10-K 1 a2018q410k.htm 10-K Document



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-K
[ X ]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2018 
 
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
Commission File No. 001-36230 
TRIBUNE PUBLISHING COMPANY
(Exact name of registrant as specified in its charter) 
Delaware
 
38-3919441
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. employer identification no.)
 
 
 
160 N. Stetson Ave
 
 
Chicago Illinois
 
60601
(Address of principal executive offices)
 
(Zip code)
Registrant’s telephone number, including area code: (312) 222-9100
Securities registered pursuant to Section 12(b) of the Act:
(Title of Class)
 
(Name of Exchange on Which Registered)
Common Stock, par value $.01 per share
 
The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No X
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes   No  X
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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  X  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  X   No   
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-K or any amendment to the Form 10-K [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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   X
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 Ex-change Act. ___
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes __  No  X
The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant was approximately $446,306,181 based upon the closing market price of $17.28 per share of Common Stock on the Nasdaq Global Select Market as of July 1, 2018.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding at March 13, 2019
Common Stock, par value $0.01 per share
 
35,764,869
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement of the registrant to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, for the 2019 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.




 
 
TRIBUNE PUBLISHING COMPANY
 
 
 
 
FORM 10-K
 
 
 
 
TABLE OF CONTENTS
 
 
 
 
 
 
Page
 
 
 
 
 
PART I
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
Item 1A.
 
 
 
 
 
 
 
Item 1B.
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
Item 3.
 
 
 
 
 
 
 
Item 4.
 
 
 
 
 
 
 
PART II
 
 
 
 
 
 
 
 
 
Item 5.
 
 
 
 
 
 
 
Item 6.
 
 
 
 
 
 
 
Item 7.
 
 
 
 
 
 
 
Item 7A.
 
 
 
 
 
 
 
Item 8.
 
 
 
 
 
 
 
Item 9.
 
 
 
 
 
 
 
Item 9A.
 
 
 
 
 
 
 
Item 9B.
 
 
 
 
 
 
 
PART III
 
 
 
 
 
 
 
 
 
Item 10.
 
 
 
 
 
 
 
Item 11.
 
 
 
 
 
 
 
Item 12.
 
 
 
 
 
 
 
Item 13.
 
 
 
 
 
 
 
Item 14.
 
 
 
 
 
 
 
PART IV
 
 
 
 
 
 
 
 
 
Item 15.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Statements
 

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PART I
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
The statements contained in this Annual Report on Form 10-K, as well as the information contained in the notes to our Consolidated Financial Statements, include certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based largely on our current expectations and reflect various estimates and assumptions by us. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, include: changes in advertising demand, circulation levels and audience shares; competition and other economic conditions; economic and market conditions that could impact the level of our required contributions to the defined benefit pension plans to which we contribute; decisions by trustees under rehabilitation plans (if applicable) or other contributing employers with respect to multiemployer plans to which we contribute which could impact the level of our contributions; our ability to develop and grow our online businesses; changes in newsprint price and availability; our ability to maintain effective internal control over financial reporting; concentration of stock ownership among our principal stockholders whose interest may differ from those of other stockholders; and other events beyond our control that may result in unexpected adverse operating results, including those discussed in Item 1A. - Risk Factors in this filing.
The words “believe,” “expect,” “anticipate,” “estimate,” “could,” “should,” “intend,” “may,” “will,” “plan,” “seek” and similar expressions generally identify forward-looking statements. However, such words are not the exclusive means for identifying forward-looking statements, and their absence does not mean that the statement is not forward looking. Whether or not any such forward-looking statements, in fact occur will depend on future events, some of which are beyond our control. Readers are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this Annual Report on Form 10-K. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Item 1. Business
Overview
Tribune Publishing Company, formerly tronc, Inc., was formed as a Delaware corporation on November 21, 2013. Tribune Publishing Company together with its subsidiaries (collectively, the “Company” or “Tribune”) is a media company rooted in award-winning journalism. Headquartered in Chicago, Tribune operates local media businesses in eight markets with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Orlando Sentinel, South Florida’s Sun Sentinel, Virginia’s Daily Press and The Virginian-Pilot, The Morning Call of Lehigh Valley Pennsylvania and the Hartford Courant. Tribune also operates Tribune Content Agency and on February 6, 2018, the Company became a majority owner of BestReviews LLC (“BestReviews”). On May 28, 2018, the Company acquired Virginian-Pilot Media Companies LLC, owner of The Virginian-Pilot, a daily newspaper based in Norfolk, Virginia, and associated businesses (“Virginian-Pilot”). See Note 6 to the Consolidated Financial Statements for further information on acquisitions.
On May 23, 2018, the Company completed the sale of substantially all of the assets of forsalebyowner.com and on June 18, 2018, the Company completed the sale of the Los Angeles Times, The San Diego Union-Tribune and various other titles of the Company’s California properties (“California Properties”). See Note 7 to the Consolidated Financial Statements for further information on dispositions and related discontinued operations.
Effective October 9, 2018, the Company changed its corporate name from tronc, Inc. to Tribune Publishing Company. The common stock of the Company began trading the morning of October 10, 2018 on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “TPCO.”
Tribune’s continuing legacy of brands, including The Virginian-Pilot, have earned a combined 60 Pulitzer Prizes and are committed to informing, inspiring and engaging local communities. Tribune’s brands create and distribute content across its media portfolio, offering integrated marketing, media and business services to consumers and advertisers, including digital solutions and advertising opportunities.
The Company’s results of operations, when examined on a quarterly basis, reflect the seasonality of Tribune’s revenues. Second and fourth quarter advertising revenues are typically higher than first and third quarter revenues. Results for the second quarter reflect spring advertising revenues, while the fourth quarter includes advertising revenues related to the holiday season.

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In the first quarter of 2018, the U.S. imposed preliminary tariffs on certain Canadian newsprint suppliers and the Company’s newsprint suppliers raised their prices approximately 23.0% in response. On August 29, 2018, the International Trade Commission reached a negative determination on the tariffs stating that these imports do not cause material harm to the U.S. paper industry. As a result of this final determination, duties submitted in the intervening months will not be collected from the importers of record. Since the final determination, the Company has seen very little effort by newsprint suppliers to rescind price increases, which were wholly or partially due to pending duty and tariff determinations. As a result, the Company may continue to experience high newsprint prices for an undetermined amount of time. Higher newspaper prices may negatively impact profitability and demand for newsprint.
Significant transactions and recent events
On January 29, 2018, the Company and Cars.com, LLC agreed to convert the Company’s affiliate markets into Cars.com's direct retail channel. The agreement, which resulted in more than 2,000 car deal customers moving from the Company to Cars.com, took effect February 1, 2018. The Company’s related sales and support teams joined Cars.com in connection with the transition. The deal also includes a multi-year advertising and marketing agreement between the Company and Cars.com.
On February 6, 2018, the Company acquired a 60% membership interest in BestReviews LLC (“BestReviews”), a company engaged in the business of testing, researching and reviewing consumer products, pursuant to an Acquisition Agreement (the “BestReviews Acquisition Agreement”), entered into on the same date among the Company, BestReviews Inc., a Delaware corporation (“BR Parent”), BestReviews and the stockholders of BR Parent named therein. The total purchase price of $68.3 million consisted of $33.7 million in cash, less a post-closing working capital adjustment received from the seller of $0.6 million, and $34.6 million in common stock of the Company. The Company issued 1,913,438 shares of common stock in connection with the closing (the “Stock Consideration”). See Note 6 to the Consolidated Financial Statements for additional information related to the acquisition.
On February 7, 2018, the Company entered into a Membership Interest Purchase Agreement (“MIPA”) by and between the Company and Nant Capital, LLC (“Nant Capital”), pursuant to which the Company would sell the California Properties to Nant Capital for an aggregate purchase price of $500 million in cash, plus the assumption of unfunded pension liabilities related to the San Diego Pension Plan, less closing balance sheet and other adjustments totaling $12.6 million, plus a post-closing working capital adjustment received from the buyer of $2.1 million (the "Nant Transaction"). The Nant Transaction closed on June 18, 2018. Dr. Soon-Shiong, a former director of the Company, together with Nant Capital, beneficially own 8,743,619 shares of Tribune common stock, which represented 24.6% of the outstanding shares of Tribune common stock as of December 30, 2018. The gain on sale and operating results of the California Properties are included in discontinued operations in the statement of operations for all periods presented. See Note 7 to the Consolidated Financial Statements for additional information related to the disposition.
On December 20, 2017, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Merrick Ventures LLC (“Merrick Ventures”) and solely for certain sections thereof, Michael W. Ferro, Jr. and Merrick Media, LLC (“Merrick Media”). On March 18, 2018, Mr. Ferro retired from the Company’s Board of Directors. As Mr. Ferro was no longer actively engaged in the business and the Company remained contractually committed for the future payments due under the Consulting Agreement, the Company recognized expense for the full $15.0 million due under the Consulting Agreement. In the second quarter of fiscal 2018, the Company amended the Consulting Agreement to reduce the total fees due under the Consulting Agreement by $2.5 million (from $15 million to $12.5 million) and allow the Company to engage Merrick Ventures as its adviser, if it so chooses, but at no additional cost to the Company. If so engaged, the Company would indemnify Merrick Ventures if the Company requests it to meet with third parties. In June 2018, the Company paid the remaining $7.5 million in fees due under the amended Consulting Agreement in connection with the execution of the amendment. See Note 5 to the Consolidated Financial Statements for additional information related to the Consulting Agreement.
On May 23, 2018, the Company sold substantially all of the assets of forsalebyowner.com, LLC, for $2.5 million in cash, less a post-closing working capital payment to the buyer of $0.1 million. In connection with the sale agreement, the buyer agreed to purchase advertising placements from the Company in an amount equal to at least $4.5 million over a two-year term. The gain on sale and results are included in discontinued operations in the statement of operations for all periods presented. See Note 7 to the Consolidated Financial Statements for additional information related to the disposition.

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On May 28, 2018, the Company acquired Virginian-Pilot Media Companies, LLC (“Virginian-Pilot”), a company engaged in the ownership and operation of The Virginian-Pilot daily newspaper based in Norfolk, Virginia. The purchase price was $34.0 million less a post-closing working capital adjustment of $0.1 million received from the seller. As part of the acquisition, the Company also acquired Virginian-Pilot’s real estate portfolio (comprised of approximately 460,000 square feet), including its headquarters building in downtown Norfolk, its printing and distribution facilities in Virginia Beach and a number of satellite offices in Norfolk and North Carolina. See Note 6 to the Consolidated Financial Statements for additional information related to the acquisition.
On June 21, 2018, the Company used a portion of the proceeds from the Nant Transaction to repay the outstanding principal balance under the Senior Term Facility and to terminate the Senior Term Facility. The Company also terminated the Senior ABL Facility. As a result of the Senior ABL Facility termination, the Company established $43.9 million of restricted cash for outstanding letters of credit previously secured by the Senior ABL Facility. As a result of the early extinguishment of debt, the Company incurred a $7.7 million loss related to expensing the remaining balance of original issue discount and debt origination fees. See Note 10 to the Consolidated Financial Statements for additional information related to the extinguishment and terminations of the credit facilities.
Segments
Subsequent to the Company’s name change, Tribune renamed its existing segments M and X. The Company manages its business as two distinct segments, M and X. Segment M is comprised of the Company’s media groups excluding their digital revenues and related digital expenses, except digital subscription revenues when bundled with a print subscription. Segment X includes the Company’s digital revenues and related digital expenses from local Tribune websites, third party websites, mobile applications, digital only subscriptions, Tribune Content Agency (“TCA”) and BestReviews.
Segment M
Segment M’s media groups include the Chicago Tribune Media Group, the New York Daily News Media Group, The Baltimore Sun Media Group, the Orlando Sentinel Media Group, the Sun Sentinel Media Group, the Virginia Media Group, the Morning Call Media Group and the Hartford Courant Media Group. The Virginia Media Group includes the Daily Press and the recently acquired The Virginian-Pilot. Tribune’s major daily newspapers have served their respective communities with local, regional, national and international news and information for more than 150 years. The Hartford Courant is the nation’s oldest continuously published newspaper and celebrated its 250th anniversary in October 2014.
In the year ended December 30, 2018, 41.8% of segment M’s operating revenues were derived from advertising. These revenues were generated from the sale of advertising space in published issues of the newspapers and from the delivery of preprinted advertising supplements. Approximately 41.1% of operating revenues for the year ended December 30, 2018 were generated from the sale of newspapers and other owned publications to individual subscribers or to sales outlets that re-sell the newspapers. The remaining 17.1% of operating revenues for the year ended December 30, 2018 were generated from the provision of commercial printing and delivery services to other newspapers, direct mail advertising and services and other related activities.
Newspaper print advertising is typically in the form of display, classified or preprint advertising. Advertising and marketing services revenues are comprised of three basic categories: retail, national and classified. Retail is a category of customers who tend to do business directly with the general public. National is a category of customers who tend to do business directly with other businesses. Classified is a type of advertising which is other than display or preprint.
Circulation revenue results from the sale of print editions of newspapers to individual subscribers and the sale of print editions of newspapers to sales outlets that re-sell the newspapers.
Other revenues are derived from commercial printing and delivery services provided to other newspapers, direct mail advertising and services and other related activities. The Company contracts with a number of national and local newspapers to both print and distribute their respective publications in local markets where it is a newspaper publisher. In some instances where it prints publications, it also manages and procures newsprint, ink and plates on their behalf. These arrangements allow the Company to leverage its investment in infrastructure in those markets that support its own publications. As a result, these arrangements tend to contribute incremental profitability and revenues. The Company currently distributes national newspapers (including The New York Times, USA Today and The Wall Street Journal) in its local markets under multiple agreements. Additionally, in New York, Chicago and South Florida, the Company provides some or

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all of these services to other local publications. To provide delivery services to other newspapers, the Company contracts with independent third party delivery vendors and does not provide such services directly.
Products and Services
Segment M’s product mix consists of three publication types: (i) daily newspapers, (ii) weekly newspapers and (iii) niche publications and direct mail. The key characteristics of each of these types of publications are summarized in the table below.
 
Daily Newspapers
 
Weekly Newspapers
 
Niche Publications
Cost:
Paid
 
Paid and free
 
Paid and free
Distribution:
Distributed four to seven days per week
 
Distributed one to three days per week
 
Distributed weekly, monthly or on an annual basis
Income:
Revenue from advertisers, subscribers, rack/box sales
 
Paid: Revenue from advertising, subscribers, rack/box sales
 
Paid: Revenue from advertising, rack/box sales
 
 
 
Free: Advertising revenue only
 
Free: Advertising revenue only
As of December 30, 2018, segment M’s prominent print publications included:
Media Group
 
City
 
Masthead
 
Circulation Type
 
Paid or Free
Chicago Tribune Media Group
 
 
 
 
 
 
Chicago, IL
 
Chicago Tribune
 
Daily
 
Paid
 
 
Chicago, IL
 
Chicago Magazine
 
Monthly
 
Paid
 
 
Chicago, IL
 
Hoy
 
Weekly
 
Free
 
 
Chicago, IL
 
RedEye
 
Weekly
 
Free
New York Daily News Media Group
 
 
 
 
 
 
New York, NY
 
New York Daily News
 
Daily
 
Paid
Sun Sentinel Media Group
 
 
 
 
 
 
Broward County, FL, Palm Beach County, FL
 
Sun Sentinel
 
Daily
 
Paid
 
 
Broward County, FL, Palm Beach County, FL
 
el Sentinel
 
Weekly
 
Free
Orlando Sentinel Media Group
 
 
 
 
 
 
Orlando, FL
 
Orlando Sentinel
 
Daily
 
Paid
 
 
Orlando, FL
 
el Sentinel
 
Weekly
 
Free
The Baltimore Sun Media Group
 
 
 
 
 
 
Baltimore, MD
 
The Baltimore Sun
 
Daily
 
Paid
 
 
Annapolis, MD
 
The Capital
 
Daily
 
Paid
 
 
Westminster, MD
 
Carroll County Times
 
Daily
 
Paid
Hartford Courant Media Group
 
 
 
 
 
 
Middlesex County, CT, Tolland County, CT, Hartford County, CT
 
The Hartford Courant
 
Daily
 
Paid
Virginia Media Group
 
 
 
 
 
 
Newport News, VA (Peninsula)
 
Daily Press
 
Daily
 
Paid
 
 
Norfolk, VA
 
The Virginian-Pilot
 
Daily
 
Paid
The Morning Call Media Group
 
 
 
 
 
 
Lehigh Valley, PA
 
The Morning Call
 
Daily
 
Paid

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Segment X
Segment X comprises the Company’s digital operations and includes the Company’s digital revenues and related digital expenses from local Tribune websites, third party websites, mobile applications, digital only subscriptions, TCA and BestReviews.
TCA is a syndication and licensing business providing quality content solutions for publishers around the globe.  Working with a vast collection of the world’s best news and information sources, TCA delivers a daily news service and syndicated premium content to more than 2,000 media and digital information publishers in nearly 70 countries. Tribune News Service delivers the best material from 70 leading publishers, including Los Angeles Times, Chicago Tribune, Bloomberg News, Miami Herald, The Dallas Morning News, Seattle Times and The Philadelphia Inquirer. Tribune Premium Content syndicates columnists such as Leonard Pitts, Cal Thomas, Clarence Page, Ask Amy, and Rick Steves. TCA manages the licensing of premium content from publications such as Rolling Stone, The Atlantic, Fast Company, Mayo Clinic, Inc. and many more. TCA traces its roots to 1918.
BestReviews is a company engaged in the business of testing, researching and reviewing consumer products. BestReviews generates referral fee revenue by directing online traffic from their published reviews to sites where the products can be purchased. BestReviews has affiliate agreements with online sellers, of which the two largest are Amazon.com and Walmart.com. BestReviews receives a referral fee once the product is purchased.
In the year ended December 30, 2018, 59.2% of segment X’s operating revenues were derived from advertising. These revenues were generated from the sale of advertising space on interactive websites and digital marketing services. The remaining 40.8% of operating revenues for the year ended December 30, 2018 were generated from the sale of digital content and other related activities.
Digital advertising can be in the form of display, banner ads, advertising widgets, coupon ads, video, search advertising and linear ads placed on Tribune and affiliated websites. Digital marketing services include development of mobile websites, search engine marketing and optimization, social media account management and content marketing for its customers’ web presence for small to medium size businesses.
Products and Services
As of December 30, 2018, the Company’s prominent websites include:
Websites
www.tribpub.com
www.orlandosentinel.com
www.thedailymeal.com
www.chicagotribune.com
www.orlandosentinel/elsentinel.com
www.theactivetimes.com
www.chicagomag.com
www.baltimoresun.com
www.dailypress.com
www.sun-sentinel.com
www.capitalgazette.com
www.pilotonline.com
www.sun-sentinel/elsentinel.com
www.carrollcountytimes.com
www.vivelohoy.com
www.bestreviews.com
www.courant.com
www.redeyechicago.com
www.nydailynews.com
www.themorningcall.com
 
Competition
Each of the Company’s nine major daily newspapers holds a leading market position in their respective designated market areas as determined by Nielsen (“DMA”), and competes for readership and advertising with both local or community newspapers as well as national newspapers and other traditional and web-based media sources. Increasingly, the Company is facing competition from digital platforms that have content, search, aggregation and social media functionalities, magazines, broadcast, cable and satellite television, over-the-top video services, radio, direct mail, yellow pages, outdoor, and other media as advertisers adjust their spending based on the perceived value of the audience reached and the cost to reach that audience.  Over time, less competition for advertising dollars is coming from the traditional local, regional and national newspapers.

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The competition for advertising dollars comes from local, regional, and national newspapers, digital platforms that have content, search, aggregation and social media functionalities, magazines, broadcast, cable and satellite television, radio, direct mail, yellow pages, outdoor, and other media as advertisers adjust their spending based on the perceived value of the audience reached and the cost to reach that audience.
The secular shift of how content is consumed, including the ubiquity of mobile platforms, has led to increased competition from a wide variety of new digital content offerings, many of which are often free to users. Besides price, variables impacting customer acquisition and retention include the quality and nature of the user experience and the quality of the content offered.
To address the structural shift to digital media, the Company provides editorial content on a wide variety of platforms and formats - from the printed daily newspaper to leading local websites; on social network sites such as Facebook, Apple News and Twitter; on smartphones, tablets and e-readers; on websites and blogs; in niche online publications and in e-mail newsletters.
Raw Materials
As a publisher of newspapers, Tribune utilizes substantial quantities of various types of paper. During 2018, we consumed approximately 123 thousand metric tons of newsprint. The Company currently obtains substantially all of its newsprint under a long-term contract with a national purchasing aggregator who then draws upon Canadian and U.S. based newsprint producers. We believe that our current source of paper supply is adequate. Our earnings are sensitive to changes in newsprint prices. Newsprint and ink expense accounted for 6.1% of total operating expenses in the year ended December 30, 2018.
Employees
As of December 30, 2018, we had approximately 4,448 full-time and part-time employees, including approximately 1,090 employees represented by various employee unions. We believe our relations with our employees are satisfactory.
Intellectual Property
Currently, our operations are generally not reliant on patents owned by third parties. However, because we operate a large number of websites and mobile applications in high-visibility markets, we do defend patent litigation, from time to time, brought primarily by non-practicing entities, as opposed to marketplace competitors. We have sought patent protection in certain instances; however, we do not consider patents to be material to our business as a whole. Of greater importance to our overall business are the federal, international and state trademark registrations and applications that protect, along with our common law rights, our brands, certain of which are long-standing and well known, such as Chicago Tribune, New York Daily News and The Hartford Courant. Generally, the duration of a trademark registration is perpetual if it is renewed on a timely basis and continues to be used properly as a trademark. We also own a large number of copyrights, none of which individually is material to the business. We maintain certain licensing and content sharing relationships with third-party content providers that allow us to produce the particular content mix we provide to our customers in our markets. The Company entered into a number of agreements with Tribune Media Company, formerly Tribune Company (“TCO”), or its subsidiaries that provide for licenses to certain intellectual property, and in particular, we entered into a license agreement with TCO that provides a non-exclusive, royalty-free license for us to use certain trademarks, service marks and trade names, including the Tribune name. Other than the foregoing and commercially available software licenses, we do not believe that any of our licenses to third-party intellectual property are material to our business as a whole.
Available Information
Tribune maintains its corporate website at www.tribpub.com. The Company makes available free of charge on www.tribpub.com this Annual Report on Form 10-K, the Company’s Quarterly Reports on Form 10-Q, the Company’s Current Reports on Form 8-K, and amendments to all those reports, all as filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).

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Item 1A. Risk Factors
Investors should carefully consider each of the following risks, together with all of the other information in this Annual Report on Form 10-K, in evaluating an investment in the Company’s common stock. The following risks relate to the Company’s business, the separation from TCO, the securities markets and ownership of the Company’s common stock. If any of the following risks and uncertainties develop into actual events, the Company could be materially and adversely affected. If this occurs, the trading price of the Company’s common stock could decline, and investors may lose all or part of their investment.
Risks Relating to Our Business
Advertising demand is expected to continue to be affected by changes in economic conditions and fragmentation of the media landscape.
Advertising revenue is our largest source of revenue. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. National and local economic conditions, particularly in major metropolitan markets, affect the levels of retail, national and classified newspaper advertising revenue. Changes in gross domestic product, consumer spending, auto sales, fuel prices, housing sales, unemployment rates, job creation, and circulation levels and rates, as well as federal, state and local election cycles, all affect demand for advertising.
The trend towards online shopping has negatively impacted retailers, which constitute a primary advertising channel of the Company. A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities. Consolidation across various industries, such as large department store and telecommunications companies, may also reduce overall advertising revenue.
Competition from other media, including other metropolitan, suburban and national newspapers, websites, including news aggregation websites, social media websites and search engines, broadcasters, cable systems and networks, satellite television and radio, magazines, direct marketing and solo and shared mail programs, affects our ability to retain advertising clients and maintain or raise rates. In recent years, Internet sites devoted to recruitment, automotive and real estate have become significant competitors of our newspapers and websites for classified advertising and have significantly eroded our share of classified advertising revenue.
Seasonal variations in consumer spending cause our quarterly advertising revenue to fluctuate. Second and fourth quarter advertising revenue is typically higher than first and third quarter advertising revenue, reflecting the slower economic activity in the winter and summer and the stronger fourth quarter holiday season.
Demand for our products is also one of many factors in determining advertising rates. For example, circulation levels for our newspapers have been declining.
All of these factors continue to contribute to a difficult advertising sales environment and may further adversely affect our ability to grow or maintain our advertising revenue. Our advertising revenues may decline or may decline at a faster rate than anticipated.
Increasing popularity of digital media and the shift in newspaper readership demographics, consumer habits and advertising expenditures from traditional print to digital media have adversely affected and may continue to adversely affect our operating revenues and may require significant capital investments due to changes in technology.
Technology in the media industry continues to evolve rapidly. Advances in technology have led to an increasing number of methods for delivery of news and other content and have resulted in a wide variety of consumer demands and expectations, which are also rapidly evolving. If we are unable to exploit new and existing technologies to distinguish our products and services from those of our competitors or adapt to new distribution methods that provide optimal user experiences, our business and financial results may be adversely affected.
The increasing number of digital media options available on the Internet, through social networking tools and through mobile and other devices distributing news and other content, is expanding consumer choice significantly. Faced with a multitude of media choices and a dramatic increase in accessible information, consumers may place greater value on when, where, how and at what price they consume digital content than they do on the source or reliability of such content.

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Further, as existing newspaper readers get older, younger generations may not develop similar readership habits. News aggregation websites and customized news feeds (often free to users) may reduce our traffic levels by driving interaction away from our websites or our digital applications. If traffic levels stagnate or decline, we may not be able to create sufficient advertiser interest in our digital businesses or to maintain or increase the advertising rates of the inventory on our digital platforms.
In addition, the range of advertising choices across digital products and platforms and the large inventory of available digital advertising space have historically resulted in significantly lower rates for digital advertising than for print advertising. Digital advertising networks and exchanges, real-time bidding and other programmatic buying channels that allow advertisers to buy audiences at scale are also playing a significant role in the advertising marketplace, which may cause downward pricing pressure. In addition, evolving standards for delivery of digital advertising, such as viewability, could adversely affect advertising revenues. Consequently, our digital advertising revenue may not be able to replace print advertising revenue lost as a result of the shift to digital consumption. A decrease in our customers’ advertising expenditures, reduced demand for our offerings or a surplus of advertising inventory could lead to a reduction in pricing and advertising spending, which could have an adverse effect on our businesses and assets. Our inability to maintain and/or improve the performance of our customers’ advertising results on our digital properties may negatively influence rates we achieve in the marketplace for our advertising inventory.
Paywalls on our newspaper websites require users to pay for content after accessing a limited number of pages or news articles for free each month. Our ability to build a subscriber base on our digital platforms depends on market acceptance, consumer habits, pricing, terms of delivery platforms and other factors. Stagnation or a decline in website traffic levels may adversely affect our advertiser base and advertising rates and result in a decline in digital revenue. In order to retain and grow our digital subscription base and audience, we may have to further evolve our digital subscription model, address changing consumer requirements and develop and improve our digital products while continuing to deliver high-quality journalism and content that is interesting and relevant to our audience. There can be no assurance that we will be able to successfully maintain and increase our digital subscription base and audience or that we will be able to do so without taking steps such as reducing pricing or increasing costs that would affect our financial condition and results of operations.
Technological developments may also pose other challenges that could adversely affect our operating revenues and competitive position. New delivery platforms may lead to pricing restrictions, the loss of distribution control and the loss of a direct relationship with consumers. Our advertising and circulation revenues have declined, reflecting general trends in the newspaper industry, including declining newspaper buying (by young people in particular) and the migration to other available forms of media for news. We may also be adversely affected if the use of technology developed to block the display of advertising on websites and mobile devices, fraudulent traffic generated by “bots,” or malware proliferate.
Any changes we make to our business model to address these challenges may require significant capital investments. We have invested, and expect to continue to invest, in digital technologies. However, we may be limited in our ability to invest funds and resources in digital products, services or opportunities and we may incur costs of research and development in building and maintaining the necessary and continually evolving technology infrastructure. Some of our competitors may have greater operational, financial and other resources or may otherwise be better positioned to compete for opportunities and as a result, our digital businesses may be less successful, which may adversely affect our business and financial results.
Our business operates in highly competitive markets and our ability to maintain market share and generate operating revenues depends on how effectively we compete with our competition.
Our business operates in highly competitive markets. Our newspapers often times compete for audiences and advertising revenue with other newspapers as well as with other media such as the Internet, magazines, broadcast, cable and satellite television, radio, direct mail, and yellow pages. Some of our competitors have greater financial and other resources than we do.
Our operating revenues primarily consist of advertising and paid circulation. Competition for advertising expenditures and paid circulation comes from a variety of sources, including local, regional and national newspapers, the Internet, including news aggregation websites, social media websites and search engines, magazines, broadcast, cable and satellite television, radio, direct mail, yellow pages, outdoor billboards, and other media. Free daily newspapers are available in several metropolitan markets, and there can be no assurance that free daily publications, or other publications, will not be introduced in any markets in which we publish newspapers. Competition for newspaper advertising revenue is based largely upon advertiser results, advertising rates, readership, demographics, and circulation levels. Competition for circulation is

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based largely upon the content of the newspaper, its price, editorial quality, customer service, and other sources of news and information. Circulation revenue and our ability to achieve price increases for, or even maintain prices for, our print products may be affected by competition from other publications and other forms of media available in our various markets, declining consumer spending on discretionary items like newspapers, decreasing amounts of free time, and declining frequency of regular newspaper buying among certain demographics. We may incur higher costs competing for advertising dollars and paid circulation. If we are not able to compete effectively for advertising dollars and paid circulation, our operating revenues may decline and our financial condition and results of operations may be adversely affected.
Our primary strategy is to transition from a print-focused media company to a digital platform media company, and if we are not successful in our transition, our business, financial condition and prospects will be adversely affected.
Our ability to successfully transition from a print-focused media company to a digital platform media company depends on various factors, including, among other things, the ability to:
increase digital audiences;
increase the amount of time spent on our websites, the likelihood of users returning to our websites, and their level of engagement;
attract advertisers to our websites;
tailor our products for mobile and tablet devices;
maintain or increase online advertising rates;
exploit new and existing technologies to distinguish our products and services from those of competitors and develop new content, products and services; and
invest funds and resources in digital opportunities.
There are no assurances that we will be able to attract and retain employees with skill sets and knowledge base needed to successfully operate in a digital business structure, that our sales force will be able to effectively sell advertising in the digital advertising arena versus our historical print advertising business, or that we will be able to effect the operational changes necessary to transition to from a print-focused business to a digital-focused business. We may be limited in our ability to invest funds and resources in digital products, services or opportunities, and we may incur research and development costs in building, maintaining and evolving our technology infrastructure.
The sale of the California Properties and the Transition Services Agreement entered into in connection with such sale could impact our results of operations and financial condition.
On June 18, 2018, we completed the sale of the California Properties. For the year ended December 31, 2017, the California Properties accounted for 33.0% of our total revenues. Without the California Properties, the scale and geographic scope of our operations are substantially decreased, which could negatively impact our negotiating power in both revenue matters such as advertising sales rates, as well as procurement activities such as newsprint purchase prices.
Additionally, in connection with the closing of the sale of the California Properties, we entered into a transition services agreement (“TSA”) with NantMedia Holdings, LLC (“NantMedia”), whereby the Company will provide back-office and operational services to NantMedia for up to 12 months after the transaction at negotiated rates approximating cost. NantMedia also provides a small number of transition services to the Company under the TSA. During January 2019, the TSA was extended to June 30, 2020 at the same pricing. During 2018, the Company recognized $17.2 million of revenue from provision of TSA services to NantMedia.
Under the TSA, either party may discontinue all or a portion of the services being provided by the other party upon 60 days advance notice. As TSA services are discontinued by NantMedia, our revenue will decrease. If we are unable to implement cost-control measures to offset the lost revenue, our net income would be negatively impacted.
Decreases, or slow growth, in circulation may adversely affect our circulation and advertising revenues.
Our newspapers, and the newspaper industry as a whole, are experiencing reduced consumer demand for print circulation and decreased circulation revenue. This results from, among other factors, increased competition from other media, particularly the online media outlets (which are often free to users), changing newspaper readership demographics and shifting preferences among some consumers to receive all or a portion of their news other than from a newspaper. These factors could affect our ability to implement circulation price increases, or even maintain current pricing, for our print

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products. As a result, our print circulation and circulation revenue may decline or may decline at a faster rate than anticipated.
In addition, our circulation revenue is sensitive to discretionary spending available to subscribers in the markets we serve, as well as their perceptions of economic trends and uncertainty. Weak economic indicators in various regions across the nation may adversely impact subscriber sentiment and therefore impair our ability to maintain and grow our circulation.
A continued decline in circulation could affect the rate and volume of advertising revenue. To maintain a certain level of our circulation base, we may incur additional costs, and may not be able to recover these costs through circulation and advertising revenue. To address declining circulation, we may increase spending on marketing designed to retain our existing subscriber base and continue or create niche publications targeted at specific market groups. We may also increase marketing efforts to drive traffic to our proprietary websites.
We rely on revenue from the printing and distribution of publications for third parties that may be subject to many of the same business and industry risks that we are.
In 2018, we generated approximately 10.0% of our revenue from printing and distributing third-party publications. As a result, if the macroeconomic and industry trends described herein such as the sensitivity to perceived economic weakness of discretionary spending available to advertisers and subscribers, circulation declines, shifts in consumer habits and the increasing popularity of digital media affect those third parties, we may lose, in whole or in part, a substantial source of revenue, which may adversely impact our results of operations.
If we are unable to execute cost-control measures successfully, our total operating costs may be greater than expected, which would adversely affect our profitability.
We continually assess our operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. These activities have in the past included, and could include in the future, outsourcing of various functions or operations, additional abandonment of leased space, offering employee buyouts, amending retirement benefits and other activities that may result in changes to employee headcount. See Note 4 to the Consolidated Financial Statements for more information on changes in operations during 2018. The Company expects to continue to take actions deemed appropriate to control expenses and enhance profitability but does not currently know whether or when any such actions will occur or the potential costs and expected savings. If we do not achieve expected savings, are unable to implement additional cost-control measures, or our operating costs increase as a result of investments in strategic initiatives, our total operating costs would be greater than anticipated. In addition, if we do not manage our costs properly, such efforts may affect the quality of our products and our ability to generate future revenues. Reductions in staff and employee benefits and changes to our compensation structure could also adversely affect our ability to attract and retain key employees. Finally, depending on the actions taken and the timing of any such actions, the anticipated cost savings could be recognized in fiscal periods that do not correspond to the fiscal period(s) in which the charges are recognized. As a result, our net income trends could be impacted and more difficult to predict.
Significant portions of our expenses are fixed costs that neither increase nor decrease proportionately with revenues. If we are not able to implement further cost-control efforts or reduce our fixed costs sufficiently in response to a decline in our revenues, this could adversely affect our results of operations.
Newsprint prices and availability may continue to be volatile and difficult to predict and control.
Newsprint and ink expense was 6.1% of our total operating expenses for the year ended December 30, 2018. The price of newsprint has historically been subject to change, and the consolidation of North American newsprint mills over the years has reduced the number of suppliers and the available supply of newsprint. We have historically been able to realize favorable newsprint pricing by virtue of our company-wide volume and a long-term contract with a significant supplier. Failure to maintain our current consumption levels, further supplier consolidation or the inability to maintain our existing relationships with our newsprint suppliers may adversely affect newsprint prices in the future.
In the first quarter of 2018, the United States Department of Commerce reached preliminary determinations on tariffs related to countervailing duties and anti-dumping on Canadian imports of uncoated groundwood paper, which includes newsprint. The countervailing duty tariffs ranged from 4.4% to 9.9%. The anti-dumping tariffs ranged from 0% to 22%. On August 29, 2018, the International Trade Commission reached a negative determination on both countervailing duties and

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anti-dumping tariffs, stating that these imports do not cause material harm to the U.S. paper industry and the tariffs were terminated. In the intervening months between the United States Department of Commerce’s preliminary determination and the final determination on August 29, 2018, newsprint prices both directly and indirectly rose dramatically, wholly or partially as a result of the pending duties. As a result of this final determination, duties submitted in the intervening months will not be collected from the importers of record. Since the final determination, we have seen very little effort by newsprint suppliers to rescind price increases, which were wholly or partially due to pending duty and tariff determinations. As a result, we may continue to experience high newsprint prices for an indeterminate amount of time.
We may not be able to adapt to technological changes.
Advances in technologies or alternative methods of content delivery or changes in consumer behavior driven by these or other technologies have had and could continue to have a negative effect on our business. We cannot predict the effect such technologies will have on our operations. In addition, the expenditures necessary to implement these new technologies could be substantial and other companies employing such technologies before we are able to do so could aggressively compete with our business.
Technological developments may increase the threat of content piracy and limit our ability to protect intellectual property rights.
We seek to limit the threat of content piracy; however, policing unauthorized use of our products and services and related intellectual property is often difficult and the steps taken by us may not prevent the infringement by unauthorized third parties. Developments in technology may increase the threat of content piracy by making it easier to duplicate and widely distribute pirated material. Protection of our intellectual property rights is dependent on the scope and duration of our rights as defined by applicable laws in the U.S. and abroad and the manner in which those laws are construed. If those laws are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from intellectual property may decrease, or the cost of obtaining and maintaining rights may increase. There can be no assurance that our efforts to enforce our rights and protect our products, services and intellectual property will be successful in preventing content piracy.
We rely on third-party service providers for various services.
We rely on third-party service providers for various services. We do not control the operation of these service providers. If any of these third-party service providers terminate their relationship with us, or do not provide an adequate level of service, it could be disruptive to our business as we seek to replace the service provider or remedy the inadequate level of service. This disruption may adversely affect our operating results.
Significant problems with our key systems or those of our third-party service providers could have a material adverse effect on our operating results.
The systems underlying the operations of each of our businesses are complex and diverse, and must efficiently integrate with third-party systems, such as wire feeds, video playout systems and credit card processors. Key systems include, without limitation, billing, website and database management, customer support, editorial content management, advertisement and circulation serving and management systems, information technology and communications systems, print and insert production systems, and internal financial systems. Some of these systems and/or support thereof are outsourced to third parties. We or our third-party service providers may experience problems with these systems. All information technology and communication systems are subject to reliability issues, integration and compatibility concerns, and security-threatening intrusions. The continued and uninterrupted performance of our key systems is critical to our success. Unanticipated problems affecting these systems could cause interruptions in our services. In addition, if our third-party service providers face financial or other difficulties, our business could be adversely impacted. Any significant errors, damage, failures, interruptions, delays, or other problems with our systems, our backup systems or our third-party service providers or their systems could adversely impact our ability to satisfy our customers or operate our businesses and could have a material adverse effect on our operating results.

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Our business, operating results and reputation may be negatively impacted, and we may be subject to legal and regulatory claims if there is a loss, destruction, disclosure, misappropriation or alteration of or unauthorized access to data owned or maintained by us, or if we are the subject of a significant data breach or cyberattack.
We rely on our information technology and communications systems to manage our business data, including communications, news and advertising content, digital products, order entry, fulfillment and other business processes. These technologies and systems also help us manage many of our internal controls over financial reporting, disclosure controls and procedures and financial systems. Attempts to compromise information technology and communications systems occur regularly across many industries and sectors, and we may be vulnerable to security breaches resulting from accidental events (such as human error) or deliberate attacks. Moreover, the techniques used to attempt attacks and the perpetrators of such attacks are constantly expanding. We face threats both from use of malicious code (such as malware, viruses and ransomware), employee theft or misuse, advanced persistent threats, and phishing and denial-of-service attacks. For example, in December 2018, the Company was attacked by a ransomware virus, which locked up certain Company systems and data, requiring implementation of components of the Company’s business continuity plans and restoration of data from backups. The Company investigated the incident and determined that it did not result in any unauthorized access to or acquisition of sensitive data stored within its systems. Additionally, in late 2018, the Company identified and investigated unrelated activity involving unauthorized access gained to Company certain staff email accounts and payroll-related user accounts, which was the result of email phishing attacks. The Company is complying with all applicable legal requirements relating to this activity and is taking steps to implement additional safeguards to reduce the risk of successful email phishing attacks. Neither the malware infection nor the email phishing attacks resulted in any material costs to the Company. As cyberattacks become increasingly sophisticated, and as tools and resources become more readily available to malicious third parties, the Company will incur increased costs to secure its technology environment and there can be no guarantee that our and our third-party vendors’ actions, security measures and controls designed to prevent, detect or respond to security breaches, to limit access to data, to prevent destruction, alteration, or exfiltration of data, or to limit the negative impact from such attacks, can provide absolute security against compromise. As a result, our business data, communications, news and advertising content, digital products, order entry, fulfillment and other business processes may be lost, destroyed, disclosed, misappropriated, altered or accessed without consent and various controls, automated procedures and financial systems could be compromised.
A significant security breach or other successful attack could result in significant remediation costs, including repairing system damage, engaging third-party experts, deploying additional personnel or vendor support, training employees, and compensation or incentives offered to third parties whose data has been compromised. These incidents may also lead to lost revenues resulting from a loss in competitive advantage due to the unauthorized disclosure, alteration, destruction or use of business data, the failure to retain or attract customers, the disruption of critical business processes or systems, and the diversion of management’s attention and resources. Moreover, such incidents may result in adverse media coverage, which may harm our reputation. These incidents may also lead to legal claims or proceedings, including regulatory investigations and actions and private lawsuits, and related legal fees, as well as potential settlements, judgments and fines. We maintain insurance, but the coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches.
Our possession and use of personal information, including payment methods of our customers, present risks and expenses that could harm our business. A security breach involving such data, whether through breach of our security measures or otherwise, could expose us to liabilities and costly litigation and damage our reputation.
Our information technology and communications systems store and process subscriber, employee and other personal information, such as names, email addresses, payment method information, addresses, personal health information, social security numbers, and other personal information. Maintaining the security of this information and our systems is critical. Additionally, we depend on the security of our third-party service providers. Unauthorized use of or inappropriate access to our, or our third-party service providers’, information technology and communications systems could jeopardize the security of this personal information. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage information technology and communications systems change frequently and often are not recognized until launched against a target, we or our third-party service providers may be unable to anticipate these techniques or to implement adequate preventative measures. Non-technical means, for example, actions or omissions by an employee, can also result in a security breach. A party that is able to circumvent our security measures could misappropriate the personal information relating to our customers, users or employees. As a result of any such breaches, we may be subject to legal claims, and these events may adversely impact our reputation and interfere with our ability to provide our products and services, all of which

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may have a material adverse effect on our business, financial condition and results of operations. The coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches.
A significant number of our customers authorize us to bill their payment card accounts directly for all amounts charged by us. These customers provide payment card information and other personal information which, depending on the particular payment plan, may be maintained to facilitate future payment card transactions. Under payment card rules and our contracts with our card processors, if there is a breach of payment card information that we store, we could be liable to the banks that issue the payment cards for their related expenses and penalties. In addition, if we or our third-party vendors fail to follow payment card industry data security standards, even if there is no compromise of customer information, we could incur significant fines or lose our ability to give our customers the option of using payment cards. If we were unable to accept payment cards, our business would be seriously harmed.
There can be no assurance that any security measures we, or our third-party service providers, take will be effective in preventing a security breach or that we or our third -party service providers may make some other act or omission that could result in a security breach. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. If an actual or perceived breach of our security occurs, the perception of the effectiveness of our security measures could be harmed and we could lose customers or users. Failure to protect personal information of our customers and employees or to provide affected individuals with adequate notice of any security breach where required by law could also subject us to liabilities imposed by United States federal and state regulatory agencies or courts.
Privacy-related laws are constantly evolving and may increase our compliance costs and potential for liability, either of which may have an adverse effect on our business, financial condition and results of operations.
Many jurisdictions have enacted or are considering enacting privacy or data protection laws and regulations that apply to the processing or protection of personal information, including laws at the city, state and federal level in the United States. For instance, these laws and regulations may impose additional security breach notification requirements, notice and consent requirements and specific data security obligations, and may also provide for a private right of action or statutory damages. The compliance costs and operational burdens imposed by these laws and regulations could be significant. Additionally, as these laws and regulations continue to evolve and continue to be interpreted by courts and regulators, compliance may result in increasing regulatory and public scrutiny and escalating levels of enforcement, litigation, damages and sanctions. For example, California enacted the California Consumer Privacy Act (the “CCPA”) on June 28, 2018, which takes effect on January 1, 2020. The CCPA gives California residents several additional rights, including the right to access and delete their personal information, restrict certain personal information sharing, and receive greater transparency about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a limited private right of action for security breaches that is expected to increase security breach litigation. The CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and compliance costs and adversely affect our business. The law has already been amended and may be amended again before it goes into effect. Additionally, the California Attorney General’s office is expected to issue interpretive rules. These changes make it difficult to predict how the CCPA will affect our business or operations. Aside from actions by state legislatures, the FTC and state attorneys general are active in enforcing against alleged privacy and data protection failures through authority granted to them under broad consumer protection laws, which could also create potential liability and adversely affect our business.
If in the future, we decide to expand any existing or future lines of our business outside of the United States, we may become subject to additional privacy and data protection obligations by other nations’ privacy laws. For example, an expansion into European Union countries may subject us to the European Union’s existing data protection law, the General Data Protection Regulation (the “GDPR”). The GDPR has several very specific and often burdensome compliance requirements that apply to the processing personal data, including stringent conditions for consent when relied upon for processing, granting of rights for individuals (including erasure, access, portability and rectification), conditions applicable to the trans-border flow of such data, more burdensome security breach reporting and other requirements. The GDPR also has significant penalties for non-compliance (up to 20 million Euros, or approximately 23 million U.S. dollars, or 4% of an entity’s worldwide annual turnover in the preceding financial year, whichever is higher) and increases the enforcement powers of the data protection authorities and private citizens. The European Union is also considering an update to its Privacy and Electronic Communication (e-Privacy) Directive with a regulation to, among other things, amend the current directive’s rules on the use of cookies and email marketing.

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Our failure to comply with any of these laws or regulations, foreign or domestic, may have an adverse effect on our business, financial condition and results of operations. Any failure, or perceived failure, by us to comply with laws and regulations that govern our business operations, as well as any failure, or perceived failure, by us to comply with our own posted policies, could result in claims against us by governmental entities or others and/or increased costs to change our practices. They could also result in negative publicity and a loss of confidence in us by our users and advertisers. All of these potential consequences could adversely affect our business and results of operations.
Our brands and reputation are key assets, and negative perceptions or publicity could adversely affect our business, financial condition and results of operations.
Our brands are key assets of the Company, and our success depends on our ability to preserve, grow and leverage the value of our brands. We believe that our brands are trusted by consumers and have excellent reputations for high-quality journalism and content. To the extent consumers perceive the quality of our products to be less reliable or our reputation is damaged, our business, financial condition or results of operations may be adversely affected.
We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our business, or to defend successfully against intellectual property infringement claims by third parties.
Our ability to compete effectively depends in part upon our intellectual property rights, including our trademarks, copyrights and proprietary technology. Our use of contractual provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to protect our intellectual property rights and proprietary technology may not be adequate. Litigation may be necessary to enforce our intellectual property rights and protect our proprietary technology, or to defend against claims by third parties that the conduct of our businesses or our use of intellectual property infringes upon such third party’s intellectual property rights. Any intellectual property litigation or claims brought against us, whether or not meritorious, could result in substantial costs and diversion of our resources, and there can be no assurances that favorable final outcomes will be obtained in all cases. The terms of any settlement or judgment may require us to pay substantial amounts to the other party or cease exercising our rights in such intellectual property. In addition, we may have to seek a license to continue practices found to be in violation of a third party’s rights, which may not be available on reasonable terms, or at all. Our business, financial condition or results of operations may be adversely affected as a result.
Adverse results from litigation or governmental investigations can impact our business practices and operating results.
From time to time, we are party to litigation, including matters relating to alleged libel or defamation, breaches of fiduciary duties by our Board of Directors, employment-related matters, or claims that may provide for statutory damages, in addition to regulatory, environmental and other proceedings with governmental authorities and administrative agencies. The coverage, if any, and limits of our insurance policies may not be adequate to reimburse us for all costs and/or losses associated with lawsuits or investigations. If we are not successful in our defense of any claims that may be asserted against us and/or those claims are not covered by insurance or exceed our insurance coverage, we may have to pay damage awards, indemnify our officers and directors from damage awards that may be entered against them and pay the costs and expenses incurred in defense of, or in any settlement of, such claims. Any such payments or settlement arrangements could be significant and have a material adverse effect on our business, financial condition, results of operations, or cash flows if the claims are not covered by our insurance carriers or if damages exceed the limits of our insurance coverage. Furthermore, regardless of the outcome of any claims that may be filed against us, defending litigation itself could result in substantial costs and divert management’s attention and resources, which could have a material adverse effect on our business, operating results, financial condition and ability to finance our operations.
In some instances, third parties may have an obligation to indemnify us for liabilities related to litigation or governmental investigations, and may be unable to, or fail to fulfill such obligations.  It is possible that the resolution of one or more such legal matters could result in significant monetary damages. If such third parties were to fail to indemnify us, we would be responsible for the monetary damages, which could adversely affect our financial condition and cash flow. As part of our 2015 acquisition of The San Diego Union-Tribune, the seller provided us a full indemnity with respect to a consolidated class action lawsuit that asserts various claims on behalf of home delivery newspaper carriers alleged to have been misclassified as independent contractors. If the seller in The San Diego Union-Tribune were to fail to indemnify us for the payment of settlement amounts, we would be responsible for the monetary damages, which could adversely affect our financial condition.

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We may not achieve the acquisition component of our business strategy, or successfully complete strategic acquisitions, investments or divestitures.
We continuously evaluate our businesses and make strategic acquisitions, investments and divestitures as part of our strategic plan. These transactions involve challenges and risks in negotiation, execution, valuation and integration. There can be no assurance that any such acquisitions, investments or divestitures can be completed.
Acquisitions are an important component of our business strategy; however, there can be no assurance that we will be able to grow our business through acquisitions, that any businesses acquired will perform in accordance with expectations or that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove to be correct.
Acquisitions involve a number of risks, including (i) the challenges in achieving strategic objectives, cost savings and other anticipated benefits; (ii) potential adverse short-term effects on operating results through increased costs or otherwise; (iii) diversion of management’s attention and failure to recruit new, and retain existing, key personnel of the acquired business; (iv) stockholder dilution if an acquisition is consummated (in whole or in part) through an issuance of our securities; (v) failure to successfully implement systems integration; (vi) potential future impairments of goodwill associated with the acquired business; (vii) the risks inherent in the systems of the acquired business and risks associated with unanticipated events or liabilities, any of which could have a material adverse effect on our business, financial condition and results of operations (viii) exceeding the capability of our systems; (ix) problems implementing disclosure controls and procedures for the newly acquired business; and (x) unforeseen difficulties extending internal control over financial reporting and performing the required assessment at the newly acquired business.
Our ability to execute an acquisition strategy may also encounter limitations in completing transactions.  Among other considerations, we may not be able to obtain necessary financing on attractive terms or at all, and we may face regulatory considerations that limit the candidates with whom we are permitted to proceed or may impose transaction execution delays. Future acquisitions may result in the Company incurring debt and contingent liabilities, pension obligations, an increase in interest and amortization expense and significant charges relative to integration costs. Our strategy could be impeded if we do not identify suitable acquisition candidates and our financial condition and results of operations will be adversely affected if we overpay for acquisitions. Even if successfully negotiated, closed and integrated, certain acquisitions may prove not to advance our business strategy and may fall short of expected returns.
Strategic investments are an important component of our business strategy as well. Investments in other companies expose us to the risk that we may not be able to control the operations of the companies we have invested in, which could decrease the benefits we realize from a particular relationship. The success of these investments is dependent on the companies we invest in, as well as other investors. We also are exposed to the risk that a company in which we have made an investment may encounter financial difficulties, which could lead to disruption of that company’s business or operations. Further, our ability to monetize the investments and/or the value we may receive upon any disposition may depend on the actions of the companies we have invested in and other investors. As a result, our ability to control the timing or process relating to a disposition may be limited, which could adversely affect the liquidity of these investments or the value we may ultimately attain upon disposition. If the value of the companies in which we invest declines, we may be required to record a charge to earnings. There can be no assurances that we will receive a return on these investments or that they will result in revenue growth or will produce equity income or capital gains in future years.
If we are unable to successfully operate our business in new markets we may enter, our business, financial condition, and results of operations could be adversely affected.
Part of our strategy is to expand through both organic and inorganic growth. For example, we expanded the geographic scope of our business in 2018 through the acquisition of The Virginian-Pilot. In addition, through our acquisition of a 60% membership interest in BestReviews LLC in 2018, we expanded into a new line of business of testing, researching and reviewing consumer products. Our future financial results will depend in part on our ability to profitably manage our business in these and any other new markets that we may enter. In order to successfully execute on our growth initiatives, we will need to, among other things, anticipate and react to market conditions and develop expertise in areas outside of our business’s traditional core competencies. If we are unable to do so, our business, financial condition, and results of operations could be adversely affected.

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Continued economic uncertainty and the impact on our business or changes to our business and operations may result in goodwill and masthead impairment charges.
Because we have grown in part through acquisitions, goodwill and other acquired intangible assets represent a substantial portion of our assets. We also have long-lived assets consisting of property and equipment and other identifiable intangible assets which we review both on an annual basis as well as when events or circumstances indicate that the carrying amount of an asset may not be recoverable. Erosion of general economic, market or business conditions could have a negative impact on our business and stock price, which may require that we record impairment charges in the future, which negatively affects our results of operations. If a determination is made that a significant impairment in value of goodwill, other intangible assets or long-lived assets has occurred, such determination could require us to impair a substantial portion of our assets. Asset impairments could have a material adverse effect on our financial condition and results of operations.
We assumed underfunded pension liabilities as part of the New York Daily News acquisition and our pension obligations under this plan, or other pension plans we may assume in future acquisitions, could increase.
In connection with acquisitions, we have in the past assumed, and may in the future assume, single-employer and/or multi-employer pension obligations of the acquired entity(ies) which may or may not be fully funded at the time of acquisition.  In connection with our acquisition of the New York Daily News, we assumed the Daily News Retirement Plan (the “NYDN Pension Plan”) which is currently underfunded.  The Company’s contributions to the NYDN Pension Plan were $3.9 million in fiscal 2018. The unfunded status of the NYDN Pension Plan is $19.2 million as actuarially determined as of December 30, 2018. Our pension funding requirements could increase due to a reduction in the plan’s funded status. The extent of underfunding of this plan is directly affected by a variety of factors, including performance of financial markets, changing interest rates, changes in assumptions or investments that do not achieve adequate or expected returns, and liquidity of the plan’s investments. It also is affected by the rate and age of employee retirements, along with actual experience compared to actuarial projections. These items affect pension plan assets and the calculation of pension obligations and expenses. Such changes could increase the cost to our obligations, which could have a material adverse effect on our results and our ability to meet those obligations. In addition, changes in the law, rules, or governmental regulations with respect to pension funding could also materially and adversely affect cash flow and our ability to meet our pension obligations.
Our annual pension funding obligations could also further increase if we assume additional pension plans (whether or not unfunded) in connection with future acquisitions. No assurances can be made regarding whether we will assume other pension plan obligations and, if we do, the level of any underfunded status, if any.
We may be obligated to make greater contributions to multiemployer defined benefit pension plans that cover our union-represented employees in the next several years than previously required, placing greater liquidity needs upon our operations.
As of December 30, 2018, we participate in, and make periodic contributions to ten multiemployer pension plans that cover many of our current and former union employees. The risks of participating in multiemployer plans are different from single-employer plans in that assets contributed are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer withdraws from or otherwise ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. Our required contribution to these plans could increase because of a shrinking contribution base as a result of the insolvency or withdrawal of other companies that currently contribute to these plans, the inability or failure of withdrawing companies to pay their withdrawal liability, low interest rates, lower than expected returns on pension fund assets or the other funding deficiencies. Our withdrawal liability for any multiemployer pension plan will depend on the nature and timing of any triggering event and the extent of that plan’s funding of vested benefits.
Under federal pension law, special funding rules apply to multiemployer pension plans that are classified as “endangered,” “critical” or “ critical and declining.” If plans in which we participate are in critical status, benefit reductions may apply and/or we could be required to make additional contributions. Five of the multiemployer plans we contribute to are in critical and declining status and project insolvency at various dates within the next 12 years. As such four of these plans have implemented rehabilitation plans designed to enable them to emerge from critical status within the time frame stipulated by the Internal Revenue Code (“IRC”). One of these plans adopted a rehabilitation plan in connection with merging the plan with a healthy multiemployer plan. The merger is subject to approval by the Pension Benefit Guaranty Corporation (“PBGC”), which is not assured. The fifth plan was not able to implement a rehabilitation plan that would enable it to emerge from critical status and therefore adopted a rehabilitation plan that reflects reasonable measures to forestall

17



insolvency. Rehabilitation plans are required to be reviewed annually and modified if necessary to meet federal requirements. Therefore, there can be no assurances that the funding obligations under the rehabilitation plans will not increase in the future or that the rehabilitation plans will be successful in preventing or forestalling the projected insolvency of the multiemployer plans.
Given the critical and declining status of the four plans, the trustees may amend the current, or adopt new, rehabilitation plans with increased funding obligations. Trustees of a plan or the PBGC also may decide to terminate a multiemployer plan rather than permit it to become insolvent, and a termination would result in additional liabilities for the participating employers.
With respect to four of the ten multiemployer defined benefit pension plans to which we are obligated to contribute, we are among only a limited number of participating employers. As a result, if one or more of the other contributing employers withdraws from, or ceases to contribute to, such plans, our required contributions to such plans could increase. A withdrawal by a significant percentage of participating employers may result in a mass withdrawal, which would require us to record additional withdrawal liabilities. Additionally, if we are the last remaining participating employer in such plan, we may become obligated to fund the plan’s future liabilities more quickly as if it were a single employer plan and the unfunded liability could reside on our financial statements which would impact our financial statements.
If, in the future, we elect to withdraw from an underfunded multiemployer plan, or if we trigger a partial withdrawal due to declines in contribution base units or a partial cessation of our obligation to contribute, additional liabilities would be required to be recorded that could have an adverse effect on our business, results of operations, financial condition or cash flows. We are not currently able to quantify such potential increased contributions or withdrawal liabilities. See Note 14 to the Consolidated Financial Statements for additional information on individual multiemployer plans.
Labor strikes, lockouts and protracted negotiations can lead to business interruptions and increased operating costs.
As of December 30, 2018, union employees comprised approximately 24.5% of our workforce. We are required to negotiate collective bargaining agreements across our business units on an ongoing basis. Complications in labor negotiations can lead to work slowdowns or other business interruptions and greater overall employee costs. Additionally, certain of our employee groups could elect to unionize in the future. If we or our suppliers are unable to negotiate new or renew expiring collective bargaining agreements, it is possible that the affected unions or others could take action in the form of strikes or work stoppages. Such actions, higher costs in connection with these agreements or a significant labor dispute could adversely affect our business by disrupting our ability to provide customers with our products or services. Depending on its duration, any lockout, strike or work stoppage may have an adverse effect on our operating revenues, cash flows or operating income or the timing thereof.
Our revenues and operating results fluctuate on a seasonal basis and may suffer if revenues during the peak season do not meet our expectations.
Our advertising business is seasonal, and our quarterly revenues and operating results typically exhibit seasonality. Our revenues and operating results tend to be higher in the second and fourth quarters than the first and third quarters. Results for the second quarter reflect spring advertising revenues, while the fourth quarter includes advertising revenues related to the holiday season. Our operating results may suffer if advertising revenues during the second and fourth quarters do not meet expectations. Our working capital and cash flows also fluctuate as a result of this seasonality. Moreover, the operational risks described elsewhere in these risk factors may be significantly exacerbated if those risks were to occur during the fourth quarter.
Our ability to operate effectively could be impaired if we fail to attract, integrate and retain our senior management team.
We rely heavily on the skills and expertise of our senior management team and therefore, our success depends, in part, upon the services they provide us. For example, in January 2019, we appointed a new Chief Executive Officer and new Chairman of the Board. If we are unable to assimilate these new senior managers, if they or our other leaders fail to perform effectively, if we are unable to retain them, or if we are unable to attract additional qualified senior managers as needed, our strategic initiatives could be adversely impacted which could adversely affect our business, financial condition and results of operations.

18



We may not be able to access the credit and capital markets at the times and in the amounts needed and on acceptable terms.
From time to time we may need to access the long-term and short-term capital markets to obtain financing. Our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including: (1) our financial performance, (2) our credit ratings or absence of a credit rating, (3) the liquidity of the overall capital markets and (4) the state of the economy. There can be no assurance that we will have access to the capital markets on terms acceptable to us.
If the distribution of Tribune’s shares by TCO described below does not qualify as a tax-free distribution under Section 355 of the IRC, including as a result of subsequent acquisitions of stock of TCO or Tribune, then TCO may be required to pay substantial U.S. federal income taxes, and Tribune may be obligated to indemnify TCO for such taxes imposed on TCO as a result thereof.
TCO spun-off essentially all of its publishing business into an independent company (the “Distribution”).  TCO received a private letter ruling (the “IRS Ruling”) from the Internal Revenue Service (the “IRS”) to the effect that the Distribution and certain related transactions qualify as tax-free to TCO, Tribune and the TCO stockholders and warrantholders for U.S. federal income tax purposes. Although a private letter ruling from the IRS generally is binding on the IRS, the IRS Ruling does not rule that the Distribution satisfies every requirement for a tax-free distribution, and the parties rely solely on the opinion of counsel described below for comfort that such additional requirements are satisfied.
In connection with the Distribution, TCO received an opinion of special tax counsel to TCO to the effect that the Distribution and certain related transactions qualify as tax-free to TCO and the stockholders and warrantholders of TCO. The opinion of TCO’s special tax counsel relied on the IRS Ruling as to matters covered by it.
The IRS Ruling and the opinion of TCO’s special tax counsel are based on, among other things, certain representations and assumptions as to factual matters made by TCO and certain of the TCO stockholders. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS Ruling or the opinion of TCO’s special tax counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS Ruling and the opinion of TCO’s special tax counsel are based on then current law, and cannot be relied upon if the law changes with retroactive effect.
Among other reasons, the Distribution would be taxable to TCO pursuant to Section 355(e) of the IRC if there is a 50% or more change in ownership of either TCO or Tribune, directly or indirectly, as part of a plan or series of related transactions that include the Distribution. Section 355(e) might apply if other acquisitions of stock of TCO before or after the Distribution, or of Tribune after the Distribution, are considered to be part of a plan or series of related transactions that include the Distribution. If Section 355(e) applied, TCO might recognize a very substantial amount of taxable gain.
Under the tax matters agreement, in certain circumstances, and subject to certain limitations, we are required to indemnify TCO against taxes on the Distribution that arise as a result of our actions or failures to act after the Distribution.
We may incur significant costs to address contamination issues at certain sites operated or used by our publishing businesses.
We may incur costs in connection with the investigation or remediation of contamination at sites currently or formerly owned or operated by us. In connection with the Distribution, we agreed to indemnify TCO for claims or expenses related to certain identified environmental issues. The identified issues generally relate to sites previously owned, operated or used by the Company’s publishing businesses and in some cases, continue to be used for our publishing businesses at which contaminations were identified. Historically, our publishing business was obligated to investigate and remediate contamination at certain of these sites. We were also required to contribute to cleanup costs at certain of these sites that were third-party waste disposal facilities at which it disposed of its wastes. In addition, we acquired real property in connection with our acquisitions of the New York Daily News and The Virginian-Pilot, which includes sites at which contaminations were identified. The sellers in these acquisitions have agreed to indemnify us for certain environmental liabilities, but we may have additional investigation and remediation obligations and be required to contribute to cleanup costs at these facilities. We could have additional investigation and remediation obligations and be required to contribute to cleanup costs at these

19



facilities. Environmental liabilities, including investigation and remediation obligations, could adversely affect our operating results or financial condition.
Macroeconomic trends may adversely impact our business, financial condition and results of operations.
Our operating revenues are sensitive to discretionary spending available to advertisers and subscribers in the markets we serve, as well as their perceptions of economic trends and uncertainty. Weak economic indicators, such as high unemployment rates, weakness in housing, fuel prices and uncertainty regarding the national and state governments’ ability to resolve fiscal issues, may adversely impact advertiser and subscriber sentiment. These types of conditions could impair our ability to maintain and grow our advertiser and subscriber bases.
Events beyond our control may result in unexpected adverse operating results.
Our results could be affected in various ways by global or domestic events beyond our control, such as wars, political unrest, acts of terrorism, natural disasters and Internet outages. Such events can quickly result in significant declines in advertising revenue and significant increases in newsgathering costs. There are no assurances that our business continuity or disaster recovery plans are adequate or that they will be implemented successfully if any such events were to occur.
Risks Relating to our Common Stock and the Securities Market
Certain provisions of our certificate of incorporation, by-laws, and Delaware law may discourage takeovers.
Our amended and restated certificate of incorporation and amended and restated by-laws contain certain provisions that may discourage, delay or prevent a change in our management or control over us. For example, our amended and restated certificate of incorporation and amended and restated by-laws, collectively:
authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to thwart a takeover attempt;
provide that vacancies on our Board of Directors, including vacancies resulting from an enlargement of our Board of Directors, may be filled only by a majority vote of directors then in office;
prohibit stockholders from calling special meetings of stockholders;
prohibit stockholder action by written consent;
establish advance notice requirements for nominations of candidates for elections as directors or to bring other business before an annual meeting of our stockholders; and
require the approval of holders of at least 66 2/3% of the outstanding shares of our common stock to amend certain provisions of our amended and restated certificate of incorporation or to amend our amended and restated by-laws.
These provisions could discourage potential acquisition proposals and could delay or prevent a change in control, even though a majority of stockholders may consider such proposal, if effected, desirable. Such provisions could also make it more difficult for third parties to remove and replace the members of the Board of Directors. Moreover, these provisions may inhibit increases in the trading price of our common stock that may result from takeover attempts or speculation.
Concentration of ownership among our existing directors and principal stockholders may prevent new investors from influencing significant corporate decisions.
As of March 13, 2019, our two largest shareholders are (1) Merrick Media, LLC (“Merrick Media”) and its affiliate Merrick Venture Management, LLC (“Merrick Venture” and together with Merrick Media, the “Merrick Entities”) which beneficially owned approximately 25.5% of our outstanding common stock, and (2) Nant Capital, together with Dr. Patrick Soon-Shiong, which beneficially owned approximately 24.6% of our outstanding common stock. Michael W. Ferro, Jr. is the sole managing member of Merrick Venture, which is the sole manager of Merrick Media. Dr. Patrick Soon-Shiong is the indirect sole owner of Nant Capital. The interests of the Merrick Entities and Nant Capital may differ from those of the

20



Company’s other stockholders. The Merrick Entities and Nant Capital are in the business of making investments in companies and maximizing the return on those investments. They currently may have and may from time to time in the future acquire, interests in businesses that directly or indirectly compete with certain aspects of our business or that supply us with goods and services; provided, however, that pursuant to a Consulting Agreement with the Company, Mr. Ferro and Merrick Ventures have agreed to certain non-compete covenants in favor of the Company.
Due to their significant stockholdings, the Merrick Entities and Nant Capital and their affiliates may be able to significantly influence matters requiring approval of stockholders, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions. For additional information on the purchase agreements under which each of the Merrick Entities and Nant Capital acquired their shares, see Note 18 to the Consolidated Financial Statements.
In addition, our certificate of incorporation, as amended, provides that the provisions of Section 203 of the Delaware General Corporate Law, which relate to business combinations with interested stockholders, do not apply to us.
Substantial sales, or stock issuances by us, of our common stock or the perception that such sales or issuances might occur, could depress the market price of our common stock.
Any sales of substantial amounts of our common stock in the public market, including resales by our investors such as those to whom we have granted registration rights, or the perception that such sales might occur, could depress the market price of our common stock. Pursuant to the purchase agreements under which each of the Merrick Entities and Nant Capital acquired shares from us, certain of the restrictions on resales of those shares expired and, therefore, these stockholders could sell a significant number of shares either in the open market or in privately negotiated transactions. There is no assurance that there will be sufficient buying interest to offset any such public market sales, and, accordingly, the price of our common stock may be depressed by those sales and have periods of volatility.
In addition, we could from time to time issue new securities (debt or equity) or use treasury stock to fund potential acquisitions. For example, we used approximately 1.9 million shares of our common stock held in treasury in connection with our acquisition of a 60% interest in BestReviews. Any issuance of common stock by us could dilute the ownership of current stockholders and could impact the price per share of our common stock. In addition, if we were to issue debt and/or preferred equity, the holders of such securities would have rights senior to those of our common stockholders. There can be no assurances whether we will issue additional securities in the future and, if so, how many and how such issuance could impact our current stockholders and our share price.
The market price for our common stock may be volatile.
Many factors could cause the trading price of our common stock to rise and fall, including the following: (i) declining newspaper print circulation; (ii) declining operating revenues derived from our core business; (iii) variations in quarterly results; (iv) announcements regarding dividends; (v) announcements of technological innovations by us or by competitors; (vi) introductions of new products or services or new pricing policies by us or by competitors; (vii) acquisitions or strategic alliances by us or by competitors; (viii) recruitment or departure of key personnel or key groups of personnel; (ix) the gain or loss of significant advertisers or other customers; (x) changes in the estimates of our operating performance or changes in recommendations by any securities analysts that elect to follow our stock; and (xi) market conditions in the newspaper industry, the media industry, the industries of our customers, and the economy as a whole.
We may be subject to the actions of activist shareholders, which could adversely impact our business.
Activist shareholders and other third parties have made, or may in the future make, strategic proposals, including unsolicited takeover proposals, suggestions or requested changes concerning the Company’s operations, strategy, governance, management, business or other matters. Responding to these campaigns or proposals can be costly and time-consuming, disrupt our operations, and divert the attention of management and our employees from our strategic initiatives. These activities can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the loss of potential business opportunities, harm our ability to attract new investors and customers, and cause the price of our common stock to be depressed and have periods of volatility. We cannot predict, and no assurances can be given, as to the outcome or timing of any matters relating to the foregoing, and such matters may adversely affect our ability to effectively and timely implement our current initiatives, retain and attract key employees, and execute on our business strategy.

21



We do not currently pay cash dividends on our outstanding common stock, and our ability to pay dividends in the future is subject to limitations.
We currently do not pay quarterly common stock cash dividends. Any future determination to declare and pay dividends will be made at the discretion of our Board of Directors after taking into account our financial results, capital requirements and other factors the Board may deem relevant. In addition, because we are a holding company with no material direct operations, we are dependent on loans, dividends and other payments from our operating subsidiaries to generate the funds necessary to pay distributions to us in an amount sufficient for us to pay dividends. Our subsidiaries’ ability to make such distributions will be subject to their operating results, cash requirements and financial condition and the applicable provisions of Delaware law that may limit the amount of funds available for distribution to us.
If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the security or industry analysts downgrades our stock, ceases coverage of our company, fails to publish reports on us regularly, or publishes misleading or unfavorable research about our business, demand for our stock may decrease, which could cause our stock price or trading volume to decline.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim against us arising under the General Corporation Law of the State of Delaware (the “DGCL”), our amended and restated certificate of incorporation or our amended and restated by-laws or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. By becoming a stockholder in our company, you will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of incorporation related to choice of forum. The choice of forum provision in our amended and restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our leased facilities are approximately 4.0 million square feet in the aggregate. Our owned facilities are approximately 0.5 million square feet, which primarily include a printing plant, distribution center, and office space in Virginia.
The Company currently has leased newspaper production facilities in Connecticut, Florida, Illinois, Maryland, New Jersey, and Pennsylvania, however Tribune owns substantially all of the production equipment. For printing plants, the initial lease term is 10 years with two options to renew for additional 10 year terms. For distribution facilities, the initial lease term is 5 years, with options to renew either two or three additional 5 year terms.
Our corporate headquarters are located at 160 N. Stetson Avenue, Chicago, Illinois. The lease is for approximately 137,000 square feet with a 10 year and 11 month term for one floor and a 12 year term for four floors, expiring in 2028 and 2030, respectively.
Many of our local media organizations have outside news bureaus, sales offices and distribution centers that are leased from third parties.
We believe that our current facilities, including the terms and conditions of the relevant lease agreements, are adequate to operate our businesses as currently conducted. As discussed in Note 20 of the Consolidated Financial

22



Statements, we do not manage our assets at a segment level.
Item 3. Legal Proceedings
We are subject to various legal proceedings and claims that have arisen in the ordinary course of business. The legal entities comprising our operations are defendants from time to time in actions for matters arising out of their business operations. In addition, the legal entities comprising our operations are involved from time to time as parties in various regulatory, environmental and other proceedings with governmental authorities and administrative agencies.
The Company does not believe that any matters or proceedings presently pending will have a material adverse effect, individually or in the aggregate, on our consolidated financial position, results of operations or liquidity. However, legal matters and proceedings are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. As such, there can be no assurance that the final outcome of these matters and proceedings will not materially and adversely affect our consolidated financial position, results of operations or liquidity.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The common stock of Tribune, formerly tronc, Inc., is traded on Nasdaq under the symbol “TPCO.” The common shares of the Company ceased trading on Nasdaq under the ticker symbol “TRNC” on October 9, 2018, at the end of the day, and begun trading on Nasdaq under the ticker symbol “TPCO” the morning of October 10, 2018.
On March 13, 2019, the closing price for the Company’s common stock as reported on Nasdaq was $10.96. The approximate number of stockholders of record of the common stock at the close of business on such date was 20. A substantially greater number of holders of Tribune’s common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions.
Tribune Stock Comparative Performance Graph
The following graph compares the cumulative total stockholder return on our common stock for the period commencing August 5, 2014 through December 28, 2018 (the last trading day of fiscal 2018) with the cumulative total return on the Standard & Poor’s 500 Stock Index (the “S&P 500”) and the Standard & Poor’s Publishing Stock Index (the “S&P Publishing Index”).
Total return values were calculated based on cumulative total return assuming (i) the investment of $100 in our common stock, the S&P 500 and the S&P Publishing Index and (ii) reinvestment of dividends.

23



The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the SEC, nor should such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference in such filing.
chart-a8e1e5a8688a501fbd3.jpg


24



Item 6. Selected Financial Data
 
 
As of and for the years ended
(In thousands, except per share data)
 
December 30, 2018
 
December 31, 2017
 
December 25, 2016
 
December 27, 2015
 
December 28, 2014
Statement of Operations Data:
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
$
1,030,669

 
$
1,015,453

 
$
1,063,363

 
$
1,145,885

 
$
1,214,624

Operating expenses
 
1,076,881

 
1,006,523

 
1,080,260

 
1,172,322

 
1,193,220

Income (loss) from operations
 
(46,212
)
 
8,930

 
(16,897
)
 
(26,437
)
 
21,404

Interest expense, net
 
(11,353
)
 
(26,334
)
 
(26,561
)
 
(25,896
)
 
(9,801
)
Loss on early extinguishment of debt
 
(7,666
)
 

 

 

 

Premium on stock buyback
 

 
(6,031
)
 

 

 

Loss on equity investments, net
 
(1,868
)
 
(2,725
)
 
(1,487
)
 
(1,694
)
 
(233
)
Reorganization items, net
 

 

 
(259
)
 
(1,026
)
 
(286
)
Other non-operating income, net
 
14,513

 
3,535

 
265

 
2,117

 
(1,575
)
Income (loss) from continuing operations before income taxes
 
(52,586
)
 
(22,625
)
 
(44,939
)
 
(52,936
)
 
9,509

Income tax expense (benefit)
 
(12,723
)
 
7,188

 
(9,576
)
 
(20,358
)
 
9,308

Net loss from continuing operations
 
$
(39,863
)
 
$
(29,813
)
 
$
(35,363
)
 
$
(32,578
)
 
$
201

Plus: Earnings from discontinued operations, net of taxes
 
289,510

 
35,348

 
41,900

 
29,813

 
42,087

Net income (loss)
 
249,647

 
5,535

 
6,537

 
(2,765
)
 
42,288

Less: Income attributable to noncontrolling interest
 
856

 

 

 

 

Net income (loss) attributable to Tribune
 
$
248,791

 
$
5,535

 
$
6,537

 
$
(2,765
)
 
$
42,288

Loss from continuing operations per common share:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(1.15
)
 
$
(0.88
)
 
$
(1.05
)
 
$
(1.25
)
 
$
0.01

Diluted
 
$
(1.15
)
 
$
(0.88
)
 
$
(1.05
)
 
$
(1.25
)
 
$
0.01

Net income attributable to Tribune per common share:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
7.05

 
$
0.16

 
$
0.19

 
$
(0.11
)
 
$
1.66

Diluted
 
$
7.05

 
$
0.16

 
$
0.19

 
$
(0.11
)
 
$
1.66

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
35,268

 
33,996

 
33,788

 
25,990

 
25,430

Diluted
 
35,268

 
33,996

 
33,788

 
25,990

 
25,430

Dividends declared per common share
 
$

 
$

 
$

 
$
0.700

 
$
0.175

Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
726,627

 
$
865,133

 
$
888,766

 
$
832,966

 
$
590,131

Total debt
 
7,204

 
352,551

 
369,031

 
388,264

 
347,524


25



Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the other sections of this Annual Report on Form 10-K, including the Consolidated Financial Statements and related Notes thereto and “Cautionary Statement Concerning Forward-Looking Statements.” Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and other factors described throughout this Form 10-K, including the factors disclosed under “Item 1A. Risk Factors.”
We believe that the assumptions underlying the Consolidated Financial Statements included in this Annual Report are reasonable. However, the Consolidated Financial Statements may not necessarily reflect our results of operations, financial position and cash flows for future periods.
OVERVIEW
Tribune Publishing Company, formerly tronc, Inc., was formed as a Delaware corporation on November 21, 2013. Tribune Publishing Company and its subsidiaries (collectively, the “Company,” or “Tribune”) is a media company rooted in award-winning journalism. Headquartered in Chicago, Tribune operates local media businesses in eight markets, with titles including the Chicago Tribune, New York Daily News, The Baltimore Sun, Orlando Sentinel, South Florida’s Sun Sentinel, Virginia’s Daily Press and The Virginian-Pilot, The Morning Call of Lehigh Valley, Pennsylvania and the Hartford Courant. Tribune also operates TCA and on February 6, 2018, the Company became a majority owner of BestReviews. On May 28, 2018, the Company acquired Virginian-Pilot Media Companies LLC, owner of the The Virginian-Pilot a daily newspaper based in Norfolk, Virginia and associated businesses. See Note 6 to the Consolidated Financial Statements for further information on acquisitions.
On May 23, 2018, the Company completed the sale of substantially all of the assets of forsalebyowner.com and on June 18, 2018, the Company completed the sale of the California Properties. See Note 7 for further information on the dispositions and related discontinued operations.
In October 2018, the Company changed its corporate name from tronc, Inc. to Tribune Publishing Company. The common stock of the Company began trading the morning of October 10, 2018 on Nasdaq under the ticker symbol “TPCO.”
Tribune’s continuing legacy of brands, including the New York Daily News and The Virginian-Pilot, have earned a combined 60 Pulitzer Prizes and are committed to informing, inspiring, and engaging local communities. Tribune’s brands create and distribute content across its media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities.
The Company continually assesses its operations in an effort to identify opportunities to enhance operational efficiencies and reduce expenses. These activities have in the past included, and could include in the future, outsourcing of various functions or operations, additional abandonment of leased space and other activities which may result in changes to employee headcount. See Note 4 to the Consolidated Financial Statements for further information on changes in operations during fiscal year 2018. The Company expects to continue to take actions deemed appropriate to enhance profitability but does not currently know whether or when any such actions will occur or the potential costs and expected savings. Depending on the actions taken and the timing of any such actions, the anticipated cost savings could be recognized in fiscal periods that do not correspond to the fiscal period(s) in which the charges are recognized. As a result, the Company’s net income trends could be impacted and more difficult to predict.
2018 Highlights and Recent Events
On January 29, 2018, the Company and Cars.com, LLC agreed to convert the Company’s affiliate markets into Cars.com's direct retail channel.
On February 6, 2018, the Company acquired a 60% membership interest in BestReviews LLC (“BestReviews”), a company engaged in the business of testing, researching and reviewing consumer products. See Note 6 to the Consolidated Financial Statements for further information about the acquisition.
On February 7, 2018, the Company entered into an agreement to sell the California Properties. The Nant Transaction closed on June 18, 2018. See Note 7 to the Consolidated Financial Statements for additional information related to the disposition.

26



On December 20, 2017, the Company entered into a Consulting Agreement with Merrick Ventures. In the second quarter of 2018, the Company amended the Consulting Agreement. See Note 5 to the Consolidated Financial Statements for further information about this agreement.
On May 23, 2018, the Company sold substantially all of the assets of forsalebyowner.com, LLC. See Note 7 to the Consolidated Financial Statements for additional information related to the disposition.
On May 28, 2018, the Company acquired Virginian-Pilot. See Note 6 to the Consolidated Financial Statements for further information about the acquisition.
On June 21, 2018, the Company used a portion of the proceeds from the Nant Transaction to repay the outstanding principal balance under the Senior Term Facility and to terminate the Senior Term Facility. The Company also terminated the Senior ABL Facility. See Note 10 to the Consolidated Financial Statements for additional information related to the extinguishment.
In the fourth quarter of 2018, the Company offered a Voluntary Severance Incentive Plan (“VSIP”), which provides enhanced separation benefits to eligible employees with more than 10 years of service, and ratified collective bargaining agreements with the truck driver’s unions at both the New York Daily News and the Chicago Tribune that allowed for reductions in the number of drivers. See Note 4 to the Consolidated Financial Statements for additional information related to these initiatives.

27



Results of Operations
The Company intends for the following discussion of its financial condition and results of operations to provide information that will assist in understanding the Company’s financial statements, the changes in certain key items in those statements from period to period and the primary factors that accounted for those changes as well as how certain accounting principles, policies and estimates affect the Company’s financial statements.
Consolidated
Operating results for the years ended December 30, 2018, December 31, 2017 and December 25, 2016 are shown in the table below (in thousands). References in this discussion to individual markets include daily newspapers in those markets and their related businesses.
 
 
Year Ended
 
 
 
Year Ended
 
 
 
 
December 30, 2018
 
December 31, 2017
 
% Change
 
December 31, 2017
 
December 25, 2016
 
% Change
Operating revenues
 
$
1,030,669

 
$
1,015,453

 
1.5
%
 
$
1,015,453

 
$
1,063,363

 
(4.5
%)
Compensation
 
443,084

 
406,279

 
9.1
%
 
406,279

 
443,729

 
(8.4
%)
Newsprint and ink
 
66,134

 
59,241

 
11.6
%
 
59,241

 
62,529

 
(5.3
%)
Outside services
 
348,827

 
331,202

 
5.3
%
 
331,202

 
346,690

 
(4.5
%)
Other operating expenses
 
163,702

 
162,495

 
0.7
%
 
162,495

 
175,949

 
(7.6
%)
Depreciation and amortization
 
53,262

 
47,306

 
12.6
%
 
47,306

 
51,363

 
(7.9
%)
Impairment
 
1,872

 

 
*
 

 

 
*
Operating expenses
 
1,076,881

 
1,006,523

 
7.0
%
 
1,006,523

 
1,080,260

 
(6.8
%)
Income (loss) from operations
 
(46,212
)
 
8,930

 
*
 
8,930

 
(16,897
)
 
*
Interest expense, net
 
(11,353
)
 
(26,334
)
 
(56.9
%)
 
(26,334
)
 
(26,561
)
 
(0.9
%)
Loss on early extinguishment of debt
 
(7,666
)
 

 
*
 

 

 
*
Premium on stock buyback
 

 
(6,031
)
 
*
 
(6,031
)
 

 
*
Loss on equity investments, net
 
(1,868
)
 
(2,725
)
 
(31.4
%)
 
(2,725
)
 
(1,487
)
 
83.3%
Other non-operating income
 
14,513

 
3,535

 
*
 
3,535

 
265

 
*
Reorganization items, net
 

 

 
*
 

 
(259
)
 
*
Loss from continuing operations before income taxes
 
(52,586
)
 
(22,625
)
 
*
 
(22,625
)
 
(44,939
)
 
(49.7%)
Income tax expense (benefit)
 
(12,723
)
 
7,188

 
*
 
7,188

 
(9,576
)
 
*
Loss from continuing operations
 
(39,863
)
 
(29,813
)
 
33.7
%
 
(29,813
)
 
(35,363
)
 
(15.7
%)
Earnings from discontinued operations, net of tax
 
289,510

 
35,348

 
*
 
35,348

 
41,900

 
(15.6
%)
Net income
 
249,647

 
5,535

 
*
 
5,535

 
6,537

 
(15.3
%)
Income:loss attributable to noncontrolling interest
 
856

 

 
*
 

 

 
*
Net income attributable to Tribune
 
$
248,791

 
$
5,535

 
*
 
$
5,535

 
$
6,537

 
(15.3
%)
* Represents positive or negative change in excess of 100%
Year ended December 30, 2018 compared to the year ended December 31, 2017
Operating Revenues—Operating revenues increased 1.5%, or $15.2 million, in the year ended December 30, 2018 compared to the prior year period primarily due to the combined impact of the acquisitions of the New York Daily News in the third quarter of 2017, BestReviews in the first quarter of 2018 and The Virginian-Pilot in the second quarter of 2018. Such acquisitions contributed $175.3 million in revenue during the year ended December 30, 2018 compared to $40.2 million




during the year ended December 31, 2017. This increase was partially offset by a $111.9 million decrease in advertising revenue, $3.4 million decrease in circulation revenue and a $4.7 million decrease in other revenue. The decrease in advertising revenue includes $39.9 million related to the conversion of the Cars.com agreement.
Compensation Expense—Compensation expense increased 9.1%, or $36.8 million, in the year ended December 30, 2018 compared to the prior period. This increase was due primarily to the acquisitions which contributed $98.2 million in the year ended December 30, 2018 compared to $29.0 million in the year ended December 31, 2017. The increase from acquisitions was partially offset by a decrease in salary expense of $37.6 million as a result of the reduction in headcount due to current and prior periods personnel restructuring.
Newsprint and Ink Expense—Newsprint and ink expense increased 11.6%, or $6.9 million, in the year ended December 30, 2018 compared to the prior year. This increase was due primarily to the acquisitions which contributed $17.3 million in the year ended December 30, 2018 compared to $4.6 million during the year ended December 31, 2017. In addition to the increase related to the acquisitions, the Company experienced a 23.1% increase in average cost per ton of newsprint, related to a proposed tariff on certain newsprint products sourced from Canada. These increases were partially offset by a 13.4% decrease in consumption.
Outside Services Expense—Outside services expense increased 5.3%, or $17.6 million, in the year ended December 30, 2018. This increase was due primarily to the acquisitions which contributed $35.9 million in the year ended December 30, 2018 compared to $7.2 million during the year ended December 31, 2017 as well as expense related to the Consulting Agreement described in Note 5 to the Consolidated Financial Statements. These increases were partially offset by decreases in circulation and distribution expenses of $15.8 million, outsourced services of $2.9 million and outside printing and production expenses of $1.9 million.
Other Expenses—Other expenses include occupancy costs, promotion and marketing costs, affiliate fees and other miscellaneous expenses. These expenses increased 0.7%, or $1.2 million, in the year ended December 30, 2018 compared to the prior year. This increase was due primarily to the acquisitions which contributed $48.3 million in the year ended December 30, 2018 compared to $6.1 million during the year ended December 31, 2017. This increase was partially offset by a $33.1 million decrease in affiliate fees related to the conversion of the Cars.com agreement and a $7.7 million decrease in bad debt expense.
Depreciation and Amortization Expense—Depreciation and amortization expense increased 12.6%, or $6.0 million, for the year ended December 30, 2018. This increase was due primarily to the acquisitions which contributed $6.8 million in the year ended December 30, 2018 compared to $1.2 million during the year ended December 31, 2017.
Impairment Expense—In the fourth quarter of 2018, the Company recorded a non-cash impairment charge of $1.9 million related to the goodwill associated with the Sun Sentinel Media Group. 
Interest Expense—Interest expense decreased as the Senior Term Facility was repaid in full in June 2018. See Note 10 to the Consolidated Financial Statements for further information on the debt repayment.
Loss on early extinguishment of debt—In June 2018, the Company repaid the outstanding principal balance under the Senior Term Facility and terminated the agreement. As a result of the early extinguishment of debt, the Company incurred a $7.7 million loss to expense the remaining balance of original issue discount and debt origination fees. See Note 10 to the Consolidated Financial Statements for further information on the debt repayment.
Premium on Stock Buyback—On March 23, 2017, the Company repurchased 3,745,947 shares of the Company’s stock for $56.2 million, or $15 per common share. The fair value of the stock as of the purchase date was $50.2 million, or $13.39 per common share. The $6.0 million difference between the purchase price and the transaction date fair value was recorded as a a non-operating expense. See Note 18 to the Consolidated Financial Statements for additional information.
Loss on Equity Investments, Net—Loss on equity investments, net was consistent with the prior year.
Other Income, Net - The increase in other income, net is primarily due to increased credits related to early termination of certain postretirement benefit plans. Due to an accounting standard change, credits for amortization of prior service costs related to such plans are reported in Other Income, Net, instead of Compensation. See Note 2 to the Consolidated Financial Statements for additional information on the standard change and Note 14 to the Consolidated Financial Statements for

29



additional information on the Company’s pension and other postretirement benefits.
Income Tax Expense (Benefit)—Income tax expense on continuing operations decreased $19.9 million for the year ended December 30, 2018, over the prior year period primarily due to prior year tax law changes and lower taxable income. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017. The effects of the changes in tax rates are required to be recognized in the period enacted and as a result, the Company recorded $10.8 million as additional income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. The Company has recorded an additional $0.2 million of expense in the third quarter of 2018, to bring the total expense to $11.0 million. The additional provision resulted from the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future. See Note 13 to the Consolidated Financial Statements for further explanation of the tax law change.
The effective tax rate on pretax income was 24.2% and (31.8)% in the years ended December 30, 2018 and December 31, 2017, respectively.
Year ended December 31, 2017 compared to the year ended December 25, 2016
Operating Revenues—Operating revenues decreased 4.5%, or $47.9 million, in the year ended December 31, 2017 compared to the prior year period due to a $68.3 million decrease in advertising revenues and a $21.0 million decrease in other revenues. These decreases were partially offset by contributions from acquisitions of $40.2 million in year ended December 31, 2017 and by an increase of $1.2 million in circulation revenues. Overall decreases in circulation volume were generally offset by rate increases.
Compensation Expense—Compensation expense decreased 8.4%, or $37.5 million, in the year ended December 31, 2017. The decrease is due primarily to a $24.7 million decrease in accrued incentives, a $18.1 million decrease in salary and payroll tax expense as a result of the reduction in headcount due to current and prior periods personnel restructuring, a $10.3 million decrease in severance costs, and a $9.2 million decrease in health care expense. These decreases were partially offset by compensation expense from acquisitions of $29.0 million.
Newsprint and Ink Expense—Newsprint and ink expense declined 5.3%, or $3.3 million, in the year ended December 31, 2017. The decrease was due mainly to a 14.1% decline in newsprint consumption due primarily to less advertising space and lower commercial printing revenue, partially offset by a 1.3% increase in the average cost per ton of newsprint. This decrease was partially offset by newsprint and ink expense from acquisitions of $4.6 million.
Outside Services Expense—Outside services expense decreased 4.5%, or $15.5 million in the year ended December 31, 2017. This decrease was primarily due to decreases in circulation and distribution expense of $10.5 million, decreases in legal and consulting expenses of $9.7 million and a decrease in outside printing and production expenses of $5.6 million. These decreases were partially offset by outside service expenses from acquisitions of $7.2 million.
Other Expenses—Other expenses include occupancy costs, promotion and marketing costs, affiliate fees and other miscellaneous expenses. These expenses decreased 7.6%, or $13.5 million, in the year ended December 31, 2017 due primarily to decreases in occupancy costs of $8.1 million, promotion and marketing costs of $4.3 million, and $6.7 million in pre-sale shared service costs that were allocated to discontinued operations. These decreases were partially offset by other expenses from acquisitions of $6.1 million.
Depreciation and Amortization Expense—Depreciation and amortization expense decreased 7.9%, or $4.1 million, for the year ended December 31, 2017 primarily as a result of the depreciation on prior year fixed asset additions.
Interest Expense—Interest expense was consistent with the prior year.
Premium on Stock Buyback—As mentioned above, the Company repurchased shares of the Company’s stock for $56.2 million. The fair value of the stock as of the purchase date was $50.2 million. The $6.0 million difference between the purchase price and the transaction date fair value was recorded as a non-operating expense.
Loss on Equity Investments, net—Loss on equity investments, net was consistent with the prior year.

30



Other Income, Net - The increase in other income, net is due to increased credits related to amortization of prior service costs of postretirement plans. See Note 14 to the Consolidated Financial Statements for additional information on the Company’s pension and other postretirement benefits.
Income Tax Expense (Benefit)—Income tax expense increased $16.8 million for the year ended December 31, 2017 over the prior year period, primarily due to the additional expense of $11.0 million related to the Tax Cuts and Jobs Act of 2017 mentioned above. See Note 13 to the Consolidated Financial Statements for further explanation of the charge.
The effective tax rate on pretax income (loss) was (31.8)% and 21.3% in the years ended December 31, 2017 and December 25, 2016, respectively. The effective tax rate decreased in 2017 as compared with 2016. In the case of a pre-tax loss, the unfavorable permanent differences, such as non-deductible meals and entertainment expense, have the effect of decreasing the tax benefit which, in turn, decreases the effective tax rate.
Segments
The Company manages its business as two distinct segments, M and X. The Company measures segment profit using income from operations, which is defined as net income before net interest expense, gain on investment transactions, reorganization items and income taxes. The tables below show the segmentation of income and expenses for the year ended December 30, 2018 as compared to the year ended December 31, 2017, as well as the year ended December 25, 2016 (in thousands). Fiscal year 2018 is a 52-week year, fiscal year 2017 is a 53-week year and fiscal year 2016 is a 52-week year.
 
M
 
X
 
Corporate and Eliminations
 
Consolidated
 
Year ended
 
Year ended
 
Year ended
 
Year ended
 
Dec. 30, 2018
 
Dec. 31, 2017
 
Dec. 30, 2018
 
Dec. 31, 2017
 
Dec. 30, 2018
 
Dec. 31, 2017
 
Dec. 30, 2018
 
Dec. 31, 2017
Operating revenues
$
851,069

 
$
854,840

 
$
165,612

 
$
163,977

 
$
13,988

 
$
(3,364
)
 
$
1,030,669

 
$
1,015,453

Operating expenses
846,122

 
792,665

 
152,698

 
161,783

 
78,061

 
52,075

 
1,076,881

 
1,006,523

Income (loss) from operations
4,947

 
62,175

 
12,914

 
2,194

 
(64,073
)
 
(55,439
)
 
(46,212
)
 
8,930

Depreciation and amortization
17,419

 
16,415

 
19,819

 
15,299

 
16,024

 
15,592

 
53,262

 
47,306

Impairment
1,872

 

 

 

 

 

 
1,872

 

Adjustments (1)
41,476

 
17,227

 
9,272

 
3,612

 
34,186

 
22,707

 
84,934

 
43,546

Adjusted EBITDA
$
65,714

 
$
95,817

 
$
42,005

 
$
21,105

 
$
(13,863
)
 
$
(17,140
)
 
$
93,856

 
$
99,782

(1) - See Non-GAAP Measures for additional information on adjustments.
 
M
 
X
 
Corporate and Eliminations
 
Consolidated
 
Year ended
 
Year ended
 
Year ended
 
Year ended
 
Dec. 31, 2017
 
Dec. 25, 2016
 
Dec. 31, 2017
 
Dec. 25, 2016
 
Dec. 31, 2017
 
Dec. 25, 2016
 
Dec. 31, 2017
 
Dec. 25, 2016
Operating revenues
$
854,840

 
$
912,386

 
$
163,977

 
$
158,996

 
$
(3,364
)
 
$
(8,019
)
 
$
1,015,453

 
$
1,063,363

Operating expenses
792,665

 
839,123

 
$
161,783

 
155,709

 
52,075

 
85,428

 
1,006,523

 
1,080,260

Income (loss) from operations
62,175

 
73,263

 
$
2,194

 
3,287

 
(55,439
)
 
(93,447
)
 
8,930

 
(16,897
)
Depreciation and amortization
16,415

 
17,629

 
$
15,299

 
11,452

 
15,592

 
22,282

 
47,306

 
51,363

Adjustments (1)
17,227

 
9,926

 
$
3,612

 
3,671

 
22,707

 
50,785

 
43,546

 
64,382

Adjusted EBITDA
$
95,817

 
$
100,818

 
$
21,105

 
$
18,410

 
$
(17,140
)
 
$
(20,380
)
 
$
99,782

 
$
98,848

(1) - See Non-GAAP Measures for additional information on adjustments.

31



Segment M
Segment M’s media groups include the Chicago Tribune Media Group, the New York Daily News Media Group, the Sun Sentinel Media Group, the Orlando Sentinel Media Group, The Baltimore Sun Media Group, the Hartford Courant Media Group, the Morning Call Media Group, and the Virginia Media Group (which includes the Daily Press and the recently acquired The Virginian-Pilot).
 
 
Year Ended
 
Year Ended
(in thousands)
 
Dec. 30, 2018
 
Dec. 31, 2017
 
% Change
 
Dec. 31, 2017
 
Dec. 25, 2016
 
% Change
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Advertising
 
$
355,790

 
$
380,214

 
(6.4
%)
 
$
380,214

 
$
439,662

 
(13.5
%)
Circulation
 
349,975

 
319,727

 
9.5
%
 
319,727

 
304,699

 
4.9
%
Other
 
145,304

 
154,899

 
(6.2
%)
 
154,899

 
168,025

 
(7.8
%)
Total operating revenues
 
851,069

 
854,840

 
(0.4
%)
 
854,840

 
912,386

 
(6.3
%)
Operating expenses
 
846,122

 
792,665

 
6.7
%
 
792,665

 
839,123

 
(5.5
%)
Income from operations
 
4,947

 
62,175

 
(92.0
%)
 
62,175

 
73,263

 
(15.1
%)
Depreciation and amortization
 
17,419

 
16,415

 
6.1
%
 
16,415

 
17,629

 
(6.9
%)
Impairment
 
1,872

 

 
*
 

 

 
*
Adjustments (1)
 
41,476

 
17,227

 
*
 
17,227

 
9,926

 
73.6
%
Adjusted EBITDA
 
$
65,714

 
$
95,817

 
(31.4
%)
 
$
95,817

 
$
100,818

 
(5.0
%)
(1) - See Non-GAAP Measures for additional information on adjustments.
* Represents positive or negative change in excess of 100%
Year ended December 30, 2018 compared to the year ended December 31, 2017
Advertising Revenues—Total advertising and marketing services revenues decreased 6.4%, or $24.4 million, in the year ended December 30, 2018 compared to the prior year period. Retail advertising revenues fell 19.5%, or $55.3 million, due to declines in all categories. The categories with the largest declines were department stores, furniture and home furnishings, food and drug stores, specialty merchandise, general merchandise and hardware store categories. National advertising revenues fell 16.5%, or $5.8 million, due to declines in several categories, most notably advertising agencies and wireless categories, partially offset by an increase in the media category. Classified advertising revenues decreased 9.7%, or $5.1 million, compared to the prior year period, primarily due to decreases in the recruitment category. These decreases were partially offset by the combined impact of the acquisitions of the New York Daily News in the third quarter of 2017 and The Virginian-Pilot in the second quarter of 2018. Such acquisitions contributed $50.5 million in segment M advertising revenues during the year ended December 30, 2018 compared to $8.6 million during the year ended December 31, 2017.
Circulation Revenues—Circulation revenues increased 9.5%, or $30.2 million, in the year ended December 30, 2018. This increase was due primarily to the acquisitions which contributed $58.2 million in the year ended December 30, 2018 compared to $17.2 million in the year ended December 31, 2017. The increase attributable from the acquisitions is partially offset by a decrease in circulation volume which exceeded increases in rates.
Other Revenues—Other revenues decreased 6.2%, or $9.6 million, in the year ended December 30, 2018 compared to the prior year, primarily due to declines of $14.3 million in commercial print and delivery, $4.8 million in direct mail and marketing and $3.7 million in content syndication and other revenues. These decreases were partially offset by revenues from the acquisitions which contributed $18.8 million in the year ended December 30, 2018 compared to $5.6 million in the year ended December 31, 2017.
Operating Expenses—Operating expenses increased 6.7%, or $53.5 million, in the year ended December 30, 2018 compared to the prior year, primarily due to expenses from the acquisitions which contributed $169.3 million in the year ended December 30, 2018 compared to $42.6 million in the year ended December 31, 2017. These increases were partially offset by decreases in all expense categories.

32



Year ended December 31, 2017 compared to the year ended December 25, 2016
Advertising Revenues—Total advertising and marketing services revenues decreased 13.5%, or $59.4 million, in the year ended December 31, 2017 compared to the prior year. Retail advertising revenues fell 16.3%, or $55.3 million, due to declines in all categories. The categories with the largest declines were department stores, furniture and home furnishings, specialty merchandise, food and drug stores, car dealerships and lots and personal services categories. National advertising revenues fell 18.4%, or $8.0 million, due to declines in several categories, most notably media, advertising agencies and wireless categories. Classified advertising revenues decreased 8.3%, or $4.8 million, compared to the prior year, primarily due to decreases in the legal and recruitment categories. These decreases were partially offset by the acquisition of the New York Daily News in the third quarter of 2017 which contributed $8.6 million in segment M advertising revenues during the year ended December 31, 2017.
Circulation Revenues—Circulation revenues increased 4.9%, or $15.0 million, in the year ended December 31, 2017 due primarily to the acquisition of the New York Daily News which contributed $17.2 million in circulation revenue in 2017. The increase attributable from the acquisition is partially offset by a decrease in circulation volume which exceeded increases in rates.
Other Revenues—Other revenues decreased 7.8%, or $13.1 million, in year ended December 31, 2017 primarily due to declines in direct mail and marketing of $7.3 million, content syndication and other revenue of $5.8 million and commercial print and delivery revenues of $5.7 million for third-party publications. These decreases were partially offset by revenues from the New York Daily News which contributed $5.6 million in other revenues the year ended December 31, 2017.
Operating Expenses—Operating expenses decreased 5.5%, or $46.5 million, in the year ended December 31, 2017 compared to the prior year, primarily due to decreases in all expense categories, partially offset by increased expenses from acquisitions and corporate allocations. The New York Daily News contributed $42.6 million in operating expenses the year ended December 31, 2017.
Segment X
Segment X is comprised of the Company’s digital revenues and related digital expenses from local websites and mobile applications, digital only subscriptions, TCA and BestReviews. On January 29, 2018, the Company and Cars.com agreed to convert the Company’s affiliated markets into Cars.com’s direct retail channel.
 
 
Year Ended
 
Year Ended
(in thousands)
 
Dec. 30, 2018
 
Dec. 31, 2017
 
% Change
 
Dec. 31, 2017
 
Dec. 25, 2016
 
% Change
Operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Advertising
 
$
98,023

 
$
130,376

 
(24.8
%)
 
$
130,376

 
$
124,215

 
5.0
%
Content
 
67,589

 
33,601

 
*
 
33,601

 
34,781

 
(3.4
%)
Total revenues
 
165,612

 
163,977

 
1.0
%
 
163,977

 
158,996

 
3.1
%
Operating expenses
 
152,698

 
161,783

 
(5.6
%)
 
161,783

 
155,709

 
3.9
%
Income from operations
 
$
12,914

 
$
2,194

 
*
 
2,194

 
3,287

 
(33.3
%)
Depreciation and amortization
 
19,819

 
15,299

 
29.5
%
 
15,299

 
11,452

 
*
Adjustments (1)
 
9,272

 
3,612

 
*
 
3,612

 
3,671

 
*
Adjusted EBITDA
 
$
42,005

 
$
21,105

 
99.0
%
 
$
21,105

 
$
18,410

 
14.6
%
(1) - See Non-GAAP Measures for additional information on adjustments.
* Represents positive or negative change in excess of 100%
Year ended December 30, 2018 compared to the year ended December 31, 2017
Advertising Revenues—Total advertising revenues decreased 24.8%, or $32.4 million, in the year ended December 30, 2018. Classified advertising revenue decreased $51.7 million primarily due to a decrease in the automotive category as a result of the conversion of the Cars.com agreement. Other advertising revenue decreased $2.5 million primarily due to decreases in revenue shares received from advertising partners due to decreased volume. These decreases were partially offset by

33



contributions from acquisitions and an $8.4 million increase in retail advertising revenue primarily due to increases in the car dealerships and lots category partially offset by decreases in the amusements, food and drug stores and hardware stores categories. National advertising revenue remained consistent with prior periods. The combined contribution in segment X advertising revenues of the acquisitions of the New York Daily News in the third quarter of 2017 and The Virginian-Pilot in the second quarter of 2018 was $21.2 million during the year ended December 30, 2018 compared to $7.8 million during the year ended December 31, 2017.
Content Revenues—Content revenues increased $34.0 million in the year ended December 30, 2018 compared to the prior year. This increase was primarily due to the acquisitions and an increase of $7.3 million in digital subscription revenue. The combined contribution in segment X content revenues of the acquisitions of the New York Daily News, BestReviews in the first quarter of 2018 and The Virginian-Pilot was $26.7 million in the year ended December 30, 2018 compared to $1.0 million in the year ended December 31, 2017.
Operating Expenses—Operating expenses decreased 5.6%, or $9.1 million, in the year ended December 30, 2018 compared to the prior year, primarily due to a $33.6 million decrease in affiliate fees related to the conversion of the Cars.com agreement and a $7.3 million decrease in bad debt expense. These decreases were partially offset by operating expense from acquisitions. Such acquisitions contributed $37.2 million in the year ended December 30, 2018 compared to $5.5 million during the year ended December 31, 2017.
Year ended December 31, 2017 compared to the year ended December 25, 2016
Advertising Revenues—Total advertising revenues increased 5.0%, or $6.2 million, in the year ended December 31, 2017 compared to the prior year, primarily due to the acquisition of the New York Daily News which contributed $7.8 million in advertising revenues in 2017, and a $1.9 million increase in other advertising revenue primarily due to increases in revenue shares received from advertising partners due to increased volume. Retail and National advertising revenue remained consistent year over year. These increases were partially offset by decreases in classified advertising revenue, which decreased $5.0 million, primarily due to decreases in the real estate and recruitment categories.
Content Revenues—Content revenues decreased 3.4%, or $1.2 million, in the year ended December 31, 2017 compared to the prior year, primarily due to decreases in content syndication of $5.5 million partially offset by increases in digital subscription revenue of $3.4 million and contributions from the acquisition of the New York Daily News of $1.0 million.
Operating Expenses—Operating expenses increased 3.9%, or $6.1 million, in the year ended December 31, 2017 compared to the prior year, primarily due to the acquisition of the New York Daily News which contributed $5.5 million in operating expenses in 2017.
Liquidity and Capital Resources
The Company believes that its working capital and future cash from operations will provide adequate resources to fund its operating and financing needs for the foreseeable future. The Company’s access to, and the availability of, financing in the future will be impacted by many factors, including its credit rating, the liquidity of the overall capital markets, the current state of the economy and other risks described in Part 1, Item 1A of this report. There can be no assurances that the Company will have access to capital markets on acceptable terms.
Sources and Uses
The Company expects to fund capital expenditures, pension payments and other operating requirements through a combination of cash flows from operations and investments. The Company’s financial and operating performance remains subject to prevailing economic and industry conditions and to financial, business and other factors, some of which are beyond the control of the Company and, despite the Company’s current liquidity position, no assurances can be made that cash flows from operations and investments, or dispositions of assets or operations will be sufficient to satisfy the Company’s future liquidity needs.

34



The table below summarizes the total operating, investing and financing activity cash flows from continuing operations for the years ended December 30, 2018, December 31, 2017 and December 25, 2016 (in thousands):
 
 
Year Ended
 
 
December 30, 2018
 
December 31, 2017
 
December 25, 2016
Net cash provided by operating activities
 
$
50,953

 
$
39,754

 
$
601

Net cash used for investing activities
 
(128,210
)
 
(23,175
)
 
(17,701
)
Net cash provided by (used for) financing activities
 
(359,420
)
 
(83,653
)
 
86,334

Increase (decrease) in cash attributable to continuing operations
 
(436,677
)
 
(67,074
)
 
69,234

Net cash provided by discontinued operations
 
392,833

 
56,289

 
71,574

Net increase (decrease) in cash
 
$
(43,844
)
 
$
(10,785
)
 
$
140,808

Cash flow generated by operating activities is the Company’s primary source of liquidity. Net cash provided by operating activities was $51.0 million for the year ended December 30, 2018, an increase of $11.2 million from $39.8 million for the year ended December 31, 2017. The increase was primarily driven by higher working capital contributions partially offset by a decrease in operating results and higher pension contributions. Net cash provided by operating activities was $39.8 million in the year ended December 31, 2017, an increase of $39.2 million from $0.6 million in the year ended December 25, 2016. The increase was primarily higher working capital contributions.
Net cash used for investing activities totaled $128.2 million in the year ended December 30, 2018, and included $53.2 million used for capital expenditures and $70.9 million used for acquisitions. Net cash used for investing activities totaled $23.2 million in the year ended December 31, 2017 and included $23.5 million used for capital expenditures. Net cash used for investing activities totaled $17.7 million in the year ended December 25, 2016 primarily due to $10.7 million used for capital expenditures and $4.4 million used for acquisitions. We anticipate that capital expenditures for the year ended December 30, 2019 will be approximately $20.0 million to $25.0 million.
Net cash used for financing activities totaled $359.4 million in the year ended December 30, 2018, primarily due to $353.3 million used for principal payments on senior debt after the sale of the California Properties. Net cash used for financing activities totaled $83.7 million in the year ended December 31, 2017, primarily due to $56.2 million used for the repurchase of shares of the Company’s common stock and $26.4 million used for principal payments on senior debt. In the year ended December 25, 2016, net cash provided by financing activities totaled $86.3 million primarily due to $113.3 million provided by the private placements of 9.9 million shares of the Company’s stock, partially offset by $21.1 million used for principal payments on senior debt.
Net cash provided by discontinued operations totaled $392.8 million in the year ended December 30, 2018, primarily due to net proceeds of $497.7 million from the sale of the California Properties and forsalebyowner.com partially offset by $96.7 million of federal tax payments. In the years ended December 31, 2017 and December 25, 2016, net cash provided by discontinued operations totaled $56.3 million and $71.6 million, respectively, primarily due to cash provided by operating activities of the Los Angeles Times and The San Diego Union-Tribune.
Stock Repurchases
On March 23, 2017, the Company entered into a purchase agreement with investment funds associated with Oaktree Capital Management, L.P. (“Oaktree”), pursuant to which the Company acquired 3,745,947 shares of the Company’s common stock for $15.00 per share or a total purchase price of $56.2 million. See Note 18 to the Company’s Consolidated Financial Statements for further information on the stock repurchase.
On March 13, 2019, the Company announced that the Board of Directors authorized a stock repurchase program. Under the program, the Company may purchase up to $25.0 million of its outstanding common stock over the next 24 months. The purchases may be made in open-market transactions or privately negotiated transactions and may be made from time to time depending on market conditions, share price, trading volume, cash needs and other business factors.

35



Private Placements
On February 3, 2016 and June 1, 2016, the Company completed a $44.4 million and a $70.5 million private placement, pursuant to which the Company sold 5,220,000 shares and 4,700,000 shares of the Company’s common stock at a purchase price of $8.50 per share and $15.00 per share, respectively. See Note 18 to the Company’s Consolidated Financial Statements for further information on the private placements.
Acquisitions
See Note 6 to the Company’s Consolidated Financial Statements for further information on acquisitions.
Acquisitions — 2018
Virginian-Pilot
On May 28, 2018, Tribune Publishing Company, LLC, a wholly-owned subsidiary of the Company, acquired Virginian-Pilot Media Companies, LLC (“Virginian-Pilot”), the owner of The Virginian-Pilot daily newspaper based in Norfolk, Virginia, pursuant to a Securities Purchase Agreement, entered into on the same date, by and among the Company, Virginian-Pilot and Landmark Media Enterprises, LLC for a cash purchase price of $34.0 million, less a post-closing working capital adjustment of $0.1 million received from the seller.
BestReviews
On February 6, 2018, the Company acquired a 60% membership interest in BestReviews LLC (“BestReviews”), a company engaged in the business of testing, researching and reviewing consumer products, pursuant to an Acquisition Agreement, entered into on the same date, among the Company, BestReviews Inc., a Delaware corporation, BestReviews and the stockholders of Best Reviews Inc. for a total purchase price of $68.3 million, consisting of $33.7 million in cash, less a post-closing working capital adjustment received from the seller of $0.6 million, and $34.6 million in common stock of the Company.
Acquisitions 2017
On September 3, 2017, the Company completed the acquisition of 100% of the partnership interests in DNLP, the owner of the New York Daily News in New York City, pursuant to the Partnership Interest Purchase Agreement dated September 3, 2017, for a cash purchase price of one dollar and assumption of various liabilities, subject to a post-closing working capital adjustment. During the second quarter of 2018, the Company finalized the working capital calculation which resulted in an immaterial adjustment. During the third quarter of 2018, the final determination of the fair value of assets acquired and liabilities assumed was completed.
Acquisitions 2016
In December 2016, the Company completed acquisitions totaling $7.6 million including Spanfeller Media, a digital platform which includes The Daily Meal and The Active Times, and other immaterial properties. The results of the acquisitions and the related transaction costs were not material to the Company’s Consolidated Financial Statements and are included in the Consolidated Statements of Income (Loss) since the date of acquisition.
Debt
On June 21, 2018, the Company used a portion of the proceeds received from the Nant Transaction to repay the outstanding principal amount under the Senior Term Facility and to terminate the Senior ABL Facility. Refer to Note 10 of the Consolidated Financial Statements for detailed information related to the Company’s Term Loan Credit Agreement, Senior Term Facility, ABL Credit Agreement, Senior ABL Facility and Letter of Credit Agreement.
Employee Reductions
During the year ended December 30, 2018, the Company implemented reductions in staffing levels in its operations of 840 positions for which the Company recorded pretax charges totaling $45.8 million. These reductions include 190

36



positions identified in the fourth quarter of 2018 related to a voluntary severance incentive plan; 178 positions identified during the third quarter of 2018, of which approximately 50% were at the New York Daily News; 70 positions related to the New York Daily News truck drivers’ union and 38 positions related to the Chicago Tribune truck drivers’ union.
In the fourth quarter of 2018, the Company offered a Voluntary Severance Incentive Plan (“VSIP”) which provides enhanced separation benefits to eligible employees with more than 10 years of service. The Company plans to fund the VSIP ratably over the payout period through salary continuation that started in the fourth quarter of 2018 and continues through the fourth quarter 2019.
In the fourth quarter of 2018 the truck drivers’ union of the New York Daily News ratified a new collective bargaining agreement with the Company that extended the existing agreement from 2021 to 2024 and relinquished to NYDN the right of delivery of the remaining 60 single copy routes in New York City. The agreement allows for the separation of a total of 80 drivers.  The remaining 10 drivers’ separations will occur later in the term of the contract.  In addition, the Company received other rights and reductions, including reduced dock manning, a move to bi-weekly payroll and a move to Company-provided medical benefits.  The Company expects to achieve savings derived from driver salaries, overtime, collection pay, medical contributions to the union welfare plan, worker’s compensation, fleet expenses, insurance and other expenses, net of the third-party cost of single copy newspaper delivery. The severance payments were in the form of lump sum payments and were paid in the first quarter of 2019.
In the fourth quarter of 2018, the truck drivers’ union of the Chicago Tribune ratified a new collective bargaining agreement with the Company that extended the existing agreement to 2021 and allows the Company to reduce the number of union positions. As a result, the Company agreed to certain changes to the union multiemployer pension plan as well as the proposed merger of such plan. See Note 14 for additional information related to the multiemployer pension plan changes. The Company expects to achieve savings derived from driver salaries, overtime, collection pay, worker’s compensation, fleet expenses, insurance and other expenses, net of the third-party cost of newspaper delivery. The Company plans to fund the severance over the payout period through salary continuation that started in the first quarter of 2019 and continues through the fourth quarter 2019.
During the year ended December 31, 2017, the Company implemented reductions in staffing levels in its operations of 484 positions for which the Company recorded pretax charges related to these reductions totaling $18.0 million. These reductions include 112 positions related to the outsourcing to a third party of the printing, packaging and delivery of the Orlando Sentinel. The related salary continuation payments began in the third quarter of 2017 and continued through the third quarter of 2018. Additionally, these reductions include 86 positions identified at the New York Daily News. The related salary continuation payments began in the fourth quarter of 2017 and continued through the third quarter of 2018.
Contractual Obligations
The table below represents Tribune’s contractual obligations as of December 30, 2018 (in thousands):
Contractual Obligations
Total
 
2019
 
2020
 
2021
 
2022
 
2023
 
Thereafter
Long-term capital lease
7,397

 
405

 
100

 
6,892

 

 

 

Operating leases (1)
173,951

 
33,006

 
30,412

 
26,817

 
24,916

 
15,933

 
42,867

Pensions
70,915

 
14,120

 
7,900

 
9,125

 
10,050

 
11,100

 
18,620

Total
$
252,263

 
$
47,531

 
$
38,412

 
$
42,834

 
$
34,966

 
$
27,033

 
$
61,487

(1)
The Company leases certain equipment and office and production space under various operating leases. Net lease expense for Tribune was $32.8 million, $33.5 million and $40.15 million for the years ended December 30, 2018, December 31, 2017 and December 25, 2016, respectively.
The contractual obligations table includes the Company’s estimated minimum contribution to the NYDN Pension Plan for 2019 and the Company’s minimum contributions to the Chicago Newspaper Publishers Drivers’ Union Pension Plan (the Drivers’ Plan) for 2019 through 2026 pursuant to a rehabilitation plan and merger agreement adopted by the Drivers’ Plan in 2018, as discussed in Note 14 to the Consolidated Financial Statements. The contractual obligations table does not include actuarially projected minimum funding requirements of the NYDN Pension Plan after 2019. The projected minimum funding requirements contain significant uncertainties regarding the actuarial assumptions involved in making such minimum funding projections, including interest rate levels, asset returns, mortality and cost trends, and what, if any, changes will occur to regulatory requirements. Further contributions are currently projected for 2019 through 20125, however the amounts

37



cannot be reasonably estimated. With respect to additional contributions to the Drivers’ Plan and contributions to other multiemployer plans, the Company’s funding obligation will be subject to changed based on a number of factors, including the outcome of collective bargaining within the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations. See Note 14 to the Consolidated Financial Statements for additional information on the Company’s multiemployer pension plans.
Critical Accounting Policies
The Company’s significant accounting policies are summarized in Note 2 to the Consolidated Financial Statements. These policies conform with U.S. GAAP and reflect practices appropriate to Tribune’s businesses. The preparation of the Company’s Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes thereto. The Company bases its estimates on past experience and assumptions that management believes are reasonable under the circumstances and evaluates its policies, estimates and assumptions on an ongoing basis.
Revenue Recognition—Tribune’s primary sources of revenue are from the sales of advertising space in published issues of its newspapers and other publications and on websites owned by, or affiliated with, Tribune; distribution of preprinted advertising inserts; sales of newspapers, digital subscriptions and other publications to distributors and individual subscribers; the provision of commercial printing and delivery services to third parties, primarily other newspaper companies; and ecommerce referral fee revenue. 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 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 referral fee revenue is earned, or over time, such as for content licensing. See Note 3 to the Consolidated Financial Statements for additional revenue recognition disclosures.
Goodwill and Other Intangible AssetsGoodwill and other intangible assets are summarized in Note 9 to the Consolidated Financial Statements. The Company reviews goodwill and other indefinite-lived intangible assets, which include only newspaper mastheads, for impairment annually, or more frequently if events or changes in circumstances indicate that an asset may be impaired. The Company has determined that the reporting units at which goodwill will be evaluated are the eight newspaper media groups, TCA, BestReviews and the aggregate of the Company’s other digital businesses.
The Company’s annual impairment review measurement date is in the beginning of the fourth quarter of each year. The estimated fair value of goodwill is determined using many critical factors, including projected future operating cash flows, revenue and market growth, market multiples, discount rates and consideration of market valuations of comparable companies. The estimated fair values of other intangible assets subject to the annual impairment review are calculated based on projected future discounted cash flow analysis. The development of estimated fair values requires the use of assumptions, including assumptions regarding revenue and market growth as well as specific economic factors in the publishing industry such as operating margins and royalty rates for newspaper mastheads. These assumptions reflect Tribune’s best estimates, but these items involve inherent uncertainties based on market conditions generally outside of Tribune’s control.
Impairment Review of Long-Lived Assets—Tribune evaluates the carrying value of long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset or asset group may be impaired. The carrying value of a long-lived asset or asset group may be impaired when the projected future undiscounted cash flows to be generated from the asset or asset group over its remaining depreciable life are less than its current carrying value.
Pension PlansWith the acquisition of the New York Daily News, the Company became the sponsor of a single-employer pension plan (the “NYDN Pension Plan”). The Company follows accounting guidance under ASC Topic 715, “Compensation—Retirement Benefits” for single employer defined benefit plans. Plan assets and the projected benefit obligation are measured each December 31, and the Company records as an asset or liability the net funded or underfunded position of the plans. Certain changes in actuarial valuations related to returns on plan assets and projected benefit obligations are recorded to other comprehensive income (loss) and are amortized to net periodic pension expense over the weighted average remaining life of plan participants. Net periodic pension expense is recognized each period by accruing interest expense on the projected benefit obligation and accruing a return on assets associated with the plan assets.

38



Other Postretirement Benefits—Tribune provides certain health care and life insurance benefits for retired Tribune employees through postretirement benefit plans. The expected cost of providing these benefits is accrued over the years that the employees render services. It is the Company’s policy to fund postretirement benefits as claims are incurred.
The Company recognizes the overfunded or underfunded status of its postretirement benefit plans as an asset or liability in its Consolidated Balance Sheets and recognizes changes in that funded status in the year in which changes occur through comprehensive income. The amounts included within these Consolidated Financial Statements were actuarially determined based on amounts for eligible Tribune employees.
Multiemployer Pension Plans—Contributions made to union-sponsored plans are based upon collective bargaining agreements and are accounted for under guidance related to multiemployer plans. See Note 14 to the Consolidated Financial Statements for further information.
New Accounting Standards
See Note 2 to the Consolidated Financial Statements for a description of new accounting standards issued and/or adopted in the year ended December 30, 2018.

39



Non-GAAP Measures
Adjusted EBITDA—The Company defines Adjusted EBITDA as income (loss) from continuing operations before equity in earnings of unconsolidated affiliates, income taxes, loss on early debt extinguishment, interest expense, other (expense) income, realized gain (loss) on investments, reorganization items, depreciation and amortization, impairment, net income attributable to noncontrolling interest, and other items that the Company does not consider in the evaluation of ongoing operating performance. These items include stock-based compensation expense, restructuring charges, transaction expenses, certain other charges and gains that the Company does not believe reflects the underlying business performance as detailed below.
 
 
Year Ended
(In thousands)
 
December 30, 2018
 
% Change
 
December 31, 2017
 
% Change
 
December 25, 2016
Loss from continuing operations
 
$
(39,863
)
 
33.7
%
 
$
(29,813
)
 
(15.7%)
 
$
(35,363
)
Income tax expense (benefit)
 
(12,723
)
 
*
 
7,188

 
*
 
(9,576
)
Interest expense, net
 
11,353

 
(56.9
%)
 
26,334

 
(0.9
%)
 
26,561

Loss on extinguishment of debt
 
7,666

 
*
 

 
*
 
 
Premium on stock buyback
 

 
*
 
6,031

 
*
 

Loss on equity investments, net
 
1,868

 
(31.4
%)
 
2,725

 
83.3
%
 
1,487

Other income, net (1)
 
(14,513
)
 
*
 
(3,535
)
 
*
 
(265
)
Reorganization items, net
 

 
*
 

 
*
 
259

Income (loss) from operations
 
(46,212
)
 
*
 
8,930

 
*
 
(16,897
)
Depreciation and amortization
 
53,262

 
12.6
%
 
47,306

 
(7.9
%)
 
51,363

Impairment
 
1,872

 
*
 

 
*
 

Restructuring and transaction costs (2)
 
74,481

 
*
 
30,890

 
(25.1
%)
 
41,220

Litigation settlement (3)
 

 
*
 
3,000

 
*
 

Stock-based compensation
 
10,453

 
12.9
%
 
9,255

 
22.2
%
 
7,573

Employee voluntary separation program
 

 
*
 
401

 
*
 
15,589

Adjusted EBITDA
 
$
93,856

 
(5.9
%)
 
$
99,782

 
0.9
%
 
$
98,848

* Represents positive or negative change in excess of 100%
(1) -
Effective January 1, 2018, the Company adopted ASU 2017-07, which requires certain components of net benefit costs to be presented outside of income from operations. The standard required retrospective application. Accordingly, amounts presented in the prior period have been adjusted to conform with the standard.
(2) -
Restructuring and transaction costs include costs related to Tribune's internal restructuring, such as severance, charges associated with vacated space, costs related to completed and potential acquisitions and a one-time charge related to the Consulting Agreement.
(3) -
Adjustment to litigation settlement reserve.
Adjusted EBITDA is a financial measure that is not calculated in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management believes that because Adjusted EBITDA excludes (i) certain non-cash expenses (such as depreciation, amortization, stock-based compensation, and gain/loss on equity investments) and (ii) expenses that are not reflective of the Company’s core operating results over time (such as restructuring costs, including the employee voluntary separation program and gain/losses on employee benefit plan terminations, litigation or dispute settlement charges or gains, premiums on stock buybacks and transaction-related costs), this measure provides investors with additional useful information to measure the Company’s financial performance, particularly with respect to changes in performance from period to period.  The Company’s management uses Adjusted EBITDA (a) as a measure of operating performance; (b) for planning and forecasting in future periods; and (c) in communications with the Company’s Board of Directors concerning the Company’s financial performance. In addition, Adjusted EBITDA, or a similarly calculated measure, has been used as the basis for certain financial maintenance covenants that the Company was subject to in connection with certain credit facilities. Since not all companies use identical calculations, the Company’s presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies and should not be used by investors as a substitute or alternative to net income or any

40



measure of financial performance calculated and presented in accordance with U.S. GAAP. Instead, management believes Adjusted EBITDA should be used to supplement the Company’s financial measures derived in accordance with U.S. GAAP to provide a more complete understanding of the trends affecting the business.
Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for, or more meaningful than, amounts determined in accordance with U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical tool are:
they do not reflect the Company’s interest income and expense, or the requirements necessary to service interest or principal payments on the Company’s debt;
they do not reflect future requirements for capital expenditures or contractual commitments; and
although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and non-GAAP measures do not reflect any cash requirements for such replacements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
The Consolidated Financial Statements, together with the Reports of Independent Registered Public Accounting Firm, are included elsewhere in this Annual Report on Form 10-K. Financial statement schedules have been omitted because the required information is contained in the Consolidated Financial Statements or related Notes, or because such information is not applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company conducted an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer, to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

41



Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 30, 2018 based on the framework established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management has concluded that the Company’s internal control over financial reporting was effective as of December 30, 2018.
As discussed elsewhere in this report, the Company acquired a 60% membership interest in BestReviews LLC (“BestReviews”) on February 6, 2018, a company engaged in the business of testing, researching and reviewing consumer products. BestReviews primarily generates e-commerce revenue through affiliate agreements with major retailers, which is a new, unique and material revenue stream for the Company. The Company is consolidating 100% of BestReviews within its financial statements as of December 30, 2018 with the 40% noncontrolling interest portion presented between liabilities and stockholder’s equity. BestReviews represents 1.5% of total assets and 2.4% of operating revenues as of and for the year ended December 30, 2018, respectively. The Company is in the process of integrating BestReviews into its existing internal control over financial reporting processes. Management has excluded BestReviews from its assessment of internal control over financial reporting as of December 30, 2018.
The effectiveness of our internal control over financial reporting as of December 30, 2018, has been audited by Ernst & Young LLP, the independent registered public accounting firm that has also audited the Company’s consolidated financial statements as of and for the year ended December 30, 2018. Ernst & Young’s report on the Company’s internal control over financial reporting appears below.
Changes in Internal Control Over Financial Reporting
We utilize a third-party cloud-based ERP system in our financial reporting. In the fourth quarter of 2018, the ERP service provider made changes to its internal controls to address deficiencies related to its information technology change management controls. Apart from the foregoing, there were no changes in the Company’s internal control over financial reporting during the fourth quarter of the fiscal year covered by this report that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

42



Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Tribune Publishing Company
Opinion on Internal Control Over Financial Reporting
We have audited the internal control over financial reporting of Tribune Publishing Company (the Company) as of December 30, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 30, 2018, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of BestReviews LLC, which is included in the 2018 consolidated financial statements of the Company and constituted 1.5% of total assets and 2.4% of operating revenues as of and for the year ended December 30, 2018, respectively. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of BestReviews LLC.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2018 consolidated financial statements of the Company, and our report dated March 18, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Dallas, Texas
March 18, 2019

43



Item 9B. Other Information
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to information under the captions “Corporate Governance,” “Board Composition,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Consideration of Stockholder-Recommended Director Nominees” in our definitive proxy statement relating to the 2019 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2018 fiscal year.
Tribune has a Code of Ethics and Business Conduct that applies to all directors, officers and employees, and a Code of Ethics and Business Conduct for CEO and Senior Financial Officers which can be found at the Company's website, www.tribpub.com. The Company will post any amendments to the Code of Ethics and Business Conduct, as well as any waivers that are required to be disclosed by the rules of either the SEC or Nasdaq, on the Company’s website. Information on Tribune’s website is not incorporated by reference to the Annual Report on Form 10-K.
The Company’s Board of Directors has adopted Corporate Governance Guidelines and charters for the Audit and Compensation, Nominating and Corporate Governance Committees of the Board of Directors. These documents can be found at the Company’s website, www.tribpub.com.
A stockholder can also obtain, without charge, a printed copy of any of the materials referred to above by contacting the Company at the following address:
Tribune Publishing Company
160 N. Stetson Avenue
Chicago, Illinois 60601
Attn: Corporate Secretary
Telephone: (312) 222-9100
Item 11. Executive Compensation
The information required by this item is incorporated by reference to information under the captions “Compensation Discussion and Analysis,” “Compensation, Nominating and Corporate Governance Committee Report,” “Compensation Committee Interlocks and Insider Participation,” “Named Executive Officer Compensation,” and “Director Compensation” in our definitive proxy statement relating to the 2019 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2018 fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to information under the caption “Security Ownership of Certain Beneficial Owners, Directors, and Management” in our definitive proxy statement relating to the 2019 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2018 fiscal year.
Securities Authorized for Issuance under Equity Compensation Plans
The information required by this item is incorporated by reference to information under the caption “Security Ownership of Certain Beneficial Owners, Directors, and Management” in our definitive proxy statement relating to the 2019 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2018 fiscal year.




Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to information under the captions “Policies and Procedures for the Review and Approval or Ratification of Transactions with Related Persons” and “Corporate Governance” in our definitive proxy statement relating to the 2019 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2018 fiscal year.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference to information under the caption “Independent Registered Public Accounting Firm’s Fees Report” in our definitive proxy statement relating to the 2019 Annual Meeting of Stockholders. The definitive proxy statement will be filed with the SEC within 120 days after the end of the 2018 fiscal year.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)    The following documents are filed as part of this Form 10-K:
(1)     Index and Consolidated Financial Statements
The list of Consolidated Financial Statements set forth in the accompanying Index to Financial Statements at page F-1 herein is incorporated herein by reference. Such Consolidated Financial Statements are filed as part of this Form 10-K.
(2)
The financial schedules required by Regulation S-X are either not applicable or are included in the information provided in the Consolidated Financial Statements or related Notes, which are filed as part of this Form 10-K.
(b)    Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by the Company with the Securities and Exchange Commission, as indicated. All other documents are filed as part of this Form 10-K. Exhibits marked with a tilde (~) are management contracts, compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. Certain agreements are included as exhibits to this Annual Report on Form 10-K to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the parties to the agreement. Each agreement may contain representations and warranties by the parties to the agreement. These representations and warranties have been made solely for the benefit of the other party or parties to the agreement and (1) should not in all instances be treated as categorical statements of fact, but rather as a means of allocating the risk to one of the parties if those statements prove to be inaccurate; (2) may have been qualified by disclosures that were made to the other party or parties in connection with the negotiation of the attached agreement, which disclosures are not necessarily reflected in the agreement; (3) may apply standards of materiality in a manner that is different from what may be viewed as material to you or other investors; and (4) were made only as of the date of the agreement or other date or dates that may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
Exhibit                Description
Number
2.1*
2.2*




2.3*
2.4*
2.5*
3.1*
3.2*
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*

46



10.9*
10.10*~
10.11*~
10.12*~
10.13*~
10.14*~
10.15*~
10.16*~
10.17*~
10.18*~
10.19*~
10.20*~
10.21*~
10.22*~
10.23*~
10.24*~
10.25*~

47



10.26*~
10.27*~
10.28*~
10.29*~
10.30*~
10.31*~
21.1