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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 June 30, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-36097
___________________________
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
___________________________
Delaware
 
38-3910250
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
7950 Jones Branch Drive,
McLean,
Virginia
 
22107-0910
(Address of principal executive offices)
 
(Zip Code)
Registrant's telephone number, including area code: (703854-6000.
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol
 
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
 
GCI
 
The New York Stock Exchange
Preferred Stock Purchase Rights

N/A

The New York Stock Exchange
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 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 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 12b-2 of the Exchange Act): Yes No
As of August 3, 2020, the total number of shares of the registrant's Common Stock, $0.01 par value, outstanding was 136,305,331.
 




CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION

Certain statements in this report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views regarding, among other things, our future growth, results of operations, performance, and business prospects and opportunities as well as other statements that are other than historical fact. Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “target(s),” “project(s),” “believe(s),” “will,” “aim,” “would,” “seek(s),” “estimate(s)” and similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of known and unknown risks, uncertainties, and other factors that could lead to actual results materially different from those described in the forward-looking statements. We can give no assurance our expectations will be attained. Our actual results, liquidity, and financial condition may differ from the anticipated results, liquidity, and financial condition indicated in these forward-looking statements. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause our actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others:

Risks and uncertainties associated with the ongoing COVID-19 pandemic;

General economic and market conditions;

Economic conditions in the various regions of the United States;

The growing shift within the publishing industry from traditional print media to digital forms of publication;

Risks and uncertainties associated with our Marketing Solutions segment, including its significant reliance on Google for media purchases, its international operations, and its ability to develop and gain market acceptance for new products or services;

Declining print advertising revenue and circulation subscribers;

Our ability to grow our digital marketing services initiatives, digital audience, and advertiser base;

Our ability to grow our business organically;

Variability in the exchange rate relative to the U.S. dollar of currencies in foreign jurisdictions in which we operate;

The risk that we may not realize the anticipated benefits of our 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 payments associated with our debt;

Our ability to pay dividends consistent with prior practice or at all;

Our ability to reduce costs and expenses;

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;

The competitive environment in which we operate; and

Our ability to recruit and retain key personnel.

Additional risk factors that could cause actual results to differ materially from our expectations include, but are not limited to, the risks identified by us under the heading “Risk Factors” in Item 1A of this report and the statements made in subsequent




filings. Such forward-looking statements speak only as of the date they are made. Except to the extent required by law, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or change in events, conditions, or circumstances on which any statement is based.





INDEX TO GANNETT CO., INC.
Q2 2020 FORM 10-Q
 






PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS
Gannett Co., Inc. and Subsidiaries
in thousands, except share data
June 30, 2020
 
December 31, 2019
ASSETS
(Unaudited)
 
 
Current assets
 
 
 
Cash and cash equivalents
$
158,603

 
$
156,042

Accounts receivable, net of allowance for doubtful accounts of $26,560 and $19,923
288,509

 
438,523

Inventories
40,468

 
55,090

Prepaid expenses and other current assets
125,208

 
129,460

Total current assets
612,788

 
779,115

Property, plant and equipment, at cost net of accumulated depreciation of $358,746 and $277,291
718,590

 
815,807

Operating lease assets
296,128

 
309,112

Goodwill
559,623

 
914,331

Intangible assets, net
920,525

 
1,012,564

Deferred income tax assets
105,051

 
76,297

Other assets
125,212

 
112,876

Total assets
$
3,337,917

 
$
4,020,102

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable and accrued liabilities
$
327,071

 
$
453,628

Deferred revenue
213,988

 
218,823

Current portion of long-term debt

 
3,300

Other current liabilities
47,017

 
42,702

Total current liabilities
588,076

 
718,453

Long-term debt
1,633,449

 
1,636,335

Convertible debt
3,300

 
3,300

Deferred tax liabilities
6,256

 
9,052

Pension and other postretirement benefit obligations
214,084

 
235,906

Long-term operating lease liabilities
282,896

 
297,662

Other long-term liabilities
157,313

 
136,188

Total noncurrent liabilities
2,297,298

 
2,318,443

Total liabilities
2,885,374

 
3,036,896

Redeemable noncontrolling interests
458

 
1,850

Commitments and contingent liabilities (See Note 12)
 
 
 
 
 
 
 
Equity
 
 
 
Common stock of $0.01 par value per share, 2,000,000,000 shares authorized, 136,885,320 issued and 136,114,347 shares outstanding at June 30, 2020; 129,386,258 issued and 128,991,544 shares outstanding at December 31, 2019
1,369

 
1,294

Treasury stock at cost, 770,973 and 394,714 shares at June 30, 2020 and December 31, 2019, respectively
(4,818
)
 
(2,876
)
Additional paid-in capital
1,101,899

 
1,090,694

Accumulated deficit
(633,003
)
 
(115,958
)
Accumulated other comprehensive income (loss)
(13,362
)
 
8,202

Total equity
452,085

 
981,356

Total liabilities and equity
$
3,337,917

 
$
4,020,102


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

2



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Gannett Co., Inc. and Subsidiaries
Unaudited; in thousands, except share data
 
Three months ended June 30,
 
Six months ended June 30,
 
2020
 
2019
 
2020
 
2019
Operating revenues:
 
 
 
 
 
 
 
Advertising and marketing services
$
356,918

 
$
204,697

 
$
843,929

 
$
398,242

Circulation
342,646

 
150,850

 
717,369

 
303,015

Other
67,436

 
48,840

 
154,385

 
90,730

Total operating revenues
767,000

 
404,387

 
1,715,683

 
791,987

Operating expenses:
 
 
 
 
 
 
 
Operating costs
476,735

 
233,407

 
1,043,199

 
462,902

Selling, general and administrative expenses
226,484

 
126,628

 
525,622

 
255,676

Depreciation and amortization
66,327

 
23,328

 
144,352

 
44,251

Integration and reorganization costs
32,306

 
4,278

 
60,560

 
10,077

Acquisition costs
2,379

 
2,364

 
8,348

 
3,137

Impairment of property, plant and equipment
6,859

 
1,262

 
6,859

 
2,469

Goodwill and intangible impairment
393,446

 

 
393,446

 

Loss on sale or disposal of assets
88

 
947

 
745

 
2,737

Total operating expenses
1,204,624

 
392,214

 
2,183,131

 
781,249

Operating income (loss)
(437,624
)
 
12,173

 
(467,448
)
 
10,738

Non-operating (income) expense:
 
 
 
 
 
 
 
Interest expense
57,928

 
10,212

 
115,827

 
20,346

Loss on early extinguishment of debt
369

 

 
1,174

 

Non-operating pension income
(17,553
)
 
(208
)
 
(36,099
)
 
(417
)
Other income, net
(6,261
)
 
(103
)
 
(4,616
)
 
(154
)
Non-operating expense
34,483

 
9,901

 
76,286

 
19,775

Net income (loss) before income taxes
(472,107
)
 
2,272

 
(543,734
)
 
(9,037
)
Benefit for income taxes
(34,276
)
 
(343
)
 
(25,297
)
 
(2,297
)
Net income (loss)
(437,831
)
 
2,615

 
(518,437
)
 
(6,740
)
Net income (loss) attributable to redeemable noncontrolling interests
(938
)
 
(200
)
 
(1,392
)
 
(449
)
Net income (loss) attributable to Gannett
$
(436,893
)
 
$
2,815

 
$
(517,045
)
 
$
(6,291
)
Income (loss) per share attributable to Gannett - basic
$
(3.32
)
 
$
0.05

 
$
(3.95
)
 
$
(0.10
)
Income (loss) per share attributable to Gannett - diluted
$
(3.32
)
 
$
0.05

 
$
(3.95
)
 
$
(0.10
)
Dividends declared per share
$
0.00

 
$
0.38

 
$
0.00

 
$
0.76

 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
 
 
Foreign currency translation adjustments
$
(2,552
)
 
3

 
$
(16,585
)
 
3

Pension and other postretirement benefit items:
 
 
 
 
 
 
 
Net actuarial loss
(8,078
)
 

 
(8,078
)
 

Amortization of net actuarial gain
(11
)
 
(30
)
 
(25
)
 
(60
)
Other
95

 

 
1,061

 

Total pension and other postretirement benefit items
(7,994
)
 
(30
)
 
(7,042
)
 
(60
)
Other comprehensive loss before tax
(10,546
)
 
(27
)
 
(23,627
)
 
(57
)
Income tax effect related to components of other comprehensive income
2,059

 

 
2,063

 

Other comprehensive loss, net of tax
(8,487
)
 
(27
)
 
(21,564
)
 
(57
)
Comprehensive loss
(446,318
)
 
2,588

 
(540,001
)
 
(6,797
)
Comprehensive loss attributable to redeemable noncontrolling interests
(938
)
 
(200
)
 
(1,392
)
 
(449
)
Comprehensive loss attributable to Gannett
$
(445,380
)
 
$
2,788

 
$
(538,609
)
 
$
(6,348
)
The accompanying notes are an integral part of these condensed consolidated financial statements.

3




CONDENSED CONSOLIDATED STATEMENTS OF EQUITY 
GANNETT CO., INC.
Unaudited; in thousands, except share data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock
 
Additional
Paid-in
Capital
 
Accumulated other comprehensive income (loss)
 
Retained
Earnings (Accumulated Deficit)
 
Treasury stock
 
 
 
Shares
 
Amount
Shares
 
Amount
 
Total
Three months ended June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of March 31, 2020
132,715,532

 
$
1,327

 
$
1,093,705

 
$
(4,875
)
 
$
(196,110
)
 
657,165

 
$
(4,491
)
 
$
889,556

Net income (loss)

 

 

 

 
(436,893
)
 

 

 
(436,893
)
Restricted share grants
3,531,279

 
36

 
(36
)
 

 

 

 

 

Restricted stock awards settled, net of withholdings
251,250

 
3

 
(109
)
 

 

 

 

 
(106
)
Other comprehensive income, net of income taxes of $2,059

 

 

 
(8,487
)
 


 

 

 
(8,487
)
Equity-based compensation expense

 

 
7,391

 

 

 

 

 
7,391

Issuance of common stock
387,259

 
3

 
1,021

 

 

 

 

 
1,024

Purchase of treasury stock

 

 

 

 

 
55,236

 
(326
)
 
(326
)
Restricted share forfeiture

 

 

 

 

 
58,572

 
(1
)
 
(1
)
Other activity

 

 
(73
)
 

 

 

 

 
(73
)
Balance as of June 30, 2020
136,885,320

 
1,369

 
1,101,899

 
(13,362
)
 
(633,003
)
 
770,973

 
(4,818
)
 
452,085

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of March 31, 2019
60,806,451

 
$
608

 
$
699,787

 
$
(6,911
)
 
$
(5,224
)
 
276,590

 
$
(2,562
)
 
$
685,698

Net income (loss)

 

 

 

 
2,815

 

 

 
2,815

Other comprehensive income, net of income taxes of $0

 

 

 
(27
)
 

 

 

 
(27
)
Equity-based compensation expense

 

 
707

 

 

 

 

 
707

Purchase of treasury stock

 

 

 

 

 
955

 
(11
)
 
(11
)
Restricted share forfeiture

 

 

 

 

 
47,232

 

 

Dividends declared

 

 
(22,920
)
 

 

 

 

 
(22,920
)
Balance as of June 30, 2019
60,806,451

 
$
608

 
$
677,574

 
$
(6,938
)
 
$
(2,409
)
 
324,777

 
$
(2,573
)
 
$
666,262

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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


4



Unaudited; in thousands, except share data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock
 
Additional
Paid-in
Capital
 
Accumulated other comprehensive income (loss)
 
Retained
Earnings (Accumulated Deficit)
 
Treasury stock
 
 
 
Shares
 
Amount
Shares
 
Amount
 
Total
Six months ended June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 30, 2019
129,386,258

 
$
1,294

 
$
1,090,694

 
$
8,202

 
$
(115,958
)
 
394,714

 
$
(2,876
)
 
$
981,356

Net income (loss)

 

 

 

 
(517,045
)
 

 

 
(517,045
)
Restricted share grants
4,346,313

 
44

 
(44
)
 

 

 

 

 

Restricted stock awards settled
2,508,585

 
25

 
(9,953
)
 

 

 

 

 
(9,928
)
Other comprehensive income, net of income taxes of $2,063

 

 

 
(21,564
)
 

 

 

 
(21,564
)
Equity-based compensation expense

 

 
18,968

 


 

 

 

 
18,968

Issuance of common stock
644,164

 
6

 
2,570

 

 

 


 


 
2,576

Purchase of treasury stock

 

 

 

 

 
317,687

 
(1,941
)
 
(1,941
)
Restricted share forfeiture

 

 

 

 

 
58,572

 
(1
)
 
(1
)
Other activity

 

 
(336
)
 

 

 

 

 
(336
)
Balance as of June 30, 2020
136,885,320

 
1,369

 
1,101,899

 
(13,362
)
 
(633,003
)
 
770,973

 
(4,818
)
 
452,085

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 30, 2018
60,508,249

 
$
605

 
$
721,605

 
$
(6,881
)
 
$
3,767

 
201,963

 
$
(1,873
)
 
$
717,223

Net income (loss)

 

 

 

 
(6,291
)
 

 

 
(6,291
)
Restricted share grants
298,202

 
3

 
(3
)
 

 

 

 

 

Other comprehensive income, net of income taxes of $0

 

 

 
(57
)
 

 

 

 
(57
)
Equity-based compensation expense

 

 
1,843

 

 

 

 

 
1,843

Impact of adoption of ASC 842 - Leases

 

 

 

 
115

 

 

 
115

Purchase of treasury stock

 

 

 

 

 
52,721

 
(700
)
 
(700
)
Restricted share forfeiture

 

 

 

 

 
70,093

 

 

Dividends declared

 

 
(45,871
)
 

 

 

 

 
(45,871
)
Balance as of June 30, 2019
60,806,451

 
608

 
677,574

 
(6,938
)
 
(2,409
)
 
324,777

 
(2,573
)
 
666,262

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


5



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Gannett Co., Inc. and Subsidiaries
Unaudited; in thousands
 
Six months ended June 30,
 
2020
 
2019
 
 
 
 
Cash flows from operating activities:
 
 
 
Net loss
$
(518,437
)
 
$
(6,740
)
Adjustments to reconcile net income to operating cash flows:
 
 
 
Depreciation and amortization
144,352

 
44,251

Equity-based compensation expense
18,968

 
1,843

Non-cash interest expense
11,902

 
689

Loss on sale or disposal of assets
745

 
2,737

Loss on early extinguishment of debt
1,174

 

Goodwill and intangible impairment
393,446

 

Impairment of property, plant and equipment
6,859

 
2,469

Pension and other postretirement benefit obligations, net of contributions
(49,064
)
 
(649
)
Change in other assets and liabilities, net
14,695

 
13,053

Net cash provided by operating activities
24,640

 
57,653

Cash flows from investing activities:
 
 
 
Acquisitions, net of cash acquired

 
(39,353
)
Purchase of property, plant, and equipment
(22,157
)
 
(4,934
)
Proceeds from sale of real estate and other assets
17,792

 
7,107

Insurance proceeds received for damage to property
1,643

 

Change in other investing activities
(304
)
 

Net cash used for investing activities
(3,026
)
 
(37,180
)
Cash flows from financing activities:
 
 
 
Repayment under term loans
(18,985
)
 
(11,296
)
Borrowing under revolving credit facility

 
102,900

Repayments under revolving credit facility

 
(94,900
)
Payments for employee taxes withheld from stock awards
(1,942
)
 
(700
)
Issuance of common stock
1,007

 

Payment of dividends

 
(46,066
)
Changes in other financing activities
(411
)
 

Net cash used for financing activities
(20,331
)
 
(50,062
)
Effect of currency exchange rate change on cash
(780
)
 
3

Increase (decrease) in cash and cash equivalents and restricted cash
503

 
(29,586
)
Balance of cash, cash equivalents, and restricted cash at beginning of period
188,664

 
52,770

Balance of cash, cash equivalents, and restricted cash at end of period
$
189,167

 
$
23,184

 
 
 
 
Supplemental cash flow information:
 
 
 
Cash paid for taxes, net of refunds
$
(1,720
)
 
$
921

Cash paid for interest
$
125,311

 
$
22,684

Non-cash investing and financing activities:
 
 
 
Accrued capital expenditures
$
718

 
$
183

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

6



NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Basis of presentation and summary of significant accounting policies

Description of business: Gannett Co., Inc. ("Gannett", "we", "us", "our", or the "Company") is an innovative, digitally focused media and marketing solutions company committed to fostering the communities in our network and helping them build relationships with their local businesses. On November 19, 2019, New Media Investment Group Inc. ("Legacy New Media") completed its acquisition of Gannett Co., Inc. (which was renamed Gannett Media Corp. and is referred herein as "Legacy Gannett"), which retained the name Gannett Co., Inc. and trades on the New York Stock Exchange under the ticker symbol "GCI".

Our current portfolio of media assets includes USA TODAY, local media organizations in 46 states in the U.S. and Guam, and Newsquest (a wholly owned subsidiary operating in the United Kingdom (the "U.K.") with more than 140 local media brands). Gannett also owns the digital marketing services companies ReachLocal, Inc. ("ReachLocal"), UpCurve, Inc. ("UpCurve"), and WordStream, Inc. ("WordStream") and runs the largest media-owned events business in the U.S., GateHouse Live.

Through USA TODAY, our local property network, and Newsquest, Gannett delivers high-quality, trusted content where and when consumers want to engage on virtually any device or platform. Additionally, the Company has strong relationships with hundreds of thousands of local and national businesses in both our U.S. and U.K. markets due to our large local and national sales forces and a robust advertising and marketing solutions product suite. The Company reports in two segments: Publishing and Marketing Solutions. A full description of our segments is included in Note 14 — Segment reporting of the notes to the consolidated financial statements.

COVID-19 Pandemic: The newspaper industry and the Company have experienced declining same-store revenue and profitability over the past several years, and these industry trends are expected to continue in the future. Additionally, during the six months ended June 30, 2020, the Company experienced additional revenue and profitability declines in connection with the COVID-19 global pandemic. More specifically, during March 2020, the Company began to experience decreased demand for its advertising and digital marketing services, commercial print and distribution services, as well as reductions in the single copy and commercial distribution of its newspapers. At this point, the Company’s newspaper production operations have not been significantly impacted and the vast majority of the Company’s non-production employees are currently working remotely. However, the COVID-19 global pandemic had a significant negative impact on the Company’s business and results of operations during the second quarter of 2020, and we expect it to continue to have an impact in future periods. Longer-term, the impact of the COVID-19 pandemic on the Company’s business and results of operations will depend on the severity and length of the pandemic, the duration and extent of the mitigation measures and governmental actions designed to combat the pandemic, as well as the changes in customer behavior as a result of the pandemic, all of which are highly uncertain. As a result, the Company has implemented, and continues to implement, measures to reduce costs and preserve cash flow. These measures include suspension of the quarterly dividend, employee furloughs, decreases in employee compensation, as well as reductions in discretionary spending. In addition, the Company has deferred certain payroll tax remittance as permitted under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") and negotiated the deferral of pension contributions, as well as continuing with its previously disclosed plan to monetize non-core assets. The Company believes these initiatives, along with cash on hand and cash provided by operating activities, will provide sufficient cash flow to enable the Company to meet its commitments. However, these measures will not be sufficient to fully offset the negative impact of the COVID-19 pandemic on the Company's business and results of operations.

Basis of presentation: Our condensed consolidated financial statements are unaudited; however, in the opinion of management, they contain all of the adjustments (consisting of those of a normal, recurring nature) considered necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") applicable to interim periods. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates entities that it controls due to ownership of a majority voting interest. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and footnotes thereto. Actual results could differ from those estimates. The COVID-19 pandemic has caused increased uncertainty in estimates and assumptions affecting the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements.

7




Examples of significant estimates include pension and postretirement benefit obligation assumptions, income taxes, leases, self-insurance liabilities, impairment analysis, stock-based compensation, business combinations and valuation of property, plant and equipment and intangible assets. Actual results could differ from those estimates.
 
Fiscal period: Starting in 2019 and subsequent to our acquisition of Legacy Gannett, our fiscal period end coincides with the Gregorian calendar. In periods prior to the acquisition, our fiscal periods ended on the last Sunday of the calendar month. Our fiscal period for the second quarter of 2019 was June 30, 2019.

Advertising and marketing services revenues: Pursuant to our acquisition of Legacy Gannett, we realigned the presentation of marketing services revenues generated by our UpCurve subsidiary from other revenues to advertising and marketing services revenue on the Condensed consolidated statements of operations and comprehensive income (loss). As a result of this updated presentation, advertising and marketing services revenues increased and other revenues decreased $19.9 million for the three months ended June 30, 2019 and $34.8 million for the six months ended June 30, 2019. Operating revenues, net income, retained earnings, and earnings per share remained unchanged.

Segment presentation: In connection with our Legacy Gannett acquisition and as noted above, we reorganized our reportable segments to include (1) Publishing, which consists of our portfolio of regional, national, and international newspaper publishers and (2) Marketing Solutions, which is comprised of our marketing solutions subsidiaries ReachLocal, UpCurve and WordStream. In addition to these operating segments, we have a corporate category that includes activities not directly attributable to a specific segment. This category primarily consists of broad corporate functions and includes legal, human resources, accounting, analytics, finance, and marketing as well as activities and costs not directly attributable to a particular segment and other general business costs.

Cash and cash equivalents, including restricted cash: Cash equivalents represent highly liquid certificates of deposit which have original maturities of three months or less. Restricted cash is held as cash collateral for certain business operations. Restricted cash primarily consists of funding for letters of credit and cash held in an irrevocable grantor trust for our deferred compensation plans. The restrictions will lapse when benefits are paid to plan participants and their beneficiaries as specified in the plans.
The following table presents a reconciliation of cash, cash equivalents, and restricted cash:
 
June 30,
In thousands
2020
 
2019
Cash and cash equivalents
$
158,603

 
$
20,029

Restricted cash included in other current assets
9,298

 
3,155

Restricted cash included in investments and other assets
21,266

 

Total cash, cash equivalents, and restricted cash
$
189,167

 
$
23,184



New accounting pronouncements adopted: The following are new accounting pronouncements that we adopted in the first six months of 2020:

Financial Instruments—Credit Losses: In June 2016, the Financial Accounting Standards Board ("FASB") issued new guidance which amends the principles around the recognition of credit losses by mandating entities incorporate an estimate of current expected credit losses when determining the value of certain assets. The guidance also amends reporting around allowances for credit losses on available-for-sale marketable securities. This guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. Adopting this guidance did not have a material impact on our consolidated financial statements, refer to Note 4 — Accounts receivable, net for further details.

Intangibles—Internal Use Software: In August 2018, the FASB issued new guidance which 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. This guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. The guidance can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. This guidance was adopted prospectively and did not have a material impact on our consolidated financial statements. Capitalized costs are recognized within prepaid expenses and other current assets or other assets within the consolidated balance sheet.


8



Fair Value Measurement—Disclosure Framework: In August 2018, the FASB issued new guidance that changes disclosure requirements related to fair value measurements as part of the disclosure framework project. The disclosure framework project aims to improve the effectiveness of disclosures in the notes to the financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. Adopting this guidance did not have a material impact on our consolidated financial statements.

New accounting pronouncements not yet adopted: The following are new accounting pronouncements that we are evaluating for future impacts on our financial statements:

Compensation—Retirement Plans: In August 2018, the FASB issued new guidance that changes disclosures related to defined benefit pension and other postretirement benefit plans as part of the disclosure framework project. This guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We are evaluating the provisions of the updated guidance and assessing the impact on our consolidated financial statements.

Simplifying the Accounting for Income Taxes: In December 2019, the FASB issued new guidance that simplifies the accounting for income taxes. The guidance amends the rules for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods. It also reduces complexity in certain areas, including accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group. This guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We are evaluating the provisions of the updated guidance and assessing the impact on our consolidated financial statements.

NOTE 2 — Revenues

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 Condensed consolidated statements of operations and comprehensive income (loss) presents revenues disaggregated by revenue type. Sales taxes and other usage-based taxes are excluded from revenues. The following table presents our revenues disaggregated by source:

 
Three months ended June 30,
 
Six months ended June 30,
In thousands
2020

2019
 
2020
 
2019
Print advertising
$
188,158

 
$
158,205

 
$
456,000

 
$
309,105

Digital advertising and marketing services
168,760

 
46,492

 
387,929

 
89,137

Total advertising and marketing services
356,918

 
204,697

 
843,929

 
398,242

Circulation
342,646

 
150,850

 
717,369

 
303,015

Other
67,436

 
48,840

 
154,385

 
90,730

Total revenues
$
767,000

 
$
404,387

 
$
1,715,683

 
$
791,987


Approximately 6% of our quarter to date and