EX-99.1 3 a20188-kfsboproformafinanc.htm EXHIBIT 99.1 Exhibit
EXHIBIT 99.1

TRONC, INC.
PRO FORMA COMBINED BALANCE SHEETS
As of April 1, 2018
(In thousands) (Unaudited)


 
 
tronc, Inc.
 
Forsalebyowner.com
 
Pro forma Adjustments
 
Ref
 
Proforma Combined
 
 
 
 
(a)
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
Cash
 
$
162,731

 
$
(38
)
 
$
2,275

 
(b)
 
$
164,968

Accounts receivable
 
153,533

 
(27
)
 
—

 
 
 
153,506

Inventories
 
13,277

 
(62
)
 
—

 
 
 
13,215

Prepaid expenses
 
26,870

 
(1
)
 
—

 
 
 
26,869

Total current assets
 
356,411

 
(128
)
 
2,275

 
 
 
358,558

 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment
 
 
 
 
 
 
 
 
 
 
Machinery, equipment and furniture
 
130,289

 
(973
)
 
—

 
(b)
 
129,316

Buildings and leasehold improvements
 
43,246

 
—

 
—

 
 
 
43,246

 
 
173,535

 
(973
)
 
—

 
 
 
172,562

Accumulated depreciation
 
(77,788
)
 
517

 

 
(b)
 
(77,271
)
 
 
95,747

 
(456
)
 
—

 
 
 
95,291

Advance payments on property, plant and equipment
 
14,007

 
—

 
—

 
 
 
14,007

Property, plant and equipment, net
 
109,754

 
(456
)
 
—

 
 
 
109,298

 
 
 
 
 
 
 
 
 
 
 
Other assets
 
 
 
 
 
 
 
 
 
 
Goodwill
 
203,464

 
(100
)
 
—

 
 
 
203,364

Intangible assets, net
 
144,078

 
—

 
—

 
 
 
144,078

Software, net
 
39,774

 
—

 
—

 
 
 
39,774

Deferred income taxes
 
28,886

 
—

 
—

 
 
 
28,886

Other long-term assets
 
30,818

 
—

 
—

 
 
 
30,818

Total other assets
 
447,020

 
(100
)
 
—

 
 
 
446,920

 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
913,185

 
$
(684
)
 
$
2,275

 
 
 
$
914,776

 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these proforma combined financial statements.
1

TRONC, INC.
PRO FORMA COMBINED BALANCE SHEETS
As of April 1, 2018
(In thousands) (Unaudited)


 
 
tronc, Inc.
 
Forsalebyowner.com
 
Pro forma Adjustments
 
Ref
 
Proforma Combined
 
 
 
 
(a)
 
 
 
 
 
 
Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
21,829

 
$
—

 
$
—

 
 
 
$
21,829

Accounts payable
 
75,281

 
(49
)
 
—

 
 
 
75,232

Employee compensation and benefits
 
56,421

 
(31
)
 
—

 
 
 
56,390

Deferred revenue
 
79,740

 
(61
)
 
—

 
 
 
79,679

Other current liabilities
 
24,291

 
—

 
578

 
(c)
 
24,869

Total current liabilities
 
257,562

 
(141
)
 
578

 
 
 
257,999

 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
326,979

 
—

 
—

 
 
 
326,979

Deferred revenue
 
3,534

 
—

 
—

 
 
 
3,534

Pension and postretirement benefits payable
 
104,494

 
—

 
—

 
 
 
104,494

Other obligations
 
90,201

 
—

 
—

 
 
 
90,201

Total non-current liabilities
 
525,208

 
—

 
—

 
 
 
525,208

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling interest
 
42,062

 
—

 
—

 
 
 
42,062

 
 
 
 
 
 
 
 
 
 
 
Stockholders' equity (deficit)
 
88,353

 
(543
)
 
1,697

 
(d)
 
89,507

 
 
 
 
 
 
 
 
 
 
 
Total liabilities and stockholders’ equity
 
$
913,185

 
$
(684
)
 
$
2,275

 
 
 
$
914,776




The accompanying notes are an integral part of these proforma combined financial statements.
2

TRONC, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME (LOSS)
For the year ended December 31, 2017
(In thousands) (Unaudited)
 
 
tronc, Inc.
 
Forsalebyowner.com
 
Pro forma Adjustments
 
Ref
 
Proforma Combined
 
 
 
 
(e)
 
 
 
 
 
 
Operating revenues
 
$
1,524,018

 
$
(4,407
)
 
$
—

 
 
 
$
1,519,611

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Compensation
 
549,363

 
(2,968
)
 
—

 
 
 
546,395

Newsprint and ink
 
94,340

 
—

 
—

 
 
 
94,340

Outside services
 
468,044

 
(2,717
)
 
—

 
 
 
465,327

Other operating expenses
 
288,986

 
(3,824
)
 
—

 
 
 
285,162

Depreciation and amortization
 
56,696

 
(250
)
 
—

 
 
 
56,446

Total operating expenses
 
1,457,429

 
(9,759
)
 
—

 
 
 
1,447,670

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
66,589

 
5,352

 
—

 
 
 
71,941

Interest expense, net
 
(26,481
)
 
—

 
—

 
 
 
(26,481
)
Premium on stock buyback
 
(6,031
)
 
—

 
—

 
 
 
(6,031
)
Income (loss) on equity investments, net
 
3,139

 
—

 
—

 
 
 
3,139

Income (loss) before income taxes
 
37,216

 
5,352

 
—

 
 
 
42,568

Income tax expense (benefit)
 
31,681

 
2,181

 
—

 
 
 
33,862

Net income (loss)
 
$
5,535

 
$
3,171

 
$
—

 
 
 
$
8,706

 
 
 
 
 
 
 
 
 
 
 
Net income per common share
 
 
 
 
 
 
 
 
 
 
  Basic
 
$
0.16

 
 
 
 
 
 
 
$
0.26

  Diluted
 
$
0.16

 
 
 
 
 
 
 
$
0.25

Weighted average shares outstanding
 
 
 
 
 
 
 
 
 
 
  Basic
 
33,996

 
 
 
 
 
 
 
33,996

  Diluted
 
34,285

 
 
 
 
 
 
 
34,285


The accompanying notes are an integral part of these proforma combined financial statements.
3

TRONC, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME (LOSS)
For the three months ended April 1, 2018
(In thousands) (Unaudited)
 
 
tronc, Inc.
 
Forsalebyowner.com
 
Pro forma Adjustments
 
Ref
 
Proforma Combined
 
 
 
 
(e)
 
 
 
 
 
 
Operating revenues
 
$
355,616

 
$
(922
)
 
$
—

 
 
 
$
354,694

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Compensation
 
144,537

 
(325
)
 
—

 
 
 
144,212

Newsprint and ink
 
22,034

 
—

 
—

 
 
 
22,034

Outside services
 
130,559

 
(266
)
 
—

 
 
 
130,293

Other operating expenses
 
62,598

 
(61
)
 
—

 
 
 
62,537

Depreciation and amortization
 
14,649

 
(63
)
 
—

 
 
 
14,586

Total operating expenses
 
374,377

 
(715
)
 
—

 
 
 
373,662

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
(18,761
)
 
(207
)
 
—

 
 
 
(18,968
)
Interest expense, net
 
(6,594
)
 
—

 
—

 
 
 
(6,594
)
Premium on stock buyback
 
—

 
—

 
—

 
 
 
—

Loss on equity investments, net
 
(729
)
 
—

 
—

 
 
 
(729
)
Other income, net
 
4,388

 
—

 
—

 
 
 
4,388

Income (loss) before income taxes
 
(21,696
)
 
(207
)
 
—

 
 
 
(21,903
)
Income tax expense (benefit)
 
(7,185
)
 
(58
)
 
—

 
 
 
(7,243
)
Net income (loss)
 
(14,511
)
 
(149
)
 
—

 
 
 
(14,660
)
Less: Income attributable to noncontrolling interest
 
262

 
—

 
—

 
 
 
262

Net loss attributable to tronc common stockholders
 
$
(14,773
)
 
$
(149
)
 
$
—

 
 
 
$
(14,922
)
 
 
 
 
 
 
 
 
 
 
 
Net loss attributable to tronc common share
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.42
)
 
 
 
 
 
 
 
$
(0.43
)
Diluted
 
$
(0.42
)
 
 
 
 
 
 
 
$
(0.43
)
Weighted average shares outstanding
 
 
 
 
 
 
 
 
 
 
Basic
 
34,801

 
 
 
 
 
 
 
34,801

Diluted
 
34,801

 
 
 
 
 
 
 
34,801



The accompanying notes are an integral part of these proforma combined financial statements.
4
TRONC, INC.
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed consolidated financial statements of tronc, Inc. and subsidiaries (the “Company”) were derived from the Company’s historical consolidated financial statements. The unaudited pro forma balance sheet as of April 1, 2018 was adjusted to reflect the sale of Forsalebyowner.com for an aggregate purchase price of $2.5 million in cash, which closed on May 23, 2018, as though the disposition occurred on April 1, 2018.
The unaudited pro forma condensed consolidated statements of operations for the quarter ended April 1, 2018 and the year ended December 31, 2017 were prepared as though the disposition occurred on December 26, 2016, the first day of the Company’s fiscal year 2017.
The unaudited pro forma condensed consolidated financial statements are furnished for informational purposes only and do not purport to reflect the Company’s financial position and results of operations had the dispositions occurred on the dates as indicated above. Further, these financial statements are not necessarily indicative of the Company’s future financial position and future results of operations and should be read in conjunction with the historical financial statements of the Company included in its Annual Report on Form 10‑K for the year ended December 31, 2017 and the Company’s Quarterly Report on Form 10-Q for the quarter ended April 1, 2018.
NOTE 2: PRO FORMA ADJUSTMENTS
The pro forma adjustments are based on preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma combined financial information:
Adjustments to the pro forma condensed combined balance sheet
(a)
To eliminate the assets and liabilities of Forsalebyowner.com.
(b)
The cash adjustment amount consists of gross proceeds of $2,500 received from the sale of Forsalebyowner.com on May 23, 2018 and is decreased by selling expenses requiring payment at closing, which total approximately $225.
(c)
Other accrued expense adjustment represents estimated taxes payable related to the sale of Forsalebyowner.com, calculated at the statutory rate.
(d)
Stockholders’ equity was adjusted as a result of adjustments (a) through (c).
Adjustments to the pro forma condensed statements of operations
(e)
To eliminate the revenues and expenses of Forsalebyowner.com.



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