10-Q 1 mni-20180930x10q.htm 10-Q mni_Current_Folio_10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended:  September 30, 2018

 

or

 

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

 

For the transition period from                      to                     

 

Commission file number: 1-9824

 

G:\SHARED\CONTROL\Financial Reporting\2016\Q1 2016 10Q\Working Copy\Vertical_White (1).JPG

 

The McClatchy Company

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

52-2080478

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

2100 “Q” Street, Sacramento, CA

 

95816

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

 

 

916-321-1844

 

 

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒  No ◻

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes ☒  No ◻

 

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

 

 

 

 

 

 

 

Large accelerated filer ◻

Accelerated filer ☒

 Non-accelerated filer ◻

Smaller reporting company ☒

 

Emerging growth company ◻

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b of the Exchange Act).

 

Yes ◻  No ☒

 

As of November 2, 2018, the registrant had shares of common stock as listed below outstanding:

 

 

 

Class A Common Stock

5,380,650

Class B Common Stock

2,428,191

 

 

 


 

 

THE MCCLATCHY COMPANY

 

TABLE OF CONTENTS

 

 

 

 

 

 


 

PART I – FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS.

 

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; amounts in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Quarters Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 24,

 

September 30,

 

September 24,

 

 

    

2018

    

2017

 

2018

 

2017

 

REVENUES — NET:

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising

 

$

95,102

 

$

115,331

 

$

301,942

 

$

360,459

 

Audience

 

 

84,040

 

 

87,142

 

 

255,143

 

 

268,473

 

Other

 

 

11,923

 

 

10,131

 

 

37,186

 

 

30,004

 

 

 

 

191,065

 

 

212,604

 

 

594,271

 

 

658,936

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation

 

 

73,501

 

 

80,652

 

 

230,650

 

 

258,883

 

Newsprint, supplements and printing expenses

 

 

12,913

 

 

15,075

 

 

40,333

 

 

49,379

 

Depreciation and amortization

 

 

19,041

 

 

19,588

 

 

57,496

 

 

59,016

 

Other operating expenses

 

 

90,527

 

 

83,963

 

 

271,993

 

 

268,784

 

Other asset write-downs

 

 

14,148

 

 

8,715

 

 

14,207

 

 

10,672

 

 

 

 

210,130

 

 

207,993

 

 

614,679

 

 

646,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS)

 

 

(19,065)

 

 

4,611

 

 

(20,408)

 

 

12,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-OPERATING INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(23,346)

 

 

(19,801)

 

 

(60,181)

 

 

(60,547)

 

Interest income

 

 

135

 

 

121

 

 

441

 

 

410

 

Equity income (loss) in unconsolidated companies, net

 

 

(473)

 

 

(600)

 

 

573

 

 

(696)

 

Impairments related to investments in unconsolidated companies, net

 

 

 —

 

 

(1,866)

 

 

 —

 

 

(171,013)

 

Gains related to investments in unconsolidated companies

 

 

1,721

 

 

 —

 

 

1,721

 

 

 —

 

Gain (loss) on extinguishment of debt, net

 

 

36,286

 

 

(1,831)

 

 

30,918

 

 

(2,700)

 

Retirement benefit expense

 

 

(2,778)

 

 

(3,328)

 

 

(8,335)

 

 

(9,983)

 

Other — net

 

 

136

 

 

23

 

 

71

 

 

106

 

 

 

 

11,681

 

 

(27,282)

 

 

(34,792)

 

 

(244,423)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(7,384)

 

 

(22,671)

 

 

(55,200)

 

 

(232,221)

 

Income tax (benefit) expense

 

 

(14,422)

 

 

237,805

 

 

(2,932)

 

 

161,276

 

NET INCOME (LOSS)

 

$

7,038

 

$

(260,476)

 

$

(52,268)

 

$

(393,497)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.90

 

$

(34.11)

 

$

(6.74)

 

$

(51.67)

 

Diluted

 

$

0.90

 

$

(34.11)

 

$

(6.74)

 

$

(51.67)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

7,778

 

 

7,637

 

 

7,754

 

 

7,616

 

Diluted

 

 

7,850

 

 

7,637

 

 

7,754

 

 

7,616

 

 

See notes to the condensed consolidated financial statements.

 

 

1


 

 

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited; amounts in thousands) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Quarters Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 24,

 

September 30,

 

September 24,

 

 

    

2018

    

2017

 

2018

 

2017

 

NET INCOME (LOSS)

 

$

7,038

 

$

(260,476)

 

$

(52,268)

 

$

(393,497)

 

OTHER COMPREHENSIVE INCOME (LOSS): 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension and post retirement plans: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in pension and post-retirement benefit plans

 

 

5,550

 

 

7,712

 

 

16,649

 

 

12,853

 

Investment in unconsolidated companies: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 —

 

 

2,697

 

 

 —

 

 

6,743

 

Other comprehensive income

 

 

5,550

 

 

10,409

 

 

16,649

 

 

19,596

 

Comprehensive income (loss)

 

$

12,588

 

$

(250,067)

 

$

(35,619)

 

$

(373,901)

 

_____________________

(1) There is no income tax benefit associated with the quarter and nine months ended September 30, 2018, or September 24, 2017, due to the recognition of a valuation allowance.    

 

See notes to the condensed consolidated financial statements.

 

 

2


 

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; amounts in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

    

September 30,

    

December 31,

 

 

 

2018

 

2017

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,492

 

$

99,387

 

Trade receivables (net of allowances of $3,772 and $3,225) 

 

 

65,791

 

 

101,081

 

Other receivables

 

 

11,591

 

 

11,556

 

Newsprint, ink and other inventories

 

 

9,829

 

 

7,918

 

Assets held for sale

 

 

5,924

 

 

6,332

 

Other current assets

 

 

17,997

 

 

19,000

 

 

 

 

115,624

 

 

245,274

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

242,414

 

 

257,639

 

Intangible assets:

 

 

 

 

 

 

 

Identifiable intangibles — net

 

 

178,216

 

 

228,222

 

Goodwill

 

 

705,174

 

 

705,174

 

 

 

 

883,390

 

 

933,396

 

Investments and other assets:

 

 

 

 

 

 

 

Investments in unconsolidated companies

 

 

3,696

 

 

7,172

 

Other assets

 

 

61,389

 

 

62,437

 

 

 

 

65,085

 

 

69,609

 

 

 

$

1,306,513

 

$

1,505,918

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

 —

 

$

74,140

 

Accounts payable

 

 

30,478

 

 

31,856

 

Accrued pension liabilities

 

 

8,941

 

 

8,941

 

Accrued compensation

 

 

21,598

 

 

24,050

 

Income taxes payable

 

 

 —

 

 

10,133

 

Unearned revenue

 

 

60,193

 

 

60,436

 

Accrued interest

 

 

11,599

 

 

7,954

 

Other accrued liabilities

 

 

16,958

 

 

18,832

 

 

 

 

149,767

 

 

236,342

 

Non-current liabilities:

 

 

 

 

 

 

 

Long-term debt

 

 

638,651

 

 

707,252

 

Deferred income taxes

 

 

25,892

 

 

28,062

 

Pension and postretirement obligations

 

 

584,158

 

 

599,763

 

Financing obligations

 

 

106,192

 

 

91,905

 

Other long-term obligations

 

 

43,077

 

 

46,926

 

 

 

 

1,397,970

 

 

1,473,908

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

Common stock $.01 par value:

 

 

 

 

 

 

 

Class A (authorized 200,000,000 shares, issued 5,429,199 shares and 5,256,325 shares)

 

 

54

 

 

52

 

Class B (authorized 60,000,000 shares, issued 2,428,191 shares and 2,443,191 shares)

 

 

24

 

 

24

 

Additional paid-in-capital

 

 

2,216,926

 

 

2,215,109

 

Accumulated deficit

 

 

(2,025,033)

 

 

(1,970,097)

 

Treasury stock at cost, 48,654 shares and 3,157 shares

 

 

(475)

 

 

(51)

 

Accumulated other comprehensive loss

 

 

(432,720)

 

 

(449,369)

 

 

 

 

(241,224)

 

 

(204,332)

 

 

 

$

1,306,513

 

$

1,505,918

 

 

See notes to the condensed consolidated financial statements.

3


 

 

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Unaudited; amounts in thousands)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30,

 

September 24,

 

    

2018

    

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

    

 

 

    

 

 

Net loss

 

$

(52,268)

 

$

(393,497)

 

 

 

 

 

 

 

Reconciliation to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

57,496

 

 

59,016

Gain on disposal of property and equipment (excluding other asset write-downs)

 

 

(2,820)

 

 

(10,269)

Retirement benefit expense

 

 

8,335

 

 

9,983

Stock-based compensation expense

 

 

1,819

 

 

1,786

Deferred income taxes

 

 

(2,170)

 

 

153,725

Equity (income) loss in unconsolidated companies

 

 

(573)

 

 

696

Gains related to investments in unconsolidated companies

 

 

(1,721)

 

 

 —

Impairments related to investments in unconsolidated companies, net

 

 

 —

 

 

171,013

Distributions of income from investments in unconsolidated companies

 

 

2,876

 

 

 —

(Gain) loss on extinguishment of debt, net

 

 

(30,918)

 

 

2,700

Other asset write-downs

 

 

14,207

 

 

10,672

Other

 

 

(1,119)

 

 

(4,823)

Changes in certain assets and liabilities:

 

 

 

 

 

 

Trade receivables

 

 

32,622

 

 

24,409

Inventories

 

 

(1,911)

 

 

2,526

Other assets

 

 

2,380

 

 

1,358

Accounts payable

 

 

(1,378)

 

 

(4,001)

Accrued compensation

 

 

(2,452)

 

 

(3,160)

Income taxes

 

 

(10,379)

 

 

(2,304)

Accrued interest

 

 

3,645

 

 

6,093

Other liabilities

 

 

(7,793)

 

 

(5,464)

Net cash provided by operating activities

 

 

7,878

 

 

20,459

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(9,262)

 

 

(7,378)

Proceeds from sale of property, plant and equipment and other

 

 

4,052

 

 

22,656

Distributions from equity investments

 

 

 —

 

 

7,318

Contributions to cost and equity investments

 

 

(2,301)

 

 

(2,698)

Proceeds from sale of unconsolidated companies and other-net

 

 

5,301

 

 

66,652

Net cash provided by (used in) investing activities

 

 

(2,210)

 

 

86,550

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Repurchase of notes and related expenses

 

 

(459,539)

 

 

(70,615)

Proceeds from issuance of debt

 

 

361,449

 

 

 —

Payment of financing costs

 

 

(17,387)

 

 

 —

Proceeds from sale-leaseback financing obligations

 

 

15,749

 

 

43,971

Purchase of treasury shares

 

 

(424)

 

 

(457)

Other

 

 

(441)

 

 

861

Net cash used in financing activities

 

 

(100,593)

 

 

(26,240)

Increase (decrease) in cash, cash equivalents and restricted cash

 

 

(94,925)

 

 

80,769

Cash, cash equivalents and restricted cash at beginning of period

 

 

131,354

 

 

36,248

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD 

 

$

36,429

 

$

117,017

 

See notes to the condensed consolidated financial statements

4


 

 

 

 

THE MCCLATCHY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

 

1.  SIGNIFICANT ACCOUNTING POLICIES

 

Business and Basis of Accounting

 

The McClatchy Company (“Company,” “we,” “us” or “our”) operates 30 media companies in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. We are a publisher of brands such as the Miami HeraldThe Kansas City StarThe Sacramento BeeThe Charlotte Observer,  The (Raleigh) News & Observer, and the (Fort Worth) Star-Telegram. We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the NYSE American under the symbol MNI.

 

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulation of the Securities and Exchange Commission requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The condensed consolidated financial statements include the Company and our subsidiaries. Intercompany items and transactions are eliminated. 

 

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, that are necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. The financial statements contained in this report are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”). Each of the fiscal periods included herein comprise 13 weeks for the third-quarter periods and 39 weeks for the nine-month periods.

 

Fair Value of Financial Instruments

 

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

 

Level 1 – Unadjusted quoted prices available in active markets for identical investments as of the reporting date.

 

Level 2 – Observable inputs to the valuation methodology are other than Level 1 inputs and are either directly or indirectly observable as of the reporting date and fair value can be determined through the use of models or other valuation methodologies.

 

Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability, and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

 

Our policy is to recognize significant transfers between levels at the actual date of the event or circumstance that caused the transfer. During the quarter ended September 30, 2018, as a result of the refinancing transactions discussed in Note 5, we transferred our Debentures (as defined in Note 5) from Level 2 to Level 3 in the fair value hierarchy.

 

5


 

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

 

Cash and cash equivalents, accounts receivable and accounts payable.  As of September 30, 2018, and December 31, 2017, the carrying amount of these items approximates fair value because of the short maturity of these financial instruments.

 

Long-term debt.   At September 30, 2018 the carrying value and the estimated fair value of our 2026 Notes (as defined in Note 5) was $290.0 million and $314.3 million, respectively. As of December 31, 2017, the carrying value and the estimated fair value of the long-term debt, including the current portion of long-term debt, was $781.4 million and $810.7 million, respectively. The fair value of our long-term debt is described above was determined using quoted market prices, including the current market activity of our publicly-traded notes and bank debt, trends in investor demand for debt and market values of comparable publicly-traded debt. These are considered to be Level 2 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value.

 

At September 30, 2018, the carrying value and the estimated fair value of our Debentures and Junior Term Loans (as defined in Note 5), was $348.6 million and $328.7 million, respectively. The fair values of our Debentures and Junior Term loans were estimated based on available market evidence, including quoted market prices for the same or similar instruments. If market evidence was not available or reliable, the fair value was based on the net present value of the future cash flows using interest rates derived from market inputs and a Treasury yield curve in effect at September 30, 2018. These are considered to be Level 3 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value.

 

Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Our non-financial assets that may be measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and cost or equity method investments. All of these are measured using Level 3 inputs. We utilize valuation techniques that seek to maximize the use of observable inputs and minimize the use of unobservable inputs. The significant unobservable inputs include the expected cash flows and the discount rates that we estimate market participants would seek for bearing the risk associated with such assets.

 

Newsprint, ink and other inventories

 

Newsprint, ink and other inventories are stated at the lower of cost (based principally on the first‑in, first‑out method) and net realizable value. During the nine months ended September 24, 2017, we recorded a $2.0 million write‑down of non-newsprint inventory, which is reflected in the other asset write-downs line on our condensed consolidated statement of operations. There were no similar write-downs of newsprint, ink or other inventories during the nine months ended September 30, 2018.

Property, Plant and Equipment

 

Depreciation expense with respect to property, plant and equipment is summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended

 

Nine Months Ended

 

    

September 30,

    

September 24,

 

September 30,

 

September 24,

(in thousands)

 

2018

 

2017

 

2018

 

2017

Depreciation expense

 

$

7,146

 

$

7,496

 

$

21,638

 

$

22,748

 

Assets Held for Sale

 

During the nine months ended September 30, 2018, we began to actively market for sale the land and buildings at two of our media companies. In connection with classifying these assets as assets held for sale, the carrying value of the land and building at one of the properties was reduced to its estimated fair value less selling costs, as determined based on the current market conditions and the estimated selling price. As a result, an impairment charge of $0.1 million was recorded during the nine months ended September 30, 2018, and is included in other asset write-downs on our condensed

6


 

consolidated statement of operations. The land and building at this property were sold during the quarter ended July 1, 2018, with no gain or additional loss. The assets at the second property remain classified as assets held for sale.

 

Intangible Assets and Goodwill

 

We test for impairment of goodwill annually at year‑end, or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The required approach uses accounting judgments and estimates of future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results. Impairment testing is done at a reporting unit level. We perform this testing on our operating segments, which are also considered our reporting units. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The fair value of our reporting units is determined using a combination of a discounted cash flow model and market based approaches. The estimates and judgments that most significantly affect the fair value calculation are assumptions related to future revenue, newsprint prices, compensation levels, discount rate, hypothetical transaction structures, and for the market based approach, private and public market trading multiples for newspaper assets. We consider current market capitalization, based upon the recent stock market prices plus an estimated control premium, in determining the reasonableness of the aggregate fair value of the reporting units. We had no impairment of goodwill during the quarters and nine months ended September 30, 2018, or September 24, 2017.

 

Newspaper mastheads (newspaper titles and website domain names) are not subject to amortization and are tested for impairment annually at year‑end, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of each newspaper masthead with its carrying amount. We use a relief-from-royalty approach, which utilizes the discounted cash flow model to determine the fair value of each newspaper masthead. We performed an interim testing of impairment of intangible newspaper mastheads as of September 30, 2018, due to the continuing challenging business conditions in certain markets as of the end of the third quarter of 2018. We also performed an interim testing of impairment of intangible newspaper mastheads as of September 24, 2017, due to the continuing challenging business conditions and the resulting weakness in our stock price as of the end of the third quarter of 2017. Individual newspaper mastheads were estimated using the present value of expected future cash flows, using estimates, judgments and assumptions discussed above that we believe were appropriate in the circumstances. As a result of these interim tests, we recorded intangible newspaper masthead impairment charge of $14.1 million in the quarter and nine months ended September 30, 2018, and $8.7 million in the quarter and nine months ended September 24, 2017. Both of which are recorded in other asset write-downs on our condensed consolidated statements of operations.

 

Long‑lived assets such as intangible assets subject to amortization (primarily advertiser and subscriber lists) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of such asset group. We had no impairment of long‑lived assets subject to amortization during the quarters and nine months ended September 30, 2018, or September 24, 2017.  

 

Financing Obligations

 

Financing obligations consist of contributions of real properties to the Pension Plan in 2016 and 2011, real property previously owned by The Sacramento Bee in Sacramento, California that was sold and leased back during the third quarter of 2017, and real property previously owned by The State in Columbia, South Carolina that we sold and leased back during the second quarter of 2018. Our long-term financing obligations increased by approximately $14.6 million during the first nine months of 2018 with the sale and leaseback of the Columbia real property.

 

Segment Reporting

 

We have two operating segments that we aggregate into a single reportable segment because each has similar economic characteristics, products, customers and distribution methods. Our operating segments are based on how our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”), makes decisions about allocating resources and assessing performance. The CODM is provided discrete financial information for the two operating

7


 

segments. Each operating segment consists of a group of media companies and both operating segments report to the same segment manager. One of our operating segments (“Western Segment”) consists of our media companies’ operations in the West and Midwest, while the other operating segment (“Eastern Segment”) consists primarily of media operations in the Carolinas and East.

 

Accumulated Other Comprehensive Loss

 

Our accumulated other comprehensive loss (“AOCL”) and reclassifications from AOCL, net of tax, consisted of the following: 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Other

    

 

 

 

 

 

Minimum

 

Comprehensive

 

 

 

 

 

 

Pension and

 

Loss

 

 

 

 

 

 

Post-

 

Related to

 

 

 

 

 

 

Retirement

 

Equity

 

 

 

 

(in thousands)

 

Liability

 

Investments

 

Total

 

Balance at December 31, 2017

 

$

(442,406)

 

$

(6,963)

 

$

(449,369)

 

Amounts reclassified from AOCL

 

 

16,649

 

 

 

 

16,649

 

Other comprehensive income

 

 

16,649

 

 

 —

 

 

16,649

 

Balance at September 30, 2018

 

$

(425,757)

 

$

(6,963)

 

$

(432,720)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount Reclassified from AOCL

 

Amount Reclassified from AOCL

 

 

 

    

Quarters Ended

 

Nine Months Ended

    

 

(in thousands)

 

September 30,

 

September 24,

 

September 30,

 

September 24,

 

Affected Line in the Condensed

AOCL Component

    

2018

    

2017

    

2018

 

2017

 

Consolidated Statements of Operations

Minimum pension and post-retirement liability

 

$

5,550

 

$

7,712

 

$

16,649

   

$

12,853

 

Retirement benefit expense (1) 

_____________________

(1) There is no income tax benefit associated with the quarter and nine months ended September 30, 2018, or September 24, 2017, due to the recognition of a valuation allowance. 

 

Income Taxes

 

We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

 

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted. The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal corporate rate from 35% to 21%; (ii) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (iii) creating a new limitation on deductible interest expense; (iv) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (v) bonus depreciation that will allow for full expensing of qualified property; and (vi) limitations on the deductibility of certain executive compensation.

The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”) in December 2017, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides that the measurement period for the tax effects of the Tax Act should not extend more than one year from the date the Tax Act was enacted. We have concluded our evaluation of the tax implications of the Tax Act on our accounting, including the impact on state taxes, certain compensation arrangements and depreciation. There were no significant adjustments from our original conclusions as previously reported.

A tax valuation allowance is required when it is more-likely-than-not that all or a portion of deferred tax assets may not be realized. The timing of recording or releasing a valuation allowance requires significant judgment. Establishment and removal of a valuation allowance requires us to consider all positive and negative evidence and to make a judgmental decision regarding the amount of valuation allowance required as of a reporting date. The assessment takes into account expectations of future taxable income or loss, available tax planning strategies and the reversal of temporary differences.

8


 

The development of these expectations involves the use of estimates such as operating profitability. The weight given to the evidence is commensurate with the extent to which it can be objectively verified.

 

We performed our assessment of the deferred tax assets during the third and fourth quarters of 2017, weighing the positive and negative evidence as outlined in ASC 740-10, Income Taxes. As we have incurred three years of cumulative pre-tax losses, such objective negative evidence limits our ability to give significant weight to other positive subjective evidence, such as projections for future growth and profitability. As of December 31, 2017, our valuation allowance against a majority of our deferred tax assets was $109.7 million. For the quarter and nine months ended September 30, 2018, we recorded a valuation allowance benefit of $2.8 million and a charge of $21.6 million, respectively, which is recorded in income tax (benefit) expense on our condensed consolidated statements of operations. Our valuation allowance as of September 30, 2018, was $131.3 million.

 

We will continue to maintain a valuation allowance against our deferred tax assets until we believe it is more likely than not that these assets will be realized in the future. If sufficient positive evidence arises in the future that provides an indication that all of or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance may be reversed, in whole or in part, in the period that such determination is made. 

 

Current generally accepted accounting principles prescribe a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise’s tax returns. We recognize accrued interest related to unrecognized tax benefits in interest expense. Accrued penalties are recognized as a component of income tax expense.

 

Earnings Per Share (EPS)

 

Basic EPS excludes dilution from common stock equivalents and reflects income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS is based upon the weighted average number of outstanding shares of common stock and dilutive common stock equivalents in the period.  Common stock equivalents arise from dilutive stock appreciation rights and restricted stock units, and are computed using the treasury stock method. Anti-dilutive common stock equivalents are excluded from diluted EPS. The weighted average anti-dilutive common stock equivalents that could potentially dilute basic EPS in the future, but were not included in the weighted average share calculation, consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended

 

Nine Months Ended

 

 

September 30,

 

September 24,

 

September 30,

 

September 24,

(shares in thousands)

 

2018

 

2017

 

2018

 

2017

Anti-dilutive common stock equivalents

    

127

    

336

    

199

 

385

 

Cash Flow Information

 

Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above:

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

(in thousands)

 

2018

 

2017

Cash and equivalents

 

$

4,492

 

$

99,387

Restricted cash included in other assets(1)

 

 

31,937

 

 

31,967

Total cash, cash equivalents and restricted cash

 

$

36,429

 

$

131,354

_____________________

(1) Restricted cash balances are certificates of deposits secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and one of our property leases. 

9


 

 

Cash paid for interest and income taxes and other non-cash activities consisted of the following:

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30,

 

September 24,

(in thousands)

 

2018

 

2017

Interest paid (net of amount capitalized)

    

$

42,910

    

$

45,889

Income taxes paid (net of refunds)

 

 

12,865

 

 

9,988

 

 

 

 

 

 

 

Other non-cash investing and financing activities related to pension plan transactions:

 

 

 

 

 

 

Reduction of financing obligation due to sale of real properties by pension plan

 

 

(2,667)

 

 

 —

Reduction of PP&E due to sale of real properties by pension plan

 

 

(2,854)

 

 

 —

 

During the third quarter of 2018, we completed a debt for debt exchange of a majority of the existing 2027 Debentures and 2029 Debentures for newly issued Tranche A Junior Term Loans and Tranche B Junior Term Loans. This transaction included a non-cash discount of $68.7 million recorded within the gain on extinguishment of debt. See Note 5 for definitions and further information.

 

Recently Adopted Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“Topic 606”), “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 "Revenue Recognition." ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. Topic 606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In 2016 and 2017, the FASB issued additional updates: ASU No. 2016-08, 2016-10, 2016-11, 2016-12, 2016-20 and 2017-05. These updates provided further guidance and clarification on specific items within the previously issued update. We adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method. See Note 2 for further details.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. We adopted ASU 2016-01 as of January 1, 2018, on a prospective basis, but it did not have an impact on our condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 as of January 1, 2018, retrospectively, but it did not have an impact on our condensed consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” ASU 2016-18 addresses the presentation of restricted cash in the statement of cash flows. The standard requires an entity to include restricted amounts with cash and cash equivalents in the statement of cash flows. An entity will no longer present transfers between cash and cash equivalents and restricted amounts on the statement of cash flows. We adopted ASU 2016-18 as of January 1, 2018, using the retrospective transition method to each period presented. As a result of the adoption, net cash provided by operating activities increased of $2.0 million to exclude the changes in restricted cash, resulting in the nine months ended September 24, 2017, on our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Accounting Standards Codification 842 (“ASC 842”)) and it replaces the existing guidance in ASC 840, “Leases.” ASC 842 requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets (“ROU”). For income statement purposes operating leases will result in straight-line expenses and capital leases will result in expenses similar to current financing

10


 

leases. The new lease standard does not substantially change lessor accounting. The guidance also requires additional disclosures to enable users of financial statements to understand the amount, timing and uncertainty of cash flows arising from leases. In 2018, the FASB issued ASU No. 2018-01, ASU 2018-10, and ASU 2018-11 that provides further guidance and clarification on specific items within the previously issued update. ASC 842 is effective for us for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted.

We plan to adopt ASC 842 in our next fiscal year beginning December 31, 2018, using the modified retrospective approach and we intend to elect certain available practical expedients upon adoption. Our leases are made up of mostly real estate, vehicle and other equipment leases. As a result, we anticipate that ASC 842 will have a material impact on our condensed consolidated balance sheets due to the recognition of ROU assets and lease liabilities for operating leases. We expect our accounting for capital leases to remain substantially unchanged and do not expect that adoption will have a material impact on our condensed consolidated statements of operations. We are in the process of reviewing various lease agreements, implementing a lease management and accounting software, and identifying changes to internal controls and processes to appropriately account and disclose for the new standard. We have not yet quantified the standards impact on the condensed consolidated financial statements. We plan to finalize our determination of the impact by the end of the fourth quarter of 2018.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The measurement of expected credit losses is to be based upon a broad set of information to include historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. It is effective for us for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim or annual reporting periods beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allows for reclassification of stranded tax effects resulting from the Tax Act from accumulated other comprehensive income to retained earnings. This standard also requires certain disclosures about the stranded tax effects. It is effective for us for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

 

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-02 adds, removes and modifies various disclosure requirements within Topic 820. It is effective for us for interim and annual reporting periods beginning after December 15, 2019. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this guidance and delay adoption of the additional disclosures until their effective date. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

 

In August 2018, the FASB issued ASU No. 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plan-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 adds, removes or clarifies various disclosure requirements within guidance. It is effective for us for annual reporting periods beginning after December 15, 2020, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

 

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal -Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). It is effective for us for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

11


 

 

2. REVENUES

 

Adoption of ASC 2014-09 (Topic 606), “Revenue from Contracts with Customers”

 

On January 1, 2018, we adopted 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 Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

 

We recorded a net increase to opening accumulated deficit of $2.7 million as of January 1, 2018, due to the cumulative impact of adopting Topic 606, with the impact primarily related to our audience revenues. The impact to revenues as a result of applying Topic 606 was zero and an increase of $0.4 million for the quarter and nine months ended September 30, 2018, respectively, compared to applying Topic 605.

 

Revenue Recognition

 

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

All revenues recognized on the condensed consolidated statements of operations are the result of contracts with customers, except for revenues associated with lease income where we are the lessor through a sublease arrangement, as these are outside the scope of Topic 606.

 

Advertising Revenues

 

We generate revenues primarily by delivering advertising on our digital media sites, on our partners’ websites and in our newspapers. These advertising revenues are generated through digital and print performance obligations that are included in contracts with customers, which are typically one year or less in duration or commitment. There are no differences in the treatment of digital and print advertising performance obligations or the recognition of revenues for retail, national, classified, and direct marketing revenue categories under Topic 606.  

 

We generate advertising revenues through digital products that are sold on cost-per-thousand impressions (“CPM”) which means that an advertiser pays based upon number of times their ad is displayed on our owned and operated websites and apps, our partners’ websites, ad exchanges, in a video pre-roll or a programmatic bidding exchange. Such revenues are recognized according to the timing outlined in the contract. 

 

There are also monthly marketing campaigns which may include multiple products such as items sold by CPM, reputation management, search engine marketing and search engine optimization. In these arrangements as well as in a CPM sale, the contracted goods and services are performed over the specific contract term and the transfer of the performance obligation occurs as the benefits are consumed by the customer. As such, revenue is recognized daily regardless of the performance obligations classification of timing of being point in time or overtime.

 

Print advertising is advertising that is printed in a publication, inserted into a publication, or physically mailed to a customer. Our performance obligations for print products are directly associated with the inclusion of the advertisement in the final publication and delivery of the product on the contracted distribution day. Revenues are recognized at the point in time that the newspaper publication is delivered and distribution of the advertisement is satisfied.

 

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. We estimate these amounts based on the expected value approach.

 

For ads placed on our partners’ websites or selling a product hosted or managed by partners, we evaluate whether we are the principal or agent. Generally, we report advertising revenues for ads placed on our partners’ websites or for the resale of their products on a gross basis; that is, the amounts billed to our customers are recorded as revenues, and amounts paid

12


 

to our partners for their products or advertising space are recorded as operating expenses. Where we are the principal, we are primarily responsible to our customers for fulfillment of the contract goals though, from time to time, the use of third party goods or services. Our control is further supported by our level of discretion in establishing price and in some cases, controlling inventory before it is transferred to the customer. 

 

Most products, including the printed newspaper advertising product, banner ads on our websites and video ads on our owned and operated player are reported on a gross basis. However, there are some third party products and services that we offer to customers and various revenue share arrangements, such as exchange platforms, that are reported on a net basis. Revenues are earned through being a reseller of a product or participating in an exchange where control over the service provided is limited and costs of the arrangement are net of revenue received.

 

Audience Revenues

 

Audience revenues include digital and print subscriptions or a combination of both at various frequencies of delivery. Our subscribers typically pay us in advance of when their subscriptions start or shortly thereafter. Our performance obligation to subscribers of our digital products is the real-time access to news and information delivered through multiple digital platforms. Our performance obligation to our traditional print subscribers is delivery of the physical newspaper according to their subscription plan. Revenues related to digital and print subscriptions are recognized ratably each day that a product is delivered to the subscriber. 

 

Digital subscriptions may be purchased for a day, month, quarter, or year, and revenue is reported daily over the term of the contract.

 

Traditional print subscriptions may have various frequencies of delivery based upon the subscribers delivery preference. Revenues are recognized based upon each delivery, therefore at a point in time.  

 

Certain subscribers may enter into a grace period (“grace”) after their previous contract term has expired but before payment has be received on the renewal. Grace is granted as a continuation of the subscription contract, so that service is not disrupted, and the extension is accounted for as variable consideration. We estimate these revenue amounts based on the expected amount to be received, taking into account the expected discontinuation of service or nonpayment based on historical experience.

 

Other Revenues

 

The largest revenue streams within other revenues are for commercial printing and distribution. The commercial print agreements are between us and third party publishers to print and make available for distribution their finished products. Commercial print contracts are for a daily finished product and each day’s product is unique, or a separate performance obligation.  Revenue is recorded at a point in time upon completion of each day’s print project.

 

The performance obligation for distribution revenues is the transportation of third-party published products to their subscribers or stores for resale. Distribution is performed substantially the same over the life of the contract and revenue is recognized at the point in time each performance obligation is completed.

 

We report distribution revenues from the third-party publishers on a gross basis. That is, the amounts that we bill to third party publishers to deliver their finished product to their customers are recorded as revenues, and the amounts paid to our independent carriers to deliver the third party product are recorded as operating expenses.

 

13


 

Arrangements with Multiple Performance Obligations

 

Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its standalone selling price. We generally determine standalone selling prices for audience revenue contracts based upon observable market values and the adjusted market assessment. For advertising revenue contracts with multiple performance obligations, stand alone selling price is based on the prices charged to customers or on an adjusted market assessment.

 

Unearned Revenues

 

We record unearned revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. The decrease in the unearned revenue balance for the nine months ended September 30, 2018, was primarily driven by cash payments received or due in advance of satisfying our performance obligations, exceeded by $55.9 million of revenues recognized that were included in the unearned revenue balance as of December 31, 2017.

 

Our payment terms vary for advertising and subscriber customers. Subscribers generally pay in advance of up to one year. Advertiser payments are due within 30 days of invoice issuance and therefore amounts paid in advance are not significant. For advertisers that are considered to be at a higher risk of collectability due to payment history or credit processing, we require payment before the products or services are delivered to the customer. 

 

Practical Expedients and Exemptions

 

We expense sales commissions when incurred because the amortization period would have been one year or less if capitalized. These costs are recorded within compensation expenses.

 

We record usage-based royalties promised in exchange for use of our intellectual property, including but not limited to photographs and articles. These royalty revenues are accrued when estimates of usage and recoverability are made. These revenues are recorded within other revenues.

 

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

 

3.  INTANGIBLE ASSETS AND GOODWILL

 

Intangible assets subject to amortization (primarily advertiser lists, subscriber lists and developed technology), mastheads and goodwill consisted of the following: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

Impairment

 

Disposition

 

Amortization

 

September 30,

(in thousands)

    

2017

    

Charges

    

Adjustments

    

Expense

    

2018

Intangible assets subject to amortization

 

$

839,284

 

$

 —

 

$

(785)

 

$

 —

 

$

838,499

Accumulated amortization

 

 

(761,013)

 

 

 —

 

 

785

 

 

(35,858)

 

 

(796,086)

 

 

 

78,271

 

 

 —

 

 

 —

 

 

(35,858)

 

 

42,413

Mastheads

 

 

149,951

 

 

(14,148)

 

 

 —

 

 

 —

 

 

135,803

Goodwill

 

 

705,174

 

 

 —

 

 

 —

 

 

 —

 

 

705,174

Total

 

$

933,396

 

$

(14,148)

 

$

 —

 

$

(35,858)

 

$

883,390

 

Amortization expense with respect to intangible assets is summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended

 

Nine Months Ended

 

    

September 30,

    

September 24,

 

September 30,

 

September 24,

(in thousands)

 

2018

 

2017

 

2018

 

2017

Amortization expense

 

 $

11,895

 

 $

12,092

 

 $

35,858

 

 $

36,268

 

14


 

The estimated amortization expense for the remainder of fiscal year 2018 and the five succeeding fiscal years is as follows: 

 

 

 

 

 

 

 

Amortization

 

 

Expense

Year

 

(in thousands)

2018 (Remainder)

 

$

11,802

2019

 

 

24,154

2020

 

 

803

2021

 

 

680

2022

 

 

655

2023

 

 

667

 

 

4.  INVESTMENTS IN UNCONSOLIDATED COMPANIES

 

CareerBuilder, LLC

 

On September 13, 2018, we sold our remaining 3.0% ownership interest in CareerBuilder, LLC (“CareerBuilder”) and received gross proceeds of $5.3 million. As a result of this sale, we recognized a gain on sale of investments in unconsolidated companies of $1.7 million in the quarter and nine months ended September 30, 2018. In the nine months ended September 30, 2018, we also received distributions totaling approximately $2.8 million from CareerBuilder, which relate to returns of earnings. Our 3.0% ownership interest in CareerBuilder was accounted for under the cost method (measurement alternative under ASU 2016-01).

 

On July 31, 2017, we along with the then-existing ownership group of CareerBuilder sold a majority of the collective ownership interest in CareerBuilder to an investor group. Our ownership interest in CareerBuilder was reduced to approximately 3.0% from 15.0%. We received $73.9 million from the closing of the transaction, consisting of approximately $7.3 million in normal distributions and $66.6 million of gross proceeds. As a result of announcing the sale prior to closing, we recorded $168.6 million in pre-tax impairment charges on our equity investment in CareerBuilder during the nine months ended September 24, 2017.

 

Other

 

During the quarter and nine months ended September 24, 2017, excluding the CareerBuilder impairments noted above, we wrote-down $1.9 million and $2.4 million, respectively, of certain other unconsolidated investments.

 

 

5.  LONG-TERM DEBT

 

Our long-term debt consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

Face Value at

 

Carrying Value

 

 

September 30,

 

September 30,

 

December 31,

(in thousands)

 

2018

 

2018

 

2017

ABL Credit Agreement

 

$

 —

 

$

 —

 

$

 —

Notes: