ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 38-3910250 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1345 Avenue of the Americas 45th floor, New York, NY | 10105 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | Emerging growth company | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
• | general economic and market conditions; |
• | economic conditions in the Northeast, Southeast and Midwest regions of the United States; |
• | the growing shift within the publishing industry from traditional print media to digital forms of publication; |
• | declining advertising revenue and circulation subscribers; |
• | our ability to grow our digital marketing and business services initiatives, and grow our digital audience and advertiser base; |
• | our ability to grow our business organically: |
• | our ability to acquire local media print assets at attractive valuations; |
• | the risk that we may not realize the anticipated benefits of our recent or potential future acquisitions; |
• | the availability and cost of capital for future investments; |
• | our indebtedness may restrict our operations and / or require us to dedicate a portion of cash flow from operations to the payment of principal and interest; |
• | our ability to pay dividends consistent with prior practice or at all; |
• | our ability to reduce costs and expenses; |
• | our ability to realize the benefits of the Management Agreement (as defined below); |
• | the impact of any material transactions with the Manager (as defined below) or one of its affiliates, including the impact of any actual, potential or perceived conflicts of interest; |
• | effects of the completed merger of Fortress Investment Group LLC with affiliates of SoftBank Group Corp.; |
• | the competitive environment in which we operate; and |
• | our ability to recruit and retain key personnel. |
Page | ||
PART I. | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Financial Statements |
September 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash | |||||||
Accounts receivable, net of allowance for doubtful accounts of $7,242 and $5,998 at September 30, 2018 and December 31, 2017, respectively | |||||||
Inventory | |||||||
Prepaid expenses | |||||||
Other current assets | |||||||
Total current assets | |||||||
Property, plant, and equipment, net of accumulated depreciation of $209,120 and $171,395 at September 30, 2018 and December 31, 2017, respectively | |||||||
Goodwill | |||||||
Intangible assets, net of accumulated amortization of $92,437 and $67,588 at September 30, 2018 and December 31, 2017, respectively | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | $ | |||||
Accounts payable | |||||||
Accrued expenses | |||||||
Deferred revenue | |||||||
Total current liabilities | |||||||
Long-term liabilities: | |||||||
Long-term debt | |||||||
Deferred income taxes | |||||||
Pension and other postretirement benefit obligations | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
Redeemable noncontrolling interest | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 60,498,451 shares issued and 60,297,040 shares outstanding at September 30, 2018; 53,367,853 shares issued and 53,226,881 shares outstanding at December 31, 2017 | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Accumulated deficit | ( | ) | ( | ) | |||
Treasury stock, at cost, 201,411 and 140,972 shares at September 30, 2018 and December 31, 2017, respectively | ( | ) | ( | ) | |||
Total stockholders' equity | |||||||
Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ | $ |
Three months ended | Nine months ended | ||||||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | ||||||||||||
Revenues: | |||||||||||||||
Advertising | $ | $ | $ | $ | |||||||||||
Circulation | |||||||||||||||
Commercial printing and other | |||||||||||||||
Total revenues | |||||||||||||||
Operating costs and expenses: | |||||||||||||||
Operating costs | |||||||||||||||
Selling, general, and administrative | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Integration and reorganization costs | |||||||||||||||
Impairment of long-lived assets | |||||||||||||||
Goodwill and mastheads impairment | |||||||||||||||
Net (gain) loss on sale or disposal of assets | ( | ) | ( | ) | ( | ) | |||||||||
Operating income | |||||||||||||||
Interest expense | |||||||||||||||
Loss on early extinguishment of debt | |||||||||||||||
Other income | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
(Loss) income before income taxes | ( | ) | ( | ) | ( | ) | |||||||||
Income tax (benefit) expense | ( | ) | |||||||||||||
Net (loss) income | ( | ) | ( | ) | ( | ) | |||||||||
Net income attributable to redeemable noncontrolling interest | |||||||||||||||
Net (loss) income attributable to New Media | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||
(Loss) income per share: | |||||||||||||||
Basic: | |||||||||||||||
Net (loss) income attributable to New Media | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||
Diluted: | |||||||||||||||
Net (loss) income attributable to New Media | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||
Dividends declared per share | $ | $ | $ | $ | |||||||||||
Comprehensive (loss) income | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||
Comprehensive income attributable to redeemable noncontrolling interest | |||||||||||||||
Comprehensive (loss) income attributable to New Media | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Common stock | Additional paid-in capital | Accumulated other comprehensive loss | Accumulated deficit | Treasury stock | Total | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||
Net actuarial loss and prior service cost, net of income taxes of $0 | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||
Restricted share grants | — | — | — | — | |||||||||||||||||||||||||
Non-cash compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||
Issuance of common stock, net of underwriters' discount and offering costs | — | — | — | — | |||||||||||||||||||||||||
Restricted share forfeiture | — | — | — | — | — | — | — | ||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||
Common stock cash dividend | — | — | ( | ) | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
Nine months ended | |||||||
September 30, 2018 | September 24, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | $ | ( | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Non-cash compensation expense | |||||||
Non-cash interest expense | |||||||
Deferred income taxes | |||||||
Net gain on sale or disposal of assets | ( | ) | ( | ) | |||
Non-cash charge to investments | |||||||
Non-cash loss on early extinguishment of debt | |||||||
Impairment of long-lived assets | |||||||
Goodwill and mastheads impairment | |||||||
Pension and other postretirement benefit obligations | ( | ) | ( | ) | |||
Changes in assets and liabilities: | |||||||
Accounts receivable, net | |||||||
Inventory | ( | ) | |||||
Prepaid expenses | ( | ) | ( | ) | |||
Other assets | ( | ) | |||||
Accounts payable | ( | ) | |||||
Accrued expenses | ( | ) | ( | ) | |||
Deferred revenue | ( | ) | ( | ) | |||
Other long-term liabilities | |||||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Acquisitions, net of cash acquired | ( | ) | ( | ) | |||
Purchases of property, plant, and equipment | ( | ) | ( | ) | |||
Proceeds from sale of publications, real estate and other assets | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Borrowings under term loans | |||||||
Payment of debt issuance costs | ( | ) | ( | ) | |||
Repayments under term loans | ( | ) | ( | ) | |||
Payment of offering costs | ( | ) | ( | ) | |||
Issuance of common stock, net of underwriters' discount | |||||||
Purchase of treasury stock | ( | ) | ( | ) | |||
Repurchase of common stock | ( | ) | |||||
Payment of dividends | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||
Current assets | $ | ||
Other assets | |||
Property, plant and equipment | |||
Advertiser relationships | |||
Subscriber relationships | |||
Customer relationships | |||
Mastheads | |||
Goodwill | |||
Total assets | |||
Current liabilities assumed | |||
Long-term liabilities assumed | |||
Redeemable noncontrolling interest | |||
Net assets | $ |
Current assets | $ | ||
Other assets | |||
Property, plant and equipment | |||
Noncompete agreements | |||
Advertiser relationships | |||
Subscriber relationships | |||
Customer relationships | |||
Software | |||
Mastheads | |||
Goodwill | |||
Total assets | |||
Current liabilities | |||
Other long-term liabilities | |||
Total liabilities | |||
Net assets | $ |
Number of RSGs | Weighted-Average Grant Date Fair Value | |||||
Unvested at December 31, 2017 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited | ( | ) | ||||
Unvested at September 30, 2018 | $ |
Severance and Related Costs | Other Costs (1) | Total | |||||||||
Balance at December 31, 2017 | $ | $ | $ | ||||||||
Restructuring provision included in Integration and Reorganization | |||||||||||
Cash payments | ( | ) | ( | ) | ( | ) | |||||
Balance at September 30, 2018 | $ | $ | $ |
(1) |
Three months ended | Nine months ended | ||||||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | ||||||||||||
Severance and related costs | $ | $ | $ | $ | |||||||||||
Other costs | |||||||||||||||
Cash payments | ( | ) | ( | ) | ( | ) | ( | ) |
September 30, 2018 | |||||||||||
Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||
Amortized intangible assets: | |||||||||||
Advertiser relationships | $ | $ | $ | ||||||||
Customer relationships | |||||||||||
Subscriber relationships | |||||||||||
Other intangible assets | |||||||||||
Total | $ | $ | $ | ||||||||
Nonamortized intangible assets: | |||||||||||
Goodwill | $ | ||||||||||
Mastheads | |||||||||||
Total | $ | ||||||||||
December 31, 2017 | |||||||||||
Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||
Amortized intangible assets: | |||||||||||
Advertiser relationships | $ | $ | $ | ||||||||
Customer relationships | |||||||||||
Subscriber relationships | |||||||||||
Other intangible assets | |||||||||||
Total | $ | $ | $ | ||||||||
Nonamortized intangible assets: | |||||||||||
Goodwill | $ | ||||||||||
Mastheads | |||||||||||
Total | $ |
For the following fiscal years: | |||
2018 (three months remaining) | $ | ||
2019 | |||
2020 | |||
2021 | |||
2022 | |||
Thereafter | |||
Total | $ |
Balance at December 31, 2017, net of accumulated impairments of $25,641 | $ | ||
Goodwill acquired in business combinations | |||
Measurement period adjustments | |||
Balance at September 30, 2018, net of accumulated impairments of $25,641 | $ |
2018 (three months remaining) | $ | ||
2019 | |||
2020 | |||
2021 | |||
2022 | |||
Less: Current portion of long-term debt | |||
Remaining original issue discount | |||
Deferred financing costs, net | |||
Long-term debt | $ |
Three months ended | Nine months ended | ||||||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | ||||||||||||
Management fee expense | $ | $ | $ | $ | |||||||||||
Incentive fee expense | |||||||||||||||
Management fees paid | |||||||||||||||
Incentive fees paid | |||||||||||||||
Reimbursement for expenses |
Three months ended | Nine months ended | ||||||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | ||||||||||||
Numerator for (loss) income per share calculation: | |||||||||||||||
Net (loss) income attributable to New Media | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||
Denominator for (loss) income per share calculation: | |||||||||||||||
Basic weighted average shares outstanding | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||
Stock Options and Restricted Stock | |||||||||||||||
Diluted weighted average shares outstanding |
Three months ended | Nine months ended | ||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | ||||||||
Stock warrants | |||||||||||
Stock options | |||||||||||
Restricted stock grants |
Number of Options | Weighted-Average Grant Date Fair Value | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value ($000) | ||||||||||||
Outstanding at December 31, 2017 | $ | $ | $ | |||||||||||||
Granted | $ | $ | ||||||||||||||
Outstanding at September 30, 2018 | $ | $ | $ | |||||||||||||
Exercisable at September 30, 2018 | $ | $ |
Net actuarial loss and prior service cost (1) | |||
For the nine months ended September 30, 2018: | |||
Balance at December 31, 2017 | $ | ( | ) |
Amounts reclassified from accumulated other comprehensive loss | ( | ) | |
Balance at September 30, 2018 | $ | ( | ) |
For the nine months ended September 24, 2017: | |||
Balance at December 27, 2016 | $ | ( | ) |
Amounts reclassified from accumulated other comprehensive loss | |||
Balance at September 24, 2017 | $ | ( | ) |
(1) |
Amounts Reclassified from Accumulated Other Comprehensive Loss | Affected Line Item in the Consolidated Statements of Operations and Comprehensive (Loss) Income | ||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | ||||||||||||||
Amortization of unrecognized (gain) loss | $ | ( | ) | $ | $ | ( | ) | $ | (1) | ||||||||
Amounts reclassified from accumulated other comprehensive loss | ( | ) | ( | ) | Income (loss) before income taxes | ||||||||||||
Income tax expense | Income tax benefit | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of taxes | $ | ( | ) | $ | $ | ( | ) | $ | Net (loss) income |
(1) |
Three months ended | Nine months ended | ||||||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | ||||||||||||
Components of net periodic benefit costs: | |||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||
Interest cost | |||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of unrecognized loss | |||||||||||||||
Net periodic credit cost | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
• | Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities; |
• | Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs; and |
• | Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop their own assumptions about how market participants price the asset or liability. |
• | Market approach – Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; |
• | Income approach – Uses valuation techniques to convert future amounts to a single present amount based on current market expectation about those future amounts; |
• | Cost approach – Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). |
Fair Value Measurements at Reporting Date Using | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value Measurements | ||||||||||||
As of September 30, 2018 | |||||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | $ | — | $ | — | $ | |||||||||
Restricted cash | — | — | |||||||||||||
Total | $ | $ | — | $ | — | $ | |||||||||
As of December 31, 2017 | |||||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | $ | — | $ | — | $ | |||||||||
Restricted cash | — | — | |||||||||||||
Total | $ | $ | — | $ | — | $ |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | our strong and trusted local brands, with 85% of our daily newspapers having published local content for more than 100 years; |
• | our ability to market through our print and online properties, driving branding and traffic; and |
• | our more than 1,290 local, direct, in-market sales professionals with long standing relationships with small businesses in the communities we serve. |
• | 145 daily newspapers with total paid circulation of approximately 1.5 million; |
• | 325 weekly newspapers (published up to three times per week) with total paid circulation of approximately 278,000 and total free circulation of approximately 2.2 million; |
• | 134 “shoppers” (generally advertising-only publications) with total circulation of approximately 3.2 million; |
• | 558 locally-focused websites, which extend our businesses onto the internet and mobile devices with approximately 319 million page views per month; |
• | two yellow page directories, with a distribution of approximately 290,000, that cover a population of approximately 419,000 people; |
• | 70 business publications; and |
• | UpCurve Cloud and ThriveHive digital marketing. |
Three months ended | Nine months ended | ||||||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | ||||||||||||
Revenues: | |||||||||||||||
Advertising | $ | 176,461 | $ | 159,481 | $ | 527,329 | $ | 482,427 | |||||||
Circulation | 145,934 | 112,792 | 420,461 | 334,160 | |||||||||||
Commercial printing and other | 58,024 | 44,903 | 162,196 | 130,986 | |||||||||||
Total revenues | 380,419 | 317,176 | 1,109,986 | 947,573 | |||||||||||
Operating costs and expenses: | |||||||||||||||
Operating costs | 220,771 | 177,724 | 634,935 | 532,535 | |||||||||||
Selling, general, and administrative | 121,871 | 106,967 | 367,526 | 319,831 | |||||||||||
Depreciation and amortization | 25,094 | 18,257 | 64,276 | 54,621 | |||||||||||
Integration and reorganization costs | 9,064 | 2,210 | 13,243 | 6,817 | |||||||||||
Impairment of long-lived assets | 1,121 | — | 1,121 | 6,485 | |||||||||||
Goodwill and mastheads impairment | — | — | — | 27,448 | |||||||||||
Net (gain) loss on sale or disposal of assets | (72 | ) | 686 | (4,051 | ) | (1,860 | ) | ||||||||
Operating income | 2,570 | 11,332 | 32,936 | 1,696 | |||||||||||
Interest expense | 9,115 | 7,848 | 26,466 | 22,283 | |||||||||||
Loss on early extinguishment of debt | — | 4,767 | — | 4,767 | |||||||||||
Other income | (433 | ) | (246 | ) | (1,290 | ) | (568 | ) | |||||||
(Loss) income before income taxes | (6,112 | ) | (1,037 | ) | 7,760 | (24,786 | ) | ||||||||
Income tax (benefit) expense | (239 | ) | 934 | 2,591 | 2,557 | ||||||||||
Net (loss) income | $ | (5,873 | ) | $ | (1,971 | ) | $ | 5,169 | $ | (27,343 | ) |
Nine months ended September 30, 2018 | Nine months ended September 24, 2017 | ||||||
Cash provided by operating activities | $ | 71,983 | $ | 80,768 | |||
Cash used in investing activities | (150,020 | ) | (34,237 | ) | |||
Cash provided by (used in) financing activities | 91,683 | (58,236 | ) |
• | income tax expense (benefit); |
• | interest/financing expense; |
• | depreciation and amortization; and |
• | non-cash impairments. |
Three months ended | Nine months ended | |||||||||||||||
September 30, 2018 | September 24, 2017 | September 30, 2018 | September 24, 2017 | |||||||||||||
(in thousands) | ||||||||||||||||
Net (loss) income | $ | (5,873 | ) | $ | (1,971 | ) | $ | 5,169 | $ | (27,343 | ) | |||||
Income tax (benefit) expense | (239 | ) | 934 | 2,591 | 2,557 | |||||||||||
Interest expense | 9,115 | 7,848 | 26,466 | 22,283 | ||||||||||||
Impairment of long-lived assets | 1,121 | — | 1,121 | 6,485 | ||||||||||||
Loss on early extinguishment of debt | — | 4,767 | — | 4,767 | ||||||||||||
Goodwill and mastheads impairment | — | — | — | 27,448 | ||||||||||||
Depreciation and amortization | 25,094 | 18,257 | 64,276 | 54,621 | ||||||||||||
Adjusted EBITDA from continuing operations | $ | 29,218 | (a) | $ | 29,835 | (b) | $ | 99,623 | (c) | $ | 90,818 | (d) |
(a) | Adjusted EBITDA for the three months ended September 30, 2018 included net expenses of $14,914, related to transaction and project costs, non-cash compensation, and other expense of $5,922, integration and reorganization costs of $9,064, less a $72 gain on the sale or disposal of assets. |
(b) | Adjusted EBITDA for the three months ended September 24, 2017 included net expenses of $7,289, related to transaction and project costs, non-cash compensation, and other expense of $4,393, integration and reorganization costs of $2,210 and a $686 loss on the sale or disposal of assets. |
(c) | Adjusted EBITDA for the nine months ended September 30, 2018 included net expenses of $25,786, related to transaction and project costs, non-cash compensation, and other expense of $16,594, integration and reorganization costs of $13,243 and a $4,051 gain on the sale or disposal of assets. |
(d) | Adjusted EBITDA for the nine months ended September 24, 2017 included net expenses of $16,273, related to transaction and project costs, non-cash compensation, and other expense of $11,316, integration and reorganization costs of $6,817 and an $1,860 gain on the sale or disposal of assets. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | require us to dedicate a portion of cash flow from operations to the payment of principal and interest on indebtedness, including indebtedness we may incur in the future, thereby reducing the funds available for other purposes, including dividends or other distributions; |
• | subject us to increased sensitivity to increases in prevailing interest rates; |
• | place us at a competitive disadvantage to competitors with relatively less debt in economic downturns, adverse industry conditions or catastrophic external events; or |
• | reduce our flexibility in planning for or responding to changing business, industry and economic conditions. |
• | incur or guarantee additional debt; |
• | make certain investments, loans or acquisitions; |
• | transfer or sell assets; |
• | make distributions on capital stock or redeem or repurchase capital stock; |
• | create or incur liens; |
• | enter into transactions with affiliates; |
• | consolidate, merge or sell all or substantially all of our assets; and |
• | create restrictions on the payment of dividends or other amounts to us from our restricted subsidiaries. |
• | uncoordinated market functions; |
• | unanticipated issues in integrating the operations and personnel of the acquired businesses; |
• | the incurrence of indebtedness and the assumption of liabilities; |
• | the incurrence of significant additional capital expenditures, transaction and operating expenses and non-recurring acquisition-related charges; |
• | unanticipated adverse impact on our earnings from the amortization or write-off of acquired goodwill and other intangible assets; |
• | cultural challenges associated with integrating acquired businesses with the operations of New Media; |
• | not retaining key employees, vendors, service providers, readers and customers of the acquired businesses; and |
• | the diversion of management’s attention from ongoing business concerns. |
• | our business profile and market capitalization may not fit the investment objectives of any stockholder; |
• | a shift in our investor base; |
• | our quarterly or annual earnings, or those of other comparable companies; |
• | actual or anticipated fluctuations in our operating results; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | announcements by us or our competitors of significant investments, acquisitions or dispositions; |
• | the failure of securities analysts to cover our Common Stock; |
• | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
• | the operating and stock price performance of other comparable companies; |
• | negative public perception of us, our competitors, or industry; |
• | overall market fluctuations; and |
• | general economic conditions. |
• | amendment of provisions in our amended and restated certificate of incorporation and amended and restated bylaws regarding the election of directors, classes of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | amendment of provisions in our amended and restated certificate of incorporation regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | removal of directors only for cause and only with the affirmative vote of at least 80% of the voting interest of stockholders entitled to vote in the election of directors; |
• | our Board to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval; |
• | provisions in our amended and restated certificate of incorporation and amended and restated bylaws prevent stockholders from calling special meetings of our stockholders; |
• | advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings; |
• | a prohibition, in our amended and restated certificate of incorporation, stating that no holder of shares of our Common Stock will have cumulative voting rights in the election of directors, which means that the holders of majority of the issued and outstanding shares of our Common Stock can elect all the directors standing for election; and |
• | action by our stockholders outside a meeting, in our amended and restated certificate of incorporation and our amended and restated bylaws, only by unanimous written consent. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased | Weighted-Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs | Approximate Number of Shares that May Yet Be Purchased Under the Plan or Programs | ||||||||||
July 2, 2018 through August 5, 2018 | 1,862 | (1) | $ | 18.15 | — | $ | 6,135,565 | |||||||
August 6, 2018 through September 2, 2018 | — | $ | — | — | 6,135,565 | |||||||||
September 3, 2018 through September 30, 2018 | — | $ | — | — | $ | 6,135,565 | ||||||||
Total | 1,862 | — |
(1) | Pursuant to the "withhold to cover" method for collecting and paying withholding taxes for our employees upon the vesting of restricted securities, we withheld from certain employees the shares noted in the table above to cover such statutory minimum tax withholdings. These transactions took place outside of a publicly-announced repurchase plan. The weighted-average price per share listed in the above table is the weighted-average of the fair market prices at which we calculated the number of shares withheld to cover tax withholdings for the employees. |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit No. | Description | |
* 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
* 101.SCH | XBRL Taxonomy Extension Schema | |
* 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
* 101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
* 101.LAB | XBRL Taxonomy Extension Label Linkbase | |
* 101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
NEW MEDIA INVESTMENT GROUP INC. | |
Date: October 31, 2018 | /s/ Gregory W. Freiberg |
Gregory W. Freiberg | |
Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 of New Media Investment Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 31, 2018 |
/s/ Michael E. Reed |
Michael E. Reed Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 of New Media Investment Group Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 31, 2018 |
/s/ Gregory W. Freiberg |
Gregory W. Freiberg Chief Financial Officer (Principal Financial Officer) |
/s/ Michael E. Reed | ||
Name: | Michael E. Reed | |
Title: | Chief Executive Officer (Principal Executive Officer) | |
Date: | October 31, 2018 | |
/s/ Gregory W. Freiberg | ||
Name: | Gregory W. Freiberg | |
Title: | Chief Financial Officer (Principal Financial Officer) | |
Date: | October 31, 2018 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Oct. 29, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | New Media Investment Group Inc. | |
Trading Symbol | NEWM | |
Entity Central Index Key | 0001579684 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock Shares Outstanding | 60,297,040 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 7,242 | $ 5,998 |
Property, plant and equipment, accumulated depreciation | 209,120 | 171,395 |
Intangible assets, accumulated amortization | $ 92,437 | $ 67,588 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued | 60,498,451 | 53,367,853 |
Common stock, shares outstanding | 60,297,040 | 53,226,881 |
Treasury stock, shares | 201,411 | 140,972 |
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
|
Revenues: | ||||
Advertising | $ 176,461 | $ 159,481 | $ 527,329 | $ 482,427 |
Circulation | 145,934 | 112,792 | 420,461 | 334,160 |
Commercial printing and other | 58,024 | 44,903 | 162,196 | 130,986 |
Total revenues | 380,419 | 317,176 | 1,109,986 | 947,573 |
Operating costs and expenses: | ||||
Operating costs | 220,771 | 177,724 | 634,935 | 532,535 |
Selling, general, and administrative | 121,871 | 106,967 | 367,526 | 319,831 |
Depreciation and amortization | 25,094 | 18,257 | 64,276 | 54,621 |
Integration and reorganization costs | 9,064 | 2,210 | 13,243 | 6,817 |
Impairment of long-lived assets | 1,121 | 0 | 1,121 | 6,485 |
Goodwill and mastheads impairment | 0 | 0 | 0 | 27,448 |
Net (gain) loss on sale or disposal of assets | (72) | 686 | (4,051) | (1,860) |
Operating income | 2,570 | 11,332 | 32,936 | 1,696 |
Interest expense | 9,115 | 7,848 | 26,466 | 22,283 |
Loss on early extinguishment of debt | 0 | 4,767 | 0 | 4,767 |
Other income | (433) | (246) | (1,290) | (568) |
(Loss) income before income taxes | (6,112) | (1,037) | 7,760 | (24,786) |
Income tax (benefit) expense | (239) | 934 | 2,591 | 2,557 |
Net (loss) income | (5,873) | (1,971) | 5,169 | (27,343) |
Net income attributable to redeemable noncontrolling interest | 232 | 0 | 232 | 0 |
Net (loss) income attributable to New Media | $ (6,105) | $ (1,971) | $ 4,937 | $ (27,343) |
Basic (in dollars per share): | ||||
Net (loss) income attributable to New Media | $ (0.10) | $ (0.04) | $ 0.09 | $ (0.52) |
Diluted (in dollars per share): | ||||
Net (loss) income attributable to New Media | (0.10) | (0.04) | 0.09 | (0.52) |
Dividends declared per share (in dollars per share) | $ 0.37 | $ 0.35 | $ 1.11 | $ 1.05 |
Comprehensive (loss) income | $ (5,940) | $ (1,944) | $ 4,967 | $ (27,260) |
Comprehensive income attributable to redeemable noncontrolling interest | 232 | 0 | 232 | 0 |
Comprehensive (loss) income attributable to New Media | $ (6,172) | $ (1,944) | $ 4,735 | $ (27,260) |
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) (Parenthetical) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Statement of Stockholders' Equity [Abstract] | |
Net actuarial loss and prior service cost, income tax | $ 0 |
Unaudited Financial Statements |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Unaudited Financial Statements | Unaudited Financial Statements The accompanying unaudited condensed consolidated financial statements of New Media Investment Group Inc. and its subsidiaries (together, the “Company” or “New Media”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and applicable provisions of Regulation S-X, each as promulgated by the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in comprehensive annual financial statements presented in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. Management believes that the accompanying condensed consolidated financial statements contain all adjustments (which include normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the Company’s consolidated financial condition, results of operations, changes in stockholders' equity and cash flows for the periods presented. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10-K. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Through July 1, 2018, the Company’s reporting units (Eastern US Publishing ("East"), Central US Publishing ("Central"), Western US Publishing ("West"), Recent Acquisitions and BridgeTower) were aggregated into one reportable business segment. On July 2, 2018, the reporting units were changed to Newspapers and BridgeTower. The reporting units will continue to be aggregated into one reportable business segment. Refer to Note 5 for further discussion. The newspaper industry and the Company have experienced declining revenue and profitability over the past several years. As a result, the Company has implemented, and continues to implement, plans to reduce costs and preserve cash flow. This includes cost-reduction programs and the sale of non-core assets. The Company believes these initiatives along with cash provided by operating activities will provide it with the financial resources necessary to invest in the business and provide sufficient cash flow to enable the Company to meet its commitments. However, the Company recognized impairments of both goodwill and mastheads during the second quarter of 2017. Refer to Note 5 for further discussion. Reclassifications Certain amounts in the prior period's condensed consolidated financial statements have been reclassified to conform to the current year presentation. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASC Topic 606"). ASC Topic 606 replaces all current U.S. GAAP guidance for revenue recognition and eliminates industry-specific guidance. The new standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company 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. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers - Principal versus Agent Considerations” (ASU 2016-08), which amends ASC Topic 606 and clarifies the implementation guidance on principal versus agent considerations. The Company adopted ASC Topic 606 on January 1, 2018 using the modified retrospective approach. Refer to Note 10 for the discussion of the impact of the adoption of the new standard. In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), “Leases (Topic 842)", which revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset on the balance sheet for all leases with terms greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach and are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. The Company intends to adopt the standard on December 31, 2018. The Company expects to report comparative periods presented under current GAAP and does not expect to restate prior periods as a result of the adoption of ASU 2016-02. The Company continues to evaluate the effect that ASU 2016-02 will have on the consolidated financial statements, but it expects the ASU will have a material effect on the Consolidated Balance Sheets due to the recognition of most of its operating leases as both right-of-use assets and lease liabilities. In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash” (Topic 230), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. The Company adopted this standard on January 1, 2018 using a retrospective transition method. The impact of the new standard is that the Company’s consolidated statements of cash flows now present the change in a combined amount for both restricted and unrestricted cash and cash equivalents for all periods presented. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations - Clarifying the Definition of a Business” (Topic 805), which clarifies the definition of a business for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this standard on January 1, 2018 and is applying the standard prospectively to determine whether certain future transactions should be accounted for as acquisitions of assets or businesses. In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (Topic 715), which provides guidance that requires an employer to report the service cost component separate from the other components of net benefit pension costs. The employer is required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside the subtotal of income from operations, if one is presented. If a separate line item is not used, the line item used in the income statement must be disclosed. The Company adopted the standard on January 1, 2018 using a retrospective transition method. The adoption of the standard did not have a material impact on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”)". This ASU provides entities the option to reclassify tax effects to retained earnings from AOCI which are impacted by the Tax Cuts and Jobs Act (“TCJA”). The ASU is effective for fiscal years beginning after December 15, 2018 but early adoption is permitted. The Company has a full valuation allowance for all tax benefits related to AOCI and therefore there are no tax effects to be reclassified to retained earnings for the year ended December 31, 2017. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820)". This ASU: (i) adds incremental requirements for entities to disclose (a) the amount of total gains or losses for the period recognized in other comprehensive income that is attributable to fair value changes in assets and liabilities held as of the balance sheet date and categorized within Level 3 of the fair value hierarchy, (b) the range and weighted average used to develop significant unobservable inputs and (c) how the weighted average was calculated for fair value measurements categorized within Level 3 of the fair value hierarchy and (ii) eliminates disclosure requirements for (a) transfers between Level 1 and Level 2 and (b) valuation processes for Level 3 fair value measurements. ASU No. 2018-13 is effective for the Company in the first quarter of 2020. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)". This ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that are no longer considered cost beneficial, clarifying the specific requirements of disclosures and adding disclosure requirements identified as relevant. The guidance will be effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the requirements of this update and has not yet determined its impact on the Company’s financial statements. All other issued and not yet effective accounting standards are not relevant to the Company.
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Acquisitions and Dispositions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Dispositions | Acquisitions and Dispositions 2018 Acquisitions The Company acquired substantially all the assets, properties and business of certain publications and businesses on August 15, 2018, July 2, 2018, June 18, 2018, June 4, 2018, May 11, 2018, May 1, 2018, April 2, 2018, March 31, 2018, March 6, 2018, February 28, 2018, February 23, 2018, and February 7, 2018 (“2018 Acquisitions”), which included seven daily newspapers, 16 weekly publications, one shopper, a print facility, an events production business, cloud services and digital platforms, and domains, for an aggregate purchase price of $158,977, including estimated working capital. The acquisitions were financed from cash on hand. The rationale for the acquisitions was primarily due to the attractive nature, as applicable, of the newspaper assets and digital platforms, and their estimated cash flows combined with the cost-saving and revenue-generating opportunities available. In the August 15, 2018 acquisition, the Company acquired an 80% equity interest in the acquiree, and the minority equity owners retained a 20% interest, which has been classified as noncontrolling interest in the accompanying financial statements. Noncontrolling interests with embedded redemption features, such as put rights, that are not solely within the control of the Company are considered redeemable noncontrolling interests and are presented outside of stockholders’ equity on the Company's Unaudited Condensed Consolidated Balance Sheets. The Company accounted for the 2018 Acquisitions using the acquisition method of accounting for those acquisitions determined to meet the definition of a business. The net assets, including goodwill, have been recorded in the consolidated balance sheet at their fair values in accordance with Accounting Standards Codification ("ASC") 805, “Business Combinations” (“ASC 805”). The fair value determination of the assets acquired and liabilities assumed are preliminary based upon all information currently available to the Company and are subject to working capital and other adjustments and 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. The 2018 Acquisitions that were determined to be asset acquisitions were measured at the fair value of the consideration transferred on the acquisition date. Intangible assets acquired in an asset acquisition have been recognized in accordance with ASC 350 “Intangibles - Goodwill and Other”. Goodwill is not recognized in an asset acquisition. The following table summarizes the preliminary determination of fair values of the assets and liabilities:
The Company obtained third party independent valuations or performed similar calculations internally to assist in the determination of the fair values of certain assets acquired and liabilities assumed. Three basic approaches were used to determine value: the cost approach (used for equipment where an active secondary market is not available, building improvements, and software), 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). The weighted average amortization periods for recently acquired amortizable intangible assets are equal to or similar to the periods presented in Note 5. The Company recorded approximately $68 and $344 of selling, general and administrative expenses for acquisition-related costs for the 2018 Acquisitions during the three and nine months ended September 30, 2018, respectively. For tax purposes, the amount of goodwill that is expected to be deductible is $61,700, excluding goodwill attributable to a 20% noncontrolling interest. 2017 Acquisitions The Company acquired substantially all the assets, properties and business of certain publications and businesses on November 6, 2017, October 30, 2017, October 2, 2017, July 6, 2017, June 30, 2017, February 10, 2017, and January 31, 2017 (“2017 Acquisitions”), which included four business publications, 22 daily newspapers, 34 weekly publications, 24 shoppers, two customer relationship management solutions providers, a social media app and an event production business for an aggregate purchase price of $165,053, including working capital. The acquisitions were financed from cash on hand. The rationale for the acquisitions was primarily due to the attractive nature, as applicable, of the newspaper assets and event production business, and cash flows combined with cost-saving and revenue-generating opportunities available. The Company accounted for the 2017 Acquisitions using the acquisition method of accounting. The net assets, including goodwill, have been recorded in the consolidated balance sheet at their fair values in accordance with ASC 805. The fair value determination of the assets acquired and liabilities assumed are preliminary based upon all information available to the Company at the present time and are subject to working capital and other adjustments and subject to the completion of valuations to determine the fair market value of these 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. The following table summarizes the fair values of the assets and liabilities:
The weighted average amortization periods for recently acquired amortizable intangible assets are equal to or similar to the periods presented in Note 5. The Company recorded approximately $978 of selling, general and administrative expenses for acquisition-related costs for the 2017 Acquisitions. For tax purposes, the amount of goodwill that is expected to be deductible is $37,652. Dispositions On May 11, 2018, the Company completed its sale of certain publications and related assets in Alaska for approximately $2,369, including working capital. As a result, a nominal pre-tax gain, net of selling expenses, is included in net gain on sale or disposal of assets on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income during the nine months ended September 30, 2018. On February 27, 2018, the Company sold a parcel of land and building located in Framingham, Massachusetts for a sale price of $9,264, and recognized a pre-tax gain of approximately $3,337, net of selling expenses, which is included in net gain on sale or disposal of assets on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income during the nine months ended September 30, 2018. On June 2, 2017, the Company completed its sale of the Mail Tribune, located in Medford, Oregon, for approximately $14,700, including working capital. As a result, a pre-tax gain of approximately $5,400, net of selling expenses, is included in net gain on sale or disposal of assets on the Unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income during the nine months ended September 24, 2017 since the disposition did not qualify for treatment as a discontinued operation.
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Share-Based Compensation |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation The Company recognized compensation cost for share-based payments of $667, $769, $2,499, and $2,364 during the three and nine months ended September 30, 2018 and September 24, 2017, respectively. The total compensation cost not yet recognized related to non-vested Restricted Stock Grants (“RSGs”) pursuant to the Company’s Nonqualified Stock Option and Incentive Award Plan as of September 30, 2018 was $4,558, which is expected to be recognized over a weighted average period of 2.00 years through July 2021. As of September 30, 2018, the aggregate intrinsic value of unvested RSGs was $5,908. RSG activity during the nine months ended September 30, 2018 was as follows:
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Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring Over the past several years, in furtherance of the Company’s cost-reduction and cash-preservation plans outlined in Note 1, the Company has engaged in a series of individual restructuring programs, designed primarily to right-size the Company’s employee base, consolidate facilities and improve operations, including those of recently acquired entities. These initiatives impact all of the Company’s geographic regions and are often influenced by the terms of union contracts within the region. All costs related to these programs, which primarily include severance expense, are accrued at the time of the program announcement or over the remaining service period. Severance-related expenses Accrued restructuring costs are included in accrued expenses on the Unaudited Condensed Consolidated Balance Sheets. The activity in accrued restructuring costs for the nine months ended September 30, 2018 is as follows:
The accrued restructuring reserve balance is expected to be paid out over the next twelve months. The following table summarizes the costs incurred and cash paid in connection with these restructuring programs for the three and nine months ended September 30, 2018 and September 24, 2017.
Facility consolidation charges and accelerated depreciation During the three and nine months ended September 30, 2018, the Company ceased operations of seven print publications and six printing operations as part of the ongoing cost reduction programs. As a result, the Company recognized an impairment charge related to retired equipment of $503 and intangibles of $618 and accelerated depreciation of $3,601 during the nine months ended September 30, 2018. During the nine months ended September 24, 2017, the Company ceased printing operations at 12 facilities as part of the ongoing cost reduction programs. As a result, the Company recognized an impairment charge related to retired equipment of $6,485 and accelerated depreciation of $2,429 during the nine months ended September 24, 2017.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill and intangible assets consisted of the following:
As of September 30, 2018, the weighted average amortization periods for amortizable intangible assets are 14.5 years for advertiser relationships, 12.9 years for customer relationships, 13.4 years for subscriber relationships and 4.7 years for other intangible assets. The weighted average amortization period in total for all amortizable intangible assets is 13.8 years. Amortization expense for the three and nine months ended September 30, 2018 and September 24, 2017 was $9,520, $5,672, $24,852, and $16,896, respectively. Estimated future amortization expense as of September 30, 2018, is as follows:
The changes in the carrying amount of goodwill for the period from December 31, 2017 to September 30, 2018 are as follows:
The Company’s annual impairment assessment is made on the last day of its fiscal second quarter. The carrying value of goodwill and indefinite-lived intangible assets are evaluated for possible impairment on an annual basis or between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or indefinite-lived intangible asset below its carrying value. The Company adopted ASU No. 2017-04 in the second quarter of 2017 and performed a quantitative goodwill impairment test to identify the existence of impairment, if any, and the amount of impairment loss. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The Company performed its 2017 annual assessment for possible impairment of the carrying value of goodwill and indefinite-lived intangible assets as of June 25, 2017. As a result of this assessment, the Company recorded a goodwill impairment totaling $25,641 in two of its former reporting units, Central and West. This impairment was primarily attributable to continuing economic pressures in the newspaper industry and a decline in the Company’s stock price, and represented a full impairment of the goodwill then recorded in the former West reporting unit and a partial impairment of the goodwill recorded in the former Central reporting unit. In addition, the Company recorded a partial impairment of the carrying value of mastheads, totaling $1,807, in the former West reporting unit in the same period. The Company performed its 2018 annual assessment for possible impairment of the carrying value of goodwill and indefinite-lived intangibles as of July 1, 2018. The fair value of four of the Company's former reporting units, including East, West, Central and BridgeTower, which include newspaper mastheads, were estimated using the expected present value of future cash flows, recent industry multiples and using estimates, judgments and assumptions that management believes were appropriate in the circumstances. The estimates and judgments used in the assessment included multiples for EBITDA, the weighted average cost of capital and the terminal growth rate. The Company determined that the future cash flow and industry multiple analysis provided the best estimate of the fair value of its reporting units. Key assumptions in the impairment analysis include revenue and EBITDA projections, discount rates, long-term growth rates and the effective tax rate that the Company determined to be appropriate. Revenue projections reflected slight declines in the current and next year, and revenues are expected to moderate to a terminal growth rate of 1%. Discount rates ranged from 16% to 17%. The effective tax rate was 27%. The fair value of the former West reporting unit was less than its carrying value, however, all goodwill was previously written off in 2017. The fair value of the former Central reporting unit exceeded the carrying value by approximately 10%. The Company performed a qualitative assessment for the Recent Acquisitions reporting unit and concluded that it is not more likely than not that the goodwill and indefinite-lived intangible assets are impaired. As a result, no quantitative impairment testing was performed for the Recent Acquisitions. The total Company’s estimate of reporting unit fair values was reconciled to its then market capitalization (based upon the stock market price and fair value of debt) plus an estimated control premium. The Company used a “relief from royalty” approach, a discounted cash flow model, to determine the fair value of each reporting units' mastheads. The estimated fair value equaled or exceeded carrying value for mastheads. The fair value of mastheads exceeded carrying value by less than 10% in the former West reporting unit. Key assumptions within the masthead analysis included revenue projections, discount rates, royalty rates, long-term growth rates and the effective tax rate that the Company determined to be appropriate. Revenue projections reflected declines in the current and next year, and revenues are expected to moderate to a terminal growth rate of 1%. Discount rates ranged from 16% to 17%, and royalty rates ranged from 1.25% to 1.75%. The effective tax rate was 27%. The Company considered the impairment of goodwill in the former West to be a potential indicator of impairment under ASC 360. The Company determined that the long-lived asset groups were the same as its reporting units. The Company performed an analysis of its undiscounted cash flows in the former West reporting unit to determine if there was an impairment of long-lived assets. The sum of undiscounted cash flows over the primary asset’s weighted-average remaining useful life exceeded the groups’ carrying value, so no impairment was recorded. As of July 2, 2018, the Company reorganized its reporting units to align with its new management structure. The East, Central, West and Recent Acquisitions reporting units were consolidated into one reporting unit called Newspapers. BridgeTower remained a separate reporting unit. Due to the change in the composition of the reporting units, the Company performed an additional impairment test for goodwill and mastheads after the reorganization. Similar methodologies and assumptions were utilized for the post-reorganization impairment assessment, as described above. Fair values of the reporting units were determined to be greater than the carrying value of the reporting units, and the estimated fair value exceeded carrying value for all mastheads. As of September 30, 2018, the Company performed a review of potential impairment indicators noting that its financial results and forecast have not changed materially since the annual impairment assessment, and it was determined that no indicators of impairment were present. The newspaper industry and the Company have experienced declining same store revenue and profitability over the past several years. Should general economic, market or business conditions decline and have a negative impact on estimates of future cash flow and market transaction multiples, the Company may be required to record impairment charges in the future.
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Indebtedness |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness | Indebtedness New Media Credit Agreement On June 4, 2014, New Media Holdings II LLC (the “New Media Borrower”), a wholly owned subsidiary of New Media, entered into a credit agreement (the “New Media Credit Agreement”) among the New Media Borrower, New Media Holdings I LLC (“Holdings I”), the lenders party thereto, RBS Citizens, N.A. and Credit Suisse Securities (USA) LLC as joint lead arrangers and joint bookrunners, Credit Suisse AG, Cayman Islands Branch as syndication agent and Citizens Bank of Pennsylvania as administration agent which provided for (i) a $200,000 senior secured term facility (the “Term Loan Facility” and any loan thereunder, including as part of the Incremental Facility, “Term Loans”), (ii) a $25,000 senior secured revolving credit facility, with a $5,000 sub-facility for letters of credit and a $5,000 sub-facility for swing loans, (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Senior Secured Credit Facilities”) and (iii) the ability for the New Media Borrower to request one or more new commitments for term loans or revolving loans from time to time up to an aggregate total of $75,000 (the “Incremental Facility”) subject to certain conditions. On June 4, 2014, the New Media Borrower borrowed $200,000 under the Term Loan Facility (the “Initial Term Loans”). As of September 30, 2018, $0 was drawn under the Revolving Credit Facility. The Term Loans mature on July 14, 2022 and the maturity date for the Revolving Credit Facility is July 14, 2021. The New Media Credit Agreement was amended: •on September 3, 2014, to provide for additional term loans under the Incremental Facility in an aggregate principal amount of $25,000 (the “2014 Incremental Term Loan”); •on November 20, 2014, to increase the amount of the Incremental Facility that may be requested after the date of the amendment from $75,000 to $225,000; •on January 9, 2015, to provide for $102,000 in additional term loans (the “2015 Incremental Term Loan”) and $50,000 in additional revolving commitments (the “2015 Incremental Revolver”) under the Incremental Facility and to make certain amendments to the Revolving Credit Facility in connection with the purchase of the assets of Halifax Media; •on February 13, 2015, to provide for the replacement of the existing term loans under the Term Loan Facility (including the 2014 Incremental Term Loan and the 2015 Incremental Term Loan) with a new class of replacement term loans; •on March 6, 2015, to provide for $15,000 in additional revolving commitments under the Incremental Facility; •on May 29, 2015, to provide for $25,000 in additional term loans under the Incremental Facility; •on July 14, 2017, to (i) extend the maturity date of the outstanding term loans under the Term Loan Facility to July 14, 2022, (ii) extend the maturity date of the Revolving Credit Facility to July 14, 2021, (iii) provide for $20,000 in additional term loans (the “2017 Incremental Term Loan”) under the Incremental Facility and (iv) increase the amount of the Incremental Facility that may be requested on or after the date of the amendment (inclusive of the 2017 Incremental Term Loan) to $100,000; and •on February 16, 2018, to provide for $50,000 in additional term loans under the Term Loan Facility. In connection with the February 16, 2018 amendment, the Company incurred approximately $592 of fees and expenses, of which $500 were capitalized in deferred financing costs and will be amortized over the term of the Term Loan Facility. The related third party fees of $92 were expensed during the quarter as this amendment was determined to be a debt modification for accounting purposes. In addition, the Company recognized $250 of original issue discount, which will also be amortized over the term of the Term Loan Facility. In connection with the July 14, 2017 amendment, the Company incurred approximately $6,605 of fees and expenses. There was one lender who had a significant change in the terms of the Term Loan Facility; the difference between the present value of the cash flows after this amendment and the present value of the cash flows before this amendment was more than 10%. This portion of the transaction was accounted for as an early extinguishment of debt. Deferred fees and expenses of $1,009 previously allocated to that lender were written off to loss on early extinguishment of debt. Additionally, the current fees of $2,423 attributed to this lender were expensed to loss on early extinguishment of debt. The third party expenses of $121 apportioned to the lender were capitalized. Finally, $1,335 fees and expenses allocated to lenders that exited the facility were written off to loss on early extinguishment of debt. The remainder of this amendment was treated as a debt modification for accounting purposes. The consent fees of $3,020 for the lenders other than the one mentioned above were capitalized and will be amortized over the term of the Term Loan Facility. The third party fees of $606 related to these lenders were expensed. Additionally, the fees and expenses allocated to the Revolving Credit Facility of $435 were capitalized as this component of the amendment was accounted for as a debt modification. Borrowings under the Term Loan Facility bear interest, at the New Media Borrower’s option, at a rate equal to either (i) an adjusted Eurodollar rate, plus an applicable margin equal to 6.25% per annum (subject to a floor of 1.00%) or (ii) an adjusted base rate, plus an applicable margin equal to 5.25% per annum (subject to a floor of 2.00%). The New Media Borrower currently uses the Eurodollar rate option. Borrowings under the Revolving Credit Facility bear interest, at the New Media Borrower’s option, at a rate equal to either (i) an adjusted Eurodollar rate, plus an applicable margin equal to 5.25% per annum or (ii) an adjusted base rate, plus an applicable margin equal to 4.25% per annum, with a step down based on achievement of a certain total leverage ratio. The New Media Borrower currently uses the Eurodollar rate option. As of September 30, 2018, the New Media Credit Agreement had a weighted average interest rate of 8.49%. The Senior Secured Credit Facilities are unconditionally guaranteed by Holdings I and certain subsidiaries of the New Media Borrower (collectively, the “Guarantors”) and are required to be guaranteed by all future material wholly-owned domestic subsidiaries, subject to certain exceptions. All obligations under the New Media Credit Agreement are secured, subject to certain exceptions, by substantially all of the New Media Borrower’s assets and the assets of the Guarantors. Repayments made under the Term Loans are equal to 1.0% annually of the original principal amount in equal quarterly installments for the life of the Term Loans, with the remainder due at maturity. The New Media Borrower is permitted to make voluntary prepayments at any time without premium or penalty, except in the case of prepayments made in connection with certain repricing transactions with respect to the Term Loans effected within six months of February 16, 2018, to which a 1.00% prepayment premium applies. The New Media Credit Agreement contains customary representations and warranties and affirmative covenants and negative covenants applicable to Holdings I, the New Media Borrower and the New Media Borrower's subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, dividends and other distributions, and events of default. The New Media Credit Agreement contains a financial covenant that requires Holdings I, the New Media Borrower and the New Media Borrower’s subsidiaries to maintain a maximum total leverage ratio of 3.25 to 1.00. As of September 30, 2018, the Company is in compliance with all of the covenants and obligations under the New Media Credit Agreement. Advantage Credit Agreements In connection with the purchase of the assets of Halifax Media, which was completed on January 9, 2015, certain subsidiaries of the Company (the “Advantage Borrowers”) agreed to assume all of the obligations of Halifax Media and its affiliates in respect of each of (i) that certain Consolidated Amended and Restated Credit Agreement dated January 6, 2012 among Halifax Media Acquisition LLC, Advantage Capital Community Development Fund XXVIII, L.L.C., and Florida Community Development Fund II, L.L.C. (as amended, the “Halifax Florida Credit Agreement”) and (ii) that certain Credit Agreement dated June 18, 2013 between Halifax Alabama, LLC and Southeast Community Development Fund V, L.L.C. (the “Halifax Alabama Credit Agreement” and, together with the Halifax Florida Credit Agreement, the “Advantage Credit Agreements”), respectively (the debt under the Halifax Florida Credit Agreement, the “Advantage Florida Debt”; the debt under the Halifax Alabama Credit Agreement, the “Advantage Alabama Debt”). The $10,000 outstanding balance under the Halifax Florida Credit Agreement was fully repaid on December 31, 2016. As of January 9, 2015, the Halifax Alabama Credit Agreement had a principal amount of $8,000 and bore interest at the rate of LIBOR plus 6.25% per annum (with a minimum of 1% LIBOR) payable quarterly in arrears. On May 15, 2018, the Halifax Alabama Credit Agreement was amended to reduce the interest rate to 2% per annum. In addition, a 2% prepayment premium will be charged if the balance is paid before December 28, 2018 unless the Advantage Borrowers elect to escrow the remaining principal amount. Subsequent to December 28, 2018, the principal may be repaid without a premium or penalty. The Advantage Alabama Debt matures on March 31, 2019. The Advantage Alabama Debt is secured by a perfected second priority security interest in all the assets of the Advantage Borrowers and certain other subsidiaries of the Company, subject to the limitation that the maximum amount of secured obligations is $15,000. The Advantage Alabama Debt is unconditionally guaranteed by Holdings I and certain subsidiaries of the New Media Borrowers and is required to be guaranteed by all future material wholly-owned domestic subsidiaries, subject to certain exceptions. The Advantage Alabama Debt is subordinated to the Senior Secured Credit Facilities pursuant to an intercreditor agreement. The Halifax Alabama Credit Agreement contains covenants substantially consistent with those contained in the New Media Credit Agreement in addition to those required for compliance with the New Markets Tax Credit program. The Advantage Borrowers are subject to customary mandatory prepayment events including from proceeds from asset sales and certain debt obligations. The Halifax Alabama Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Advantage Borrowers and certain of the Company's subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. The Halifax Alabama Credit Agreement contains a financial covenant that requires Holdings I, the New Media Borrower and the New Media Borrower’s subsidiaries to maintain a maximum total leverage ratio of 3.75 to 1.00. The Halifax Alabama Credit Agreement contains customary events of default. As of September 30, 2018, the Company is in compliance with all of the covenants and obligations under the Halifax Alabama Credit Agreement. Fair Value The fair value of long-term debt under the Senior Secured Credit Facilities and the Advantage Alabama Debt was estimated at $415,257 as of September 30, 2018, based on discounted future contractual cash flows and a market interest rate adjusted for necessary risks, including the Company’s own credit risk as there are no rates currently observable in publicly traded debt markets of similar risk, terms and average maturities. Accordingly, the Company’s long-term debt under the Senior Secured Credit Facilities is classified within Level 3 of the fair value hierarchy. Payment Schedule As of September 30, 2018, scheduled principal payments of outstanding debt are as follows:
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Related Party Transactions |
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Related Party Transactions | Related Party Transactions As of September 30, 2018, the Company's manager, FIG LLC (the “Manager”), which is an affiliate of Fortress Investment Group LLC ("Fortress"), and its affiliates owned approximately 1.1% of the Company’s outstanding stock and approximately 39.5% of the Company’s outstanding warrants, and held options to purchase 2,904,811 shares of the Company’s common stock. During the three and nine months ended September 30, 2018 and September 24, 2017, Fortress and its affiliates were paid $238, $239, $728, and $716 in dividends, respectively. In addition, the Company’s Chairman, Wesley Edens, is also a member of the board of directors of the Manager and a Principal, the Co-Chief Executive Officer and a member of the board of directors of Fortress. The Company does not pay Mr. Edens a salary or any other form of compensation. On February 28, 2018, the Company acquired substantially all of the assets, consisting primarily of publications and related websites, of Holden Landmark Corporation ("Holden"), a Massachusetts corporation owned by the Company’s Chief Operating Officer, for $1,307. Prior to the acquisition, the Company recognized revenue from Holden of $0, $140, $77, and $452 during the three and nine months ended September 30, 2018 and September 24, 2017, respectively, which is included in commercial printing and other on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The Company’s Chief Executive Officer and Chief Financial Officer are employees of Fortress (or one of its affiliates), and their salaries are paid by Fortress (or one of its affiliates). Management Agreement On November 26, 2013, the Company entered into a management agreement with the Manager (as amended and restated, the “Management Agreement”). The Management Agreement requires the Manager to manage the Company’s business affairs subject to the supervision of the Company’s board of directors (the “Board of Directors” or "Board"). On March 6, 2015, the Company’s independent directors of the Board approved an amendment to the Management Agreement. The Management Agreement had an initial three-year term and will be automatically renewed for one-year terms thereafter unless terminated either by the Company or the Manager. The Manager is (a) entitled to receive from the Company a management fee, (b) eligible to receive incentive compensation that is based on the Company’s performance and (c) eligible to receive options to purchase New Media Common Stock upon the successful completion of an offering of shares of the Company’s Common Stock or any shares of preferred stock with an exercise price equal to the price per share paid by the public or other ultimate purchaser in the offering, see Note 9. In addition, the Company is obligated to reimburse certain expenses incurred by the Manager. The Manager is also entitled to receive a termination fee from the Company under certain circumstances. The following provides the management and incentive fees recognized and paid to the Manager for the three and nine months ended September 30, 2018 and September 24, 2017:
The Company had an outstanding liability for all management agreement related fees of $1,915 and $2,680 at September 30, 2018 and December 31, 2017, respectively, included in accrued expenses. Registration Rights Agreement with Omega The Company entered into a registration rights agreement (the “Omega Registration Rights Agreement”) with Omega Advisors, Inc. and its affiliates (collectively, “Omega”). Under the terms of the Omega Registration Rights Agreement, upon request by Omega the Company is required to use commercially reasonable efforts to file a resale shelf registration statement providing for the registration and sale on a continuous or delayed basis by Omega of its New Media Common Stock acquired in connection with the restructuring of GateHouse (the “Registrable Securities”) (the “Shelf Registration”), subject to customary exceptions and limitations. Omega is entitled to initiate up to three offerings or sales with respect to some or all of the Registrable Securities pursuant to the Shelf Registration. Omega may only exercise its right to request Shelf Registrations if Registrable Securities to be sold pursuant to such Shelf Registration are at least 3% of the then-outstanding New Media Common Stock.
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Income Taxes |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense includes Federal and state income taxes and interest and penalties on uncertain tax positions. Certain income and expenses are not reported in tax returns and financial statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes. Deferred tax assets are reported net of a full valuation allowance since the Company believes it is more likely than not that a tax benefit will not be realized. The Company recorded an income tax benefit of $239 and income tax expense of $934, $2,591 and $2,557 for the three and nine months ended September 30, 2018 and September 24, 2017, respectively. The Company's estimated effective tax rate was 33% for the nine months ended September 30, 2018. The tax effects resulting from utilizing the annual effective tax rate for the nine months ended September 24, 2017 was determined to not be an effective method to determine the tax expense for that period. Therefore, the Company calculated its tax provision based upon year-to-date results. The Company performs a quarterly assessment of its deferred tax assets and liabilities. ASC Topic 740, “Income Taxes” (“ASC 740”) limits the ability to use future taxable income to support the realization of deferred tax assets when a company has experienced a history of losses even if future taxable income were supported by detailed forecasts and projections. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are projected to become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. During the nine months ended September 30, 2018, the Company recorded a net decrease to the valuation allowance of $181, which was a benefit to earnings. All of this amount was recognized through the Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The realization of the remaining deferred tax assets is primarily dependent on their scheduled reversals. Any changes to deferred taxes may require an additional valuation allowance. Any increase or decrease in the valuation allowance could result in an increase or decrease in income tax expense in the period of adjustment. The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating (loss) income for the year, projections of the proportion of income or loss, permanent and temporary differences, and an assessment of the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is acquired, or as additional information is obtained. On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into law. The Company recorded a tax benefit of $4,200 during the year ended December 31, 2017 which was primarily attributable to a re-measurement of deferred tax assets and deferred tax liabilities. The tax benefit was also attributable to a valuation allowance release of $800 related to an alternative minimum tax credit that is refundable in 2021 or earlier. As of December 31, 2017, the Company made a reasonable estimate of the effects on the change in deferred tax balances under the TCJA. These amounts are provisional and subject to change through the fourth quarter of 2018 under SAB 118 ( Income Tax Accounting Implications of the Tax Cuts and Jobs Act) as the determination of the impact of the income tax effects may require additional analysis and further interpretation of the TCJA from yet to be issued FASB guidance, U.S. Treasury regulations or state legislation. In addition, the TCJA imposes a new limit on interest expense deductions with respect to any debt outstanding on January 1, 2018. The Company has evaluated the effect of this rule and do not expect that the Company will be limited in its ability to claim interest expense deductions at this time although limitations may apply after 2021. For the nine months ended September 30, 2018, the difference between the expected tax charge at a statutory rate of 21%, or $1,630, and the recorded tax expense of $2,591 is primarily due to deferred tax liabilities attributable to indefinite lived intangible assets which exceed the projected 2018 tax loss, state taxes and other charges. The Company and its subsidiaries file a U.S. federal consolidated income tax return. The U.S. federal and state statute of limitations generally remains open for the 2015 tax year and beyond.
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Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Text Block] | (9) Equity (Loss) Income Per Share The following table sets forth the computation of basic and diluted (loss) income per share (“EPS”):
The Company excluded the following securities from the computation of diluted income per share because their effect would have been antidilutive:
Equity On May 17, 2017, the Board of Directors authorized the repurchase of up to $100,000 of the Company's common stock ("Share Repurchase Program") over the next 12 months. On May 1, 2018, the Board of Directors authorized an extension of the Share Repurchase Program through May 18, 2019. Under the Share Repurchase Program, the Company may purchase its shares from time to time in the open market or in privately negotiated transactions. During the three months ended June 25, 2017, the Company repurchased 391,120 shares at a weighted average price of $12.77 per share for a total cost, including transaction costs, of $5,001. The shares were subsequently retired. The cost paid to acquire the shares in excess of par was recorded in additional paid-in capital in the consolidated balance sheet. Pursuant to the anti-dilution provisions of the Incentive Plan, the exercise price on the 652,311 remaining options granted to the Manager in 2014 were equitably adjusted during the three months ended April 1, 2018 from $14.37 to $12.95 as a result of return of capital distributions. Pursuant to the anti-dilution provisions of the Incentive Plan, the exercise price on the 700,000 options granted to the Manager in 2015 were equitably adjusted during the three months ended April 1, 2018 from $20.36 to $18.94 as a result of return of capital distributions. Pursuant to the anti-dilution provisions of the Incentive Plan, the exercise price on the 862,500 options granted to the Manager in 2016 were equitably adjusted during the three months ended April 1, 2018 from $16.00 to $13.24 as a result of return of capital distributions. During the three months ended June 25, 2017, the Company issued 16,605 shares of its common stock to its Non-Officer Directors to settle a liability of $225 for 2016 services. During the three months ended April 1, 2018, the Company issued 13,008 shares of its common stock to its Non-Officer Directors to settle a liability of $225 for 2017 services. During April 2018, the Company completed the sale of 6,900,000 shares of the Company's common stock, including 25,000 shares of the Company's common stock sold to an officer of the Company. The estimated net proceeds of the sale were approximately $110,650. For the purpose of compensating the Manager for its successful efforts in raising capital for the Company, in connection with this offering, the Company granted options to the Manager to purchase 690,000 shares of the Company’s common stock at a price of $16.45, which had an aggregate fair value of approximately $1,408 as of the grant date. The assumptions used in an option valuation model to value the options were: a 2.8% risk-free rate, a 8.0% dividend yield, 28.1% volatility and an expected life of 10 years. The following table includes additional information regarding the Manager stock options:
Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2018 and September 24, 2017 are outlined below.
The following table presents reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2018 and September 24, 2017.
Dividends During the nine months ended September 24, 2017, the Company paid dividends of $1.05 per share of Common Stock of New Media. During the nine months ended September 30, 2018, the Company paid dividends of $1.11 per share of Common Stock of New Media.
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Revenues |
9 Months Ended |
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Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Revenue Recognition Disclosure [Text Block] | (10) Revenues Adoption of ASC Topic 606, "Revenue from Contracts with Customers" On January 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the previously applicable accounting standards under ASC Topic 605. The adoption of ASC Topic 606 resulted in no change to accumulated deficit as of January 1, 2018. Revenue and expenses related to certain license agreements and recognized during the three and nine months ended September 30, 2018 decreased by $1,514 and $4,401, respectively, as a result of applying ASC Topic 606. Summary of Accounting Policies for Revenue Recognition Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenues are recognized as performance obligations that are satisfied either at a point in time, such as when an advertisement is published, or over time, such as customer subscriptions. The Company’s Unaudited Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income presents revenues disaggregated by revenue type. Sales taxes and other usage-based taxes are excluded from revenues. Advertising Revenues The Company generates advertising revenues primarily by delivering advertising in local publications including newspapers and websites. Advertising revenues are categorized as local retail, local classified, online and national. Revenue is recognized upon publication of the advertisement. Circulation Revenues Circulation revenues are derived from print and digital subscriptions as well as single copy sales at retail stores, vending racks and boxes. Circulation revenues from subscribers are generally billed to customers at the beginning of the subscription period and are typically recognized on a straight-line basis over the terms of the related subscriptions. The term of customer subscriptions normally ranges from three to twelve months. Circulation revenues from single-copy income are recognized based on the date of publication, net of provisions for related returns. Commercial Printing and Other Revenues The Company provides commercial printing services to third parties as a means to generate incremental revenue and utilize excess printing capacity. These customers consist primarily of other publishers that do not have their own printing presses and do not compete with other GateHouse publications. The Company also prints other commercial materials, including flyers, business cards and invitations. Revenue is generally recognized upon delivery. The Other Revenues category includes UpCurve, Inc. (“UpCurve”), formerly referred to as “Propel Business Services,” the Company's SMB solutions provider. UpCurve provides digital marketing and business services for small to medium sized businesses. Other Revenues also include GateHouse Live, the Company’s events business. A significant judgment management must make with respect to UpCurve revenue recognition is determining whether the Company is the principal or agent for certain licensing transactions. Under ASC Topic 606, the principal in the relationship is the entity that controls the specified goods or services. An entity may have control if (i) it is primarily responsible for fulfilling the promise to provide the good or service; (ii) it has inventory risk before or after the good or service has been transferred to the customer; or (iii) it has the discretion in establishing the price for the good or service. The Company has determined that UpCurve is the principal in the relationships for those transactions in which the goods or services are customized for the customer and reports the related revenues on a gross basis. The Company has determined that UpCurve is the agent in the relationships for those transactions in which the Company resells the goods or services with no customization and reports these revenues on a net basis. As a result of the change from gross to net reporting for certain licensing transactions, the Company’s commercial printing and other revenues, and operating expenses were both approximately $1,514 and $4,401 lower in the three and nine months ended September 30, 2018, respectively, than the amounts that would have been reported under previously applicable accounting standards. Arrangements with Multiple Performance Obligations The Company’s contracts with customers may include multiple performance obligations such as bundled print and digital subscriptions. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers or using expected cost plus margin. Contract Balances The Company records deferred revenues when cash payments are received in advance of the Company’s performance. The most significant unsatisfied performance obligation is the delivery of publications to subscription customers. The Company expects to recognize the revenue related to unsatisfied performance obligations over the next three to twelve months in accordance with the terms of the subscriptions. The increase in the deferred revenue balance for the nine months ended September 30, 2018 is primarily driven by acquisitions. For the nine month period ended September 30, 2018, the Company recognized approximately $79,000 of revenues that were included in the deferred revenue balance as of December 31, 2017. The Company's payment terms vary by the type and location of the customer and the products or services offered. The period between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products or services are delivered to the customer. Accounts Receivable Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. The Company’s allowance for doubtful accounts is based upon several factors including the length of time the receivables are past due, historical payment trends and current economic factors. The Company recorded bad debt expense of $1,046, $1,242, $5,146 and $3,726 during the three and nine months ended September 30, 2018 and September 24, 2017, respectively. Impairment losses are recorded within the selling, general and administrative expenses in the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. Practical Expedients and Exemptions The Company expenses sales commissions or other costs to obtain contracts when incurred because the amortization period is generally one year or less. These costs are recorded within selling, general and administrative expenses. The Company does not disclose unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for services performe
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Pension and Postretirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Postretirement Benefits | Pension and Postretirement Benefits As a result of the Enterprise News Media LLC (in 2005), Copley Press, Inc. (in 2007), and Times Publishing Company (in 2016) acquisitions, the Company maintains two pension and several postretirement medical and life insurance plans which cover certain employees. The Company uses the accrued benefit actuarial method and best estimate assumptions to determine pension costs, liabilities and other pension information for defined benefit plans. Amounts related to the postretirement benefit plans are immaterial. The George W. Prescott Company pension plan, assumed in the Enterprise News Media, LLC acquisition, was amended to freeze all future benefit accruals by December 31, 2008, except for a select group of union employees whose benefits were frozen during 2009. The Times Publishing Company pension plan was frozen prior to the acquisition. The following provides information on the pension plans for the three and nine months ended September 30, 2018 and September 24, 2017:
The service cost component of net periodic benefit cost is included within Operating Costs and the other components are included within Other Income in the Company’s Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. During the three and nine months ended September 30, 2018, the Company paid $902 and $1,349 into the pension plans, respectively. The Company is expected to pay an additional $103 in employer contributions to the pension plans during the remainder of 2018.
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Fair Value Measurement |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement | Fair Value Measurement The Company measures and records in the accompanying condensed consolidated financial statements certain assets and liabilities at fair value on a recurring basis. ASC Topic 820 “Fair Value Measurements and Disclosures” establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). These inputs are prioritized as follows:
The valuation techniques that may be used to measure fair value are as follows:
The following table provides information for the Company’s major categories of financial assets and liabilities measured or disclosed at fair value on a recurring basis:
Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). For the 2018 acquisitions and 2017 acquisitions the Company recorded the assets and liabilities under the acquisition method of accounting. Accordingly, the assets acquired and liabilities assumed were recorded at their fair value. Property, plant and equipment was valued using Level 2 inputs, and intangible assets were valued using Level 3 inputs. Refer to Note 2 for discussion of the valuation techniques, significant inputs, assumptions utilized, and the fair value recognized. During the quarter ended June 25, 2017, certain goodwill and mastheads were written down to their implied fair value using Level 3 inputs. The valuation techniques and significant inputs and assumptions utilized to measure fair value are discussed in Note 5. Refer to Note 6 for the discussion on the fair value of the Company’s total long-term debt.
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Commitments and Contingencies |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is and may become involved from time to time in legal proceedings in the ordinary course of its business, including but not limited to with respect to such matters as libel, invasion of privacy, intellectual property infringement, wrongful termination actions and complaints alleging employment discrimination, and regulatory investigations and inquiries. In addition, the Company is involved from time to time in governmental and administrative proceedings concerning employment, labor, environmental and other claims. Insurance coverage mitigates potential loss for certain of these matters. Historically, such claims and proceedings have not had a material adverse effect on the Company’s condensed consolidated results of operations or financial position. Although the Company is unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, the Company does not expect its current and any threatened legal proceedings to have a material adverse effect on the Company’s business, financial position or consolidated results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on the Company’s financial results. Restricted cash of $3,117 and $3,106 at September 30, 2018 and December 31, 2017, respectively, was held as cash collateral for certain business operations.
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Subsequent Events |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | (14) Subsequent Events Acquisition On October 1, 2018, the Company completed the acquisition of substantially all the assets of a certain publication for $12,500, plus working capital. The Company funded the acquisition with cash on hand. Dividends On October 31, 2018, the Company announced a third quarter 2018 cash dividend of $0.38 per share of Common Stock, par value $0.01 per share, of New Media. The dividend will be paid on November 20, 2018, to shareholders of record as of the close of business on November 12, 2018.
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Unaudited Financial Statements (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | ReclassificationsCertain amounts in the prior period's condensed consolidated financial statements have been reclassified to conform to the current year presentation. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASC Topic 606"). ASC Topic 606 replaces all current U.S. GAAP guidance for revenue recognition and eliminates industry-specific guidance. The new standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company 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. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers - Principal versus Agent Considerations” (ASU 2016-08), which amends ASC Topic 606 and clarifies the implementation guidance on principal versus agent considerations. The Company adopted ASC Topic 606 on January 1, 2018 using the modified retrospective approach. Refer to Note 10 for the discussion of the impact of the adoption of the new standard. In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), “Leases (Topic 842)", which revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset on the balance sheet for all leases with terms greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach and are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. The Company intends to adopt the standard on December 31, 2018. The Company expects to report comparative periods presented under current GAAP and does not expect to restate prior periods as a result of the adoption of ASU 2016-02. The Company continues to evaluate the effect that ASU 2016-02 will have on the consolidated financial statements, but it expects the ASU will have a material effect on the Consolidated Balance Sheets due to the recognition of most of its operating leases as both right-of-use assets and lease liabilities. In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash” (Topic 230), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents. The Company adopted this standard on January 1, 2018 using a retrospective transition method. The impact of the new standard is that the Company’s consolidated statements of cash flows now present the change in a combined amount for both restricted and unrestricted cash and cash equivalents for all periods presented. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations - Clarifying the Definition of a Business” (Topic 805), which clarifies the definition of a business for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted this standard on January 1, 2018 and is applying the standard prospectively to determine whether certain future transactions should be accounted for as acquisitions of assets or businesses. In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (Topic 715), which provides guidance that requires an employer to report the service cost component separate from the other components of net benefit pension costs. The employer is required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside the subtotal of income from operations, if one is presented. If a separate line item is not used, the line item used in the income statement must be disclosed. The Company adopted the standard on January 1, 2018 using a retrospective transition method. The adoption of the standard did not have a material impact on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”)". This ASU provides entities the option to reclassify tax effects to retained earnings from AOCI which are impacted by the Tax Cuts and Jobs Act (“TCJA”). The ASU is effective for fiscal years beginning after December 15, 2018 but early adoption is permitted. The Company has a full valuation allowance for all tax benefits related to AOCI and therefore there are no tax effects to be reclassified to retained earnings for the year ended December 31, 2017. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820)". This ASU: (i) adds incremental requirements for entities to disclose (a) the amount of total gains or losses for the period recognized in other comprehensive income that is attributable to fair value changes in assets and liabilities held as of the balance sheet date and categorized within Level 3 of the fair value hierarchy, (b) the range and weighted average used to develop significant unobservable inputs and (c) how the weighted average was calculated for fair value measurements categorized within Level 3 of the fair value hierarchy and (ii) eliminates disclosure requirements for (a) transfers between Level 1 and Level 2 and (b) valuation processes for Level 3 fair value measurements. ASU No. 2018-13 is effective for the Company in the first quarter of 2020. The adoption of ASU No. 2018-13 is not expected to have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)". This ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that are no longer considered cost beneficial, clarifying the specific requirements of disclosures and adding disclosure requirements identified as relevant. The guidance will be effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the requirements of this update and has not yet determined its impact on the Company’s financial statements. All other issued and not yet effective accounting standards are not relevant to the Company.
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Revenues (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Revenue RecognitionRevenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenues are recognized as performance obligations that are satisfied either at a point in time, such as when an advertisement is published, or over time, such as customer subscriptions. |
Acquisitions and Dispositions (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 Acquisitions [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary determination of fair values of the assets and liabilities:
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2017 Acquisitions [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets and liabilities:
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Share-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSG Activity | RSG activity during the nine months ended September 30, 2018 was as follows:
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Restructuring (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Program Activity | The activity in accrued restructuring costs for the nine months ended September 30, 2018 is as follows:
(1) Other costs primarily include costs to consolidate operations.
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Schedule of Restructuring Costs and Cash Paid | The following table summarizes the costs incurred and cash paid in connection with these restructuring programs for the three and nine months ended September 30, 2018 and September 24, 2017.
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill and Intangible Assets | Goodwill and intangible assets consisted of the following:
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Intangible Assets Future Amortization Expense | Estimated future amortization expense as of September 30, 2018, is as follows:
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Summary of the Change in Goodwill | The changes in the carrying amount of goodwill for the period from December 31, 2017 to September 30, 2018 are as follows:
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Indebtedness (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Principal Payments of Outstanding Debt | As of September 30, 2018, scheduled principal payments of outstanding debt are as follows:
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Related Party Transactions (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions [Table Text Block] | The following provides the management and incentive fees recognized and paid to the Manager for the three and nine months ended September 30, 2018 and September 24, 2017:
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Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Loss Per Share | The following table sets forth the computation of basic and diluted (loss) income per share (“EPS”):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The Company excluded the following securities from the computation of diluted income per share because their effect would have been antidilutive:
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Schedule of Stock Option Activity | The following table includes additional information regarding the Manager stock options:
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Reclassification out of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2018 and September 24, 2017 are outlined below.
(1) This accumulated other comprehensive loss component is included in the computation of net periodic benefit cost. See Note 11.
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The following table presents reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2018 and September 24, 2017.
(1) This accumulated other comprehensive loss component is included in the computation of net periodic benefit cost. See Note 11.
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Pension and Postretirement Benefits (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Postretirement Net Periodic Benefit Costs | The following provides information on the pension plans for the three and nine months ended September 30, 2018 and September 24, 2017:
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Fair Value Measurement (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table provides information for the Company’s major categories of financial assets and liabilities measured or disclosed at fair value on a recurring basis:
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Unaudited Financial Statements - Additional Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 1 |
Acquisitions and Dispositions - Dispositions (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
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Alaska [Member] | ||
Disposition [Line Items] | ||
Sale price | $ 2,369 | |
Framingham, Massachusetts [Member] | ||
Disposition [Line Items] | ||
Sale price | 9,264 | |
Gain on sale | $ 3,337 | |
Medford, Oregon Mail Tribune [Member] | ||
Disposition [Line Items] | ||
Sale price | $ 14,700 | |
Gain on sale | $ 5,400 |
Share-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
Dec. 31, 2017 |
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Restricted Share Grants [Abstract] | |||||
Granted (in shares) | 217,590 | ||||
Forfeited (in shares) | 14,754 | ||||
Unvested RSGs (in shares) | 376,570 | 376,570 | 342,264 | ||
Weighted average grant date fair value of unvested RSGs (in dollars per share) | $ 16.13 | $ 16.13 | $ 16.86 | ||
Aggregate intrinsic value of unvested RSGs | $ 5,908 | $ 5,908 | |||
Share-based Compensation Costs [Abstract] | |||||
Non-cash compensation expense | 667 | $ 769 | 2,499 | $ 2,364 | |
Compensation cost not yet recognized related to non-vested awards | $ 4,558 | $ 4,558 | |||
Compensation cost not yet recognized related to non-vested awards, weighted average recognition period | 2 years |
Share-Based Compensation - Summary of RSG Activity (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018
$ / shares
shares
| |
Number of RSGs | |
Unvested RSGs, beginning balance (in shares) | shares | 342,264 |
Granted (in shares) | shares | 217,590 |
Vested (in shares) | shares | (168,530) |
Forfeited (in shares) | shares | (14,754) |
Unvested RSGs, ending balance (in shares) | shares | 376,570 |
Weighted-Average Grant Date Fair Value | |
Unvested RSGs, beginning balance, weighted average grant date fair value (in dollars per share) | $ / shares | $ 16.86 |
Granted (in dollars per share) | $ / shares | 16.49 |
Vested (in dollars per share) | $ / shares | 18.05 |
Forfeited (in dollars per share) | $ / shares | 16.55 |
Unvested RSGs, ending balance, weighted average grant date fair value (in dollars per share) | $ / shares | $ 16.13 |
Restructuring - Summary of Information Related to Restructuring Program Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
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Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | $ 1,083 | |||
Restructuring provision included in Integration and Reorganization | 13,243 | |||
Cash payments | $ (3,161) | $ (2,465) | (7,234) | $ (6,649) |
Restructuring reserve, ending balance | 7,092 | 7,092 | ||
Severance and Related Costs [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 717 | |||
Restructuring provision included in Integration and Reorganization | 10,981 | |||
Cash payments | (5,021) | |||
Restructuring reserve, ending balance | 6,677 | 6,677 | ||
Other Costs [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 366 | |||
Restructuring provision included in Integration and Reorganization | 2,262 | |||
Cash payments | (2,213) | |||
Restructuring reserve, ending balance | $ 415 | $ 415 |
Restructuring - Summary of Costs Incurred and Cash Paid in Connection with Restructuring Programs (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
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Restructuring and Related Activities [Abstract] | ||||
Severance and related costs | $ 8,533 | $ 1,947 | $ 10,981 | $ 6,029 |
Other costs | 531 | 263 | 2,262 | 788 |
Cash payments | $ (3,161) | $ (2,465) | $ (7,234) | $ (6,649) |
Restructuring - Additional Information (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 24, 2017
USD ($)
|
|
Restructuring [Abstract] | ||
Number of ceased print publications | 7 | |
Number of ceased print facilities | 6 | 12 |
Impairment of retired equipment | $ 503 | $ 6,485 |
Impairment of intangible assets | 618 | |
Accelerated depreciation | $ 3,601 | $ 2,429 |
Goodwill and Intangible Assets - Amortization Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
Dec. 31, 2017 |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Amortization expense, intangible assets | $ 9,520 | $ 5,672 | $ 24,852 | $ 16,896 | |
Estimated Future Amortization Expense [Abstract] | |||||
2018 (three months remaining) | 8,992 | 8,992 | |||
2019 | 34,263 | 34,263 | |||
2020 | 33,208 | 33,208 | |||
2021 | 33,029 | 33,029 | |||
2022 | 32,369 | 32,369 | |||
Thereafter | 210,993 | 210,993 | |||
Net carrying amount | $ 352,854 | $ 352,854 | $ 300,719 |
Goodwill and Intangible Assets - Goodwill Rollforward (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, accumulated impairments | $ 25,641 | $ 25,641 |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | 236,555 | |
Goodwill acquired in business combinations | 63,905 | |
Measurement period adjustments | 449 | |
Goodwill, ending balance | $ 300,909 |
Goodwill and Intangible Assets - Additional Information (Details) |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
|
Schedule Finite-Lived and Indefinite Lived Intangible Assets [Line Items] | ||
Number of reporting units tested for impairment | 4 | |
Effective tax rate, percent | 33.00% | |
Goodwill [Member] | ||
Schedule Finite-Lived and Indefinite Lived Intangible Assets [Line Items] | ||
Discount rates, high range, percent | 17.00% | |
Discount rates, low range, percent | 16.00% | |
Terminal growth rate | 1.00% | |
Effective tax rate, percent | 27.00% | |
Fair value exceeds carrying value, percent (less than) | 10.00% | |
Mastheads [Member] | ||
Schedule Finite-Lived and Indefinite Lived Intangible Assets [Line Items] | ||
Discount rates, high range, percent | 17.00% | |
Discount rates, low range, percent | 16.00% | |
Terminal growth rate | 1.00% | |
Royalty rate, low range, percent | 1.25% | |
Royalty rate, high range, percent | 1.75% | |
Effective tax rate, percent | 27.00% | |
Fair value exceeds carrying value, percent (less than) | 10.00% |
Indebtedness - Outstanding Debt Payment Schedule (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
2018 (three months remaining) | $ 0 | |
2019 | 12,124 | |
2020 | 4,124 | |
2021 | 4,124 | |
2022 | 394,885 | |
Total outstanding debt | 415,257 | |
Less: Current portion of long-term debt | 11,093 | $ 2,716 |
Remaining original issue discount | 3,342 | |
Deferred financing costs, net | 4,253 | |
Long-term debt | $ 396,569 | $ 357,195 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Income tax (benefit) expense | $ (239) | $ 934 | $ 2,591 | $ 2,557 | |
Net increase to the valuation allowance | $ (181) | ||||
Federal tax rate | 21.00% | ||||
Expected tax expense | $ 1,630 | ||||
Tax effects-2017 Legislation | $ 4,200 | ||||
Tax valuation allowance release | $ 800 | ||||
Effective tax rate | 33.00% |
Equity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
|
Equity [Abstract] | ||||
Net (loss) income attributable to New Media | $ (6,105) | $ (1,971) | $ 4,937 | $ (27,343) |
Denominator for (loss) income per share calculation: | ||||
Basic weighted average shares outstanding (shares) | 59,919,246 | 52,868,745 | 57,377,682 | 53,058,341 |
Effect of dilutive securities: | ||||
Stock Options and Restricted Stock (shares) | 0 | 0 | 447,628 | 0 |
Diluted weighted average shares outstanding (shares) | 59,919,246 | 52,868,745 | 57,825,310 | 53,058,341 |
Equity - Changes in Accumulated Other Comprehensive Loss by Component (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Accumulated other comprehensive loss, beginning balance | $ (5,461) | |
Accumulated other comprehensive loss, ending balance | (5,663) | |
Net actuarial loss [Member] | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Accumulated other comprehensive loss, beginning balance | (5,461) | $ (3,977) |
Amounts reclassified from accumulated other comprehensive loss | (202) | 83 |
Accumulated other comprehensive loss, ending balance | $ (5,663) | $ (3,894) |
Equity - Reclassifications out of Accumulated Other Comprehensive Loss (Details) - Reclassification out of Accumulated Other Comprehensive Loss [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Amortization of unrecognized (gain) loss | $ (67) | $ 27 | $ (202) | $ 83 |
Amounts reclassified from accumulated other comprehensive loss | (67) | 27 | (202) | 83 |
Income tax expense | 0 | 0 | 0 | 0 |
Amounts reclassified from accumulated other comprehensive loss, net of taxes | $ (67) | $ 27 | $ (202) | $ 83 |
Revenues (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 24, 2017 |
Sep. 30, 2018 |
Sep. 24, 2017 |
|
Deferred revenue recognized during the period | $ 79,000 | |||
Bad debt on receivables | $ 1,046 | $ 1,242 | 5,146 | $ 3,726 |
Adoption of ASC Topic 606 [Member] | ||||
Change in revenue and expenses | (1,514) | (4,401) | ||
Change from Gross to Net Reporting for Certain Licensing Transactions [Member] | ||||
Commercial printing and other revenues, and operating expenses | $ (1,514) | $ (4,401) |
Pension and Postretirement Benefits (Details) - Pension [Member] $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
plan
|
Sep. 24, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
plan
|
Sep. 24, 2017
USD ($)
|
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of pension plans | plan | 2 | 2 | ||
Components of net periodic benefit costs: | ||||
Service cost | $ 150 | $ 157 | $ 450 | $ 470 |
Interest cost | 700 | 780 | 2,099 | 2,341 |
Expected return on plan assets | (1,062) | (1,045) | (3,186) | (3,134) |
Amortization of unrecognized loss | 67 | 43 | 202 | 131 |
Net periodic credit cost | (145) | $ (65) | (435) | $ (192) |
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | ||||
Pension contributions | 902 | 1,349 | ||
Expected employer contributions during the current fiscal year | $ 103 | $ 103 |
Fair Value Measurement (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 24, 2017 |
Dec. 25, 2016 |
---|---|---|---|---|
Assets, Fair Value Disclosure [Abstract] | ||||
Cash and cash equivalents | $ 56,691 | $ 43,056 | ||
Restricted cash | 3,117 | 3,106 | ||
Cash, cash equivalents and restricted cash | 59,808 | 46,162 | $ 163,947 | $ 175,652 |
Recurring [Member] | ||||
Assets, Fair Value Disclosure [Abstract] | ||||
Cash and cash equivalents | 56,691 | 43,056 | ||
Restricted cash | 3,117 | 3,106 | ||
Cash, cash equivalents and restricted cash | 59,808 | 46,162 | ||
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||||
Assets, Fair Value Disclosure [Abstract] | ||||
Cash and cash equivalents | 56,691 | 43,056 | ||
Restricted cash | 3,117 | 3,106 | ||
Cash, cash equivalents and restricted cash | $ 59,808 | $ 46,162 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Restricted Cash and Investments, Current [Abstract] | ||
Restricted cash - Collateral standby letters of credit in the name of the Company's insurers | $ 3,117 | $ 3,106 |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | ||||
---|---|---|---|---|---|
Nov. 04, 2018 |
Oct. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 24, 2017 |
|
Subsequent Event [Line Items] | |||||
Dividends declared, per share (in dollars per share) | $ 1.11 | $ 1.05 | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividends declared, per share (in dollars per share) | $ 0.38 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Dividend payable date | Nov. 20, 2018 | ||||
Dividend record date | Nov. 12, 2018 | ||||
Oklahoman [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Payments to acquire business, gross | $ 12,500 |
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