i) TELLC, Merger Sub and the Company agree by mutual written consent to do so, (ii) the Merger has not been consummated on or before December 31, 2021 (the “End Date”), (iii) any court has issued an order permanently restraining, enjoining or otherwise prohibiting the Merger and such order or other action is, or has become, final and non-appealable, (iv) the approval of the Company’s stockholders is not obtained at a meeting of the Company’s stockholders called for the purpose of adopting the Merger Agreement or (v) the other party breaches any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances. In addition, the Company may, under certain circumstances, terminate the Merger Agreement in order for the Company to enter concurrently into a definitive written agreement with respect to an unsolicited superior acquisition proposal, subject to the Company having first complied with certain matching rights and other obligations set forth in the Merger Agreement. Additionally, TELLC may, under certain circumstances, terminate the Merger Agreement if (i) the board of directors of the Company changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (ii) the Company materially breaches its non-solicitation obligations and such breach results in an alternative transaction proposal.

If the Merger Agreement is terminated (i) by the Company in order for the Company to enter into a definitive written agreement with respect to an unsolicited superior acquisition proposal, (ii) by TELLC because (a) the board of directors of the Company changes or adversely modifies its recommendation that the Company’s stockholders vote in favor of adopting the Merger Agreement or (b) the Company materially breaches its non-solicitation obligations and such breach results in an alternative transaction proposal, or (iii) by (x) either party because the Merger was not consummated on or before the End Date (as it may be extended) or approval of the Company’s stockholders was not obtained or (y) by TELLC if the Company commits a breach of any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied (subject to a cure period in certain circumstances), but only if, in the case of this clause (iii), an alternative acquisition proposal was previously made and, within 12 months after termination of the Merger Agreement, the Company enters into an agreement for an alternative transaction or an acquisition transaction is consummated, then, in each case, the Company will be obligated to pay to TELLC a one-time fee equal to $20 million in cash.

If the Merger Agreement is terminated by the Company (i) if TELLC breaches any representation, warranty or covenant that results in the failure of the related closing condition to be satisfied, subject to a cure period in certain circumstances or (ii) if the conditions to TELLC’s obligations to consummate the Merger are satisfied or waived, and TELLC

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

does not consummate the Merger when required by the Merger Agreement, then TELLC will be obligated to pay to the Company a one-time liquidated damages amount equal to $50 million in cash.

Pursuant to the Merger Agreement, TELLC agreed to vote all of its shares of common stock in favor of the adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger, so long as the board of directors of the Company has not changed or adversely modified its recommendation in favor of the Merger Agreement. The Merger Agreement also prohibits TELLC from transferring any of its shares of common stock, subject to certain exceptions.

Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (each, a “Guarantor”) have entered into a Limited Guarantee dated February 16, 2021 (the “Limited Guarantee”) with the Company to guarantee TELLC’s obligation to pay the liquidated damages amount to the Company and certain other specified payments to the Company, subject to the terms and obligations set forth in the Limited Guarantee.

The Guarantors have also entered into an equity commitment letter dated as of February 16, 2021 (the “Equity Commitment Letter”) with TELLC pursuant to which the Guarantors have made an equity commitment of $375 million to TELLC to fund the payment of the aggregate Merger Consideration. The Company is a third-party beneficiary of the Equity Commitment Letter and has the right to specifically enforce the Guarantors’ obligations thereunder, if the conditions to TELLC’s obligations to consummate the Merger are satisfied or waived, and the Merger is consummated substantially simultaneously.

Concurrent with the signing of the merger agreement, Alden has signed a non-binding term sheet to sell The Baltimore Sun to Sunlight for All Institute, a public charity formed by Stewart Bainum Jr.

Significant Shareholders

Alden Funds

During November 2019, Alden Global Opportunities Mast Fund, L.P. and Alden Global Value Recovery Master Fund, L.P. (together, the “Alden Funds”) acquired 11,544,213 shares, or 32.0%, of the Company’s common stock. Of those shares, 9,071,529 shares were purchased from Merrick Media and Michael W. Ferro, in a private transaction and the remaining shares were purchased on the open market. As of December 27, 2020, Alden funds beneficially owned 31.6% of Tribune common stock.

On July 1, 2020, the Company entered into an Amended and Restated Cooperation Agreement (the “Amended and Restated Cooperation Agreement”) with the Alden Funds and Alden Global Capital LLC regarding the composition of the Board and related matters. The Amended and Restated Cooperation Agreement provides that the Board would increase the size of the Board to 7 directors and appoint Randall D. Smith to fill the resulting vacancy. The Board had been reduced to 6 members at the 2020 annual shareholders meeting when 2 of the Board members retired.

The Amended and Restated Cooperation Agreement further provides, among other things, that:

•Until the earlier of June 16, 2021 or the first business day following the Company’s 2021 annual meeting of stockholders, which will be held on or before June 15, 2021 (the “Amended Cooperation Period”), the size of the Board of Directors will not be increased above seven members.

•During the Amended Cooperation Period, the Alden Funds and their affiliates will be subject to customary standstill restrictions, including (among others) refraining from (i) acquiring securities of the Company if it would result in their ownership of more than 33.0% of the Company’s outstanding shares of common stock, $0.01 par value (“Common Stock”); (ii) soliciting proxies to vote any securities of the Company; (iii) forming or participating in a “group” in connection with the Company’s voting securities or (iv) otherwise acting alone, or in concert with others, to seek to control or knowingly influence the management, Board or policies of the Company; provided that such prohibitions terminate if (a) a person or group that owns more than 10.0% of the issued and outstanding Common Stock (a “Related Party Investor”) (x) submits a valid stockholders proposal (other than a precatory proposal) at a meeting of the Company’s stockholders or (y) submits a valid notice of nomination to nominate on or more persons for election to the Board at a meeting of the Company’s stockholders; (b) the Company enters into a material agreement with any Related Party Investor, other than a Related Party Agreement or alters, amends or modifies in any way a Related Party Agreement, other than on terms no less favorable to the Company

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

than would be obtainable through arms’-length negotiations with a hypothetically similarly situated bona fide third-party; (c) the Company amends, waives or fails to enforce, the terms of any voting agreement or standstill agreement between the Company and a Related Party Investor other than such amendments or waivers that, taken as a whole, make the agreement more restrictive on the Related Party Investor; (d) any of Ms. Dana Goldsmith Needleman, Mr. Christopher Minnetian, Mr. Randall D. Smith and their successors designated by the Alden Funds are not nominated for election at, or are not elected at, the Company’s 2021 annual stockholder meeting; or (e) on the date that (1) the Company executes a definitive agreement providing for the acquisition of a majority of the outstanding shares of common stock or a majority of the consolidated assets of the Company and its subsidiaries or (2) is 10 business days after commencement of a tender offer that, if consummated, would result in the offeror acquiring a majority of the outstanding shares of common stock and the Board has not recommended against acceptance of such tender offer. The prohibitions described in clause (i) of the Standstill Restrictions above will also terminate on the date that any person or group, other than the Alden Funds and their affiliates, acquires beneficial ownership of shares of common stock that results in such person or group beneficially owning 30.0% or more of the Company’s then-outstanding shares of common stock.

•During the Amended Cooperation Period, the Alden Funds will (a) vote their shares of common stock in favor of any Company director or any nominee designated by the Compensation, Nominating and Corporate Governance Committee of the Board and against the removal of any Company director and (b) not deposit any shares of common stock that they own or have the right to vote into a voting trust or subject them to a voting agreement or similar arrangement.

Nant Capital, LLC

Dr. Patrick Soon-Shiong, together with Nant Capital, beneficially owned 8,743,619 shares of Tribune common stock, which represented 23.9% of Tribune common stock, as of December 27, 2020. California Capital Equity, LLC (“CalCap”) directly owns all of the equity interests of Nant Capital and CalCap may be deemed to have beneficial ownership of the shares held by Nant Capital. Dr. Patrick Soon-Shiong directly owns all of the equity interests of CalCap and may be deemed to beneficially own, and share voting power and investment power with Nant Capital over all shares of Tribune common stock beneficially owned by Nant Capital. Under the Securities Purchase Agreement dated May 22, 2016, among the Company, Nant Capital and Dr. Patrick Soon-Shiong (“Nant Purchase Agreement”), Nant Capital and Dr. Soon-Shiong and their respective affiliates are prohibited from transferring shares of the Company’s common stock if the transfer would result in a person beneficially owning more than 4.9% of the Company’s then-outstanding shares of common stock following the transfer, as well as transfers to a material competitor of the Company in any of the Company’s then-existing primary geographical markets.

On January 17, 2019, Dr. Patrick Soon-Shiong, NantMedia and Nant Capital entered into a Standstill and Voting Agreement (“Nant Standstill Agreement”) with the Company. The Nant Standstill Agreement provided that until June 30, 2020, Dr. Patrick Soon-Shiong, Nant Media, and Nant Capital would not (a) make or participate in any solicitation of proxies to vote, or seek to advise or knowingly influence any person with respect to the voting of any voting securities of the Company, (b) join or participate in a “group” (as defined in the rules of the Securities and Exchange Commission “SEC”) in connection with any securities of the Company or (c) seek to control or knowingly influence the management, the Board or policies of the Company. Furthermore, under the Standstill Agreement, Dr. Patrick Soon-Shiong, Nant Media and Nant Capital would, until June 30, 2020, vote their shares of common stock (a) in favor of each nominee or director designated by the Nominating and Governance Committee of the Board at each election of directors and (b) in accordance with the Board’s recommendations on any change of control transaction involving the Company at or above a minimum purchase price. The Company recorded a charge to non-operating expense during the year ended December 29, 2019, for $0.5 million related to the Nant Standstill Agreement.

Merrick Media, LLC

As of November 15, 2019, Mr Michael W. Ferro, Jr together with his affiliated entities, Merrick Media, LLC (“Merrick Media”) and Merrick Venture Management, LLC, held 9,071,529, which represented 25.2% of Tribune common stock. Michael W. Ferro, Jr., is the manager of Merrick Venture Management, LLC, which is the sole manager of Merrick Media. Because Merrick Venture Management, LLC serves as the sole manager of Merrick Media, Mr. Ferro may be deemed to indirectly control all of the shares of the Company’s common stock owned by Merrick Media. Mr. Ferro served as Chairman of the Company’s Board from February 3, 2016, through May 18, 2018. On November 15, 2019, Mr. Ferro sold all of the

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TRIBUNE PUBLISHING COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

shares he controlled to funds Alden Global Opportunities Master Fund, L.P. and Alden Global Value Recovery Master Fund, L.P.

Dividends

On February 19, 2020, the Board declared a cash dividend of $0.25 per share of common stock outstanding. The cash dividend totaling $9.1 million was paid on March 16, 2020, to shareholders of record as of March 2, 2020. Additionally, the Company accrued dividend equivalents of $0.2 million for RSUs outstanding as of the record date.

On May 8, 2020, the Board suspended the Company's quarterly cash dividend program until further notice given the unprecedented economic disruption caused by COVID-19. This action, along with many other operational actions taken at the Company, will help preserve liquidity. The Board will continue to monitor liquidity needs and capital allocation in the future.

Stock Repurchases

On March 13, 2019, the Company announced that the Company’s Board authorized a stock repurchase program. Under the program, the Company may purchase up to $25.0 million of its outstanding common stock over the next 24 months. The purchases may be made in open-market transactions or privately negotiated transactions and may be made from time to time depending on market conditions, share price, trading volume, cash needs and other business factors. NaN repurchases were made during the twelve months ended December 27, 2020.

Rights Agreement

On July 27, 2020, the Board of the Company declared a dividend of 1 preferred stock purchase right (a “Right”) for each outstanding share of common stock, par value $0.01 per share of the Company. The dividend was payable on August 7, 2020, to holders of record as of the close of business on that date. The Board has adopted the Rights Agreement to reduce the likelihood that a potential acquirer would gain (or seek to influence or change) control of the Company through acquisitions from other stockholders, open market accumulation or other tactics without paying an appropriate premium for the Company’s shares. In general terms and subject to certain exceptions, it works by imposing a significant penalty upon any person or group (including a group of persons that are acting in concert with each other) that acquires 10.0% or more of the outstanding common stock of the Company without the approval of the Board.

The Rights will expire on July 27, 2021, unless earlier exercised, exchanged, amended or redeemed. The Rights Agreement, which is described more fully in the Company’s Current Report on Form 8-K dated July 28, 2020, includes antidilution provisions designed to prevent efforts to diminish the effectiveness of the Rights.

On February 16, 2021 in connection with the transactions contemplated by the Merger Agreement, the Company entered into an Amendment No. 1 (the “Rights Amendment”) to the Rights Agreement discussed above. The Rights Amendment provides, among other things, that (i) neither the approval, execution, delivery or performance of the Merger Agreement or the other contracts or instruments related thereto, nor the announcement or the consummation of the Merger, will (a) cause the Rights to become exercisable, (b) cause TELLC, Merger Sub or any of their affiliates to become an Acquiring Person (as defined in the Rights Agreement) or (c) give rise to a Stock Acquisition Date (as defined in the Rights Agreement), Distribution Date (as defined in the Rights Agreement) or Section 9(a)(ii) Event (as defined in the Rights Agreement), (ii) the Rights will expire in their entirety, and the Rights Agreement will terminate, concurrently with the consummation of the Merger without any consideration payable therefor or in respect thereof, and (iii) the “Acting in Concert” (as defined in the Rights Agreement) provisions of the Rights Agreement will be removed.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 21: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table sets forth the components of accumulated other comprehensive income (loss), net of tax (in thousands):

	Foreign Currency		OPEB		Pension		Total
Balance at December 31, 2017	$	(31)	$	9,932	$	(23,428)	$	(13,527)
Other comprehensive income before reclassifications	(8)		(131)		(2,206)		(2,345)
Amounts reclassified from AOCI	0		(9,498)		0		(9,498)
AOCI recognized in discontinued operations	0		0		25,397		25,397
Balance at December 30, 2018	(39)		303		(237)		27
Other comprehensive loss before reclassifications	(21)		(24)		(2,434)		(2,479)
Amounts reclassified from AOCI	0		(237)		337		100
Balance at December 29, 2019	(60)		42		(2,334)		(2,352)
Other comprehensive income (loss) before reclassifications	(23)		0		(438)		(461)
Amounts reclassified from AOCI	0		(86)		207		121
Balance at December 27, 2020	$	(83)	$	(44)	$	(2,565)	$	(2,692)

The following table presents the amounts and line items in the Consolidated Statements of Income where adjustments reclassified from accumulated other comprehensive income (loss) were recorded during the years ended December 27, 2020, December 29, 2019 and December 30, 2018 (in thousands):

	Year ended
Accumulated Other Comprehensive Income (Loss) Components	December 27, 2020		December 29, 2019		December 30, 2018		Affected Line Items in the Consolidated Statements of Income
Pension and postretirement benefit adjustments:
Prior service cost recognized	$	160	$	139	$	(10,534)	Other income (expense), net
Amortization of actuarial gains	0		0		(2,621)		Other income (expense), net
Total before taxes	160		139		(13,155)
Tax effect	39		39		(3,657)		Income tax benefit
Total reclassifications for the period	$	121	$	100	$	(9,498)

The prior service costs to be amortized from accumulated other comprehensive income in the year ended December 26, 2021 is immaterial.

NOTE 22: SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information for each of the periods presented is as follows (in thousands):

	Year ended
	December 27, 2020		December 29, 2019		December 30, 2018
Cash paid during the period for:
Interest	$	194	$	895	$	15,546
Income taxes, net of refunds	(8,384)		9,797		3,407
Non-cash items in financing activities:
Shares issued for acquisitions	$	0	$	0	$	34,595

The following table provides a reconciliation of cash, cash equivalents, and restricted cash as reported within the Consolidated Balance Sheets to the cash, cash equivalents and restricted cash as reported in the Consolidated Statement of Cash Flows (in thousands):

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	As of
	December 27, 2020		December 29, 2019
Cash	$	98,862	$	54,840
Restricted cash	29,925		37,290
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	128,787	$	92,130
Cash, cash equivalents, and restricted cash in discontinued operations	$	1,159	$	6,124

NOTE 23: UNAUDITED QUARTERLY FINANCIAL INFORMATION

The following table sets forth certain unaudited quarterly financial information for the fiscal years ended December 27, 2020 and December 29, 2019 (in thousands, except per share data). The unaudited quarterly financial information has been revised to reflect BestReviews as a discontinued operation for all periods presented. The unaudited quarterly financial information includes all normal recurring adjustments that management considers necessary for a fair presentation of the information shown.

Year ended December 27, 2020	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
Operating revenues	$	206,441	$	171,689	$	175,470	$	192,650
Operating expenses	271,588		177,655		172,595		190,936
Income (loss) from operations	(65,147)		(5,966)		2,875		1,714
Income (loss) from continuing operations	(48,976)		(2,379)		3,152		1,387
Plus: Earnings from discontinued operations, net of taxes	4,970		3,935		5,339		1,076
Net income (loss)	(44,006)		1,556		8,491		2,463
Less: Income attributable to noncontrolling interest	1,330		2,162		1,824		2,200
Net income (loss) attributable to Tribune common stockholders	$	(45,336)	$	(606)	$	6,667	$	263
Net loss from continuing operations, per common share:
Basic	$	(1.35)	$	(0.07)	$	0.09	$	0.04
Diluted	$	(1.35)	$	(0.07)	$	0.09	$	0.04

Year ended December 29, 2019	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
Operating revenues	$	237,742	$	242,006	$	226,685	$	239,344
Operating expenses	245,042		238,721		220,185		246,949
Income (loss) from operations	(7,300)		3,285		6,500		(7,605)
Income (loss) from continuing operations	(3,941)		1,097		4,356		(8,642)
Plus: Earnings from discontinued operations, net of taxes	(773)		3,525		(10,331)		14,465
Net income (loss)	(4,714)		4,622		(5,975)		5,823
Less: Income (loss) attributable to noncontrolling interest	(39)		1,926		1,150		1,788
Net income (loss) attributable to Tribune common stockholders	$	(4,675)	$	2,696	$	(7,125)	$	4,035
Net loss from continuing operations, per common share:
Basic	$	(0.11)	$	0.03	$	0.12	$	(0.24)
Diluted	$	(0.11)	$	0.03	$	0.12	$	(0.24)

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