Reclassification

12 Months Ended

Dec. 27, 2020

Accounting Changes and Error Corrections [Abstract]

Reclassifications

Reclassification

The Company changed the expense captions on its Consolidated Statement of Operations effective for the quarter ended March 29, 2020. These changes were made in order to reflect how the Company manages its business and to communicate where the Company is investing resources and how this aligns with the Company’s strategy. The Company reclassified expenses for the prior period in order to present comparable financial results. There was no change to consolidated operating income, total operating costs, net income or cash flows as a result of this change in classification. A summary of changes is as follows:

“Production costs” has become “Cost of revenue”:

◦Cost of revenue contains all costs related to content creation, subscriber and advertiser servicing, and print production and distribution costs as well as infrastructure costs related to delivering digital content, which include all cloud and cloud-related costs, as well as compensation for employees that enhance and maintain our platforms. This represents a change from previously disclosed production costs, which did not include distribution or subscriber servicing costs. In addition, certain product development costs previously included in production costs have been reclassified to product development.

“Selling, general and administrative” has been split into three lines:

◦Sales and marketing represents all costs related to the Company’s marketing efforts as well as advertising sales costs.

◦Product development represents the Company’s investment into developing and enhancing new and existing product technology, including engineering, product development, and data insights.

◦General and administrative includes general management, corporate enterprise technology, building operations, unallocated overhead costs, severance and multiemployer pension plan withdrawal costs.

In addition, incentive compensation, which was previously wholly included in selling, general and administrative, was reclassified to align with the classification of the related wages across each of the expense captions.

A reconciliation of the expenses as previously disclosed to the recast presentation for twelve months ended December 29, 2019, and December 30, 2018, is as follows:

	As Reported for the Twelve Months Ended December 29, 2019		Reclassification			Recast for the Twelve Months Ended December 29, 2019
Operating costs
Production costs:
Wages and benefits	$	424,070	$	(424,070)	(1)(2)	$	—
Raw materials	75,904		(75,904)		(1)	—
Other production costs	206,381		(206,381)		(1)(2)	—
Total production costs	706,355		(706,355)		(1)(2)	—
Cost of revenue (excluding depreciation and amortization)	—		989,029		(1)(3)(4)	989,029
Selling, general and administrative costs	867,623		(867,623)		(3)(4)(5)	—
Sales and marketing	—		272,657		(4)(5)	272,657
Product development	—		105,514		(2)(4)(5)	105,514
General and administrative	—		206,778		(4)(5)	206,778
Depreciation and amortization	60,661		—			60,661
Total operating costs	$	1,634,639	$	—		$	1,634,639

	As Reported for the Twelve Months Ended December 30, 2018		Reclassification			Recast for the Twelve Months Ended December 30, 2018
Operating costs
Production costs:
Wages and benefits	$	380,678	$	(380,678)	(1)(2)	$	—
Raw materials	76,542		(76,542)		(1)	—
Other production costs	196,956		(196,956)		(1)(2)	—
Total production costs	654,176		(654,176)		(1)(2)	—
Cost of revenue (excluding depreciation and amortization)	—		947,884		(1)(3)(4)	947,884
Selling, general and administrative costs	845,591		(845,591)		(3)(4)(5)	—
Sales and marketing	—		271,164		(4)(5)	271,164
Product development	—		84,098		(2)(4)(5)	84,098
General and administrative	—		196,621		(4)(5)	196,621
Depreciation and amortization	59,011		—			59,011
Total operating costs	$	1,558,778	$	—		$	1,558,778

(1) In the first quarter of 2020, the Company discontinued the use of the production cost caption. These costs, with the exception of product engineering and product design costs, which were reclassified to product development, were reclassified to cost of revenue.

(2) Costs related to developing and enhancing new and existing product technology previously included in production costs were reclassified to product development.

(3) Distribution and fulfillment costs and subscriber and advertising servicing related costs previously included in selling, general and administrative were reclassified to cost of revenue.

(4) Incentive Compensation previously included in selling, general and administrative was reclassified to align with the related salaries in each caption.

(5) In the first quarter of 2020, the Company discontinued the use of the selling, general and administrative cost caption. These costs, with the exception of those related to distribution and fulfillment, subscriber and advertising servicing and incentive compensation related to cost of revenue, were reclassified to the new captions: sales and marketing, product development and general and administrative.