SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations — We are a diverse media enterprise with a portfolio of print and digital media brands. All of our media businesses provide content and advertising services via digital platforms, including the Internet, smartphones and tablets. The Company has aggregated its operating segments into one reportable segment since all of its newspapers sell similar products created with the same production process and which have similar economic characteristics.

Concentration Risks — Our operations are geographically dispersed and we have a diverse customer base. We believe bad debt losses resulting from default by a single customer, or defaults by customers in any depressed region or business sector, would not have a material effect on our financial position, results of operations or cash flows. We derive approximately 60% of our operating revenues from advertising and marketing services. Changes in the demand for such services both nationally and in individual markets can affect operating results.

Use of Estimates — Preparing financial statements in accordance with GAAP requires us to make a variety of decisions that affect the reported amounts and the related disclosures. Such decisions include the selection of accounting principles that reflect the economic substance of the underlying transactions and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience, actuarial studies and other assumptions.

Our consolidated and combined financial statements include estimates and assumptions including: the periods over which long-lived assets are depreciated or amortized, the evaluation of recoverability of long-lived assets, valuation allowances against deferred income tax assets, corporate allocations for periods prior to April 1, 2015, and self-insured risks.

While we reevaluate our estimates and assumptions on an ongoing basis, actual results could differ from those estimated at the time of preparation of the financial statements.

Investments and Minority Interest — Investments in 20%-to-50%-owned corporations where we exert significant influence and all 50%-or-less-owned partnerships and limited liability companies are accounted for using the equity method. We do not hold any interests in variable interest entities. All intercompany transactions have been eliminated.

Losses attributable to noncontrolling interests in subsidiary companies is included in net loss attributable to noncontrolling interest in the Consolidated and Combined Statements of Operations.

Revenue Recognition — We recognize revenue when persuasive evidence of a sales arrangement exists, delivery occurs or services are rendered, the sales price is fixed or determinable and collectability is reasonably assured. We report revenue net of sales and other taxes collected from our customers. Our primary sources of revenue are from the sale of print and digital advertising and newspaper subscription fees.

Revenue recognition policies for each source of revenue are as follows.

Advertising and marketing services — Print advertising revenue is recognized when we display the advertisements. Digital advertising includes time-based, impression-based, and click-through campaigns. We recognize digital advertising revenue from fixed duration campaigns over the period in which the advertising appears. We recognize digital advertising revenue that is based upon the number of impressions delivered or the number of click-throughs as impressions are delivered or as click-throughs occur. We recognize marketing services revenue when the service is performed.

Subscriptions — We recognize newspaper subscription revenue upon the publication date of the newspaper. We defer revenues from prepaid newspaper subscriptions and recognize subscription revenue on a pro-rata basis over the term of the subscription.

We base subscription revenue for newspapers sold directly to subscribers on the retail rate. We base subscription revenue for newspapers sold to independent newspaper distributors, which are subject to returns, upon the wholesale rate. We estimate returns based on historical return rates and adjust our estimates based on the actual returns.

Other Revenues — We also derive revenues from printing and distribution of other publications. We recognize printing revenues and third-party distribution revenue when the product is delivered in accordance with the customer’s instructions.

Shipping and handling costs — Shipping and handling costs, including postage, billed to customers are included in revenue and the related costs are included in cost of sales.

Advertising expense — We expense our advertising costs as incurred. Advertising expense totaled $7,600, $7,024 and $8,778 in 2015, 2014 and 2013, respectively.

Cash and Cash Equivalents — Cash and cash equivalents include cash and liquid investments with original maturities of three months or less. Cash and cash equivalents includes credit and debit card sales transactions that are settled generally within three days after the period.

Accounts Receivable — We extend credit to customers based upon our assessment of the customer’s financial condition. Collateral is generally not required from customers. We base allowances for credit losses upon trends, economic conditions, review of aging categories, specific identification of customers at risk of default and historical experience. We require advance payment from certain transient advertisers.

A rollforward of the allowance for doubtful accounts is as follows:



Balance as of January 1, 2013	$	676
Charged to selling, general and administrative expenses	877
Amounts charged off, net	(646		)
Balance as of December 31, 2013	907
Charged to selling, general and administrative expenses	632
Amounts charged off, net	(793		)
Balance as of December 31, 2014	746
Charged to selling, general and administrative expenses	1,117
Amounts charged off, net	(1,016		)
Balance as of December 31, 2015	$	847

Inventories — Inventories are stated at the lower of cost or market. We determine the cost of inventories using the first in, first out (“FIFO”) method.

Property, Plant and Equipment — Property, plant and equipment is carried at cost, or in the case of assets acquired in a business acquisition, at fair value as of the acquisition date, less accumulated depreciation. Property, plant and equipment includes internal use software, mobile app development and digital site development cost, which is carried at cost less amortization. We expense costs incurred in the preliminary project stage to develop or acquire internal use software, and to develop mobile apps or digital sites. Upon completion of the preliminary project stage and upon management authorization of the project, we capitalize costs to acquire or develop internal use software, mobile apps or digital sites, which primarily include coding, designing system interfaces, and installation and testing, if it is probable the project will be completed and the software will be used for its intended function. We expense costs incurred after implementation, such as maintenance and training.

We compute depreciation and amortization using the straight-line method over estimated useful lives as follows:



Buildings and improvements	30 to 45 years
Printing presses	10 to 30 years
Other production equipment	5 to 15 years
Computer hardware and software	3 to 5 years
Office and other equipment	3 to 10 years

Goodwill — Goodwill represents the cost of acquisitions in excess of the acquired businesses’ tangible assets, identifiable intangible assets and liabilities assumed. All goodwill relates to the acquisition of JRN Newspapers on April 1, 2015 as described in Note 6 - Acquisitions.

We test goodwill for impairment annually on October 1 at the reporting unit level using a fair value approach. For purposes of testing the carrying value of goodwill, we determine the fair value of the applicable reporting unit using an income and a market valuation approach. The income approach uses expected cash flows of the reporting unit. The cash flows are discounted for risk and time value. In addition, the present value of the projected residual value is estimated and added to the present value of the cash flows. The market approach to estimate fair value is based on the estimated value allocable to the reporting unit for the proposed merger (see Note 4), stock price multiples (based on revenue and EBITDA) of publicly traded stocks of comparable companies, and merger and acquisition values of comparable companies.

Amortizable Intangible Assets — We amortize using the straight-line method trade names, customer lists and other intangible assets in relation to their expected future cash flows over estimated useful lives of 3 to 25 years.

Impairment of Long-Lived Assets — We review long-lived assets (primarily property, plant and equipment and amortizable intangible assets) for impairment whenever events or circumstances indicate the carrying amounts of the assets may not be recoverable. Recoverability is determined by comparing the forecasted undiscounted cash flows of the operation to which the assets relate to the carrying amount of the assets. If the undiscounted cash flow is less than the carrying amount of the assets, then amortizable intangible assets are written down first, followed by other long-lived assets, to fair value. We determine fair value based on discounted cash flows or appraisals. We report long-lived assets to be disposed of at the lower of carrying amount or fair value less costs to sell.

Self-Insured Risks — We are self-insured, up to certain limits, for general and automobile liability, employee health, disability and workers’ compensation claims and certain other risks. Estimated liabilities for unpaid claims totaled $8,855 and $8,686 as of December 31, 2015 and 2014, respectively. We estimate liabilities for unpaid claims using actuarial methodologies and our historical claims experience. While we re-evaluate our assumptions and review our claims experience on an ongoing basis, actual claims paid could vary significantly from estimated claims, which would require adjustments to expense.

Income Taxes — Historically, the Company was included in the Scripps federal and state tax filings with other Scripps entities. The income tax provisions in these consolidated and combined financial statements prior to April 1, 2015 have been prepared on a separate return basis as if the Company was a stand-alone entity. For jurisdictions where the Company filed returns as part of Scripps, the stand alone provision will present taxes payable as a component of equity since the Company will never actually be liable for the payable.

We recognize deferred income taxes for temporary differences between the tax basis and reported amounts of assets and liabilities that will result in taxable or deductible amounts in future years. We establish a valuation allowance if we believe that it is more likely than not that we will not realize some or all of the deferred tax assets.

We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or that we expect to take in a tax return. Interest and penalties associated with such tax positions are included in the tax provision.

Parent Company Equity — Parent Company Equity on the Consolidated and Combined Balance Sheets represents Scripps' historical investment of capital into the Company, the Company's accumulated earnings after taxes, and the net effect of transactions with and allocations of corporate expenses from Scripps.

Stock-Based Compensation — On March 30, 2015, our board of directors and shareholders approved the Journal Media Group Long-Term Incentive Plan (the "2015 Plan") authorizing the award of non-qualified stock options, incentive stock options, stock appreciation rights, restricted share awards, restricted share units, performance shares, performance units, other stock-based awards or dividend equivalents. The 2015 Plan also provides for the issuance of cash-based awards. We value unrestricted stock awards at the closing market price of our common stock on the grant date. We value restricted stock units at the closing market price of our common stock on the grant date. We recognize stock-based compensation expense on a straight-line basis over the service period based upon the fair value of the award on the grant date. Stock-based compensation expense is reported in selling, general and administrative expenses in our consolidated statements of operations.

For periods prior to the April 1, 2015 separation date, certain employees were eligible to participate in the Scripps Long-Term Incentive Plan (the "Scripps Plan"). The Scripps Plan provided for the granting of non-qualified stock options, restricted stock units and restricted common shares of Scripps. Stock-based compensation expense for participants in the Scripps Plan who were solely dedicated to newspapers operations were allocated to the Company and included within selling, general and administrative expense in our consolidated and combined financial statements. Such expense was recognized on a straight-line basis over the requisite service period of the award based on the grant date fair value of the award.

Pension — Prior to April 1, 2015, retirement benefits were provided to eligible employees of the Company, primarily through defined benefit plans sponsored by Scripps. The Company has accounted for its participation in the Scripps Pension Plan as a participant in a multi-employer plan. Expense has been determined on a participant basis and included in the combined financial statements of the Company. As a participant in a multi-employer plan, no assets or liabilities are included in the Consolidated and Combined Balance Sheets of the Company other than contributions currently due and unpaid to the plan.

Prior to December 31, 2014, the Company also had four plans that were sponsored directly by the Company's Memphis and Knoxville newspapers. On September 30, 2014, the plan sponsored by the Knoxville newspaper with an unfunded liability of $3,000 was merged into the Scripps sponsored plan. On December 31, 2014, the plans sponsored by the Memphis newspaper with an unfunded liability of $14,600 was merged into the Scripps sponsored plan.

Prior to April 1, 2015, the Company participated in the Scripps Supplemental Executive Retirement Plan ("SERP") which the Company accounted for as a separate stand alone defined benefit plan. The Company accounted for the allocation of the benefit obligations specifically related to its employees and its estimated portion of the plan assets, if any. The total SERP pension expense was allocated to the Company based on the Company's share of the service cost and benefit obligations, in addition to its expected return on its portion of the SERP assets.

Effective April 1, 2015, the Company established the JMG Supplemental Executive Retirement Plan ("JMG SERP") which is a mirror plan of the former Scripps and Journal plans. The JMG SERP is an unfunded non-qualified defined benefit pension plan providing retirement benefits to certain executive employees.

Other Postretirement Benefits — Prior to April 1, 2015, certain health care and life insurance benefits for retired employees of the Company were provided through postretirement plans ("OPEB") sponsored by Scripps. The expected cost of providing these benefits was accrued over the years that the employees render services. A portion of the Scripps OPEB liability and corresponding expense has been allocated specifically to the Company and included in these consolidated and combined financial statements. The amounts included in these consolidated and combined financial statements were actuarially determined based on amounts allocable to eligible employees of the Company.

Effective April 1, 2015, the Company established the Journal Media Group postretirement plan ("JMG OPEB") which is a mirror plan of the former Scripps and Journal plans. It is the Company's policy to fund postretirement benefits as claims are incurred.