8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 9, 2015

New Media Investment Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	001- 36097	38-3910250
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1345 Avenue of the Americas New York, NY	10105
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 479-3160

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

As announced on New Media Investment Group Inc.’s (“New Media”) current report on Form 8-K filed on January 12, 2015, on January 9, 2015, New Media completed the acquisition of certain print and digital assets from Halifax Media Group, LLC (“Halifax Media”) and certain subsidiaries thereof pursuant to the terms of the previously announced Asset Purchase Agreement, dated as of November 20, 2014, by and among Halifax Media, the other sellers party thereto and Cummings Acquisition, Inc., an indirect wholly owned subsidiary of New Media (the “Halifax Acquisition”). The audited consolidated financial statements of Halifax Media as of and for the years ended December 31, 2013 and 2014 and as of and for the nine months ended September 30, 2014 were filed on New Media’s Registration Statement on Form S-1 (No. 333-201143), dated December 19, 2014, as further amended.

As announced on New Media’s current report on Form 8-K filed on March 18, 2015, on March 18, 2015, New Media completed the acquisition of certain print and digital assets from SF Holding Corp. (“Stephens”) pursuant to the terms of the previously announced Asset Purchase Agreement, dated as of February 19, 2015, by and among Stephens Media LLC, Stephens Media Iowa, LLC and Stephens Media Intellectual Property, LLC, each a wholly owned subsidiary of Stephens, and DB Acquisition, Inc., an indirect wholly owned subsidiary of New Media (the “Stephens Acquisition”).

New Media is filing this current report on Form 8-K to provide (i) the audited consolidated financial statements of Halifax Media as of and for the year ended December 31, 2014, (ii) the audited consolidated financial statements of Stephens Media LLC as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013, and 2012 and (iii) unaudited pro forma condensed combined financial information of New Media as of and for the year ended December 28, 2014, giving effect to the Halifax Acquisition, the Stephens Acquisition and certain other transactions described therein.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of businesses acquired

The consolidated financial statements of Halifax Media as of and for the year ended December 31, 2014 are filed herewith as Exhibit 99.1.

The consolidated financial statements of Stephens Media LLC as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013, and 2012 are filed herewith as Exhibit 99.2.

(b) Pro forma financial information

The unaudited pro forma condensed combined financial information of New Media as of and for the year ended December 28, 2014, giving effect to the Halifax Acquisition, the Stephens Acquisition and certain other transactions described therein is filed herewith as Exhibit 99.3.

(d) Exhibits

Exhibit No.	Description of Exhibit
99.1	Consolidated financial statements of Halifax Media Group, LLC as of and for the year ended December 31, 2014.
99.2	Consolidated financial statements of Stephens Media LLC as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013, and 2012.
99.3	Unaudited pro forma condensed combined financial information of New Media as of and for the year ended December 28, 2014, giving effect to the Halifax Acquisition, the Stephens Acquisition and certain other transactions described therein.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NEW MEDIA INVESTMENT GROUP INC.
By:	/s/ Michael E. Reed
Name:	Michael E. Reed
Title:	Chief Executive Officer

Date: April 9, 2015

Exhibit Index

Exhibit No.	Description of Exhibit
99.1	Consolidated financial statements of Halifax Media Group, LLC as of and for the year ended December 31, 2014.
99.2	Consolidated financial statements of Stephens Media LLC as of December 31, 2014 and 2013 and for the years ended December 31, 2014, 2013, and 2012.
99.3	Unaudited pro forma condensed combined financial information of New Media as of and for the year ended December 28, 2014, giving effect to the Halifax Acquisition, the Stephens Acquisition and certain other transactions described therein.

EX-99.1

Exhibit 99.1

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Daytona Beach, Florida

CONSOLIDATED FINANCIAL STATEMENTS

Including Independent Auditors’ Report

As of and for the Year Ended

December 31, 2014

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

Contents

	Page
Independent Auditors’ Report	1-2
Consolidated Balance Sheet	5
Consolidated Statement of Operations	6
Consolidated Statement of Members’ Equity	7
Consolidated Statement of Cash Flows	8
Notes to the Consolidated Financial Statements	9-22

Independent Auditors’ Report

To the Members of

Halifax Media Group, LLC and Subsidiaries

Daytona Beach, Florida

We have audited the accompanying consolidated financial statements of Halifax Media Group, LLC and Subsidiaries (“Halifax” or the “Company”), which comprise the consolidated balance sheet as of December 31, 2014, and the related consolidated statements of operations, members’ equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Halifax Media Group, LLC and Subsidiaries as of December 31, 2014, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Subsequent Event

As discussed in Note 13 to the consolidated financial statements, on January 9, 2015, the Company sold substantially all of its net operating assets to an unrelated third party for a sales price of approximately $280,000,000, plus certain working capital adjustments. Our opinion is not modified with respect to this matter.

/s/ Baker Tilly Virchow Krause, LLP

Tysons Corner, Virginia

February 18, 2015

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Consolidated Balance Sheet

As of December 31, 2014

Assets
Current Assets
Cash and cash equivalents	$	2,140,218
Accounts receivable, net of allowance for doubtful accounts of approximately $1,779,000		36,385,440
Inventories		4,803,110
Prepaid expenses and other assets		2,986,431
Total current assets		46,315,199
Property, Plant, and Equipment, net		72,331,369
Other Assets
Intangible assets, net		25,992,729
Goodwill		13,817,214
Deferred financing costs, net		1,106,392
Assets held for sale		16,685,113
Other non-current assets		201,039
Total other assets		57,802,487
Total Assets	$	176,449,055
Liabilities and Members’ Equity
Current Liabilities
Accounts payable and accrued expenses	$	21,856,248
Unearned subscription revenue		18,925,941
Current portion of long-term debt		10,000,000
Total current liabilities		50,782,189
Other Liabilities
Due to affiliate		232,456
Other liabilities		3,804,048
Long-term debt, net of current portion		44,579,041
Total other liabilities		48,615,545
Total Liabilities		99,397,734
Members’ Equity		77,051,321
Total Liabilities and Members’ Equity	$	176,449,055

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

5

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Consolidated Statement of Operations

For the Year Ended December 31, 2014

Revenues
Advertising	$	215,354,269
Circulation		104,975,688
Other operating		26,839,556
Total revenues		347,169,513
Expenses
Headcount expenses		138,050,317
Distribution costs		41,054,102
Newsprint, ink, and production supplies		34,810,914
Outside services		13,679,874
News and content		7,605,886
Outside printing		9,694,185
Promotions		6,714,876
Depreciation and amortization		11,788,253
Transaction costs		575,719
Loss on disposal of assets, net		277,935
Other operating expenses		44,217,607
Total expenses		308,469,668
Operating Income		38,699,845
Interest Expense		(3,240,303	)
Net Income from Continuing Operations		35,459,542
Discontinued Operations
Net income from discontinued operations		18,651
Net Income	$	35,478,193

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

6

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Consolidated Statement of Members’ Equity

For the Year Ended December 31, 2014

Balance, January 1, 2014	$	79,365,385
Net Income		35,478,193
Distributions to Members		(37,792,257	)
Balance, December 31, 2014	$	77,051,321

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

7

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Consolidated Statement of Cash Flows

For the Year Ended December 31, 2014

Cash Flows from Operating Activities
Net income	$	35,478,193
Reconciliation adjustments
Change in allowance for doubtful accounts		(284,082	)
Depreciation and amortization		11,804,056
Amortization of deferred financing costs		556,521
Loss on sales of assets		340,857
Changes in operating assets and liabilities:
Accounts receivable		1,407,269
Inventories		91,605
Prepaid expenses and other		859,380
Other non-current assets		(201,039	)
Accounts payable and accrued expenses		196,577
Unearned subscription revenue		471,963
Due to affiliates		(99,468	)
Other liabilities		1,175,268
Net cash provided by operating activities		51,797,100
Cash Flows from Investing Activities
Purchase of Worcester		(17,435,796	)
Proceeds from sale of Mendocino Building		6,100,000
Proceeds from sale of Phonebooks		204,168
Proceeds from sale of Sebring		325,000
Proceeds from sale of property and equipment		3,450
Purchases of property and equipment		(6,364,829	)
Net cash used in investing activities		(17,168,007	)
Cash Flows from Financing Activities
Proceeds from notes payable		15,000,000
Payments on notes payable		(12,254,292	)
Payments for deferred financing costs		(427,327	)
Distributions to Members		(37,792,257	)
Net cash used in financing activities		(35,473,876	)
Net Decrease in Cash and Cash Equivalents		(844,783	)
Cash and Cash Equivalents, beginning of year		2,985,001
Cash and Cash Equivalents, end of year	$	2,140,218
Supplemental Cash Flow Information:
Interest paid	$	2,683,781

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

8

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 1 - ORGANIZATION

Halifax Media Holdings, LLC and Subsidiaries (collectively called “Holdings”) was organized as a limited liability company under the laws of the state of Delaware on October 9, 2009. On April 1, 2010, Holdings purchased the operating assets of the News-Journal Corporation and Subsidiary (“News-Journal Corporation”).

On January 6, 2012, Holdings was reorganized to become the wholly-owned subsidiary of the newly-created entity, Halifax Media Group, LLC and Subsidiaries (collectively called “the Company” or “Halifax”). The Company was organized as a limited liability company under the laws of the state of Florida on January 6, 2012 in connection with the purchase of the operating assets of the New York Times Company’s Regional Media Group (the “Regional Media Group”), which included 16 regional newspapers and other publications in six states. Two wholly-owned subsidiaries of Holdings were also formed, Halifax RPS, LLC (“Halifax RPS”) and Halifax Media Acquisition II, LLC (“Acquisition II”) to hold the real estate and newspaper operations, respectively, of the assets purchased from the Regional Media Group. Both Halifax RPS and Acquisition II have multiple subsidiaries.

On June 27, 2012, Holdings purchased 8 daily and 11 weekly publications from Freedom Communications Group (“Freedom”). In connection with the purchase, Halifax Media Acquisition III, LLC (“Acquisition III”) was created to hold the newspaper operations of the assets purchased from Freedom. Acquisition III has multiple subsidiaries.

On December 31, 2013, Holdings purchased three daily publications from HarborPoint Media (“HPM”). In connection with the purchase, two new subsidiaries were created under Halifax RPS and Acquisition II to hold the real estate and newspaper operations of the assets purchased from HPM.

As discussed in Note 3, on June 2, 2014, Holdings purchased the operating assets of the Worcester Telegram & Gazette (“Worcester”), a daily and two non-daily newspaper publications, from Boston Globe Media Partners, LLC (“Boston Globe”). In connection with the purchase, two new subsidiaries were created under Halifax RPS and Acquisition III to hold the real estate and newspaper operations, respectively, of the assets purchased from the Boston Globe.

As discussed in Note 12, the Company sold the Sebring News-Sun (“Sebring”) in April 2014. All proceeds from the sale were used in 2014 to make the required debt curtailment.

As discussed in Note 12, the Company sold its two phonebook directory publications in May 2014.

The Company publishes various newspaper publications, local advertising shoppers, and other advertising related ventures in six states located primarily in the southeastern portion of the United States.

The Company’s operating agreement details the required initial capital contributions and the method in which all items of income, profit and loss, and distributions shall be allocated.

The Company and its results of operations are subject to certain risks and uncertainties, many of which are beyond the control of the Company. Those risks and uncertainties include general economic conditions and commodity prices, dependence on key personnel and editorial contributors, competition from alternative news media products, and other services, among other factors. Negative trends in some or all of these factors could adversely affect the Company’s results of operations, profitability, and financial position.

Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Halifax and its wholly owned subsidiaries, which include Holdings, Halifax RPS, Acquisition II, and Acquisition III. All intercompany balances and transactions are eliminated in consolidation. The Company consolidates the financial statements of all entities in which it has a controlling financial interest. The Company determines whether it must apply the Voting Interest Model or the Variable Interest Model when evaluating if it has a controlling financial interest. Under the Voting Interest Model, a controlling financial interest is defined by the direct or indirect holding of more than 50 percent of the rights necessary to control an entity. Under the Variable Interest Model, a controlling financial interest is defined by whether or not the Company is considered to be the primary beneficiary of a variable interest entity (“VIE”). All subsidiaries of the Company are consolidated under the Voting Interest Model. The Company has concluded that it does not have any variable interests with any VIEs.

9

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates - The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. Elements of the Company’s consolidated financial statements subject to significant estimates include the estimated impairment of long-lived intangible assets, assumptions used in recording losses related to self-insured risks, the allowance for doubtful accounts, and useful lives of depreciable and amortizable assets, among others. Such estimates and assumptions involve complexity and actual results could vary significantly, which could impact the amounts reported and disclosures herein.

Cash and Cash Equivalents - The term cash and cash equivalents, as used in the accompanying consolidated financial statements, includes currency on hand and short-term investments with a maturity of three months or less. The Company maintains its cash in accounts, which at times, may exceed federally insured limits. As of December 31, 2014, interest bearing and non-interest bearing accounts held in an insured institution are aggregated and guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company has not experienced any losses in such accounts and believes that no significant concentration of credit risk exists with respect to cash and cash equivalents.

Accounts Receivable - Accounts receivable are recorded at the invoiced amount and are typically due within 30 days. The allowance for doubtful accounts is management’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company periodically evaluates customer credit worthiness and current economic events and determines when balances are charged-off against the allowance, after all means of collection have been exhausted and the potential for recovery is remote. The Company does not have any off-balance sheet credit exposure related to its customers. The allowance for doubtful accounts as of December 31, 2014 was approximately $1,779,000.

Inventories - Inventories are stated at the lower of cost or market. Cost is determined using the specific identification method for newsprint, production, and other supplies inventories.

Revenue Recognition - Circulation revenue is recognized when newspapers are delivered to customers. Unearned subscription revenue represents payments received from customers related to future deliveries. Advertising revenue is recognized as services are delivered and advertisements are displayed in the newspapers and other publications. Revenues are recorded net of estimated incentives, including special pricing agreements, promotions, and other volume-based incentives, and net of sales tax collected from the customer. Other operating revenue is recognized when the related product or service has been delivered.

Phonebook Revenue Recognition, Prepaid Expenses, and Unbilled Receivables - The Company published two telephone directories, The Complete Phonebook and The St. Augustine Directory (collectively the “Phonebooks”). As further discussed in Note 12, in May 2014, the Company sold both directories. As a result of such sale, during the year ended December 31, 2014, only The St. Augustine Directory was published by the Company. Phonebook revenues and related expenses are recorded, in total, in the month in which the directories are published. The St. Augustine Directory was published in March 2014, and related revenues and expenses have been included in discontinued operations as discussed in Note 12. Customers are contractually obligated for the full amount of their advertising contract at the time the directory is published, but some customers are billed in the months subsequent to publication.

The Company outsourced the selling and production activities of the directories to a third party directory publication service. Costs for these services were paid in the form of a base fee and commissions. Commissions were calculated based on a formula of collected revenues, ultimately to be finalized 14 months following the publication of the directory. For the year ended December 31, 2014, management has estimated that approximately $206,000 was obligated to this third party directory publication service for The St. Augustine Directory and is included in discontinued operations on the accompanying consolidated statement of operations, of which $100,000 is included in accounts payable and accrued expenses on the accompanying consolidated balance sheet as of December 31, 2014.

10

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Unbilled receivables represent contractual amounts owed for published directories that have yet to be billed to customers. The Company records an allowance for doubtful accounts when the unbilled receivables are deemed to be uncollectible. The Company periodically evaluates customer credit worthiness and current economic events and determines when balances are charged-off against the allowance after all means of collection have been exhausted and the potential for recovery is remote. As of December 31, 2014, unbilled receivables related to published directories of approximately $33,000 are included in accounts receivable, net on the accompanying consolidated balance sheet.

Deferred Financing Costs - Deferred financing costs represent fees and other related costs incurred in obtaining debt financing. Deferred financing costs are amortized using the effective interest method over the terms of the respective loans. As further discussed in Note 8, in connection with the purchase of Worcester, the Company amended its 2013 Term Loan and obtained additional funding on June 2, 2014. As a result, the Company incurred deferred financing costs of approximately $427,000 during the year ended December 31, 2014, primarily consisting of creditor fees, which have been capitalized. Amortization of deferred financing costs was approximately $557,000 for the year ended December 31, 2014 and is included in interest expense on the accompanying consolidated statement of operations. As of December 31, 2014, total capitalized deferred financing costs were approximately $1,893,000, of which approximately $787,000 had been amortized.

Property, Plant, and Equipment - Property, plant, and equipment include amounts related to land and improvements, buildings and improvements, machinery, equipment, furniture, and fixtures. Property, plant, and equipment purchased upon acquisition have been recorded at fair value with subsequent purchases recorded at cost. Property, plant, and equipment are depreciated using the straight-line method over estimated useful lives or lease terms, where applicable, ranging from 3 to 40 years as follows:

	Useful Life
Land improvements	8 to 20 years
Buildings and improvements	7 to 40 years
Machinery, equipment, furniture, and fixtures	3 to 10 years

Expenditures for maintenance and repairs and minor renewals, which do not improve or extend the life of the respective assets, are expensed. All other expenditures for renewals are capitalized. The assets and related depreciation are adjusted for property retirements and disposals with the resulting gain or loss included in operating income. Fully depreciated assets remain in the accounts until retired from service.

Assets Held for Sale - The Company considers assets to be held for sale when management commits to a plan to actively market the asset for sale at a price reasonable in relation to its fair value; the asset is available for immediate sale in its present condition; the sale of the asset is probable and expected to be completed within one year and it is unlikely that significant changes will be made to the plan. Upon designation as held for sale, the carrying value of the asset is recorded at the lower of its carrying value or its estimated fair value, less costs to sell. Liabilities related to assets held for sale, if any, are separately stated in the accompanying consolidated balance sheet and represent liabilities that will be repaid upon the sale of the asset. The Company ceases to record depreciation at the time of designation as held for sale.

The Company is actively marketing the commercial real estate located in Sarasota, Florida (the “Sarasota Property”) for sale. The real estate is used in connection with the Company’s newspaper operations in Sarasota. The Company has ceased recording depreciation on the property and the asset is reported as held for sale, recorded in the accompanying consolidated balance sheet at the lower of its carrying amount or fair value less costs to sell, which is approximately $16,685,000 as of December 31, 2014.

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HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

As of December 31, 2013, the Company reported as assets held for sale commercial real estate (the “Mendocino Building”), which was associated with its California operations that were previously sold. During 2013, the carrying value of the Mendocino Building was reduced to its estimated fair value less selling costs of approximately $6,300,000, based on existing market conditions and proposed selling prices. The sale of the Mendocino Building closed in April 2014 (Note 12). The property was sold for $6,100,000, resulting in an additional loss of $200,000, which was recorded and included in net loss from discontinued operations on the consolidated statement of operations for the year ended December 31, 2014.

Discontinued Operations - As further discussed in Note 12, results of operations related to assets classified as held for sale and assets previously sold, are recorded as discontinued operations when a) the operations and cash flows related to the asset will be eliminated from ongoing operations as a result of the sale and b) the Company will not have any significant continuing involvement in their operations after the sale. In addition to the Mendocino Building, the Company has classified operations related to Sebring and its Phonebooks as discontinued operations for the year ended December 31, 2014.

Distribution Costs - Distribution costs on the accompanying consolidated statement of operations, includes home delivery expense, subcontracted distribution, and postage totaling approximately $15,656,000 for the year ended December 31, 2014.

Advertising - Advertising costs are expensed as incurred and are included in other operating expenses in the accompanying consolidated statement of operations. Advertising expense for the year ended December 31, 2014 was approximately $2,718,000.

Fair Value Measurements - Under U.S. GAAP, certain assets and liabilities are required to be recorded in the consolidated balance sheet on a recurring basis or measured on a non-recurring basis under certain circumstances at fair value. Measuring fair value generally requires the use of one or more valuation approaches that includes the market, income, or cost approaches.

U.S. GAAP also establishes market based observable data as the preferred source of inputs when using such valuation techniques, followed in preference by unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management assumptions about market conditions in hypothetical transactions. Inputs used in the required valuation techniques are classified according to the following hierarchy:

•	Level 1 -	Quoted prices for identical instruments in active markets.
•	Level 2 -	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
•	Level 3 -	Significant inputs to the valuation model are unobservable.

The Company has applied these provisions when measuring impairment of long-lived assets, intangible assets, and goodwill, if present, and when preparing fair value disclosures of its long-term debt.

The Company utilizes the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. As of December 31, 2014, the Company has no assets or liabilities that are required to be recorded at fair value in the Company’s consolidated balance sheet on a recurring or nonrecurring basis.

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HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

For any financial instruments not recorded in the consolidated balance sheet at fair value, the Company must provide disclosure of the fair value in the footnotes to its consolidated financial statements. As of December 31, 2014, the fair value of all current assets and liabilities approximate their carrying value due to the short-term nature of these instruments. In the absence of a ready market for the Company’s long-term debt, the Company evaluates its current borrowing rates for the same or similar instruments in order to estimate the value of its long-term debt. Such evaluation includes consideration of current interest rates, including forward interest rate curves, referenced credit spreads, among others, adjusted for non-performance risk. As of December 31, 2014, the estimated fair value of the Company’s long-term debt approximated the carrying value.

Impairment of Long-Lived Assets - For the purpose of evaluating potential impairment, the Company classifies its long-lived assets in three categories: (1) tangible and intangible long-lived assets with definite lives subject to depreciation and amortization, (2) intangible assets with indefinite lives not subject to amortization, and (3) goodwill.

Tangible and Intangible Assets Subject to Depreciation and Amortization - This category includes the carrying value of property, plant, and equipment and the carrying value of amounts assigned to building naming rights, subscriber relationships, and advertiser relationships. The Company evaluates such assets for impairment when events or changes in circumstances indicate the carrying value of such assets may not be recoverable. The carrying value of such assets is deemed recoverable if the sum of the future undiscounted cash flows associated with such assets (individually or in related groups) exceeds the carrying value. If the sum of the future undiscounted cash flows is less than the carrying value, impairment is then deemed present. Impairment, if any, is then measured based on fair value. The Company has considered whether there were any impairment indicators at December 31, 2014 related to the tangible and intangible long-lived assets with definite lives and concluded there were no such indicators of impairment.

Indefinite Lived Intangible Assets - This category includes the carrying value of the amounts assigned to the trade names. The Company evaluates the carrying value of identifiable intangible assets with indefinite lives at least once annually for impairment. Impairment is also assessed more frequently when circumstances indicate that impairment may be present. The Company estimated the fair value of its trade names using an income approach by applying a relief from royalty technique. The Company used inputs and assumptions in applying this technique that it believes a market participant would use in a hypothetical transaction and that management has determined are Level 3 inputs. The Company has determined that no impairment existed at December 31, 2014.

Goodwill - The Company evaluates goodwill for impairment at least once annually or more frequently if events and circumstances indicate that impairment may be present. The recoverability of goodwill is measured at the reporting unit level, which constitutes a business component for which discrete financial information is available and management regularly reviews the operating results of the component. The evaluation of goodwill impairment consists of two steps. The first step compares the estimated fair value of a reporting unit to its carrying value. If a reporting unit’s estimated fair value exceeds its carrying value, no impairment is deemed present. However, if a reporting unit’s estimated fair value is less than its carrying value, a second step is performed whereby the estimated fair value of all of a reporting unit’s assets and liabilities is determined in order to assess the current implied fair value of goodwill. If the carrying value of goodwill exceeds the implied fair value, an impairment charge is recognized for that excess.

For the purposes of evaluating goodwill for impairment, management has determined that the Company has multiple reporting units. In performing the first step of the goodwill impairment test, management estimated the enterprise value of the reporting unit for which goodwill was evaluated, using both a market based approach including the implied values indicated by comparisons to similar publicly traded companies and the income approach by applying the discounted cash flow technique. When using the discounted cash flow technique, the Company used inputs and assumptions about revenues, expenses, and the cost of capital that it believed a market participant would use in a hypothetical transaction. When using market based approaches, the Company used inputs and indicators that are observable, but which required adjustment based upon management’s judgment to reflect circumstances specific to the reporting unit. Management classified the inputs to its use of the market based and income based approaches as Level 3 inputs.

13

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

The Company’s step one analysis as of December 31, 2014 indicated that no impairment of goodwill was present.

In evaluating impairment for all tangible and intangible long-lived assets and goodwill, the Company uses methods and techniques that include significant judgment and assumptions about future performance of the Company and overall conditions of the economy and the financial markets. Revenues and expenses included in cash flow projections are impacted significantly by the level of new circulation and advertising customers, the level of customer attrition, subscription prices, and the direct and indirect cost of fulfillment, among others. Assumptions made by management about these and other factors could vary significantly from actual results and such variances could result in additional future impairment charges or indicate future impairment where previously no impairment was present.

Self-Insured Risks - The Company self-insures up to certain limits for workers’ compensation claims and automobile risks. Estimated liabilities for unpaid claims are included in other liabilities on the accompanying consolidated balance sheet totaling approximately $1,228,000 as of December 31, 2014. The Company accrues for unpaid claims using an estimate of the ultimate cost of claims, which includes claims filed, an estimate for claims incurred but not reported, and historical claims experience.

Sale and Leaseback Transactions - The Company accounts for the sale and leaseback of real estate assets in accordance with accounting guidance for leases as established under U.S. GAAP. The Company evaluates sale and leaseback transactions involving real estate assets for whether the transaction qualifies as a sale in addition to examining any commitments, obligations, provisions, or circumstances that require or result in the Company having continuing involvement. If the transaction qualifies as a sale and the Company concludes it has no continuing involvement with the real estate asset, losses on sale and leaseback transactions are recognized at the time of sale if the fair value of the property sold is less than the undepreciated cost of the property. Gains on sale and leaseback transactions are deferred and amortized over the remaining base term of the lease. Prior to 2014, the Company completed sale and leaseback transactions resulting in a gain of approximately $1,169,000, which has been deferred and included in other liabilities on the accompanying consolidated balance sheet and is being amortized on a straight-line basis over the remaining base term of the lease through 2032. The Company recognized approximately $50,000 of the gain for the year ending December 31, 2014, which is included in loss on disposal of assets, net, in the accompanying consolidated statement of operations.

Income Taxes - The Company is a limited liability company treated as a partnership for income tax purposes. As such, the members are taxed on their share of the Company’s taxable income or loss, whether or not distributed. Accordingly, no provision or benefit has been made for income taxes in the accompanying consolidated financial statements.

The Company has adopted the authoritative guidance related to accounting for and disclosure of uncertain tax positions. The guidance requires the Company to determine whether it is more likely than not that a tax position will be sustained upon examination by the applicable taxing authority. The Company has determined that there are no uncertain tax positions as defined. The Company recognizes interest and penalties related to uncertain tax positions as a component of other expenses. No interest or penalties have been recognized for the year ended December 31, 2014. The Company’s tax returns are subject to examination for all tax years beginning with the year ending December 31, 2011. No income tax returns for the Company are currently under examination.

Subsequent Events - In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the accompanying consolidated financial statements were available to be issued.

14

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 3 - ACQUISITION ACCOUNTING

Purchase of Worcester Telegram and Gazette

On June 2, 2014, the Company purchased newspapers distributed in and around Worcester, Massachusetts from the Boston Globe for approximately $17,436,000, net of a working capital adjustment. The purchase included approximately $13,012,000 of identifiable tangible and intangible assets, plus working capital. In addition, the Company recorded, at closing, goodwill totaling approximately $4,778,000, primarily related to expected synergies to be obtained from combining operations. The estimates of fair values for tangible assets acquired and liabilities assumed are determined by management based on various market analyses. Significant judgment is required to arrive at these estimates of fair value and changes to assumptions used could lead to materially different results. For income tax purposes, the amount of goodwill that is expected to be deductible is approximately $4,778,000.

The Company estimated the fair value of these assets using commonly applied methods including the income approach of applying discounted cash flow techniques and using inputs and assumptions it believes a market participant would use in a hypothetical transaction and references to market prices or replacement costs of similar assets.

The acquisition was financed with long-term debt totaling $15,000,000 and a $3,000,000 draw on a revolving line of credit (Note 8). The Company incurred approximately $639,000 of transaction costs in connection with the June 2, 2014 acquisition. The Company capitalized $407,000 as deferred financing costs. The remaining transaction costs consisting of legal costs and other transaction related costs of $232,000 were expensed.

The composition of purchase price, fair value of net assets acquired, and remaining unidentified purchase price or goodwill is summarized as follows:

Total Purchase Price, net of working capital adjustment	$	17,435,796
Tangible Assets Acquired
Accounts receivable and prepaid expenses		3,716,771
Property, plant, and equipment		1,565,754
Total tangible assets acquired		5,282,525
Liabilities Assumed
Accounts payable and accrued expenses		1,055,068
Unearned subscription revenue		3,016,158
Total liabilities assumed		4,071,226
Net tangible assets acquired, at fair value		1,211,299
Total Remaining Purchase Price, net of tangible assets acquired at fair value		16,224,497
Intangible Assets
Trade names		2,597,865
Subscriber relationships		2,773,129
Advertiser relationships		6,075,065
Total intangible assets		11,446,059
Goodwill	$	4,778,438

15

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 4 - INVENTORY

As of December 31, 2014, inventories consisted of the following:

Newsprint	$	2,921,941
Newsprint in transit		443,773
Production and other supplies		1,437,396
	$	4,803,110

NOTE 5 - PROPERTY, PLANT, AND EQUIPMENT

As of December 31, 2014, property, plant, and equipment consisted of the following:

Land and improvements	$	8,214,341
Buildings and improvements		20,120,020
Machinery, equipment, furniture, and fixtures		62,466,198
Construction in progress		3,455,175
		94,255,734
Less accumulated depreciation		(21,924,365	)
	$	72,331,369

Depreciation expense for the year ended December 31, 2014 was approximately $8,801,000.

16

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 6 - INTANGIBLE ASSETS

Intangible assets consist of the following as of December 31, 2014:

	Estimated Useful Life
Trade names	Indefinite	$	16,890,012
Less accumulated impairment			(1,941,000	)
Trade names, net of accumulated impairment			14,949,012
Advertiser relationships	3 to 11 years		14,658,357
Less accumulated amortization			(7,156,658	)
Advertiser relationships, net of accumulated amortization			7,501,699
Building naming rights	19 years		1,000,000
Less accumulated amortization			(250,001	)
Building naming rights, net of accumulated amortization			749,999
Subscriber relationships	4 to 7 years		3,590,388
Less accumulated amortization			(798,369	)
Subscriber relationships, net of accumulated amortization			2,792,019
Intangible Assets, net		$	25,992,729

The useful lives of amortizable intangible assets are based upon the period over which the Company expects to benefit from their use. The Company evaluates the appropriateness of its useful lives at each reporting date or more frequently if circumstances warrant.

Amortization expense related to amortizable intangible assets for the year ended December 31, 2014 was approximately $2,988,000. Future amortization expense for these intangible assets as of December 31, 2014, is as follows:

Year ending December 31, 2015	$	2,820,064
2016		1,517,298
2017		1,080,062
2018		1,031,550
2019		1,031,550
Thereafter		3,563,193
	$	11,043,717

17

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following as of December 31, 2014:

Accounts payable	$	10,735,595
Accrued headcount and related expenses		6,415,108
Accrued newsprint payable		298,672
Accrued vacation		474,280
Accrued self insurance reserve		1,228,271
Other payables and accrued expenses		2,704,322
	$	21,856,248

NOTE 8 - LONG-TERM DEBT

As of December 31, 2014, long-term debt consists of the following:

2013 Term Loan, original amount of $35,000,000 with an additional borrowing of $15,000,000 on June 2, 2014, requires monthly principal payments of $583,333 through May 30, 2014 and monthly principal payments of $833,333 beginning June 30, 2014 through maturity, with the remaining unpaid balance, if any, due upon maturity which is the earlier of October 10, 2018 or 120 days prior to the earliest scheduled maturity of the Subordinated Credit Agreement. Interest on the loan varies and is subject, at the Company’s discretion, to the commercial lender’s base rate or an elected LIBOR, plus an applicable base spread which varies from 2.0 to 3.0 percent (3.16 percent as of December 31, 2014).	$	36,579,041
Subordinated Credit Agreement, original amount of $10,000,000 requires quarterly interest payments at 7.5 percent through maturity at December 31, 2016. Additional Borrowing of $8,000,000 requires monthly interest payments at 7.5 percent through maturity at March 31, 2019.		18,000,000
Current portion of long-term debt		(10,000,000	)
	$	44,579,041

18

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 8 - LONG-TERM DEBT - CONTINUED

On October 10, 2013, the Company refinanced their outstanding debt and entered into a new revolving credit and term loan agreement with a syndicate of commercial lenders and repaid, in full, all other outstanding principal balances as of October 10, 2013, with the exception of the Subordinated Credit Agreement discussed below. In connection with the refinancing, the Company borrowed $35,000,000 under the term loan portion of the agreement (“2013 Term Loan”) and, in addition, had availability of $20,000,000 in a revolving line of credit facility for borrowings (“2013 Revolving Line of Credit”) and letter of credit capacity of up to $5,000,000. On June 2, 2014, the Company amended the 2013 Term Loan, to obtain an additional borrowing of $15,000,000. These proceeds were used exclusively to fund the Worcester asset purchase in June 2014 (Note 3). No other terms of the loan were amended, with the exception that the loan provided for repayment in equal monthly installments of $583,333 through May 2014 and equal monthly installments of $833,333 beginning in June 2014 through maturity, with any remaining unpaid principal due on maturity. The maturity date is defined as the earlier of October 10, 2018 or 120 days prior to the earliest scheduled maturity of the Subordinated Credit Agreement, which currently would be September 2, 2016. The principal balance of the 2013 Term Loan as of December 31, 2014 was approximately $36,579,000. The Company made various draws and repayments on the 2013 Revolving Line of Credit during the year but as of December 31, 2014 there was no outstanding balance. As of December 31, 2014, the Company had outstanding letters of credit of approximately $1,186,000. The contractual interest due for the 2013 Term Loan and 2013 Revolving Line of Credit varies and is subject, at the Company’s discretion, to the commercial lender’s base rate or an elected 30-Day London Interbank Offered Rate (“LIBOR”) plus an applicable base spread. Interest expense for the 2013 Term Loan was approximately $1,150,000 for the year ended December 31, 2014. Interest expense for the 2013 Revolving Line of Credit was approximately $160,000 for the year ended December 31, 2014.

On January 6, 2012, the Company had restated and consolidated previous amounts borrowed into a single subordinated credit agreement (“Subordinated Credit Agreement”) with a separate commercial lender in the amount of $10,000,000. On June 18, 2013, the Company entered into an amendment to the Subordinated Credit Agreement which provided an additional borrowing of $8,000,000 (“Additional Borrowing”). The Subordinated Credit Agreement has a maturity date of December 31, 2016 and originally bore interest at 15 percent per annum, of which 2 percent was deferred until maturity. As part of the amendment, the Subordinated Credit Agreement interest rate was reduced to 7.5 percent per annum effective June 18, 2013. Interest payments are required to be paid quarterly. The Additional Borrowing has a maturity date of March 31, 2019 and bears interest at 7.5 percent per annum. Interest payments are required to be paid monthly. The balance of the long-term debt outstanding was $18,000,000 as of December 31, 2014, and is due in full on their respective maturity dates. Interest expense for the Subordinated Credit Agreement and the Additional Borrowing for the year ended December 31, 2014 totaled approximately $1,369,000.

Substantially all of the Company’s assets, including accounts receivable, inventory, property, plant, and equipment, and other assets, are pledged as collateral under the credit agreements. In addition, the above credit agreements include covenants that restrict capital expenditures, the transfer of assets, the issuance and transfers of stock, mergers and acquisition activity, the incurrence of additional debt, and certain subjective covenants. The agreements collectively also require the Company to maintain certain financial ratios including a fixed charge ratio and total leverage and senior leverage ratios based upon the funded debt to Earnings Before Income, Taxes, Depreciation, and Amortization (“EBITDA”), as defined. As of and for the year ended December 31, 2014, the Company was in compliance with all covenants. On January 9, 2015, in connection with the transaction to sell substantially all of the Company’s assets as more fully described in Note 13, the Company repaid the 2013 Term Loan and 2013 Revolving Line of Credit in full and the purchaser assumed the Company’s Subordinated Credit Agreement and Additional Borrowing.

19

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 8 - LONG-TERM DEBT - CONTINUED

The maturities of long-term debt as of December 31, 2014 are as follows:

Year ending December 31, 2015	$	10,000,000
2016		36,579,041
2017		—
2018		—
2019		8,000,000
	$	54,579,041

NOTE 9 - COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS

Legal - The Company is involved in various legal actions from time to time arising in the normal course of business. After review, including consultation with legal counsel, management evaluates the probability of losses under any such matters and considers the need for loss accruals. Management believes any ultimate liability that could arise from these actions not accrued in the accompanying consolidated balance sheet would not materially affect the Company’s financial position or results of future operations.

Union Employees - Certain employees are covered by a union contract that expires on October 31, 2015. In addition, the Company is currently negotiating a collective bargaining agreement with a group of employees at one of its other newspapers. As of December 31, 2014, less than 1 percent of employees were represented by a labor union with a collective bargaining agreement.

Significant Vendors - During the year ended December 31, 2014, the Company purchased approximately 11 percent and 40 percent of its inventory from two vendors. These purchases primarily consisted of newsprint, which is included as newsprint, ink, and production supplies in the accompanying consolidated statement of operations for the year ended December 31, 2014.

Operating Leases - The Company leases certain facilities, including certain newspaper operation locations, as well as warehouses, office space, and equipment under noncancelable operating leases that expire at various times through December 31, 2033. The Company is recognizing the impact of fixed annual increases in minimum rental payments on a straight-line basis over the term of the leases. Future minimum lease payments under noncancelable lease agreements in excess of one year as of December 31, 2014 are as follows:

Year ending September 30, 2015	$	7,440,826
2016		7,245,706
2017		6,863,938
2018		6,876,534
2019		6,881,957
Thereafter		94,214,051
	$	129,523,012

Total rental expense for the year ended December 31, 2014 was approximately $9,748,000, and is included in other operating expenses on the accompanying consolidated statement of operations.

20

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 10 - RELATED PARTY TRANSACTIONS

Insurance - The Company has entered into an insurance services agreement with a related party, due to common ownership of a member of the Company, to serve as the Company’s exclusive broker for property, casualty, and certain employee benefits insurance products. In connection with this agreement, the Company pays a portion of the property and casualty insurance premiums to the broker and also pays a brokerage fee, which totaled approximately $3,817,000 and $400,000, respectively, for the year ended December 31, 2014. Additional brokerage fees earned by the related party, associated with placing the employee benefits insurance, are paid by the insurance carrier.

Accounting Services - The Company has engaged with a related party, due to common ownership of a member of the Company, to provide dedicated and shared finance and accounting personnel as well as financial systems support and services. These personnel and financial systems are primarily used to manage certain accounting and treasury functions. In connection with these services, the Company paid approximately $1,501,000 for the year ended December 31, 2014. As of December 31, 2014, the Company has a due to affiliate of approximately $232,000, recorded on the accompanying consolidated balance sheet, which primarily relates to amounts unpaid in connection with these services.

NOTE 11 - EMPLOYEE BENEFIT PLAN

Eligible employees of the Company may participate in the 401(k) defined contribution plan (the “Plan”). Employees can contribute up to 100 percent of their annual pay, up to the annual maximum allowed by the Internal Revenue Service. Employees at least 21 years old, who expect to work 1,000 hours or more during the year, are eligible to participate on the first day of the month following their start date. The Plan’s provisions include a discretionary match by the Company, equal to 50 percent of an employee’s contribution, up to a maximum match of 3 percent of the employee’s annual salary. The Company made no discretionary contributions for the year ended December 31, 2014.

NOTE 12 - DISCONTINUED OPERATIONS

Sebring

On April 1, 2014, the Company sold Sebring (Note 1) to an unrelated third party for $325,000. The Company will have no continuing involvement in the operation of this publication. The Company has determined that the activities related to the Sebring operations should be classified as discontinued operations. As a result, the related results of operations have been classified outside of net income from continuing operations in the accompanying consolidated statement of operations. The Company used approximately $300,000 of net proceeds from the sale to repay debt principal.

Phonebooks

On May 27, 2014, the Company sold its Phonebooks (Note 1) to Directory Publishing Solutions, Inc. for $700,000. The proceeds consisted of $105,000 in cash and a note receivable from the purchaser for $595,000. The note receivable is due in 24 monthly installments, maturing on September 15, 2016. The sale agreement contains certain provisions that require payment of the note receivable in full, at which time legal title to the assets transfer to the purchaser. Accordingly, the Company will defer the gain on the sale until amounts are received from the purchaser. As of December 31, 2014, the remaining balance of the note receivable from the purchase was approximately $496,000. The Company will continue to be obligated for commissions due on all publications released prior to the sale of these directories (Note 2) but will otherwise have no continuing involvement in the operation of these publications. As a result, the related results of operations have been classified outside of net income from continuing operations in the accompanying consolidated statement of operations. The Company used approximately $204,000 of net proceeds from the sale to repay debt principal.

21

HALIFAX MEDIA GROUP, LLC AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of and for the Year Ended December 31, 2014

NOTE 12 - DISCONTINUED OPERATIONS - CONTINUED

Mendocino Building

On April 15, 2014, the Company finalized the sale of the Mendocino Building for a selling price of $6,100,000. The Mendocino Building was classified as held for sale as of December 31, 2013. During the period the property was held for sale, the Company operated the building as a rental property and collected rents from tenants and incurred operating expenses related to the rental of the property. As a result, the related results of operations have been classified outside of net income from continuing operations in the accompanying consolidated statement of operations.

Summary of Net Income (Loss) from Discontinued Operations

The net income (loss) from discontinued operations and attributable revenues from the respective operating units included as discontinued operations in the accompanying consolidated statement of operations for the year ended December 31, 2014 consisted of the following:

	Sebring			Phonebooks		Mendocino Building			Total
Loss from discontinued operations attributable to:
Income (Loss) from operations	$	(132,427	)	$	255,833	$	(146,632	)	$	(23,226	)
Gain (Loss) on sale		108,709			133,168		(200,000	)		41,877
Net income (loss) from discontinued operations	$	(23,718	)	$	389,001	$	(346,632	)	$	18,651
Revenues attributable to discontinued operations included in income (loss) from operations above	$	294,692		$	628,168	$	189,245		$	1,112,105

NOTE 13 - SUBSEQUENT EVENTS

On November 20, 2014, the Company entered into a purchase and sale agreement to sell substantially all of its net operating assets, with the exception of the Sarasota Property and certain real property located in Daytona Beach, Florida, to an unrelated third party for a sales price of approximately $280,000,000, plus a $5,000,000 working capital adjustment. The transaction closed on January 9, 2015.

Upon closing of the transaction, the Company repaid the 2013 Term Loan in full and the seller assumed the outstanding debt under the Amended Subordinated Credit Agreement (Note 8). Additionally, the Company has certain transaction related obligations due to certain employees, which management has determined are not required to be accrued as of December 31, 2014 and which are not material to the transaction.

22

EX-99.2

Exhibit 99.2

Stephens Media LLC and Subsidiary

(A Nevada Limited Liability Company Wholly Owned by SF Holding Corp. and Subsidiaries)

Consolidated Financial Statements as of December 31, 2014 and 2013 and for the Years Ended December 31, 2014, 2013, and 2012, and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors of

New Media Investment Group, Inc.:

We have audited the accompanying consolidated financial statements of Stephens Media LLC and subsidiary (wholly owned by SF Holding Corp. and subsidiaries) (the “Company”), which comprise the consolidated balance sheets as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, changes in members’ equity, and cash flows for each of the three years in the period ended December 31, 2014, and the related notes to consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Stephens Media LLC and subsidiary as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 2 to the consolidated financial statements, the Company has elected to change its method of accounting for goodwill in 2014. Our opinion is not modified with respect to this matter.

As discussed in Note 3 to the consolidated financial statements, the Company sold its Hawaii and Aberdeen newspaper operations and has presented the operations for the years presented as discontinued operations. Our opinion is not modified with respect to this matter.

As discussed in Note 13 to the consolidated financial statements, the Company has executed a purchase and sale agreement and sold substantially all of its net assets, with the exception of its investment in Northwest Arkansas Newspapers LLC, net pension obligation, long-term debt and two buildings in Fort Smith, Arkansas, to an unrelated party. Our opinion is not modified with respect to this matter.

/s/ Deloitte & Touche LLP

Little Rock, Arkansas

April 3, 2015

- 2 -

STEPHENS MEDIA LLC AND SUBSIDIARY

(A Nevada Limited Liability Company Wholly Owned by SF Holding Corp.

and Subsidiaries)

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2014 AND 2013

(In thousands)

	2014		2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	21,171	$	14,745
Trade and other receivables—net		18,135		20,553
Inventories		833		1,153
Prepaid and other assets		2,336		2,307
Total current assets		42,475		38,758
INVESTMENTS IN PARTNERSHIPS		—		864
PROPERTY, PLANT, AND EQUIPMENT—Net		44,227		50,707
OTHER ASSETS:
Intangible assets—Net		747		952
Goodwill		3,141		3,490
Pension receivables—long-term		881		—
Other noncurrent assets		361		690
Total other assets		5,130		5,132
TOTAL	$	91,832	$	95,461
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,253	$	3,755
Accrued expenses and other liabilities		7,251		10,254
Accrued health care claims		1,234		2,238
Current portion of accrued workers’ compensation liability		569		424
Deferred income		7,988		9,464
Due to affiliates		82		143
Total current liabilities		18,377		26,278
LONG TERM LIABILITIES:
Accrued pension		2,097		350
Accrued workers’ compensation		1,321		1,243
Long-term debt		6,563		6,563
Total long-term liabilities		9,981		8,156
Total liabilities		28,358		34,434
MEMBERS’ EQUITY:
Member’s Interest		63,446		60,997
Accumulated Other Comprehensive Income		28		30
Total Member’s Equity		63,474		61,027
TOTAL	$	91,832	$	95,461

See notes to consolidated financial statements.

- 3 -

STEPHENS MEDIA LLC AND SUBSIDIARY

(A Nevada Limited Liability Company Wholly Owned by SF Holding Corp.

and Subsidiaries)

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2014, 2013, AND 2012

(In thousands)

	2014			2013			2012
OPERATING REVENUES—Newspaper:
Advertising	$	103,027		$	109,766		$	119,155
Circulation		35,677			35,698			36,436
Other		6,697			6,307			6,194
Total operating revenues		145,401			151,771			161,785
OPERATING EXPENSES:
Salaries, wages, and employee benefits		51,198			58,566			59,766
Severance wages and related benefits		626			1,527			436
Newsprint, ink, and other production supplies		11,500			13,450			16,003
Printing costs		8,234			9,050			8,555
Newspaper distribution		20,641			23,739			25,591
Occupancy		5,421			6,094			5,885
Agency commissions		2,077			1,852			2,195
Supplies and postage		2,266			2,341			2,627
Depreciation and amortization		5,136			4,962			5,207
Impairment of investment		—			1,652			3,001
Impairment of property, plant, and equipment		—			—			137
Other		23,197			25,197			24,833
Total operating expenses		130,296			148,430			154,236
OPERATING INCOME		15,105			3,341			7,549
OTHER (EXPENSE) INCOME:
Interest expense		(273	)		(294	)		(280	)
Interest income		13			31			20
Equity in losses of partnerships		(452	)		(811	)		(1,018	)
Other—net		—			1,671			—
Total other expense		(712	)		597			(1,278	)
NET INCOME FROM CONTINUING OPERATIONS	$	14,393		$	3,937		$	6,271
INCOME FROM DISCONTINUED OPERATIONS		5,356			765			826
NET INCOME	$	19,749		$	4,702		$	7,097

See notes to consolidated financial statements.

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STEPHENS MEDIA LLC AND SUBSIDIARY

(A Nevada Limited Liability Company Wholly Owned by SF Holding Corp.

and Subsidiaries)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2014, 2013, AND 2012

(In thousands)

	2014			2013			2012
NET INCOME	$	19,749		$	4,702		$	7,097
OTHER COMPREHENSIVE INCOME—Net unrealized (loss) gain on securities available for sale		(2	)		(2	)		16
COMPREHENSIVE INCOME	$	19,747		$	4,700		$	7,113

See notes to consolidated financial statements.

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STEPHENS MEDIA LLC AND SUBSIDIARY

(A Nevada Limited Liability Company Wholly Owned by SF Holding Corp.

and Subsidiaries)

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2014, 2013, AND 2012

(In thousands)

	Members’ Interest						Accumulated Other Comprehensive Income			Total Members’ Equity
	SF Holding Corp.			Stephens Holding Company
BALANCE—January 1, 2012	$	76,346		$	9,453		$	15		$	85,814
Net income		7,026			71			—			7,097
Net unrealized gain of securities available for sale		—			—			16			16
Distribution of cash		(24,354	)		(246	)		—			(24,600	)
BALANCE—December 31, 2012		59,018			9,278			31			68,327
Net income		4,654			48			—			4,702
Net unrealized loss of securities available for sale								(2	)		(2	)
Distribution of cash		(11,880	)		(120	)		—			(12,000	)
BALANCE—December 31, 2013		51,792			9,206			29			61,027
Net income		19,552			197			—			19,749
Net unrealized loss of securities available for sale		—			—			(2	)		(2	)
Distribution of cash		(17,127	)		(173	)		—			(17,300	)
BALANCE—December 31, 2014	$	54,217		$	9,230		$	27		$	63,474

See notes to consolidated financial statements.

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STEPHENS MEDIA LLC AND SUBSIDIARY

(A Nevada Limited Liability Company Wholly Owned by SF Holding Corp.

and Subsidiaries)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2014, 2013, AND 2012

(In thousands)

	2014			2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	19,749		$	4,701		$	7,097
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,535			5,431			5,720
Provision for losses on accounts receivable		331			133			375
Loss on sale of property and equipment		133			24			149
Write off of note receivable		350			—			—
Loss (gain) on sale of newspapers		(3,981	)		—			64
Equity in losses of partnerships		544			918			1,072
Impairment of investment and property, plant, and equipment		—			1,652			3,334
Other		(5	)		(25	)		180
Increase (decrease) in cash resulting from changes in assets and liabilities—net of effects of acquisitions and dispositions:
Trade and other receivables		898			(795	)		(406	)
Due from affiliates		—			(57	)		188
Inventories		170			361			599
Other current assets		399			418			(282	)
Pension obligation		(15	)		—			—
Other assets		(140	)		160			153
Accounts payable		(2,788	)		(804	)		1,346
Accrued expenses and other liabilities		(3,904	)		3,503			(49	)
Deferred income		(456	)		547			(919	)
Net cash provided by operating activities		16,820			16,167			18,621
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(3,026	)		(1,332	)		(705	)
Proceeds from sale of property and equipment		14			—			253
Proceeds from sale of newspapers		10,232			—			37
Transaction costs paid for sale of newspapers		(314	)		—			—
Acquisition of newspapers		—			(482	)		(277	)
Contributions to partnerships		—			—			(338	)
Net cash used in investing activities		6,906			(1,814	)		(1,030	)
CASH FLOWS FROM FINANCING ACTIVITY—Distributions to members		(17,300	)		(12,000	)		(24,600	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		6,426			2,353			(7,009	)
CASH AND CASH EQUIVALENTS—Beginning of year		14,745			12,392			19,401
CASH AND CASH EQUIVALENTS—End of year	$	21,171		$	14,745		$	12,392
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION—Cash paid during the year for interest	$	273		$	291		$	280
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Purchases of property and equipment in accounts payable	$	304		$	—		$	—
Recognition of net pension obligation from sale of newspapers	$	951		$	—		$	—

See notes to consolidated financial statements.

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STEPHENS MEDIA LLC AND SUBSIDIARY

(A Nevada Limited Liability Company Wholly Owned by SF Holding Corp. and Subsidiaries)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2014 AND 2013 AND FOR THE YEARS ENDED

DECEMBER 31, 2014, 2013, AND 2012

(Dollars in thousands)

1. ORGANIZATION AND OPERATIONS

As of December 31, 2014, Stephens Media LLC (the “Company”), a Nevada limited liability company, owned and operated eight daily and 28 weekly newspapers, located primarily in the central and southwestern United States. During the year ended December 31, 2014, the Company sold its Hawaii and Aberdeen newspaper operations (see Note 3).

SF Holding Corp. and subsidiaries (SFH), an Arkansas corporation, holds a 99% interest in the Company and the remaining 1% is held by Stephens Holding Company, a subsidiary of SFH.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates—The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and disclosure of contingent assets and liabilities. The estimates and assumptions used in preparing the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. However, actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements.

Cash and Cash Equivalents—The Company considers cash on hand or on deposit and short-term investments with original maturities of three months or less to be cash and cash equivalents. Due to the short-term nature of these investments, the carrying amounts are reasonable estimates of fair values.

Trade and Other Receivables Net—Trade accounts receivable consist of amounts due from advertisers and subscribers, less an allowance for doubtful accounts. Management estimates and records an allowance for doubtful accounts by identifying troubled individual accounts and using historical collection experience applied to the aging of all accounts. Accounts are written off against the allowance when deemed uncollectible, and recoveries of accounts previously written off are credited to the allowance.

Inventories—Inventories primarily consist of newsprint and are recorded at the lower of cost, determined using the last-in, first-out method, or market.

Investments in Partnerships—The Company holds noncontrolling interests in various partnerships (“Unconsolidated Partnerships”) that operate media businesses in markets in which the Company has operations. These Unconsolidated Partnerships are accounted for using the equity method of accounting as the Company exercises significant influence over them. The managing partners of each of the Unconsolidated Partnerships have generally been granted the authority to manage, supervise, and conduct the affairs of their respective partnerships. They have also been granted the authority to execute agreements and incur obligations, subject to certain limitations, on behalf of their partnerships. The Company’s ownership interests in the significant Unconsolidated Partnerships for the years ended December 31, 2014, 2013, and 2012 (see also Note 5), consisted of the following:

Northwest Arkansas Newspapers LLC (NAN) 50 % 

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Property, Plant, and Equipment—Property, plant, and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which are as follows:

	Estimated Useful Lives
Buildings and improvements		10–40 years
Machinery and equipment		3–10 years
Furniture, fixtures, and equipment		3–10 years

Goodwill—Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. The goodwill recorded at December 31, 2014 and 2013, is primarily the result of acquisitions completed during 2010.

Effective January 1, 2013, the Company initially adopted the accounting alternative to change its method of accounting for the subsequent measurement of goodwill through the election of a new accounting alternative issued by the Financial Accounting Standards Board (FASB). The election allows entities to amortize all existing and additions to goodwill on a straight-line basis over a period of 10 years or less. Additionally, the alternative permits the Company to perform a one-step impairment test at the entity level, only when events or circumstances indicate that the fair value of the entity may be less than its carrying amount. As a result of the initially elected accounting alternative, the Company reported amortization expense related to goodwill in the consolidated financial statements issued and reported on April 30, 2014, totaling $499. Additionally, the Company considered whether there were any impairment indicators at December 31, 2013, related to goodwill and concluded there were no such indicators of impairment.

As discussed in Note 13, the Company has agreed to be acquired by an unrelated third party which is a public company who files its financial statements with the Securities and Exchange Commission. The FASB guidance allowing for the amortization of goodwill is not applicable to public companies therefore; the Company determined the election is no longer preferable to the users of the consolidated financial statements. Accordingly, the Company made the decision to reverse the initially adopted accounting alternative and revised the previously issued consolidated financial statements. This resulted in an increase in total assets, members’ equity, and net income of $499.

In connection with the decision to reverse the initially adopted accounting alternative, the Company is required to evaluate goodwill for impairment at least once annually or more frequently if events and circumstances indicate that impairment may be present. The recoverability of goodwill is measured at the reporting unit level, which constitutes a business component for which discrete financial information is available and management regularly reviews the operating results of the component. Management has identified the Company as a whole as one reporting unit for the purposes of testing of goodwill.

The evaluation of goodwill impairment consists of two steps. The first step compares the estimated fair value of a reporting unit to its carrying value. If a reporting unit’s estimated fair value exceeds its carrying value, no impairment is deemed present. However, if a reporting unit’s estimated fair value is less than its carrying value, a second step is performed whereby the estimated fair value of all of a

- 9 -

reporting unit’s assets and liabilities are determined in order to assess the current implied fair value of goodwill. If the carrying value of goodwill exceeds the implied fair value, an impairment charge is recognized for that excess.

There were no impairments of goodwill recorded for the years ended December 31, 2014, 2013 and 2012.

Intangible Assets—Intangible assets primarily result from business combinations and are being amortized over the following estimated lives:

	Amortized Lives
Newspaper subscription lists, advertiser lists, and mastheads	7 years

Finite-lived intangible assets are also evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Revenue Recognition—Advertising revenue is recorded when advertisements are placed in the publication. Circulation revenue is recorded as newspapers are distributed over the subscription term. Other revenue is recognized when the related product or service has been delivered.

Deferred Income—Deferred income consists primarily of deferred subscription income. Deferred subscription income represents amounts received from subscribers in advance of newspaper deliveries and is recognized as newspaper revenue over the subscription term.

Recently Issued Accounting Pronouncements—The FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle an entity should apply a five-step process as outlined in the ASU. The standard is effective for nonpublic entities for annual and interim periods beginning after December 15, 2018. (December 15, 2017 for public companies) and early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this new standard

The FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosers of Disposals of Components of an Entity, which provides guidance for when a disposal of a component of an entity or a group of components of an entity is required to be presented as discontinued operations. A disposal of a component or group of components would be required to be presented as discontinued operations if the disposal of the component(s) represents a strategic shift that has or will have a significant a major effect in the entity’s operations and financial results. The standard is effective for the Company for annual periods beginning after December 15, 2014. Early adoption is permitted under certain scenarios. The Company is evaluating the effects of this standard for periods subsequent to December 31, 2014.

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3. ACQUISITIONS, DISPOSITIONS, AND INVESTMENTS IN PARTNERSHIPS

Acquisitions—During 2013, the Company acquired an Iowa newspaper, The Perry Chief for $482. The effects of this acquisition was not material to the consolidated financial position or operating results of the Company for 2013.

During 2012, the Company acquired an Iowa newspaper, Story City Herald for $150. Also, the Bartlesville Magazine was acquired for $127. The effects of these acquisitions were not material to the consolidated financial position or operating results of the Company for 2012.

Dispositions—During 2012, the Company sold a newspaper in Lincoln County, Nevada for $37 and recorded a loss upon the sale of $64. The effects of this disposition was not material to the consolidated financial position or operating results of the Company for 2012.

During 2014, the Company sold a newspaper and affiliated publications in Aberdeen, Washington, for $1,000 (see Note 12).

Also, during 2014, the company sold two daily newspapers, one weekly newspaper and affiliated publications in Hilo and Kona, Hawaii. This sale also included the Company’s ownership in Hawaii.com. The proceeds for the sale were $9,250 (see Note 12).

4. TRADE AND OTHER RECEIVABLES

Trade and other receivables at December 31, 2014 and 2013, consisted of the following:

	2014			2013
Trade accounts receivable	$	18,073		$	21,517
Other receivables		1,346			453
		19,419			21,970
Allowance for doubtful accounts		(1,284	)		(1,417	)
Total	$	18,135		$	20,553

The Company’s trade accounts receivable arise primarily from unsecured credit granted to customers for newspaper advertisements. Customers include retail stores, hotels, and various other advertisers, including individuals. There were no significant concentrations of credit at December 31, 2014 and 2013.

The following table presents the activity of the allowance for doubtful accounts for the years ended December 31, 2014, 2013 and 2012:

	2014			2013			2012
Beginning balance	$	(1,417	)	$	(1,554	)	$	(1,574	)
Write-offs		411			498			582
Recoveries		(171	)		(228	)		(187	)
Bad debt expense		(375	)		(133	)		(375	)
Sale of newspapers		268			—			—
Ending balance	$	(1,284	)	$	(1,417	)	$	(1,554	)

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5. INVESTMENTS IN PARTNERSHIPS

Investments in partnerships at December 31, 2014 and 2013, consisted of the following:

	2014		2013
NAN	$	—	$	452
Others		—		412
Total	$	—	$	864

Since the inception of the NAN partnership the Company has reduced the balance of its investment by 50% of its equity in the net losses incurred by NAN. Due to recurring losses incurred by NAN, the Company evaluated the carrying value of its investment and recorded an impairment charge of $1,652, and $3,001 during 2013, and 2012, respectively. The carrying value of NAN as of December 31, 2014 is $0 due to the impairment charges and equity in losses of NAN recognized since the inception of NAN.

6. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment at December 31, 2014 and 2013, consisted of the following:

	2014			2013
Land	$	4,294		$	4,690
Buildings and improvements		66,387			73,715
Machinery and equipment		100,638			109,898
		171,319			188,303
Accumulated depreciation		(127,599	)		(137,670	)
		43,720			50,633
Construction in progress		507			74
Total	$	44,227		$	50,707

Depreciation expense related to property, plant, and equipment from continuing operations totaled $4,932, $4,765, and $5,009 for the years ended December 31, 2014, 2013, and 2012, respectively.

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7. GOODWILL AND INTANGIBLE ASSETS

Changes in the carrying amount of goodwill for the years ended December 31, 2014 and 2013, were as follows:

Balance—January 1, 2013	$	3,101
Purchase of newspaper		389
Balance—December 31, 2013		3,490
Decrease related to sale of newspaper		(349	)
Balance—December 31, 2014	$	3,141

As of December 31, 2014 and 2013, the Company has net intangible assets with finite useful lives of $747 and $952 respectively, consisting of newspaper subscription lists, advertiser lists, and mastheads totaling $71,135 and $92,845, less accumulated amortization of $70,388 and $91,893, respectively.

Total amortization expenses for intangible assets were $204, $197, and $198 for the years ended December 31, 2014, 2013, and 2012, respectively. Future annual amortization expense for these intangible assets as of December 31, 2014, is as follows:

2015	$	213
2016		197
2017		184
2018		153
	$	747

8. BORROWINGS

During 2010, the Company entered into a revolving credit agreement with a financial institution and proceeds of $6,563 were borrowed to finance the acquisition of newspapers in Iowa. Total borrowings available under this line of credit are $10,000 and are available until November 2016. Principal outstanding at December 31, 2014 and 2013 is $6,563 and is due in November 2016. Interest is payable monthly and the interest rate is London InterBank Offered Rate, plus 3.95% (4.10% and 4.12%, as of December 31, 2014 and 2013, respectively). On February 23, 2015, the Company repaid the principal and interest related to this agreement and the agreement was terminated.

The fair value of the outstanding borrowings are not materially different from the carrying values due to the varying nature of the interest rates of these obligations.

9. EMPLOYEE BENEFIT PLANS

The Company maintains a contributory, defined contribution profit-sharing plan, the Stephens Media Retirement Savings Plan (the “Plan”) covering all employees, except those covered by collective bargaining agreements, based on specified employment criteria. Employer contributions to the Plan are made at the discretion of the Company and are allocated to eligible participants’ accounts based on their compensation, subject to certain limitations. All eligible employees may also contribute a percentage of their compensation, subject to certain limitations, as a 401(k) contribution. There was no contribution made by the Company to the Plan during 2014, 2013, and 2012.

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The Company contributed to a multiemployer defined benefit pension plan (Pension Plan) under the terms of collective-bargaining agreement that cover its union-represented employees. The risks of participating in a multiemployer plan are different from single-employer plans in the following aspects:

• Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

• If the Company chooses to stop participating in its multiemployer plan the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in this Pension Plan for the years ended December 31, 2014, 2013, and 2012, is outlined in the table below. The “EIN/Pension Plan Number” column provides the employer identification number (EIN) and the three-digit plan number. The Pension Protection Act (PPA) zone status is based on information that the Company received from the Pension Plan and is certified by the Pension Plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded. 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.

Pension Fund	EIN/Pension Plan Number	PPA Zone Status			FIP/RP Status	Contributions of Stephens Media
		2014	2013	2012		2014		2013		2012
						(amounts in whole dollars)
The Newspaper Guild IPP	52-1082662-001	Red	Red	Red	Implemented	$	97,548	$	117,397	$	121,785

Note: Expiration date of the collective bargaining agreement is August 2015.

As a result of the sale of the Hawaii newspapers in 2014, the Company effectively withdrew from the Pension Plan. A withdrawal liability in the amount of $2,800 was recorded for the Company’s estimated future obligation to fund the benefits earned by eligible employees and retirees at the date of sale. The payment of this obligation is required to be made in equal annual installments over the next 20 years. The purchaser of the Hawaii newspapers has agreed to pay the lesser of $1,400 or half of the pension withdrawal liability in equal annual installments over the next 20 years. The Company recorded a pension obligation of $1,902 and receivable of $951 related to the amounts to be paid and received related to this Pension Plan and net expense of $951 was recorded within the gain on sale as discussed in Note 12.

10. COMMITMENTS AND CONTINGENCIES

The Company maintains a high retention insurance program for its exposures to property damage, workers’ compensation, and general liability losses, including libel and slander. The estimated costs of claims are accrued as incidents occur based upon historical loss development trends and may be subsequently revised based upon developments relating to such claims. The program is administered by an unrelated insurance carrier while any stop-loss policies, which were utilized, are provided by several different insurance underwriters.

- 14 -

The Company leases certain facilities, including certain newspaper operation locations, as well as warehouses, office space, and equipment under noncancelable operating leases. Also included in the commitment schedule below are leases related to certain software applications. Minimum payments required under these agreements at December 31, 2014, were as follows:

Years Ending December 31	Noncancelable Operating Leases
2015	$	1,142
2016		837
2017		440
2018		272
2019		19
Thereafter		—
	$	2,710

Rent expense to unrelated parties totaled $1,335, $1,663, and $800 for the years ended December 31, 2014, 2013, and 2012, respectively.

The Company, through its Las Vegas, Nevada, newspaper the Las Vegas Review Journal, is required under a joint operating agreement (the “Agreement”) to publish and include the Las Vegas Sun, owned by Greenspun Media Group, in the newspaper through 2040, subject to limitations set forth in the Agreement. The Agreement calls for payments to be made to a counterparty based on a fixed amount that is increased or decreased annually based on the financial performance of the Company’s Las Vegas paper. The Company paid $1,073, $1,297, and $1,392, which is included in other operating expenses, under this Agreement in 2014, 2013, and 2012, respectively.

The Company is a defendant in certain lawsuits and arbitrations, which arose from its usual business activities. Although the ultimate outcome of these actions cannot be ascertained at this time, and the results of legal proceedings cannot be predicted with certainty, management, based on its understanding of the facts and consultation with outside counsel, does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company’s consolidated financial statements.

The Company maintains various insurance coverage in order to minimize the financial risk associated with certain of these claims.

11. RELATED-PARTY TRANSACTIONS

Certain marketable securities and cash equivalents are purchased through and are held in accounts with Stephens Inc., a broker/dealer owned by a 50% shareholder of SFH. The Company also receives allocations of specific direct expenses for services performed by affiliates. Amounts related to such transactions as of December 31, 2014 and 2013, and for the years ended December 31, 2014, 2013, and 2012, were insignificant.

12. DISCONTINUED OPERATIONS

On October 1, 2014, the Company sold a newspaper and affiliated publications in Aberdeen, Washington to an unrelated third party for $1,000, subject to adjustment for working capital, and recorded a gain upon the sale of $126. The Company will have no continuing involvement in the operations of these publications. The Company has determined that the financial results related to these

- 15 -

operations should be classified as discontinued operations. As a result, the related results of operations have been classified outside of net income from continuing operations in the accompanying consolidated statement of operations. The net income related to this newspaper in the accompanying consolidated statement of operations for the years ended 2014, 2013, and 2012 is $122 (including the gain on sale of $126), $266, and ($51) respectively.

On December 3, 2014, the Company sold two daily newspapers, one weekly newspaper and affiliated publications in Hilo and Kona, Hawaii for $9,250, subject to adjustment for working capital, and recorded a gain of $3,855. This sale also included the Company’s ownership in Hawaii.com. The Company will have no continuing involvement in the operation of these publications or Hawaii.com. The Company has determined that the financial results related to the operations of these publications should be classified as discontinued operations. As a result, the related results of operations have been classified outside of net income from continuing operations in the accompanying consolidated statement of operations. The net income related to these publications/investment in the accompanying consolidated statement of operations for the years ended 2014, 2013, and 2012 is $5,234 (including the gain on sale of $3,855), $499, and $878 respectively.

The following table summarizes the impact of the Aberdeen and Hawaii operations for the years ended December 31, 2014, 2013 and 2012:

	2014		2013		2012
Aberdeen revenue	$	2,458	$	3,638	$	3,736
Hawaii revenue		12,347		13,392		14,453
Total revenue	$	14,805	$	17,030	$	18,189
Aberdeen expenses	$	2,462	$	3,372	$	3,787
Hawaii expenses		10,968		12,893		13,576
Total expenses	$	13,430	$	16,265	$	17,363
Aberdeen gain	$	126
Hawaii gain		3,855
Total gain	$	3,981
Aberdeen net income (loss)	$	122	$	266	$	(51	)
Hawaii net income		5,234		499		877
Total net income	$	5,356	$	765	$	826

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The following table presents the assets and liabilities of Aberdeen and Hawaii as of December 31, 2013:

	Aberdeen		Hawaii		Total
Cash	$	10	$	336	$	346
Trade and other receivables—net		276		1,522		1,798
Inventories		4		148		152
Prepaid and other assets		5		57		62
Investment in Partnerships		—		412		412
Property, plant, and equipment		818		3,763		4,581
Goodwill		70		279		349
Other noncurrent assets		—		178		178
Total assets	$	1,183	$	6,695	$	7,878
Accounts payable	$	43	$	112	$	155
Accrued expenses and other liabilities		145		652		797
Deferred income		281		869		1,150
Other noncurrent liabilities		—		350		350
Total liabilities	$	469	$	1,983	$	2,452

13. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date these consolidated financial statements were available to be issued on April 3, 2015.

In March 2015, the Company executed a purchase and sale agreement and sold substantially all of its assets, with the exception of its investment in Northwest Arkansas Newspapers LLC, net pension obligation, long-term debt and two buildings in Fort Smith, Arkansas, to an unrelated party, for a cash and sales price of approximately $102,500 subject to working capital adjustments. The transaction was completed in the first quarter 2015.

The Company is not aware of any other significant events that occurred subsequent to the balance sheet date, but prior to the issuance of these financials that would have a material impact on the consolidated financial statements.

* * * * * *

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EX-99.3

Exhibit 99.3

NEW MEDIA

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

AS OF DECEMBER 28, 2014

The following unaudited pro forma condensed combined balance sheet as of December 28, 2014 and the unaudited pro forma condensed combined statement of operations for the year ended December 28, 2014 are based on (i) the audited consolidated financial statements of New Media Investment Group Inc. (“New Media”, “the Company”, “us”, “our”) for the year ended December 28, 2014; (ii) the consolidated financial statements of the Providence Journal Company and Subsidiaries (“Providence Journal”) for the eight months ended September 2, 2014, (iii) the consolidated financial statements of Halifax Media Group, LLC and Subsidiaries (“Halifax Media”) as of and for the year ended December 31, 2014, and (iv) the consolidated financial statements of Stephens Media LLC and Subsidiary (“Stephens Media”) as of and for the year ended December 31, 2014.

The unaudited pro forma condensed combined statement of operations for the year ended December 28, 2014 gives effect to the Pro Forma Transactions as if the Pro Forma Transactions had occurred or had become effective as of December 30, 2013 (beginning of our fiscal year 2014). The unaudited pro forma condensed combined balance sheet as of December 28, 2014 gives effect to the Pro Forma Transactions as if they had occurred on December 28, 2014.

The unaudited pro forma condensed combined financial information has been prepared to reflect adjustments to New Media’s historical consolidated financial information that are (i) directly attributable to the Pro Forma Transactions, (ii) factually supportable and (iii) with respect to the unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on our results.

The unaudited pro forma condensed combined financial information reflects the following Pro Forma Transactions:

• payment of the credit agreement dated November 26, 2013 (“GateHouse Credit Facilities”) and the credit agreement dated September 3, 2013 (the “Local Media Credit Facility”) in full and entering into the New Media Credit Agreement (as defined below);

• the acquisition of substantially all assets of Providence Journal, Halifax Media and Stephens Media including the impact of purchase accounting adjustments, in accordance with Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations” and the incremental financing under the New Media Credit Agreement in connection with these acquisitions, if applicable; and

• the issuance of seven million shares of stock in January 2015 for gross proceeds of $151.9 million. A portion of the proceeds were used to pay down $50.0 million of debt incurred in relation to the Halifax Media acquisition.

The impact of the acquisition of Providence Journal and the refinancing of the Gatehouse Credit Facilities and the Local Media Credit Facility is already reflected in the Company’s historical consolidated balance sheet as of December 28, 2014 and accordingly, no pro forma adjustment has been made to the balance sheet as the impact of such transactions is included in our respective historical financial information.

Each of the transactions reflected in the adjustments is described in more detail below.

The unaudited pro forma condensed combined financial information is included for illustrative and informational purposes only and does not purport to reflect our results of operations or financial condition had the pro forma transactions occurred at an earlier date. The unaudited pro forma condensed combined financial information also should not be considered representative of our future financial condition or results of operations.

All tables are presented in thousands unless otherwise noted.

New Media Refinancing Adjustments

On June 4, 2014, New Media entered into a credit agreement which provides for (i) a $200 million senior secured term facility (the “Term Loan Facility”) and (ii) a $25 million senior secured revolving credit facility, with a $5 million sub-facility for letters of credit and a $5 million sub-facility for swing loans (the “Revolving Credit Facility”) (as amended, the “New Media Credit Agreement”). The Term Loan Facility matures on June 4, 2020 and the maturity date for the Revolving Credit Facility is June 4, 2019. In addition, New Media may request one or more new commitments for term loans

or revolving loans from time to time up to an aggregate total of $75.0 million (the “Incremental Facility”). On September 3, 2014, the New Media Credit Agreement was amended to provide for $25.0 million in additional term loans under the Incremental Facility. On November 20, 2014, the New Media Credit Agreement was amended to increase the amount available thereunder for incremental loans. On January 9, 2015, the New Media Credit Agreement was amended to provide for a combined $152.0 million in additional term loans and revolving commitments under the Incremental Facility and to make certain amendments to the Revolving Credit Facility. The New Media Credit Agreement was amended on February 13, 2015 to provide for the replacement of the existing term loans under the Term Loan Facility with a new class of replacement term loans and was further amended on March 6, 2015 to provide for $15.0 million in additional revolving commitments under the Incremental Facility.

The proceeds of the New Media Credit Agreement, which included a $6.7 million original issue discount, were used to repay in full all amounts outstanding under the GateHouse Credit Facilities, the Local Media Credit Facility and to pay fees associated with the financing, with the balance going to the Company for general corporate purposes.

One lender under the New Media Credit Agreement was also a lender under the GateHouse Credit Facilities. This portion of the transaction was accounted for as a modification under ASC Topic 470-50, “Debt Modifications and Extinguishments” (“ASC 470-50”), as the difference between the present value of the cash flows under the New Media Credit Agreement and the present value of the cash flows under the GateHouse Credit Facilities was less than 10%. The unamortized deferred financing costs and original issuance discount balances as of the refinance date pertaining to this lender’s portion of the GateHouse Credit Facilities will be amortized over the terms of the new facility. The remaining portion of the GateHouse Credit Facilities and the Local Media Credit Facility debt refinancing constituted an extinguishment of debt under ASC 470-50, and was accounted for accordingly.

The refinancing related adjustments are reflected in the unaudited financial statements of New Media as of December 28, 2014. As such, the historical consolidated balance sheet reflects this transaction. Adjustments to the statement of operations related to the refinancing are in a separate column titled “New Media Refinancing Adjustments” to reflect the impact on interest expense and amortization of deferred financing costs as if the refinancing occurred as of December 30, 2013.

See Note 11 to New Media’s Consolidated Financial Statements, “Indebtedness,” in our Annual Report on Form 10-K for the period ended December 28, 2014.

Providence Journal Purchase Accounting and Other Adjustments

On September 3, 2014, a wholly owned subsidiary of New Media completed its acquisition of the assets of Providence Journal Company. The “Providence Journal Purchase Accounting and Other Adjustments” column of the pro forma financial information gives effect to preliminary purchase accounting adjustments in accordance with ASC 805. The Providence Journal acquisition was financed with $9.0 million of revolving debt that will mature on June 4, 2019, $25.0 million of additional term debt under the New Media Credit Agreement that will mature on June 4, 2020 and $13.0 million of cash. The revolving debt has an interest rate of LIBOR plus 5.25% and the additional term debt has an interest rate of LIBOR (with minimum of 1%), plus 6.25%. Original issue discount of $0.5 million was incurred related to the consummation of this debt. The purchase price, including estimated working capital, of approximately $48.7 million was allocated to the fair value of the net assets acquired and any excess value over the tangible and identifiable intangible assets was recorded as goodwill.

As Providence Journal was consolidated in New Media historical results beginning on September 3, 2014, the purchase accounting adjustments are therefore already recorded within the column “New Media Historical December 28, 2014” on the unaudited pro forma condensed combined balance sheet. The unaudited pro forma condensed combined statement of operations for the year ended December 28, 2014 includes a separate column for Providence Journal adjustments labeled as “Providence Journal Purchase Accounting and Other Adjustments.”

The following table summarizes the allocation of the acquisition value of $48.7 million to the fair value of Providence Journal’s assets and liabilities and the identified intangible assets based on pro forma values as of December 28, 2014. The excess of acquisition value over the amounts allocated to the identified intangible assets and the fair value of tangible assets and liabilities was recorded as goodwill. The purchase price allocations are preliminary based upon all information available to us at the present time and are subject to working capital and other adjustments. The value assigned to property, plant and equipment, intangible assets and goodwill is preliminary and subject to the completion of valuations to determine the fair market value of the tangible and

intangible assets. The final calculation of working capital and other adjustments and determination of fair values for tangible and intangible assets may result in different allocations among the various asset classes from those set forth below and any such differences could be material. No assurance can be given that the amount recorded as goodwill would be recoverable as part of the required annual test for goodwill impairment

Current assets	$	10,068
Property, plant and equipment		32,080
Advertiser relationships		1,780
Subscriber relationships		1,510
Customer relationships		1,810
Mastheads		3,700
Goodwill		3,653
Total assets		54,601
Current liabilities		5,935
Total liabilities		5,935
Net assets	$	48,666

The Company obtained a third party independent valuation to assist in the determination of the fair values of property, plant and equipment and intangible assets. The property, plant and equipment valuation included an analysis of recent comparable sales and offerings of land parcels in each of the subject’s markets. The estimated fair value is supported by the consideration to be paid and was determined using standard generally accepted appraisal practices and valuation procedures. The valuation firm used the three basic approaches to value: the cost approach (used for equipment where an active secondary market is not available and building improvements), the direct sales comparison (market) approach (used for land and equipment where an active secondary market is available) and the income approach (used for intangible assets). These approaches used are based on the cost to reproduce assets, market exchanges for comparable assets and the capitalization of income. Useful lives range from 1 to 15 years for personal property and 4 to 28 years for real property.

The valuation utilized a relief from royalty method, an income approach, to determine the fair value of mastheads. Key assumptions utilized in this valuation include revenue projections, a royalty rate of 1.5%, a long term growth rate of 0.0%, a tax rate of 40.0% and a discount rate of 21.5%. The Company valued the following intangible assets using the income approach, specifically the excess earnings method: subscriber relationships, advertiser relationships and customer relationships. In determining the fair value of these intangible assets, the excess earnings approach values the intangible asset at the present value of the incremental after-tax cash flows attributable only to the asset after deducting contributory asset charges. The incremental after-tax cash flows attributable to the subject intangible asset are then discounted to their present value. A static pool approach using historical attrition rates was used to estimate attrition rates of 3.0% to 10.0% for advertiser relationships, subscriber relationships and customer relationships. The long term growth rate was estimated to be 0.0% and the discount rate was estimated at 22.0%. Amortizable lives range from 13 to 16 years for subscriber relationships, advertiser relationships and customer relationships, while mastheads are considered a non-amortizable intangible asset.

Halifax Media Purchase Accounting and Other Adjustments

On January 9, 2015, a wholly owned subsidiary of New Media completed its acquisition of the assets of Halifax Media for approximately $280.0 million, including assumed debt of $18.0 million, subject to working capital adjustments. The “Halifax Media Purchase Accounting and Other Adjustments” column of the pro forma financial information gives effect to preliminary purchase accounting adjustments in accordance with ASC 805.

The Halifax Media acquisition was financed with a combined $152.0 million of additional term and revolving debt under the New Media Credit Agreement that will mature on June 4, 2020 and June 4, 2019, respectively, and $110.0 million of cash. The term debt has an interest rate of LIBOR (with a minimum of 1%) plus 6.25% and the revolving debt has an interest rate of LIBOR plus 5.25%. Original issue discount of $1.5 million was assumed related to the consummation of this debt. A portion of the debt, $50.0 million, was subsequently paid off with proceeds from the sale of stock, see discussion below. The purchase price of approximately $280.0 million will be allocated to the fair value of the net assets acquired and any excess value over the tangible and identifiable intangible assets will be recorded as goodwill.

The Company obtained a preliminary third party independent valuation to assist in the determination of the fair values of property, plant and equipment and intangible assets. The property, plant and equipment valuation includes an analysis of recent comparable sales and offerings of land parcels in each of the subject’s markets. The estimated fair value is supported by the consideration to be paid and was determined using standard generally accepted appraisal practices and valuation procedures. The valuation firm used the three basic approaches to value: the cost approach (used for equipment where an active secondary market is not available and building improvements), the direct sales comparison (market) approach (used for land and equipment where an active secondary market is available) and the income approach (used for intangible assets). These approaches used are based on the cost to reproduce assets, market exchanges for comparable assets and the capitalization of income. Useful lives range from 1 to 15 years for personal property and 8 to 22 years for real property.

The preliminary valuation utilized a relief from royalty method, an income approach, to determine the fair value of mastheads. Key assumptions utilized in this valuation include revenue projections, a royalty rate of 2.0%, a long term growth rate of 0.0%, a tax rate of 40.0% and a discount rate of 16.0%. The Company valued the following intangible assets using the income approach, specifically the excess earnings method: subscriber relationships, advertiser relationships and customer relationships. In determining the fair value of these intangible assets, the excess earnings approach values the intangible asset at the present value of the incremental after-tax cash flows attributable only to the asset after deducting contributory asset charges. The incremental after-tax cash flows attributable to the subject intangible asset are then discounted to their present value. A static pool approach using historical attrition rates was used to estimate attrition rates of 5.0% to 10.0% for advertiser relationships, subscriber relationships and customer relationships. The long term growth rate was estimated to be 0.0% and the discount rate was estimated at 16.5%. Amortizable lives range from 14 to 17 years for subscriber relationships, advertiser relationships and customer relationships, while mastheads are considered a non-amortizable intangible asset.

Equity Offering Adjustments

On January 20, 2015, New Media closed on an equity offering that included seven million shares of common stock for gross proceeds of $151.9 million. Underwriter and other fees were approximately $1.7 million and the Company received net proceeds of $150.2 million. A portion of the proceeds were used to pay down $50.0 million of debt incurred in relation to the Halifax Media acquisition.

Stephens Media Purchase Accounting and Other Adjustments

On March 18, 2015, a wholly owned subsidiary of New Media completed its acquisition of the assets of Stephens Media for approximately $102.5 million, subject to working capital adjustments. The “Stephens Media Purchase Accounting and Other Adjustments” column of the pro forma financial information gives effect to preliminary purchase accounting adjustments in accordance with ASC 805.

The Stephens Media acquisition was financed with cash on balance sheet. The purchase price of approximately $102.5 million will be allocated to the fair value of the net assets acquired and any excess value over the tangible and identifiable intangible assets will be recorded as goodwill.

A preliminary third party independent valuation was obtained to assist in the determination of the fair values of property, plant and equipment and intangible assets. The property, plant and equipment valuation includes an analysis of recent comparable sales and offerings of land parcels in each of the subject’s markets. The estimated fair value is supported by the consideration to be paid and was determined using standard generally accepted appraisal practices and valuation procedures. The valuation firm used the three basic approaches to value: the cost approach (used for equipment where an active secondary market is not available and building improvements), the direct sales comparison (market) approach (used for land and equipment where an active secondary market is available) and the income approach (used for intangible assets). These approaches used are based on the cost to reproduce assets, market exchanges for comparable assets and the capitalization of income. Useful lives range from 1 to 15 years for personal property and 9 to 29 years for real property.

The preliminary valuation utilized a relief from royalty method, an income approach, to determine the fair value of mastheads. Key assumptions utilized in this valuation include revenue projections, a royalty rate of 2.0%, a long term growth rate of 0.0%, a tax rate of 40.0% and a discount rate of 25.0%. The following intangible assets were valued using the income approach, specifically the excess earnings method: subscriber relationships, advertiser relationships and customer relationships. In determining the fair value of these intangible assets, the excess earnings approach values the intangible asset at the present value of the incremental after-tax cash flows attributable only to the asset after deducting contributory asset charges. The incremental after-tax cash flows attributable to the subject intangible asset are then discounted to their present value. A static pool approach using historical attrition rates was used to estimate attrition rates of 5.0% to 10.0% for advertiser relationships, subscriber relationships and customer relationships. The long term growth rate was estimated to be 0.0% and the discount rate was estimated at 27.0%. The licensing agreement asset was valued using a discounted cash flow analysis, an income approach. In determining the fair value of this intangible asset, the discounted cash flow approach values the intangible asset at the present value of the incremental after-tax cash flows attributable to the asset. The terms of the licensing agreement provide for a $2.5 million annual payment. A discount rate of 10.0% and income tax rate of 40.0% were used in the discounted cash flow calculation. Amortizable lives range from 14 to 16 years for subscriber relationships, advertiser relationships and customer relationships, while mastheads are considered a non-amortizable intangible asset and the licensing agreement is amortized over the remaining contract life of 26 years.

The valuations used in this filing represent current estimates based on data available. However, updates to these valuations may be made based on the results of asset and liability valuations, as well as the related calculation of deferred income taxes. The differences between the actual valuations and the current estimated valuations used in preparing the pro forma financial information may be material and will be reflected in our future balance sheets and may affect amounts, including depreciation and amortization expense, which we will recognize in our statement of operations post acquisition. As such, the pro forma financial information may not accurately represent our post acquisition financial condition or results from operations and any differences may be material.

NEW MEDIA INVESTMENT GROUP AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Statements of Operations

(In thousands, except share and per share data)

	Twelve Months Ended December 28, 2014
	New Media Historical December 28, 2014			New Media Refinancing Adjustments			Providence Journal September 2, 2014		Providence Journal Purchase Accounting and Other Adjustments			Halifax Media Historical December 31, 2014		Halifax Media Purchase and Accounting and Other Adjustments			Equity Offering Adjustments			Stephens Media Historical December 31, 2014		Stephens Media Purchase Accounting and Other Adjustments			Pro Forma December 28, 2014
Revenues:
Advertising	$	385,399					$	25,035				$	215,354							$	103,027				$	728,815
Circulation		195,661						22,670					104,976								35,677					385,984
Commercial printing and other		71,263						10,650					26,840								6,697					115,450
Total revenues		652,323			—			58,355					347,170		—			—			145,401		—			1,203,249
Operating costs and expenses:
Operating costs		368,420						50,829		(19,295	)(c)		296,404		(169,589	)(f)					125,160		(46,015	)(k)		605,914
Selling, general, and administrative		211,829			(1,777	)(a)				19,295	(c)				169,589	(f)		2,253	(i)				46,015	(k)		447,204
Depreciation and amortization		41,450						4,826		(1,046	)(d)		11,788		9,076	(g)					5,136		2,016	(l)		73,246
Integration and reorganization costs		2,796																								2,796
Loss on sale of assets		1,472											278													1,750
Operating income (loss)		26,356			1,777			2,700		1,046			38,700		(9,076	)		(2,253	)		15,105		(2,016	)		72,339
Interest expense		16,636								1,588	(e)		3,240		8,180	(h)		(2,801	)(j)		260		(260	)(m)		26,843
Amortization of deferred financing costs		1,049			(454	)(b)																				595
Loss on early extinguishment of debt		9,047			(9,047	)(a)																				—
(Gain) loss on derivative instruments		51			(51	)(b)																				—
Other (income) expense		65						245					—								452		(452	)(n)		310
Income (loss) from continuing operations before income taxes		(492	)		11,329			2,455		(542	)		35,460		(17,256	)		548			14,393		(1,304	)		44,591
Income tax benefit expense		2,713			1,530	(o)		1,056		(307	)(o)		—		7,127	(o)		215			—		5,124	(o)		17,458
Income (loss) from continuing operations	$	(3,205	)	$	9,799		$	1,399	$	(235	)	$	35,460	$	(24,383	)	$	333		$	14,393	$	(6,428	)		27,134
Income (loss) per share:
Basic loss from continuing operations	$	(0.10	)																						$	0.70	(g)
Diluted loss from continuing operations	$	(0.10	)																						$	0.67	(g)
Basic weighted average shares outstanding		31,985,469																7,000,000								38,985,469
Diluted weighted average shares outstanding		31,985,469																7,000,000								40,363,818

New Media Refinancing Adjustments

a. As part of the debt refinancing, $1.8 million of third party fees associated with the modified debt did not meet capitalization requirements and were expense as incurred during the year ended December 28, 2014. Additionally, a loss of $9.0 million was recognized on the extinguishment of the debt. This adjustment eliminates the impact of these nonrecurring items.

b. As a result of the refinancing, the Company had a total of $3.6 million of deferred financing fees related to the New Media Credit Agreement. These deferred financing fees included arrangement fees, legal and other related costs. The following table presents the pro forma impact of the deferred financing fees associated with the New Media Credit Agreement and those associated with the elimination of the GateHouse Credit Facilities and Local Media Credit Facility.

	Year ended December 28, 2014
Total new deferred financing fees	$	3,593
Amortization period		5-6 years
Full year New Media Credit Agreement deferred financing fees		595
Elimination of GateHouse Credit Facilities and Local Media Credit Facility deferred financing fees		(1,049	)
Total deferred financing fee adjustment	$	(454	)

As part of the refinancing, the interest rate swap associated with the GateHouse Credit Facilities was terminated. This adjustment also eliminates the loss associated with this derivative instrument for the year ended December 28, 2014. The pro forma impact on interest expense was not considered material for adjustment purposes.

Providence Journal Purchase Accounting and Other Adjustments

c. Historical results for Providence Journal reported operating expense, which includes both operating and selling, Providence Journal Purchase Accounting and Other Adjustments general and administrative expenses. This adjustment allocates expense to both categories to conform to our statement of operations classification.

d. In accordance with ASC 805, the purchase price of Providence Journal was allocated to the fair value of its assets and liabilities. The fair value of its property, plant and equipment exceeded its carrying value by approximately $1.9 million and the fair value of its intangible assets exceeded its carrying value by approximately $6.6 million. This adjustment modifies historical depreciation and amortization expense based on the fair value of property, plant and equipment and definite-lived intangible assets.

e. The financing of Providence Journal acquisition included $34.0 million of debt, $9.0 million under the revolving credit facility and $25.0 million of additional term loans under the New Media Credit Agreement (collectively “Financing of Providence Journal Acquisition”), net of $0.5 million of original issue discount. This adjustment recognizes the additional interest related to the debt as reflected in the following tables. As the acquisition occurred on September 3, 2014, four months of interest are included in New Media’s historical results and the adjustment is for an eight month period only.

	Year ended December 28, 2014
Eight months interest expense on Financing of Providence Journal Acquisition at 6.76%	$	1,532
Eight months original issuance discount accretion on Financing of Providence Journal Acquisition		56
Total increase to interest expense adjustment	$	1,588

Our weighted average interest rate on the Financing of Providence Journal Acquisition is estimated to be approximately 6.76%. A 1/8% increase or decrease in the weighted average interest rate, including from an increase in LIBOR (excluding the impact of the LIBOR floor), would increase or decrease interest expense on the New Media Credit Agreement by approximately $0.04 million annually.

	Drawn		Rate			Weighted Average
Revolving Credit Facility	$	9,000		5.41	%		1.43	%
Term Loan Facility		25,000		7.25	%		5.33	%
	$	34,000					6.76	%

Halifax Media Purchase Accounting and Other Adjustments

f. Historical results for Halifax Media reported operating expense, which includes both operating and selling, Halifax Media Purchase Accounting and Other Adjustments general and administrative expenses. This adjustment allocates expense to both categories to conform to our statement of operations classification.

g. In accordance with ASC 805, the estimated purchase price of Halifax Media will be allocated to the fair value of its assets and liabilities. The fair value of its property, plant and equipment is anticipated to exceed its carrying value by approximately $22.9 million and the fair value of its intangible assets is anticipated to exceed its carrying value by approximately $128.2 million based on the current estimate. This adjustment modifies historical depreciation and amortization expense based on the estimated fair value of property, plant and equipment and definite-lived intangible assets. The purchase price allocations are preliminary.

h. The financing of the Halifax Media acquisition included $152.0 million of additional loans under the New Media Credit Agreement, net of $1.5 million of original issue discount, and an additional $18.0 million of term loans were assumed from the seller (collectively “Financing of Halifax Media Acquisition”). This adjustment recognizes the additional interest related to the debt as reflected in the following tables.

	Year ended December 28, 2014
Full year interest expense on Financing of Halifax Media Acquisition at weighted average rate of 6.55%	$	11,143
Full year original issuance discount accretion on Financing of Halifax Media Acquisition		277
Elimination of historical Halifax Media interest expense		(3,240	)
Total increase to interest expense adjustment	$	8,180

Our weighted average interest rate on the on all debt that resulted from the Halifax acquisition adjustments, was approximately 6.55%. A 1/8% increase or decrease in the weighted average interest rate, including from an increase in LIBOR (excluding the impact of the LIBOR floor), would increase or decrease interest expense on the New Media Credit Agreement by approximately $0.2 million annually.

	Drawn		Rate			Weighted Average
Revolving loan – New Media Credit Facility	$	50,000		5.42	%		4.35	%
Term loan – New Media Credit Facility		102,000		7.25	%		1.59	%
Term loan – assumed debt		10,000		5.25	%		0.31	%
Term loan – assumed debt		8,000		6.42	%		0.30	%
	$	170,000					6.55	%

Equity Offering Adjustments

i. We are managed by FIG LLC (our “Manager”) and, as a result, we pay our Manager a management fee equal to 1.5% per annum of total equity. This adjustment provides the additional management fee related to net proceeds from the equity raised in January 2015.

j. The proceeds from the equity offering were used, in part, to pay down $50.0 million of debt incurred in the Halifax Media acquisition. This adjustment recognizes the decrease in interest related to the debt as reflected in the following table.

	Year ended months ended December 28, 2014
Full year interest expense on $50.0 million of debt at 5.42%	$	(2,710	)
Full year original issuance discount accretion on $50.0 million of debt		(91	)
Total decrease to interest expense adjustment	$	(2,801	)

Stephens Media Purchase Accounting and Other Adjustments

k. Historical results for Stephens Media reported operating expense, which includes both operating and selling, Stephens Media Purchase Accounting and Other Adjustments general and administrative expenses. This adjustment allocates expense to both categories to conform to our statement of operations classification.

l. In accordance with ASC 805, the estimated purchase price of Stephens Media will be allocated to the fair value of its assets and liabilities. The fair value of its property, plant and equipment is anticipated to exceed its carrying value by approximately $11.3 million and the fair value of its intangible assets is anticipated to exceed

its carrying value by approximately $36.3 million based on the current estimate. This adjustment modifies historical depreciation and amortization expense based on the estimated fair value of property, plant and equipment and definite-lived intangible assets. The purchase price allocations are preliminary.

m. This adjustment eliminates historical interest expense as no debt was incurred in the acquisition.

n. This adjustment removes the impact of investments in partnerships that were not assumed in the Stephens Media acquisition.

Tax Impact on Pro Forma Adjustments

o. This adjustment provides the estimated impact of income tax expense or benefit based on the Company’s estimated effective tax rate of 39.15%.

The table below provides a calculation of the pro forma income tax expense for New Media for the year ended December 28, 2014:

New Media historical December 28, 2014	$	(492	)
New Media refinancing adjustments		11,329
Providence Journal pre acquisition		2,455
Providence Journal adjustments		(542	)
Halifax Media pre acquisition		35,460
Halifax Media adjustments		(17,256	)
Equity offering adjustments		548
Stephens Media pre acquisition		14,393
Stephens Media adjustments		(1,304	)
New Media pro forma pre-tax net income	$	44,591
Effective tax rate		39.15	%
Income tax expense	$	17,458

NEW MEDIA INVESTMENT GROUP AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Balance Sheet

(In thousands)

	As of December 28, 2014
	New Media Historical December 28, 2014			Halifax Media Historical December 31, 2014		Halifax Media Purchase Accounting and Other Adjustments			Equity Offering Adjustments			Stephens Media Historical December 31, 2014		Stephens Media Purchase Accounting and Other Adjustments			Pro Forma December 28, 2014
Assets
Current assets:
Cash and cash equivalents	$	123,709		$	2,140	$	(115,800	)(p,q)	$	100,721	(t)	$	21,171	$	(123,671	)(u,v)	$	8,270
Restricted cash		6,467																6,467
Accounts receivable, net		80,151			36,385								18,135					134,671
Inventory		9,824			4,803								833					175,203
Prepaid expenses		9,129																9,129
Deferred income taxes		4,269																4,269
Other current assets		10,632			2,987								2,336					15,955
Total current assets		244,181			46,315		(115,800	)		100,721			42,475		(123,671	)		194,221
Property, plant, and equipment, net		283,786			72,331		22,869	(r)					44,227		11,257	(w)		434,470
Goodwill		134,042			13,817		19,365	(r)					3,141		4,838	(w)		175,203
Intangible assets, net		156,742			25,993		128,207	(r)					747		36,323	(w)		348,012
Deferred financing costs, net		3,252			1,106		(1,106	)(q)										3,252
Other assets		3,092			16,887		(16,685	)(q)					1,242		(881	)(v)		3,655
Total assets	$	825,095		$	176,449	$	36,850		$	100,721		$	91,832	$	(72,134	)	$	1,158,813
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term liabilities	$	650															$	650
Current portion of long-term debt		2,250			10,000	$	(8,980	)(p,q)										3,270
Accounts payable		9,306											1,253					10,559
Accrued expenses		47,061			21,856								9,136					78,053
Deferred revenue		35,806			18,926								7,988					62,720
Total current liabilities		95,073			50,782		(8,980	)					18,377		—			155,252
Long-term liabilities:
Long-term debt		219,802			44,579		122,881	(p,q)		(49,500	)(t)		6,563		(6,563	)(v)		337,762
Long-term liabilities, less current portion		5,609			4,037								1,321					10,967
Deferred income taxes		7,090																7,090
Pension and other postretirement benefit obligations		13,394											2,097		(2,097	)(v)		13,394
Total liabilities		340,968			99,398		113,901			(49,500	)		28,358		(8,660	)		524,465
Stockholders’ equity:
Common stock		375								70	(t)							445
Additional paid-in capital		484,220								150,151	(t)							634,371
Accumulated other comprehensive income		(4,469	)										28		(28	)(x)		(4,469	)
Retained earnings		4,001			77,051		(77,051	)(s)					63,446		(63,446	)(x)		4,001
Total stockholders’ equity		484,127			77,051		(77,051	)		150,221			63,474		(63,474	)		634,348
Total liabilities and stockholders’ equity	$	825,095		$	176,449	$	36,850		$	100,721		$	91,832	$	(72,134	)	$	1,158,813

Halifax Media Purchase Accounting and Other Adjustments

p. The Halifax Media acquisition was financed with a combined $152.0 million of additional term and revolving debt under the New Media Credit Agreement that will mature on June 4, 2020 and June 4, 2019, respectively, and $110.0 million of cash. The $50.0 million of revolving debt was subsequently paid with proceeds from the sale of common stock. An interest rate of LIBOR, or minimum of 1%, plus 6.25% and original issue discount of $1.5 million were assumed related to the consummation of this debt. An additional $18.0 million of term debt was assumed from the seller as part of the transaction. This adjustment recognizes the debt and cash amounts.

q. This adjustment removes those assets and liabilities that will not be assumed in the Halifax Media acquisition, including cash, deferred financing costs, assets held for sale and a portion of long term debt.

r. In accordance with ASC 805, the purchase price for Halifax Media will be allocated to the fair value of its assets and liabilities (including identifiable intangible assets). The value assigned to property, plant and equipment, goodwill and intangible assets is preliminary and subject to the completion of valuations to determine the fair market value of the tangible and intangible assets.

s. This adjustment eliminates the historical stockholders’ equity as a result of the Halifax Media purchase accounting.

Equity Offering Adjustments

t. This adjustment reflects the net increase in equity of $150.2 million from the January 2015 issuance of common stock. The proceeds were used to pay down $49.5 million of debt, net of $0.5 million of original issue discount, and the remainder was available cash.

Stephens Media Purchase Accounting and Other Adjustments

u. The Stephens Media acquisition was financed with $102.5 million of cash. This adjustment recognizes the cash payment amount.

v. This adjustment removes those assets and liabilities that will not be assumed in the Stephens Media acquisition, including cash, pension assets and liabilities and long term debt.

w. In accordance with ASC 805, the purchase price for Stephens Media will be allocated to the fair value of its assets and liabilities (including identifiable intangible assets). The value assigned to property, plant and equipment, goodwill and intangible assets is preliminary and subject to the completion of valuations to determine the fair market value of the tangible and intangible assets.

x. This adjustment eliminates the historical stockholders’ equity as a result of the Stephens Media purchase accounting.