TRANSACTIONS WITH SCRIPPS

Corporate-wide programs

Prior to the April 1, 2015 separation, Scripps Newspapers participated in a number of corporate-wide programs administrated by Scripps. These included participation in Scripps' centralized treasury function, insurance programs, employee benefit programs, workers' compensation programs and centralized service centers and other corporate functions.

Equity — Prior to April 1, 2015, equity in the consolidated and combined balance sheets included the accumulated balance of transactions between Scripps and the Company including Scripps' investment and Scripps' interest in our cumulative retained earnings and are presented within parent company investment and combined with accumulated other comprehensive loss to total Parent company equity. The amounts comprising the accumulated balance of transactions between us and Scripps include (i) the cumulative net assets attributed to us by Scripps, (ii) the cumulative net advances to Scripps representing our cumulative funds swept (net of funding provided by Scripps to us) as part of the centralized cash management program described further below, (iii) the cumulative charges (net of credits) allocated by Scripps to us for certain support services received by us, (iv) the transfer of defined benefit plans in 2014 and (v) the transfer of net deferred tax liabilities to us in 2015.

Centralized Cash Management — Prior to the separation, Scripps Newspapers participated in Scripps’ controlled disbursement system. The bank sent Scripps daily notifications of checks presented for payment and Scripps transferred funds from other sources to cover the checks. Our cash balance held by Scripps was reduced as checks were issued. Accordingly, none of Scripps' cash and cash equivalents had been assigned to us in the combined financial statements. Further, outstanding checks issued by Scripps were not recorded as a liability once the check was signed, as the obligation became tied to the central cash management arrangement.

Corporate Allocation from Scripps — The Company was allocated estimates of Scripps Newspaper's portion of Scripps' corporate expenses for periods prior to the separation. The corporate allocation included costs related to support received from Scripps for certain corporate activities including: (i) executive management, (ii) corporate development, (iii) corporate relations, (iv) legal, (v) human resources, (vi) internal audit, (vii) financial reporting, (viii) tax, (ix) treasury, (x) centralized accounting, and (xi) other Scripps corporate and infrastructure costs. For these services, actual costs incurred by Scripps were allocated to us based upon on a number of utilization measures including headcount, square footage, and proportionate effort. Where determinations based on utilization are impracticable, Scripps used other methods and criteria that are believed to be reasonable estimates of costs attributable to the Company, such as revenues.

In 2015, 2014 and 2013 the combined financial statements include $11,717, $50,673 and $40,421, respectively, in expense allocations from Scripps for certain corporate support services, which are recorded within selling, general and administrative expense in our Consolidated and Combined Statements of Operations. Management believes that the basis used for the allocations are reasonable and reflect the portion of such costs attributed to our operations; however, the amounts may not be representative of the costs necessary for us to operate as a separate stand-alone company. The Company is unable to determine what such costs would have been had the Company been independent. After April 1, 2015, the Company performed these functions using its own resources, Transition Services Agreements with Scripps, or purchased services.

Insurance — General insurance costs related to the Scripps Newspapers' participation in Scripps-sponsored risk management plans for (i) general liability, (ii) auto liability, and (iii) other insurance, such as property and media, were allocated, depending upon insurance type, prior to the separation. Total insurance costs allocated to the Company were $275, $1,344 and $1,361 in 2015, 2014 and 2013, respectively, and are allocated to selling, general and administrative expense in the consolidated and combined statements of operations. The allocated amounts were based on actuarially determined historical loss experience, vehicle count, headcount or proportional insured values for real and personal property replacement costs and business interruption.

Medical and Workers’ Compensation Benefit Plans — The Company participated in Scripps-sponsored employee benefit plans, including medical and workers’ compensation, prior to the separation. Allocations of benefit plan costs varied by plan type and were based on actuarial valuations of cost and/or liability, premium amounts and payroll. Total benefit plan costs allocated to the Company amounted to $4,738, $18,956 and $18,212 in 2015, 2014 and 2013, respectively, and are allocated to cost of sales and selling, general and administrative expense in the consolidated and combined statements of operations. While management believes the cost allocation methods utilized for the benefit plans were reasonable and reflect the portion of such costs attributed to the Company, the amounts may not be representative of the costs necessary for the Company to operate as a stand-alone business.

Other — We purchased newsprint and other items from Scripps prior to the separation. The prices charged were generally equal to prices that we would have been able to negotiate directly with unrelated parties. The total newsprint purchased was $6,497, $28,691 and $31,600 in 2015, 2014 and 2013, respectively.

Agreements with Scripps

In connection with the separation, the following agreements became effective on or before April 1, 2015:


•	Transition Services Agreement


•	Employee Matters Agreement


•	Tax Matters Agreements

Transition Services Agreement

The Transition Services Agreement provides for Scripps and Journal Media Group to provide services to each other on a compensated arms-length basis for a period of up to one year following the separation. The Company has incurred expenses of $3,381 for the year ended December 31, 2015 related to these services, which is reported in cost of sales and selling, general and administrative costs in the consolidated and combined statements of operations. Journal Media Group provides payroll, broadcast billing, and information technology support and services to Scripps. The Company has recorded $1,530 of revenue related to these services for the year ended December 31, 2015, which is reported in other revenues in the consolidated and combined statements of operations.

In addition to these services, Scripps continued to process and fund payroll for its former newspaper employees and Journal Media Group continued to process and fund payroll for the former broadcast employees of Journal. Also, each has paid various invoices on behalf of one another. As of December 31, 2015, we owe a net amount of $1,986 to Scripps for payroll and other payments made on our behalf and services provided related to the Transition Service Agreement. This amount is recorded in other current liabilities and was paid in the first quarter of 2016.

Employee Matters Agreement

The Employee Matters Agreement provided for the allocation of the liabilities and responsibilities relating to employee compensation and benefit plans and programs, including the treatment of outstanding incentive awards, deferred compensation obligations and retirement and welfare benefit obligations between Scripps and the Company. The agreement provided that Scripps and the Company would each be responsible for all employment and benefit related obligations and liabilities for employees that worked for the respective companies. The agreement also provided that Journal Media Group employees participate in mirror plans of the Scripps benefit plans through December 31, 2015.

Tax Matters Agreements

The Tax Matters Agreements set forth the allocations and responsibilities of Scripps and Journal Media Group with respect to liabilities for federal, state and local income taxes for periods before and after the separation, tax deductions related to compensation arrangements, preparation of income tax returns, disputes with taxing authorities and indemnification of income taxes that would become due if the separation was taxable. Generally, Scripps is responsible for taxes for periods prior to the separation and we are responsible for taxes for our operations after the separation. On April 1, 2015, in connection with the retention of the prior net operating loss carryforward by Scripps, the Company was allocated a net deferred tax liability of $14,537 related to the Scripps Newspapers.

The Company will indemnify Scripps for all damages, liabilities and expenses arising out of any tax imposed with respect to either the Scripps or Journal newspaper spin-off if such tax is attributable to any act, any failure to act or any omission by us or any of our subsidiaries. Scripps will indemnify the Company for all damages, liabilities and expenses relating to pre-closing taxes or taxes imposed on us or our subsidiaries because Scripps Spinco or Journal Spinco was part of the consolidated return of the applicable parent company, and the Company will indemnify Scripps for all damages, liabilities and expenses relating to post-closing taxes of us or our subsidiaries. The Merger Agreement with Gannett is not expected to disturb the tax-free treatment of the prior transaction between Scripps and Journal. Prior to entering the Merger Agreement with Gannett we delivered an unqualified tax opinion from our law firm to Scripps, which opinion Scripps has deemed to be acceptable in form and substance.