ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 47-2390983 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
7950 Jones Branch Drive, McLean, Virginia | 22107-0910 | |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer | ý | Accelerated Filer | ¨ |
Non-Accelerated Filer | ¨ | Smaller Reporting Company | ¨ |
(Do not check if a smaller reporting company) | Emerging Growth Company | ¨ |
Item No. | Page | |
1 | ||
2 | ||
3 | ||
4 | ||
1 | ||
1A | ||
2 | ||
3 | ||
4 | ||
5 | ||
6 |
September 24, 2017 | December 25, 2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 109,961 | $ | 114,324 | |||
Accounts receivable, net of allowance for doubtful accounts of $9,400 and $10,317 | 325,361 | 358,041 | |||||
Other current assets | 138,732 | 131,141 | |||||
Total current assets | 574,054 | 603,506 | |||||
Property, plant and equipment, at cost net of accumulated depreciation of $1,478,392 and $1,481,897 | 963,768 | 1,087,701 | |||||
Goodwill | 737,840 | 698,288 | |||||
Intangible assets, net | 153,035 | 154,644 | |||||
Deferred income taxes | 221,386 | 218,232 | |||||
Investments and other assets | 67,376 | 82,310 | |||||
Total assets | $ | 2,717,459 | $ | 2,844,681 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Accounts payable and accrued liabilities | $ | 390,356 | $ | 438,724 | |||
Deferred income | 135,822 | 133,263 | |||||
Total current liabilities | 526,178 | 571,987 | |||||
Income taxes | 30,395 | 25,467 | |||||
Postretirement medical and life insurance liabilities | 82,191 | 90,134 | |||||
Pension liabilities | 677,949 | 739,262 | |||||
Long-term portion of revolving credit facility | 375,000 | 400,000 | |||||
Other noncurrent liabilities | 162,077 | 161,070 | |||||
Total liabilities | 1,853,790 | 1,987,920 | |||||
Equity | |||||||
Preferred stock of $0.01 par value per share, 5,000,000 shares authorized, none issued | — | — | |||||
Common stock of $0.01 par value per share, 500,000,000 shares authorized, 117,497,254 shares issued at September 24, 2017 and 116,624,726 shares issued at December 25, 2016 | 1,175 | 1,166 | |||||
Treasury stock at cost, 5,750,000 shares at September 24, 2017 and 3,750,000 shares at December 25, 2016 | (50,046 | ) | (32,667 | ) | |||
Additional paid-in capital | 1,781,946 | 1,769,905 | |||||
Retained earnings (deficit) | (32,680 | ) | 1,269 | ||||
Accumulated other comprehensive loss | (836,726 | ) | (882,912 | ) | |||
Total equity | 863,669 | 856,761 | |||||
Total liabilities and equity | $ | 2,717,459 | $ | 2,844,681 |
Three months ended | Nine months ended | ||||||||||||||
September 24, 2017 | September 25, 2016 | September 24, 2017 | September 25, 2016 | ||||||||||||
Operating revenues: | |||||||||||||||
Advertising | $ | 420,793 | $ | 429,053 | $ | 1,301,522 | $ | 1,190,108 | |||||||
Circulation | 264,413 | 285,583 | 821,375 | 835,872 | |||||||||||
Other | 59,068 | 57,685 | 169,341 | 154,500 | |||||||||||
Total operating revenues | 744,274 | 772,321 | 2,292,238 | 2,180,480 | |||||||||||
Operating expenses: | |||||||||||||||
Cost of sales and operating expenses | 476,526 | 516,236 | 1,470,558 | 1,419,016 | |||||||||||
Selling, general and administrative expenses | 203,995 | 217,609 | 627,113 | 586,100 | |||||||||||
Depreciation | 41,128 | 30,638 | 124,260 | 83,889 | |||||||||||
Amortization | 8,658 | 5,003 | 24,193 | 7,961 | |||||||||||
Facility consolidation and asset impairment charges | 2,189 | 28,673 | 22,799 | 33,160 | |||||||||||
Total operating expenses | 732,496 | 798,159 | 2,268,923 | 2,130,126 | |||||||||||
Operating income (loss) | 11,778 | (25,838 | ) | 23,315 | 50,354 | ||||||||||
Non-operating expenses: | |||||||||||||||
Interest expense | (4,613 | ) | (3,652 | ) | (12,322 | ) | (8,509 | ) | |||||||
Other non-operating items, net (see Note 1) | (922 | ) | (3,694 | ) | (10,110 | ) | (9,572 | ) | |||||||
Total non-operating expenses | (5,535 | ) | (7,346 | ) | (22,432 | ) | (18,081 | ) | |||||||
Income (loss) before income taxes | 6,243 | (33,184 | ) | 883 | 32,273 | ||||||||||
Provision (benefit) for income taxes | (16,801 | ) | (9,223 | ) | (19,595 | ) | 4,157 | ||||||||
Net income (loss) | $ | 23,044 | $ | (23,961 | ) | $ | 20,478 | $ | 28,116 | ||||||
Earnings (loss) per share – basic | $ | 0.20 | $ | (0.21 | ) | $ | 0.18 | $ | 0.24 | ||||||
Earnings (loss) per share – diluted | $ | 0.20 | $ | (0.21 | ) | $ | 0.18 | $ | 0.24 |
Three months ended | Nine months ended | ||||||||||||||
September 24, 2017 | September 25, 2016 | September 24, 2017 | September 25, 2016 | ||||||||||||
Net income (loss) | $ | 23,044 | $ | (23,961 | ) | $ | 20,478 | $ | 28,116 | ||||||
Other comprehensive income, before tax: | |||||||||||||||
Foreign currency translation adjustments | 30,718 | (23,367 | ) | 44,675 | (62,440 | ) | |||||||||
Pension and other postretirement benefit items: | |||||||||||||||
Amortization of prior service credit, net | 756 | 470 | 2,267 | 1,539 | |||||||||||
Amortization of actuarial loss | 18,222 | 16,025 | 54,445 | 47,212 | |||||||||||
Other | (27,582 | ) | 17,723 | (43,307 | ) | 48,246 | |||||||||
Pension and other postretirement benefit items | (8,604 | ) | 34,218 | 13,405 | 96,997 | ||||||||||
Other comprehensive income, before tax | 22,114 | 10,851 | 58,080 | 34,557 | |||||||||||
Income tax effect related to components of other comprehensive income | (1,514 | ) | (8,965 | ) | (11,894 | ) | (25,937 | ) | |||||||
Other comprehensive income, net of tax | 20,600 | 1,886 | 46,186 | 8,620 | |||||||||||
Comprehensive income (loss) | $ | 43,644 | $ | (22,075 | ) | $ | 66,664 | $ | 36,736 |
Nine months ended | |||||||
September 24, 2017 | September 25, 2016 | ||||||
Operating activities: | |||||||
Net income | $ | 20,478 | $ | 28,116 | |||
Adjustments to reconcile net income to net cash flow from operating activities: | |||||||
Depreciation and amortization | 148,453 | 91,850 | |||||
Facility consolidation and asset impairment charges | 22,799 | 33,160 | |||||
Pension and other postretirement expenses, net of contributions | (36,360 | ) | (79,729 | ) | |||
Equity (income) loss in unconsolidated investees, net | 1,384 | (844 | ) | ||||
Stock-based compensation | 14,897 | 14,986 | |||||
Change in other assets and liabilities, net | (7,960 | ) | 30,432 | ||||
Net cash provided by operating activities | 163,691 | 117,971 | |||||
Investing activities: | |||||||
Capital expenditures | (46,884 | ) | (45,001 | ) | |||
Payments for acquisitions, net of cash acquired | (36,540 | ) | (462,379 | ) | |||
Payments for investments | (2,709 | ) | (12,402 | ) | |||
Proceeds from sale of certain assets | 17,293 | 16,998 | |||||
Changes in other investing activities | 1,277 | 167 | |||||
Net cash used for investing activities | (67,563 | ) | (502,617 | ) | |||
Financing activities: | |||||||
Dividends paid | (54,427 | ) | (74,437 | ) | |||
Cost of common shares repurchased | (17,379 | ) | — | ||||
Proceeds from issuance of common stock upon settlement of stock awards | 612 | 480 | |||||
Payments for employee taxes withheld from stock awards | (3,903 | ) | (3,521 | ) | |||
Proceeds from borrowings under revolving credit agreement | 35,000 | 455,000 | |||||
Repayments of borrowings under revolving credit agreement | (60,000 | ) | (70,000 | ) | |||
Changes in other financing activities | (511 | ) | (124 | ) | |||
Net cash (used for) provided by financing activities | (100,608 | ) | 307,398 | ||||
Effect of currency exchange rates change on cash | 117 | (2,647 | ) | ||||
Decrease in cash and cash equivalents | (4,363 | ) | (79,895 | ) | |||
Balance of cash and cash equivalents at beginning of period | 114,324 | 196,696 | |||||
Balance of cash and cash equivalents at end of period | $ | 109,961 | $ | 116,801 | |||
Supplemental cash flow information: | |||||||
Cash paid for taxes, net of refunds | $ | (15,554 | ) | $ | 25,236 | ||
Cash paid for interest | $ | 12,056 | $ | 7,821 | |||
Non-cash investing activities: | |||||||
Accrued capital expenditures | $ | 307 | $ | 1,643 |
In thousands | |||
Cash acquired | $ | 13,195 | |
Other current assets | 14,612 | ||
Property, plant and equipment | 13,486 | ||
Intangible assets | 88,500 | ||
Goodwill | 120,165 | ||
Other noncurrent assets | 9,852 | ||
Total assets acquired | 259,810 | ||
Current liabilities | 63,005 | ||
Noncurrent liabilities | 21,062 | ||
Total liabilities assumed | 84,067 | ||
Net assets acquired | $ | 175,743 |
In thousands | |||
Cash acquired | $ | 36,825 | |
Other current assets | 54,571 | ||
Property, plant and equipment | 264,357 | ||
Intangible assets | 42,880 | ||
Goodwill | 25,258 | ||
Other noncurrent assets | 3,825 | ||
Total assets acquired | 427,716 | ||
Current liabilities | 71,519 | ||
Noncurrent liabilities | 61,151 | ||
Total liabilities assumed | 132,670 | ||
Net assets acquired | $ | 295,046 |
Nine months ended | |||
In thousands; unaudited | September 25, 2016 | ||
Total revenues | $ | 2,546,953 | |
Net loss | $ | (2,795 | ) |
Loss per share - diluted | $ | (0.02 | ) |
In thousands | Severance Activities | ||
Balance at December 25, 2016 | $ | 18,651 | |
Expense | 25,382 | ||
Payments | (35,411 | ) | |
Balance at September 24, 2017 | $ | 8,622 |
In thousands | Three months ended | ||||||||||||||
September 24, 2017 | September 25, 2016 | ||||||||||||||
Pension | Postretirement | Pension | Postretirement | ||||||||||||
Operating expenses: | |||||||||||||||
Service cost-benefits earned during the period | $ | 610 | $ | 83 | $ | 818 | $ | 49 | |||||||
Non-operating expenses: | |||||||||||||||
Interest cost on benefit obligation | 27,935 | 902 | 30,853 | 964 | |||||||||||
Expected return on plan assets | (42,657 | ) | — | (45,560 | ) | — | |||||||||
Amortization of prior service cost | 1,668 | (912 | ) | 1,668 | (1,198 | ) | |||||||||
Amortization of actuarial loss | 18,197 | 25 | 15,823 | 202 | |||||||||||
Total non-operating expenses (credit) | 5,143 | 15 | 2,784 | (32 | ) | ||||||||||
Total expense for retirement plans | $ | 5,753 | $ | 98 | $ | 3,602 | $ | 17 | |||||||
Nine months ended | |||||||||||||||
September 24, 2017 | September 25, 2016 | ||||||||||||||
Pension | Postretirement | Pension | Postretirement | ||||||||||||
Operating expenses: | |||||||||||||||
Service cost-benefits earned during the period | $ | 1,830 | $ | 161 | $ | 2,446 | $ | 146 | |||||||
Non-operating expenses: | |||||||||||||||
Interest cost on benefit obligation | 83,309 | 2,706 | 94,571 | 2,838 | |||||||||||
Expected return on plan assets | (127,035 | ) | — | (138,708 | ) | — | |||||||||
Amortization of prior service cost | 5,003 | (2,736 | ) | 4,997 | (3,458 | ) | |||||||||
Amortization of actuarial loss | 54,368 | 77 | 46,946 | 266 | |||||||||||
Total non-operating expenses (credit) | 15,645 | 47 | 7,806 | (354 | ) | ||||||||||
Total expense (credit) for retirement plans | $ | 17,475 | $ | 208 | $ | 10,252 | $ | (208 | ) |
In thousands | Nine months ended | ||||||
September 24, 2017 | September 25, 2016 | ||||||
Balance at beginning of period | $ | 856,761 | $ | 1,058,576 | |||
Comprehensive income: | |||||||
Net income | 20,478 | 28,116 | |||||
Other comprehensive income | 46,186 | 8,620 | |||||
Total comprehensive income | 66,664 | 36,736 | |||||
Dividends declared | (54,427 | ) | (55,936 | ) | |||
Stock-based compensation | 14,897 | 14,986 | |||||
Other activity | (20,226 | ) | 19,544 | ||||
Balance at end of period | $ | 863,669 | $ | 1,073,906 |
In thousands | Retirement Plans | Foreign Currency Translation | Total | ||||||||
Balance at December 25, 2016 | $ | (1,183,196 | ) | $ | 300,284 | $ | (882,912 | ) | |||
Other comprehensive income (loss) before reclassifications | (34,980 | ) | 44,675 | 9,695 | |||||||
Amounts reclassified from accumulated other comprehensive loss | 36,491 | — | 36,491 | ||||||||
Other comprehensive income | 1,511 | 44,675 | 46,186 | ||||||||
Balance at September 24, 2017 | $ | (1,181,685 | ) | $ | 344,959 | $ | (836,726 | ) | |||
Balance at December 27, 2015 | $ | (1,058,234 | ) | $ | 384,810 | $ | (673,424 | ) | |||
Other comprehensive income (loss) before reclassifications | 39,751 | (62,440 | ) | (22,689 | ) | ||||||
Amounts reclassified from accumulated other comprehensive loss | 31,309 | — | 31,309 | ||||||||
Other comprehensive income (loss) | 71,060 | (62,440 | ) | 8,620 | |||||||
Balance at September 25, 2016 | $ | (987,174 | ) | $ | 322,370 | $ | (664,804 | ) |
In thousands | Three months ended | Nine months ended | |||||||||||||
September 24, 2017 | September 25, 2016 | September 24, 2017 | September 25, 2016 | ||||||||||||
Amortization of prior service credit, net | $ | 756 | $ | 470 | $ | 2,267 | $ | 1,539 | |||||||
Amortization of actuarial loss | 18,222 | 16,025 | 54,445 | 47,212 | |||||||||||
Total reclassifications, before tax | 18,978 | 16,495 | 56,712 | 48,751 | |||||||||||
Income tax effect | (6,755 | ) | (5,936 | ) | (20,221 | ) | (17,442 | ) | |||||||
Total reclassifications, net of tax | $ | 12,223 | $ | 10,559 | $ | 36,491 | $ | 31,309 |
In thousands, except per share data | Three months ended | Nine months ended | |||||||||||||
September 24, 2017 | September 25, 2016 | September 24, 2017 | September 25, 2016 | ||||||||||||
Net income (loss) | $ | 23,044 | $ | (23,961 | ) | $ | 20,478 | $ | 28,116 | ||||||
Weighted average number of shares outstanding - basic | 113,253 | 116,556 | 113,467 | 116,461 | |||||||||||
Effect of dilutive securities | |||||||||||||||
Restricted stock units | 1,657 | — | 1,418 | 1,506 | |||||||||||
Performance share units | 757 | — | 643 | 916 | |||||||||||
Stock options | 107 | — | 127 | 266 | |||||||||||
Weighted average number of shares outstanding - diluted | 115,774 | 116,556 | 115,655 | 119,149 | |||||||||||
Earnings (loss) per share - basic | $ | 0.20 | $ | (0.21 | ) | $ | 0.18 | $ | 0.24 | ||||||
Earnings (loss) per share - diluted | $ | 0.20 | $ | (0.21 | ) | $ | 0.18 | $ | 0.24 |
• | Publishing, which consists of our portfolio of local, regional, national, and international newspaper publishers. The results of this segment include retail, classified, and national advertising revenues consisting of both print and digital advertising, circulation revenues from the distribution of our publications on our digital platforms, home delivery of our publications, single copy sales, and other revenues from commercial printing and distribution arrangements. The publishing reportable segment is an aggregation of two operating segments: Domestic Publishing and the U.K. |
• | ReachLocal, which consists of our ReachLocal digital marketing solutions subsidiaries and SweetIQ. The results of this segment include advertising revenues from our search and display services and other revenues related to web presence and software solutions provided by ReachLocal. |
In thousands | Publishing | ReachLocal | Corporate and Other | Intersegment Eliminations | Consolidated | ||||||||||||||
Three months ended September 24, 2017 | |||||||||||||||||||
Advertising - external sales | $ | 337,802 | $ | 82,991 | $ | — | $ | — | $ | 420,793 | |||||||||
Advertising - intersegment sales | 9,904 | — | — | (9,904 | ) | — | |||||||||||||
Circulation | 264,413 | — | — | — | 264,413 | ||||||||||||||
Other - external sales | 46,904 | 10,826 | 1,338 | — | 59,068 | ||||||||||||||
Other - intersegment sales | 1,315 | — | — | (1,315 | ) | — | |||||||||||||
Total revenues | $ | 660,338 | $ | 93,817 | $ | 1,338 | $ | (11,219 | ) | $ | 744,274 | ||||||||
Adjusted EBITDA | $ | 87,451 | $ | 5,229 | $ | (18,827 | ) | $ | — | $ | 73,853 | ||||||||
Three months ended September 25, 2016 | |||||||||||||||||||
Advertising | $ | 397,214 | $ | 31,839 | $ | — | $ | — | $ | 429,053 | |||||||||
Circulation | 285,583 | — | — | — | 285,583 | ||||||||||||||
Other | 53,773 | 3,138 | 774 | — | 57,685 | ||||||||||||||
Total revenues | $ | 736,570 | $ | 34,977 | $ | 774 | $ | — | $ | 772,321 | |||||||||
Adjusted EBITDA | $ | 86,371 | $ | (6,744 | ) | $ | (21,598 | ) | $ | — | $ | 58,029 |
In thousands | Publishing | ReachLocal | Corporate and Other | Intersegment Eliminations | Consolidated | ||||||||||||||
Nine months ended September 24, 2017 | |||||||||||||||||||
Advertising - external sales | $ | 1,071,888 | $ | 229,686 | $ | (52 | ) | $ | — | $ | 1,301,522 | ||||||||
Advertising - intersegment sales | 13,863 | — | — | (13,863 | ) | — | |||||||||||||
Circulation | 821,375 | — | — | — | 821,375 | ||||||||||||||
Other - external sales | 138,320 | 27,622 | 3,399 | — | 169,341 | ||||||||||||||
Other - intersegment sales | 1,996 | — | — | (1,996 | ) | — | |||||||||||||
Total revenues | $ | 2,047,442 | $ | 257,308 | $ | 3,347 | $ | (15,859 | ) | $ | 2,292,238 | ||||||||
Adjusted EBITDA | $ | 283,235 | $ | 9,592 | $ | (65,639 | ) | $ | — | $ | 227,188 | ||||||||
Nine months ended September 25, 2016 | |||||||||||||||||||
Advertising | $ | 1,158,269 | $ | 31,839 | $ | — | $ | — | $ | 1,190,108 | |||||||||
Circulation | 835,872 | — | — | — | 835,872 | ||||||||||||||
Other | 148,480 | 3,138 | 2,882 | — | 154,500 | ||||||||||||||
Total revenues | $ | 2,142,621 | $ | 34,977 | $ | 2,882 | $ | — | $ | 2,180,480 | |||||||||
Adjusted EBITDA | $ | 298,161 | $ | (6,744 | ) | $ | (61,367 | ) | $ | — | $ | 230,050 |
In thousands | Three months ended | Nine months ended | |||||||||||||
September 24, 2017 | September 25, 2016 | September 24, 2017 | September 25, 2016 | ||||||||||||
Net income (loss) (GAAP basis) | $ | 23,044 | $ | (23,961 | ) | $ | 20,478 | $ | 28,116 | ||||||
Provision (benefit) for income taxes | (16,801 | ) | (9,223 | ) | (19,595 | ) | 4,157 | ||||||||
Interest expense | 4,613 | 3,652 | 12,322 | 8,509 | |||||||||||
Other non-operating items, net | 922 | 3,694 | 10,110 | 9,572 | |||||||||||
Operating income (loss) (GAAP basis) | 11,778 | (25,838 | ) | 23,315 | 50,354 | ||||||||||
Severance-related charges | 5,117 | 5,137 | 25,382 | 26,831 | |||||||||||
Acquisition-related expenses | 2,059 | 14,416 | 4,652 | 29,055 | |||||||||||
Facility consolidation and asset impairment charges | 2,189 | 28,673 | 22,799 | 33,160 | |||||||||||
Other items | 2,924 | — | 2,587 | (1,200 | ) | ||||||||||
Depreciation | 41,128 | 30,638 | 124,260 | 83,889 | |||||||||||
Amortization | 8,658 | 5,003 | 24,193 | 7,961 | |||||||||||
Adjusted EBITDA (non-GAAP basis) | $ | 73,853 | $ | 58,029 | $ | 227,188 | $ | 230,050 |
• | SweetIQ – In April 2017, we completed the acquisition of SweetIQ Analytics Corp. (SweetIQ) for approximately $31.7 million, net of cash acquired. SweetIQ has a platform that provides services which enable customers to launch and execute marketing campaigns to convert online searches to in-store foot traffic. SweetIQ's customers include businesses with multi-location brands and agencies that target local marketing. |
• | ReachLocal – In August 2016, we completed the acquisition of 100% of the outstanding common stock of ReachLocal for approximately $162.5 million, net of cash acquired. ReachLocal offers online marketing, digital advertising, software-as-a-service, and web presence products and solutions to local businesses. In connection with the ReachLocal acquisition, we established a new, separate reportable segment that reflects its results since the acquisition date. |
• | Certain assets of North Jersey Media Group (NJMG) – In July 2016, we completed the acquisition of certain assets of NJMG for approximately $38.6 million. NJMG is a media company with print and digital publishing operations serving primarily the northern New Jersey market. |
• | Journal Media Group (JMG) – In April 2016, we completed the acquisition of 100% of the outstanding common stock of JMG for approximately $260.6 million, net of cash acquired. JMG is a media company with print and digital publishing operations serving 15 U.S. markets in 9 states. |
• | We completed other immaterial acquisitions during the periods presented. |
• | Severance-related expenses – We incurred severance-related costs of $5.1 million in both the third quarter of 2017 and 2016. We incurred severance-related costs of $25.4 million and $26.8 million for the first nine months of 2017 and 2016, respectively. |
• | Facility consolidation and asset impairment charges – Our facility consolidation initiatives include the disposition of older, under-utilized buildings, relocations to more efficient, flexible, digitally-oriented office spaces, efforts to reconfigure spaces to take advantage of leasing and subleasing opportunities, and the combination of production and distribution operations where possible. These facility consolidation and other cost savings plans led us to recognize asset impairment charges, shutdown costs, and charges associated with reducing the useful lives of certain assets. As part of our plans, we are selling certain assets which we have classified as held-for-sale and reduced carrying values to equal fair value less costs to dispose. We recorded pre-tax charges for facility consolidations and asset impairments of $2.2 million and $28.7 million for the third quarter of 2017 and 2016, respectively, and $22.8 million and $33.2 million for the first nine months of 2017 and 2016, respectively. In addition, we recorded accelerated depreciation of $14.1 million and $37.6 million for the third quarter and the first nine months of 2017, respectively. No accelerated deprecation was recorded for the third quarter or the first nine months of 2016. |
• | Foreign currency – Earnings from operations in foreign regions are translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities are translated at exchange rates in effect at the balance sheet date. With respect to Newsquest, results for the third quarter of 2017 were translated from the British pound sterling to U.S. dollars at an average rate of 1.31 which was relatively consistent with the same period in 2016. Newsquest results for the first nine months of 2017 were translated from the British pound sterling to U.S. dollars at an average rate of 1.27 compared to 1.40 |
In thousands | Three months ended | Nine months ended | |||||||||||||||||||
September 24, 2017 | September 25, 2016 | Change | September 24, 2017 | September 25, 2016 | Change | ||||||||||||||||
Operating revenues: | |||||||||||||||||||||
Publishing | $ | 660,338 | $ | 736,570 | (10 | %) | $ | 2,047,442 | $ | 2,142,621 | (4 | %) | |||||||||
ReachLocal | 93,817 | 34,977 | *** | 257,308 | 34,977 | *** | |||||||||||||||
Corporate and Other | 1,338 | 774 | 73 | % | 3,347 | 2,882 | 16 | % | |||||||||||||
Intersegment eliminations | (11,219 | ) | — | 100 | % | (15,859 | ) | — | 100 | % | |||||||||||
Total operating revenues | 744,274 | 772,321 | (4 | %) | 2,292,238 | 2,180,480 | 5 | % | |||||||||||||
Operating expenses: | |||||||||||||||||||||
Publishing | 616,699 | 711,349 | (13 | %) | 1,908,078 | 1,979,344 | (4 | %) | |||||||||||||
ReachLocal | 98,024 | 46,207 | *** | 274,176 | 46,207 | *** | |||||||||||||||
Corporate and Other | 28,992 | 40,603 | (29 | %) | 102,528 | 104,575 | (2 | %) | |||||||||||||
Intersegment eliminations | (11,219 | ) | — | 100 | % | (15,859 | ) | — | 100 | % | |||||||||||
Total operating expenses | 732,496 | 798,159 | (8 | %) | 2,268,923 | 2,130,126 | 7 | % | |||||||||||||
Operating income (loss) | 11,778 | (25,838 | ) | *** | 23,315 | 50,354 | (54 | %) | |||||||||||||
Non-operating expense | (5,535 | ) | (7,346 | ) | (25 | %) | (22,432 | ) | (18,081 | ) | 24 | % | |||||||||
Income (loss) before income taxes | 6,243 | (33,184 | ) | *** | 883 | 32,273 | (97 | %) | |||||||||||||
Provision (benefit) for income taxes | (16,801 | ) | (9,223 | ) | 82 | % | (19,595 | ) | 4,157 | *** | |||||||||||
Net income (loss) | $ | 23,044 | $ | (23,961 | ) | *** | $ | 20,478 | $ | 28,116 | (27 | %) | |||||||||
Diluted earnings (loss) per share | $ | 0.20 | $ | (0.21 | ) | *** | $ | 0.18 | $ | 0.24 | (25 | %) |
• | Reported revenues or expenses |
• | Less: revenues or expenses for our 2016 publishing acquisitions from the beginning of fiscal year 2017 through the |
• | Less: operations exited in 2016 |
• | Add (less): decreases (increases) in foreign currency translation impacts based on a constant currency calculation |
In thousands | Three months ended | Nine months ended | |||||||||||||||||||
September 24, 2017 | September 25, 2016 | Change | September 24, 2017 | September 25, 2016 | Change | ||||||||||||||||
Operating revenues: | |||||||||||||||||||||
Advertising | $ | 347,706 | $ | 397,214 | (12 | %) | $ | 1,085,751 | $ | 1,158,269 | (6 | %) | |||||||||
Circulation | 264,413 | 285,583 | (7 | %) | 821,375 | 835,872 | (2 | %) | |||||||||||||
Other | 48,219 | 53,773 | (10 | %) | 140,316 | 148,480 | (5 | %) | |||||||||||||
Total operating revenues | 660,338 | 736,570 | (10 | %) | 2,047,442 | 2,142,621 | (4 | %) | |||||||||||||
Operating expenses: | |||||||||||||||||||||
Cost of sales | 429,211 | 488,864 | (12 | %) | 1,325,523 | 1,387,443 | (4 | %) | |||||||||||||
Selling, general, and administrative expenses | 150,246 | 166,046 | (10 | %) | 453,640 | 482,222 | (6 | %) | |||||||||||||
Depreciation | 33,730 | 25,926 | 30 | % | 102,217 | 71,721 | 43 | % | |||||||||||||
Amortization | 1,323 | 1,840 | (28 | %) | 3,899 | 4,798 | (19 | %) | |||||||||||||
Facility consolidation and impairment charges | 2,189 | 28,673 | (92 | %) | 22,799 | 33,160 | (31 | %) | |||||||||||||
Total operating expenses | 616,699 | 711,349 | (13 | %) | 1,908,078 | 1,979,344 | (4 | %) | |||||||||||||
Operating income | $ | 43,639 | $ | 25,221 | 73 | % | $ | 139,364 | $ | 163,277 | (15 | %) |
In thousands | Three months ended | Nine months ended | |||||||||||||||||||
September 24, 2017 | September 25, 2016 | Change | September 24, 2017 | September 25, 2016 | Change | ||||||||||||||||
Operating income (GAAP basis) | $ | 43,638 | $ | 25,221 | 73 | % | $ | 139,363 | $ | 163,277 | (15 | %) | |||||||||
Severance-related charges | 5,421 | 4,575 | 18 | % | 21,181 | 26,269 | (19 | %) | |||||||||||||
Acquisition-related expenses | 420 | 136 | *** | 331 | 136 | *** | |||||||||||||||
Facility consolidation and asset impairment charges | 2,189 | 28,673 | (92 | %) | 22,799 | 33,160 | (31 | %) | |||||||||||||
Other items | 730 | — | *** | (6,555 | ) | (1,200 | ) | *** | |||||||||||||
Depreciation | 33,730 | 25,926 | 30 | % | 102,217 | 71,721 | 43 | % | |||||||||||||
Amortization | 1,323 | 1,840 | (28 | %) | 3,899 | 4,798 | (19 | %) | |||||||||||||
Adjusted EBITDA (non-GAAP basis) | $ | 87,451 | $ | 86,371 | 1 | % | $ | 283,235 | $ | 298,161 | (5 | %) |
In thousands | Three months ended | Nine months ended | |||||||||||||
September 24, 2017 | September 25, 2016 | September 24, 2017 | September 25, 2016 | ||||||||||||
Operating revenues: | |||||||||||||||
Advertising | $ | 82,991 | $ | 31,839 | $ | 229,686 | $ | 31,839 | |||||||
Other | 10,826 | 3,138 | 27,622 | 3,138 | |||||||||||
Total operating revenues | 93,817 | 34,977 | 257,308 | 34,977 | |||||||||||
Operating expenses: | |||||||||||||||
Cost of sales | 55,101 | 24,485 | 150,271 | 24,485 | |||||||||||
Selling, general, and administrative expenses | 34,077 | 17,798 | 98,401 | 17,798 | |||||||||||
Depreciation | 1,511 | 761 | 5,210 | 761 | |||||||||||
Amortization | 7,335 | 3,163 | 20,294 | 3,163 | |||||||||||
Total operating expenses | 98,024 | 46,207 | 274,176 | 46,207 | |||||||||||
Operating loss | $ | (4,207 | ) | $ | (11,230 | ) | $ | (16,868 | ) | $ | (11,230 | ) |
As of date | September 24, 2017 | December 25, 2016 | |||
Active Clients (1) | 19,900 | 15,300 | |||
Active Product Units (2) | 38,400 | 27,900 |
(1) | Active Clients is calculated to approximate the number of clients served. Active Clients is calculated by adjusting the number of Active Product Units to combine clients with more than one Active Product Unit as a single Active Client. Clients with more than one location are generally reflected as multiple Active Clients. This number includes clients with which ReachLocal does not have a direct client relationship. Numbers are rounded to the nearest hundred. |
(2) | Active Product Units is calculated to approximate the number of individual products, licenses, or services we are providing under contract for Active Clients. For example, if we were performing both ReachSearch and ReachDisplay campaigns for a client that also licenses ReachEdge, we consider that three Active Product Units. Similarly, if a client purchases ReachSearch campaigns for two different products or purposes, we consider that two Active Product Units. Numbers are rounded to the nearest hundred. |
In thousands | Three months ended | Nine months ended | |||||||||||||
September 24, 2017 | September 25, 2016 | September 24, 2017 | September 25, 2016 | ||||||||||||
Operating loss (GAAP basis) | $ | (4,207 | ) | $ | (11,230 | ) | $ | (16,868 | ) | $ | (11,230 | ) | |||
Severance-related charges | 191 | 562 | 514 | 562 | |||||||||||
Acquisition-related expenses | — | — | 43 | — | |||||||||||
Other Items | 399 | — | 399 | — | |||||||||||
Depreciation | 1,511 | 761 | 5,210 | 761 | |||||||||||
Amortization | 7,335 | 3,163 | 20,294 | 3,163 | |||||||||||
Adjusted EBITDA (non-GAAP basis) | $ | 5,229 | $ | (6,744 | ) | $ | 9,592 | $ | (6,744 | ) |
In thousands | Nine months ended | ||||||
September 24, 2017 | September 25, 2016 | ||||||
Net cash provided by operating activities | $ | 163,691 | $ | 117,971 | |||
Net cash used for investing activities | (67,563 | ) | (502,617 | ) | |||
Net cash (used for) provided by financing activities | (100,608 | ) | 307,398 | ||||
Effect of currency exchange rate change on cash | 117 | (2,647 | ) | ||||
Net decrease in cash | $ | (4,363 | ) | $ | (79,895 | ) |
• | Adjusted EBITDA is a non-GAAP financial performance measure we believe offers a useful view of the overall operation of our businesses. Adjusted EBITDA is defined as net income before (1) income taxes, (2) interest expense, (3) equity income, (4) other non-operating items, (5) severance-related charges, (6) acquisition-related expenses (including certain integration expenses), (7) facility consolidation and asset impairment charges, (8) other items (including certain business transformation costs, litigation expenses, multi-employer pension withdrawals, and gains or losses on certain investments), (9) depreciation, and (10) amortization. When adjusted EBITDA is discussed in this report, the most directly comparable GAAP financial measure is net income. |
• | Adjusted net income is a non-GAAP financial performance measure we use for calculating adjusted EPS. Adjusted net income is defined as net income before the adjustments we apply in calculating adjusted EPS as described below. We believe presenting adjusted net income is useful to enable investors to understand how we calculate adjusted EPS, which provides a useful view of the overall operation of our business. The most directly comparable GAAP financial measure is net income. |
• | Adjusted EPS is a non-GAAP financial performance measure we believe offers a useful view of the overall operation of our business. We define adjusted EPS as EPS before tax-effected (1) severance-related charges, (2) facility consolidation and asset impairment charges, (3) acquisition-related expenses (including certain integration expenses), and (4) other items (including certain business transformation expenses, litigation expenses, multi-employer pension withdrawals, and gains or losses on certain investments). The tax impact on these non-GAAP tax deductible adjustments is based on the estimated statutory tax rates for the U.K. of 19.25% and the U.S. of 38.70%. In addition, tax is adjusted for the impact of non-deductible acquisition costs and a tax benefit related to a worthless stock and debt deduction. When adjusted EPS is discussed in this report, the most directly comparable GAAP financial measure is diluted EPS. |
• | Free cash flow is a non-GAAP liquidity measure that adjusts our reported GAAP results for items we believe are critical to the ongoing success of our business. We define free cash flow as cash flow from operating activities less capital expenditures, which results in a figure representing free cash flow available for use in operations, additional investments, debt obligations and returns to shareholders. The most directly comparable GAAP financial measure is net cash from operating activities. |
In thousands | Three months ended | Nine months ended | |||||||||||||||||||
September 24, 2017 | September 25, 2016 | Change | September 24, 2017 | September 25, 2016 | Change | ||||||||||||||||
Net income (loss) (GAAP basis) | $ | 23,044 | $ | (23,961 | ) | *** | $ | 20,478 | $ | 28,116 | (27 | %) | |||||||||
Provision (benefit) for income taxes | (16,801 | ) | (9,223 | ) | 82 | % | (19,595 | ) | 4,157 | *** | |||||||||||
Interest expense | 4,613 | 3,652 | 26 | % | 12,322 | 8,509 | 45 | % | |||||||||||||
Other non-operating items, net | 922 | 3,694 | (75 | %) | 10,110 | 9,572 | 6 | % | |||||||||||||
Operating income (loss) (GAAP basis) | 11,778 | (25,838 | ) | *** | 23,315 | 50,354 | (54 | %) | |||||||||||||
Severance-related charges | 5,117 | 5,137 | — | % | 25,382 | 26,831 | (5 | %) | |||||||||||||
Acquisition-related expenses | 2,059 | 14,416 | (86 | %) | 4,652 | 29,055 | (84 | %) | |||||||||||||
Facility consolidation and asset impairment charges | 2,189 | 28,673 | (92 | %) | 22,799 | 33,160 | (31 | %) | |||||||||||||
Other items | 2,924 | — | *** | 2,587 | (1,200 | ) | *** | ||||||||||||||
Depreciation | 41,128 | 30,638 | 34 | % | 124,260 | 83,889 | 48 | % | |||||||||||||
Amortization | 8,658 | 5,003 | 73 | % | 24,193 | 7,961 | *** | ||||||||||||||
Adjusted EBITDA (non-GAAP basis) | $ | 73,853 | $ | 58,029 | 27 | % | $ | 227,188 | $ | 230,050 | (1 | %) |
In thousands, except per share data | Three months ended | Nine months ended | |||||||||||||||||||
September 24, 2017 | September 25, 2016 | Change | September 24, 2017 | September 25, 2016 | Change | ||||||||||||||||
Severance-related charges | $ | 5,117 | $ | 5,137 | — | % | $ | 25,382 | $ | 26,831 | (5 | %) | |||||||||
Acquisition-related expenses | 2,059 | 14,416 | (86 | %) | 4,652 | 29,055 | (84 | %) | |||||||||||||
Facility consolidation and asset impairment charges (including accelerated depreciation) | 17,098 | 29,761 | (43 | %) | 61,445 | 34,311 | 79 | % | |||||||||||||
Other items | 19 | — | *** | (3,179 | ) | (1,200 | ) | *** | |||||||||||||
Pre-tax impact | 24,293 | 49,314 | (51 | %) | 88,300 | 88,997 | (1 | %) | |||||||||||||
Income tax impact of above items | (8,863 | ) | (17,757 | ) | (50 | %) | (33,295 | ) | (30,414 | ) | 9 | % | |||||||||
Tax benefit | $ | (20,086 | ) | — | *** | $ | (20,086 | ) | — | *** | |||||||||||
Impact of items affecting comparability on net income | $ | (4,656 | ) | $ | 31,557 | *** | $ | 34,919 | $ | 58,583 | (40 | %) | |||||||||
Net income (loss) (GAAP basis) | $ | 23,044 | $ | (23,961 | ) | *** | $ | 20,478 | $ | 28,116 | (27 | %) | |||||||||
Impact of items affecting comparability on net income (loss) | (4,656 | ) | 31,557 | *** | 34,919 | 58,583 | (40 | %) | |||||||||||||
Adjusted net income (non-GAAP basis) | $ | 18,388 | $ | 7,596 | *** | $ | 55,397 | $ | 86,699 | (36 | %) | ||||||||||
Earnings (loss) per share - diluted (GAAP basis) | $ | 0.20 | $ | (0.21 | ) | *** | $ | 0.18 | $ | 0.24 | (25 | %) | |||||||||
Impact of items affecting comparability on net income (loss) | (0.04 | ) | 0.27 | *** | 0.30 | 0.49 | (39 | %) | |||||||||||||
Adjusted earnings per share - diluted (non-GAAP basis) | $ | 0.16 | $ | 0.06 | *** | $ | 0.48 | $ | 0.73 | (34 | %) | ||||||||||
Diluted weighted average number of common shares outstanding (GAAP basis) | 115,774 | 116,556 | (1 | %) | 115,655 | 119,149 | (3 | %) | |||||||||||||
Diluted weighted average number of common shares outstanding (non-GAAP basis) | 115,774 | 119,010 | (3 | %) | 115,655 | 119,149 | (3 | %) |
In thousands | Three months ended | Nine months ended | |||||||||
September 24, 2017 | September 25, 2016 | September 24, 2017 | September 25, 2016 | ||||||||
Weighted average number of shares outstanding - basic (GAAP basis) | 113,253 | 116,556 | 113,467 | 116,461 | |||||||
Effect of dilutive securities (GAAP basis) | |||||||||||
Restricted stock units | 1,657 | — | 1,418 | 1,506 | |||||||
Performance share units | 757 | — | 643 | 916 | |||||||
Stock options | 107 | — | 127 | 266 | |||||||
Weighted average number of shares outstanding - diluted (GAAP basis) | 115,774 | 116,556 | 115,655 | 119,149 | |||||||
Effect of dilutive securities (non-GAAP basis) | |||||||||||
Restricted stock units | — | 1,446 | — | — | |||||||
Performance share units | — | 765 | — | — | |||||||
Stock options | — | 243 | — | — | |||||||
Weighted average number of shares outstanding - diluted (non-GAAP basis) | 115,774 | 119,010 | 115,655 | 119,149 |
In thousands | Nine months ended | ||||||
September 24, 2017 | September 25, 2016 | ||||||
Net cash flow provided by operating activities (GAAP basis) | $ | 163,691 | $ | 117,971 | |||
Capital expenditures | (46,884 | ) | (45,001 | ) | |||
Free cash flow (non-GAAP basis) | $ | 116,807 | $ | 72,970 |
• | Macroeconomic trends and conditions; |
• | An accelerated decline in general print readership and/or advertiser patterns as a result of competitive alternative media or other factors; |
• | An inability to adapt to technological changes or grow our digital businesses; |
• | Risks associated with the operation of an increasingly digital business, such as rapid technological changes, frequent new product introductions, declines in web traffic levels, technical failures and proliferation of ad blocking technologies; |
• | Competitive pressures in the markets in which we operate; |
• | An increase in newsprint costs over the levels anticipated; |
• | Potential disruption or interruption of our IT systems due to accidents, extraordinary weather events, civil unrest, political events, terrorism or cyber security attacks; |
• | Variability in the exchange rate relative to the U.S. dollar of currencies in foreign jurisdictions in which we operate; |
• | Risks and uncertainties related to strategic acquisitions or investments, including distraction of management attention, incurrence of additional debt, integration challenges, and failure to realize expected benefits or synergies or to operate businesses effectively following acquisitions; |
• | Risks and uncertainties associated with our ReachLocal segment, including its significant reliance on Google for media purchases, its international operations and its ability to develop and gain market acceptance for new products or services; |
• | Our ability to protect our intellectual property or defend successfully against infringement claims; |
• | Our ability to attract and retain talent; |
• | Labor relations, including, but not limited to, labor disputes which may cause business interruptions, revenue declines or increased labor costs; |
• | Risks associated with our underfunded pension plans; |
• | Adverse outcomes in litigation or proceedings with governmental authorities or administrative agencies, or changes in the regulatory environment, any of which could encumber or impede our efforts to improve operating results or the value of assets; |
• | Volatility in financial and credit markets which could affect the value of retirement plan assets and our ability to raise funds through debt or equity issuances and otherwise affect our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms; and |
• | Other uncertainties relating to general economic, political, business, industry, regulatory and market conditions. |
Period | Number of Shares Repurchased | Weighted Average Cost per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Repurchased Under the Program | |||||||||
June 26, 2017 to July 23, 2017 | — | $ | — | — | $ | — | |||||||
July 24, 2017 to August 27, 2017 | — | — | — | — | |||||||||
August 28, 2017 to September 24, 2017 | 2,000,000 | $ | 8.67 | 2,000,000 | $ | 99,954,336 |
31-1 | Rule 13a-14(a) Certification of CEO | |||
31-2 | Rule 13a-14(a) Certification of CFO | |||
32-1 | Section 1350 Certification of CEO | |||
32-2 | Section 1350 Certification of CFO | |||
101 | The following financial information from Gannett Co., Inc. Quarterly Report on Form 10-Q for the quarter ended September 24, 2017, formatted in XBRL: (i) Unaudited Condensed Consolidated Balance Sheets at September 24, 2017 and December 25, 2016, (ii) Unaudited Condensed Consolidated Statements of Income (Loss) for the fiscal quarters and six months ended September 24, 2017 and September 25, 2016, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the fiscal quarters and six months ended September 24, 2017 and September 25, 2016, (iv) Unaudited Condensed Consolidated Cash Flow Statements for the six months ended September 24, 2017 and September 25, 2016, and (v) Unaudited Notes to Condensed Consolidated Financial Statements | Attached. |
Date: November 2, 2017 | GANNETT CO., INC. |
/s/ Alison K. Engel | |
Alison K. Engel | |
Senior Vice President, Chief Financial Officer and Treasurer | |
(on behalf of Registrant and as Principal Financial Officer) |
I, | Robert J. Dickey, certify that: |
1. | I have reviewed this quarterly report on Form 10-Q of Gannett Co., Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 2, 2017 |
/s/ Robert J. Dickey |
Robert J. Dickey |
President and Chief Executive Officer |
(principal executive officer) |
I, | Alison K. Engel, certify that: |
1. | I have reviewed this quarterly report on Form 10-Q of Gannett Co., Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 2, 2017 |
/s/ Alison K. Engel |
Alison K. Engel |
Senior Vice President, Chief Financial Officer and Treasurer |
(principal financial officer) |
(1) | the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Gannett. |
/s/ Robert J. Dickey |
Robert J. Dickey |
President and Chief Executive Officer |
(principal executive officer) |
November 2, 2017 |
(1) | the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Gannett. |
/s/ Alison K. Engel |
Alison K. Engel |
Senior Vice President, Chief Financial Officer and Treasurer |
(principal financial officer) |
November 2, 2017 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 24, 2017 |
Oct. 27, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Gannett Co., Inc. | |
Entity Central Index Key | 0001635718 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 24, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock Shares Outstanding | 111,768,945 | |
Trading Symbol | GCI |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 24, 2017 |
Dec. 25, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 9,400 | $ 10,317 |
Accumulated depreciation | $ 1,478,392 | $ 1,481,897 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 500,000,000 | 500,000,000 |
Common stock, issued shares | 117,497,254 | 116,624,726 |
Treasury stock, shares | 5,750,000 | 3,750,000 |
Condensed Consolidated Statements of Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2017 |
Sep. 25, 2016 |
Sep. 24, 2017 |
Sep. 25, 2016 |
|
Operating revenues: | ||||
Advertising | $ 420,793 | $ 429,053 | $ 1,301,522 | $ 1,190,108 |
Circulation | 264,413 | 285,583 | 821,375 | 835,872 |
Other | 59,068 | 57,685 | 169,341 | 154,500 |
Total operating revenues | 744,274 | 772,321 | 2,292,238 | 2,180,480 |
Operating expenses: | ||||
Cost of sales and operating expenses | 476,526 | 516,236 | 1,470,558 | 1,419,016 |
Selling, general and administrative expenses | 203,995 | 217,609 | 627,113 | 586,100 |
Depreciation | 41,128 | 30,638 | 124,260 | 83,889 |
Amortization | 8,658 | 5,003 | 24,193 | 7,961 |
Facility consolidation and asset impairment charges | 2,189 | 28,673 | 22,799 | 33,160 |
Total operating expenses | 732,496 | 798,159 | 2,268,923 | 2,130,126 |
Operating income (loss) | 11,778 | (25,838) | 23,315 | 50,354 |
Non-operating expenses: | ||||
Interest expense | (4,613) | (3,652) | (12,322) | (8,509) |
Other non-operating items, net (see Note 1) | (922) | (3,694) | (10,110) | (9,572) |
Total non-operating expenses | (5,535) | (7,346) | (22,432) | (18,081) |
Income (loss) before income taxes | 6,243 | (33,184) | 883 | 32,273 |
Provision (benefit) for income taxes | (16,801) | (9,223) | (19,595) | 4,157 |
Net income (loss) | $ 23,044 | $ (23,961) | $ 20,478 | $ 28,116 |
Earnings (loss) per share – basic (in dollars per share) | $ 0.20 | $ (0.21) | $ 0.18 | $ 0.24 |
Earnings (loss) per share – diluted (in dollars per share) | $ 0.20 | $ (0.21) | $ 0.18 | $ 0.24 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
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Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 23,044 | $ (23,961) | $ 20,478 | $ 28,116 |
Other comprehensive income, before tax: | ||||
Foreign currency translation adjustments | 30,718 | (23,367) | 44,675 | (62,440) |
Pension and other postretirement benefit items: | ||||
Amortization of prior service credit, net | 756 | 470 | 2,267 | 1,539 |
Amortization of actuarial loss | 18,222 | 16,025 | 54,445 | 47,212 |
Other | (27,582) | 17,723 | (43,307) | 48,246 |
Pension and other postretirement benefit items | (8,604) | 34,218 | 13,405 | 96,997 |
Other comprehensive income, before tax | 22,114 | 10,851 | 58,080 | 34,557 |
Income tax effect related to components of other comprehensive income | (1,514) | (8,965) | (11,894) | (25,937) |
Other comprehensive income, net of tax | 20,600 | 1,886 | 46,186 | 8,620 |
Comprehensive income (loss) | $ 43,644 | $ (22,075) | $ 66,664 | $ 36,736 |
Basis of presentation and summary of significant accounting policies |
9 Months Ended |
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Sep. 24, 2017 | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
Basis of presentation and summary of significant accounting policies | NOTE 1 — Basis of presentation and summary of significant accounting policies Description of business: Gannett Co., Inc. (Gannett, our, us, and we) is a next-generation media company that empowers communities to connect, act, and thrive. Gannett owns ReachLocal, Inc. (an international digital marketing solutions company that recently acquired SweetIQ Analytics Corp. (SweetIQ), the USA TODAY NETWORK (made up of USA TODAY and 109 local media organizations in 34 states in the U.S. and Guam), and Newsquest (a wholly owned subsidiary with more than 160 local media brands in the U.K.). Gannett delivers high-quality, trusted content where and when consumers want to engage with it on virtually any device or platform and helps clients connect with the consumers they seek to help grow their businesses. Basis of presentation: The condensed consolidated financial statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles (U.S. GAAP) applicable to interim periods. All intercompany accounts have been eliminated in consolidation. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 25, 2016. Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and footnotes thereto. Actual results could differ from those estimates. Significant estimates and judgments inherent in the preparation of financial statements include the accounting for income taxes, pension and other post-employment benefits, allowances for doubtful accounts, equity-based compensation, depreciation and amortization, business combinations, litigation matters, contingencies, and the valuation of long-lived and intangible assets. New accounting pronouncements adopted: The following are new accounting pronouncements that we adopted in the first nine months of 2017: Inventory: We adopted Financial Accounting Standards Board (FASB) guidance that requires entities using the first-in, first-out inventory costing method to subsequently value inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The impact of adopting this guidance was not material to our consolidated financial results. Compensation—Retirement Benefits: We early adopted FASB guidance requiring changes to the presentation of net periodic pension and other postretirement benefit costs. Specifically, this guidance requires entities to classify the service cost component of the net benefit cost in the same income statement line item as other employee compensation costs while all other components of net benefit cost must be presented as non-operating items. The guidance further requires such classification changes to be retrospectively applied beginning in the interim period in which the guidance is adopted. As a result of adopting this guidance, for the three and nine months ended September 25, 2016, total operating expenses decreased $2.8 million and $7.5 million, respectively. For the three and nine months ended September 25, 2016, cost of sales decreased $1.7 million and $5.1 million, respectively, while selling, general, and administrative expenses decreased $1.1 million and $2.4 million, respectively. Net income, retained earnings, and earnings per share remained unchanged. New accounting pronouncements not yet adopted: The following are new accounting pronouncements that we are evaluating for future impacts on our financial position: Revenue from Contracts with Customers: In August 2014, the FASB issued a new revenue standard, "Revenue from Contracts with Customers," which prescribes a single comprehensive model for entities to use in the accounting of revenue arising from contracts with customers. The new guidance will supersede virtually all existing revenue guidance under U.S. GAAP and is effective for fiscal years beginning after December 15, 2017. The core principle contemplated by this new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers are also required. In April and May 2016, the FASB also issued clarifying updates to the new standard specifically to address certain core principles including the identification of performance obligations, licensing guidance, the assessment of the collectability criterion, the presentation of taxes collected from customers, non-cash considerations, contract modifications, and completed contracts at transition. We currently anticipate adopting the new revenue recognition standard using the modified retrospective approach in the fiscal year beginning January 1, 2018. This approach consists of recognizing the cumulative effect of initially applying the standard as an adjustment to opening retained earnings. As part of the modified retrospective approach, we will also amend our disclosures to reflect results under "legacy GAAP" for the initial year of adoption. To date, we have made progress in our assessment of the impact of adopting this new guidance, and steps towards implementation have been taken. Our approach to implementation has consisted of (1) performing a bottoms-up analysis of the impact of the standard on our portfolio of contracts, (2) reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to our existing revenue contracts, and (3) meeting with key stakeholders across the organization to discuss the impact of the standard on our existing contracts. We expect material impacts to the content and structure of our financial statements in the form of enhanced disclosures. Our preliminary evaluation and conclusions are subject to change as our assessment continues to progress. Our full evaluation is expected to be completed and finalized during the fourth quarter of 2017. Financial Assets and Financial Liabilities: In January 2016, the FASB issued guidance which revises the classification and measurement of investments in equity securities and the presentation of certain fair value changes in financial liabilities measured at fair value. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2017. We are currently evaluating the provisions of the updated guidance and assessing the impact on our consolidated financial statements. Leases: In February 2016, the FASB issued updated guidance modifying lease accounting for both lessees and lessors to increase transparency and comparability. Lessees are required to recognize lease assets and lease liabilities for those leases classified as operating leases under previous accounting standards and to disclose key information about leasing arrangements. This guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the provisions of the updated guidance and assessing the impact on our consolidated financial statements. Cash and Cash Equivalents, including Statement of Cash Flows and Restricted Cash: In November 2016, the FASB issued updated guidance requiring entities to explain, in their statements of cash flows, the change during the period in the total of cash, cash equivalents, and amounts generally described as "restricted cash" or "restricted cash equivalents." As a result, restricted cash and restricted cash equivalents must now be included within the total of cash and cash equivalents when reconciling the beginning and end of period totals shown on the statement of cash flows. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the provisions of this update and assessing the impact on our consolidated financial statements. Intangibles—Goodwill and Other: In January 2017, the FASB issued new guidance which simplifies the subsequent measurement of goodwill. The guidance permits an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with such losses not exceeding the total amount of goodwill allocated to that reporting unit. This guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the provisions of the updated guidance and assessing the impact on our consolidated financial statements. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | NOTE 2 — Acquisitions SweetIQ: In April 2017, our ReachLocal subsidiary completed the acquisition of SweetIQ for approximately $31.7 million, net of cash acquired. SweetIQ has a platform that provides services which enable customers to launch and execute marketing campaigns to convert online searches to in-store foot traffic. SweetIQ's customers include businesses with multi-location brands and agencies that target local marketing. The allocation of the purchase price is preliminary pending the finalization of the fair value of the acquired net assets and liabilities assumed, deferred income taxes, and assumed income and non-income based tax liabilities. As of the acquisition date, the purchase price was assigned to the acquired assets and assumed liabilities as follows: goodwill of $20.5 million, intangible assets of $15.2 million, noncurrent assets of $0.6 million, noncurrent liabilities of $3.5 million, and positive net working capital of $0.3 million. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships as well as expected future synergies. Goodwill associated with the acquisition of SweetIQ is allocated to the ReachLocal segment. We do not expect the purchase price allocated to goodwill and intangibles to be deductible for tax purposes. ReachLocal: In August 2016, we completed the acquisition of 100% of the outstanding common stock of ReachLocal for approximately $162.5 million, net of cash acquired. ReachLocal offers online marketing, digital advertising, software-as-a-service, and web presence products and solutions to local businesses. It delivers its suite of products and solutions to local businesses through its proprietary technology platform, its direct inside and outside sales force, and select third-party agencies and resellers. The allocation of the purchase price was based upon estimated fair values. The determination of the fair value of the assets acquired and liabilities assumed has been completed and the final allocation of the purchase price is as follows:
Acquired property, plant, and equipment is depreciated on a straight-line basis over the assets' respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships as well as expected future synergies. Goodwill associated with the acquisition of ReachLocal is allocated entirely to the ReachLocal segment. We do not expect the purchase price allocated to goodwill and trade names to be deductible for tax purposes. ReachLocal, including SweetIQ, is a separate segment, and its results of operations are provided in Note 11 — Segment reporting. Assets of North Jersey Media Group: In July 2016, we completed the acquisition of certain assets of North Jersey Media Group, Inc. (NJMG) for approximately $38.6 million. NJMG is a media company with print and digital publishing operations serving primarily the northern New Jersey market. Its brands include such established names as The Record (Bergen County) and The Herald. The allocation of the purchase price was based upon estimated fair values. The determination of the fair value of the assets acquired and liabilities assumed has been completed and the final allocation of the purchase price is as follows: property, plant, and equipment of $26.0 million, goodwill of $7.4 million, intangible assets of $7.2 million, noncurrent assets of $1.0 million, noncurrent liabilities of $0.3 million, and negative net working capital of $1.7 million. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships as well as expected future synergies. Any goodwill recognized related to the acquisition of NJMG is allocated to the publishing segment. We do not expect the purchase price allocated to goodwill and trade names to be deductible for tax purposes. Journal Media Group: In April 2016, we completed the acquisition of 100% of the outstanding common stock of Journal Media Group, Inc. (JMG) for approximately $260.6 million, net of cash acquired. Further, approximately $2.3 million of the purchase price paid was treated as post-acquisition expense for accounting purposes. JMG is a media company with print and digital publishing operations serving 15 U.S. markets in nine states, including the Milwaukee Journal Sentinel, the Knoxville News Sentinel, and The Commercial Appeal in Memphis. The acquisition expanded our print and digital publishing operations domestically. The allocation of the purchase price was based upon estimated fair values. The determination of the fair value of the assets acquired and liabilities assumed has been completed and the final allocation of the purchase price is as follows:
Acquired property, plant, and equipment is depreciated on a straight-line basis over the assets' respective estimated remaining useful lives. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and non-contractual relationships as well as expected future synergies. Any goodwill recognized related to the acquisition of JMG was allocated to the publishing segment. The purchase price allocated to goodwill and mastheads was not deductible for tax purposes. JMG revenues were $84.5 million and $281.2 million for the three and nine months ended September 24, 2017, respectively. JMG was integrated into our publishing segment and, as a result, it is not practicable to determine standalone earnings for 2017. Other: During the three and nine months ended September 24, 2017, we completed other immaterial acquisitions. Pro forma information: The following table sets forth unaudited pro forma results of operations assuming the ReachLocal, NJMG, and JMG acquisitions, along with transactions necessary to finance the acquisitions, occurred at the beginning of 2016:
This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other acquisition accounting adjustments, and is not necessarily indicative of what our results would have been had we operated the businesses from the beginning of the period presented. The pro forma adjustments reflect depreciation expense and amortization of intangibles related to the fair value adjustments of the assets acquired, additional interest expense related to the financing of the transactions, the elimination of acquisition-related costs, and the related tax effects of the adjustments. |
Restructuring activities |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||
Restructuring activities and asset impairment charges | NOTE 3 — Restructuring activities and asset impairment charges Over the past several years, we have engaged in a series of individual restructuring programs designed to right size our employee base, consolidate facilities, and improve operations, including those of recently acquired entities. Severance-related expenses: We recorded severance-related expenses of $4.5 million in costs of sales and operating expenses and $0.6 million in selling, general, and administrative expenses for the three months ended September 24, 2017. The majority of these expenses were related to the publishing segment. We recorded severance-related expenses of $4.1 million in costs of sales and operating expenses and $1.0 million in selling, general, and administrative expenses during the three months ended September 25, 2016. These expenses were related to the publishing segment. We recorded severance-related expenses of $17.9 million in costs of sales and operating expenses and $7.5 million in selling, general, and administrative expenses for the nine months ended September 24, 2017. Of these expenses, $21.2 million related to the publishing segment and $3.7 million related to corporate and other. The remainder is captured within our ReachLocal segment. We recorded severance-related expenses of $22.1 million in costs of sales and operating expenses and $4.7 million in selling, general, and administrative expenses during the nine months ended September 25, 2016. These expenses were related to the publishing segment. The activity and balance of severance-related liabilities are as follows:
Facility consolidation and impairment charges: Facility consolidation and other cost savings plans led us to recognize asset impairment charges, shutdown costs, and charges associated with revising the useful lives of certain assets over a shortened period. As part of our plans, we are selling certain assets which we have classified as held-for-sale and for which we have reduced the carrying values to equal the fair values less costs to dispose. We recorded pre-tax charges for facility consolidations and asset impairments of $2.2 million and $28.7 million for the three months ended September 24, 2017 and September 25, 2016, respectively. In addition, we incurred accelerated depreciation of $14.1 million for the three months ended September 24, 2017, which is included in depreciation expense. No accelerated deprecation was incurred for the three months ended September 25, 2016. These expenses were related to the publishing segment. We recorded pre-tax charges for facility consolidations and asset impairments of $22.8 million and $33.2 million for the nine months ended September 24, 2017 and September 25, 2016, respectively. In addition, we incurred accelerated depreciation of $37.6 million for the nine months ended September 24, 2017, which is included in depreciation expense. No accelerated deprecation was incurred for the nine months ended September 25, 2016. These expenses were related to the publishing segment. |
Revolving credit facility |
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Sep. 24, 2017 | |
Debt Disclosure [Abstract] | |
Revolving credit facility | NOTE 4 — Revolving credit facility We maintain a secured revolving credit facility pursuant to which we may borrow up to an aggregate principal amount of $500 million (Credit Facility). Under the Credit Facility, we may borrow at an applicable margin above the Eurodollar base rate (LIBOR loan) or the higher of the Prime Rate, the Federal Funds Effective Rate plus 0.50%, or the one month LIBOR rate plus 1.00% (ABR loan). The applicable margin is determined based on our total leverage ratio but differs between LIBOR loans and ABR loans. For LIBOR-based borrowing, the margin varies from 2.00% to 2.50%. For ABR-based borrowing, the margin varies from 1.00% to 1.50%. Up to $50 million of the Credit Facility is available for issuance of letters of credit. The Credit Facility matures on June 29, 2020. Customary fees are payable related to the Credit Facility, including commitment fees on the undrawn commitments of between 0.30% and 0.40% per annum, payable quarterly in arrears, based on our total leverage ratio. Borrowings under the Credit Facility are guaranteed by our wholly-owned material domestic subsidiaries. All obligations of Gannett and each subsidiary guarantor under the Credit Facility are or will be secured by first priority security interests in our equipment, inventory, accounts receivable, fixtures, general intangibles and other personal property, mortgages on certain material real property, and pledges of the capital stock of each subsidiary guarantor. Under the Credit Facility, our consolidated interest coverage ratio cannot be less than 3.00:1.00, and our total leverage ratio cannot exceed 3.00:1.00, in each case as of the last day of the test period consisting of the last four consecutive fiscal quarters. We were in compliance with all financial covenants under the Credit Facility as of September 24, 2017. The Credit Facility also contains a number of covenants that, among other things, limit or restrict our ability, subject to certain exceptions, to: (i) permit certain liens on current or future assets, (ii) enter into certain corporate transactions, (iii) incur additional indebtedness, (iv) make certain payments or declare certain dividends or distributions, (v) dispose of certain property, (vi) make certain investments, (vii) prepay or amend the terms of other indebtedness, or (viii) enter into certain transactions with our affiliates. We were in compliance with these covenants as of September 24, 2017. As of September 24, 2017, we had $375.0 million in outstanding borrowings under the Credit Facility and $11.9 million of letters of credit outstanding, leaving $113.1 million of availability. |
Pensions and other postretirement benefit plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pensions and other postretirement benefit plans | NOTE 5 — Pensions and other postretirement benefit plans We, along with our subsidiaries, have various defined benefit retirement plans, including plans established under collective bargaining agreements. Our retirement plans include the Gannett Retirement Plan (GRP), Newsquest and Romanes Pension Schemes in the U.K. (U.K. Pension Plans), and other defined benefit contribution plans. We also provide health care and life insurance benefits to certain retired employees who meet age and service requirements. Retirement plan costs include the following components:
Pursuant to our adoption of new guidance surrounding the presentation of net periodic benefit costs as discussed in Note 1 — Basis of presentation and summary of significant accounting policies, net periodic benefit costs other than service costs are now included in the Other non-operating items, net line in the unaudited Condensed Consolidated Statements of Income (Loss). During the nine months ended September 24, 2017, we contributed $47.2 million and $6.9 million to our pension and other postretirement plans, respectively. We expect to contribute approximately $25.0 million to the GRP in each of the fiscal years 2018 through 2020 and $15.0 million in 2021. We also expect to contribute approximately £15.0 million per year to the U.K. Pension Plans from 2017 through 2022. |
Income taxes |
9 Months Ended |
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Sep. 24, 2017 | |
Income Tax Disclosure [Abstract] | |
Income taxes | NOTE 6 — Income taxes There was a tax benefit for the three and nine months ended September 24, 2017 of $16.8 million and $19.6 million, respectively. During the three months ended September 24, 2017, we made an election to treat one of our ReachLocal international subsidiaries as a disregarded entity for U.S. federal income tax purposes, which resulted in a worthless stock and debt deduction. As a result of this election, we incurred a tax loss that resulted in a $20.1 million tax benefit, net of reserve of $14.7 million for uncertain tax positions. We expect our domestic operations to generate sufficient taxable income to fully utilize the tax benefit of the loss. This tax loss may be subject to audit and future adjustment by the IRS, which could result in a reversal of none, part, or all of the income tax benefit or could result in a benefit higher than the net amount recorded. If the IRS rejects or reduces the amount of the income tax benefit related to the worthless stock and debt deduction, we may have to pay additional cash income taxes, which could adversely affect our results of operations, financial condition, and cash flows. We cannot guarantee what the ultimate outcome or amount of the benefit we receive, if any, will be. Our effective income tax rates for the three and nine months ended September 24, 2017 are not meaningful. Our effective tax rates for the three and nine months ended September 25, 2016 were 27.8% and 12.9%, respectively. Our quarterly effective tax rate is calculated in part based on the full year forecasted income, over 50% of which is expected to be generated in foreign jurisdictions where the income tax rate is lower than in the U.S. This is similar to full year 2016, where the ratio of income earned in foreign jurisdictions to domestic income was higher than in 2014 and 2015. The lower domestic income is attributable to higher expenses domestically for corporate expenses related to public company costs, restructuring charges and asset impairments as compared with foreign jurisdictions. The recent changes in the mix of income generated from lower tax rate foreign jurisdictions relative to U.S. domestic income have had the effect of decreasing our tax expense. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was approximately $28.5 million and $17.3 million as of September 24, 2017 and December 25, 2016, respectively. The amount of accrued interest and penalties payable related to unrecognized tax benefits was $0.9 million and $3.8 million as of September 24, 2017 and December 25, 2016, respectively. It is reasonably possible that the amount of unrecognized benefits with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months. These changes may be the result of settlement of ongoing audits, lapses of statutes of limitations, or other regulatory developments. At this time, we estimate the amount of gross unrecognized tax positions may be reduced by approximately $2.8 million within the next 12 months primarily due to lapses of statutes of limitations and settlements of ongoing audits in various jurisdictions. |
Supplemental equity information |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental equity information | NOTE 7 — Supplemental equity information The following table summarizes equity account activity:
The following table summarizes the components of, and the changes in, accumulated other comprehensive loss (net of tax):
Accumulated other comprehensive loss components are included in computing net periodic postretirement costs as outlined in Note 5 — Pensions and other postretirement benefit plans. Reclassifications out of accumulated other comprehensive loss related to these postretirement plans include the following:
In July 2015, our Board of Directors approved a share repurchase program authorizing us to repurchase shares with an aggregate value of up to $150 million over a three-year period. Shares may be repurchased at management's discretion, either in the open market or in privately negotiated block transactions. Management's decision to repurchase shares depends on several factors, including share price and other corporate liquidity requirements. During the three months ended September 24, 2017, we repurchased two million shares at a cost of $17.4 million. As of September 24, 2017, there was $100.0 million in availability to repurchase shares under the share repurchase program. |
Fair value measurement |
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Sep. 24, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement | NOTE 8 — Fair value measurement We measure and record certain assets and liabilities at fair value. A fair value measurement is determined based on market assumptions that a market participant would use in pricing an asset or liability. A three-tiered hierarchy draws distinctions between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require use of our own estimates and assumptions through present value and other valuation techniques in determination of fair value (Level 3). As of September 24, 2017 and December 25, 2016, assets and liabilities measured or disclosed at fair value on a recurring basis primarily consist of pension plan assets and our revolving credit facility. As permitted by U.S. generally accepted accounting principles, the pension plans use net asset values as a practical expedient to determine the fair value of certain investments. These investments measured at net asset value have not been classified in the fair value hierarchy. The carrying value of our revolving credit facility approximates the fair value and is classified as Level 3. We also have certain assets requiring fair value measurement on a non-recurring basis. Our assets measured on a non-recurring basis are assets held for sale, which are classified as Level 3 assets and evaluated using executed purchase agreements or third party valuation analyses when certain circumstances arise. Assets held for sale totaled $22.5 million and $4.5 million as of September 24, 2017 and December 25, 2016, respectively. |
Commitments, contingencies and other matters |
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Sep. 24, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, contingencies and other matters | NOTE 9 — Commitments, contingencies and other matters Telephone Consumer Protection Act (TCPA) litigation: In January 2014, a class action lawsuit was filed against Gannett in the U.S. District Court for the District of New Jersey (Casagrand et al v. Gannett Co., Inc., et al). The suit claims various violations of the Telephone Consumer Protection Act (TCPA) arising from allegedly improper telemarketing calls made to consumers by one of our vendors. The plaintiffs sought to certify a class that would include all telemarketing calls made by the vendor or us. The TCPA provides for statutory damages of $500 per violation ($1,500 for willful violations). In April 2016, we agreed to settle all claims raised. The settlements are reflected in our financial statements as of September 24, 2017, and were not material to our results of operations, financial position, or cash flows. Environmental contingency: In 2011, the Advertiser Company (Advertiser), a subsidiary that publishes the Montgomery Advertiser, was notified by the U.S. Environmental Protection Agency (EPA) that it had been identified as a potentially responsible party (PRP) for the investigation and remediation of groundwater contamination in downtown Montgomery, Alabama. The Advertiser is a member of the Downtown Environmental Alliance, which has agreed to jointly fund and conduct all required investigation and remediation. In 2015, the Advertiser and other members of the Downtown Environmental Alliance reached a settlement with the U.S. EPA regarding the costs the U.S. EPA spent to investigate the site. The U.S. EPA has transferred responsibility for oversight of the site to the Alabama Department of Environmental Management, which has approved the work plan for the additional site investigation that is currently underway. The Advertiser's final costs cannot be determined until the investigation is complete, a determination is made on whether any remediation is necessary, and contributions from other PRPs are finalized. Other litigation: We are defendants in judicial and administrative proceedings involving matters incidental to our business. While the ultimate results of these proceedings cannot be predicted with certainty, we expect the ultimate resolution of all pending or threatened claims and litigation will not have a material effect on our consolidated results of operations, financial position, or cash flows. |
Earnings (loss) per share |
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Earnings (loss) per share | NOTE 10 — Earnings (loss) per share The following table is a reconciliation of weighted average number of shares outstanding used to compute basic and diluted earnings (loss) per share (EPS):
For the three and nine months ended September 24, 2017, approximately 428,000 and 862,000 outstanding common stock equivalents, respectively, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. For the three months ended September 25, 2016, all outstanding common stock equivalents were excluded from the computation of diluted loss per share because their effect would have been anti-dilutive due to the net loss for the period. Approximately 281,000 shares were excluded from the computation of diluted EPS for the nine months ended September 25, 2016 because their effect would have been anti-dilutive. On July 20, 2017, we declared a dividend of $0.16 per share of common stock, which was paid on September 18, 2017, to shareholders of record as of the close of business on September 1, 2017. Furthermore, on October 18, 2017, we declared a dividend of $0.16 per share of common stock, payable on December 26, 2017, to shareholders of record as of the close of business on December 12, 2017. |
Segment reporting |
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Segment reporting | NOTE 11 — Segment reporting We define our reportable segments based on the way the chief operating decision maker (CODM), currently the Chief Executive Officer, manages the operations for purposes of allocating resources and assessing performance. We classify our operations into two reportable segments as follows:
In addition to the above operating segments, we have a corporate and other category that includes activities not directly attributable to a specific segment. This category primarily consists of broad corporate functions and includes legal, human resources, accounting, finance, and marketing as well as activities such as tax settlements and other general business costs. In the ordinary course of business, our reportable segments enter into transactions with one another. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues and expenses recognized by the segment that is the counterparty to the transaction are eliminated in consolidation and do not affect consolidated results. The CODM uses adjusted EBITDA to evaluate the performance of the segments and allocate resources. Adjusted EBITDA is a non-GAAP financial performance measure we believe offers a useful view of the overall operation of our businesses and may be different than similarly-titled non-GAAP financial measures used by other companies. Adjusted EBITDA is defined as net income before (1) income taxes, (2) interest expense, (3) equity income, (4) other non-operating items, (5) severance-related charges, (6) acquisition-related expenses (including integration expenses), (7) facility consolidation and asset impairment charges, (8) other items (including certain business transformation costs, litigation expenses, multi-employer pension withdrawals and gains or losses on certain investments), (9) depreciation, and (10) amortization. When adjusted EBITDA is discussed in this report, the most directly comparable GAAP financial measure is net income. Management considers adjusted EBITDA to be the appropriate metric to evaluate and compare the ongoing operating performance of our segments on a consistent basis across reporting periods as it eliminates the effect of items which we do not believe are indicative of each segment's core operating performance. The following tables present our segment information:
Pursuant to our adoption of new guidance surrounding the presentation of net periodic benefit costs as discussed in Note 1 — Basis of presentation and summary of significant accounting policies, net periodic benefit costs other than service costs are now included in the Other non-operating items, net line in the unaudited Condensed Consolidated Statements of Income (Loss). As a result of adopting this guidance, adjusted EBITDA increased $2.8 million and $7.5 million for the three and nine months ended September 25, 2016, respectively. We changed certain corporate allocations at the beginning of fiscal year 2017 and retrospectively applied that change. The following table presents our reconciliation of adjusted EBITDA to net income:
Asset information by segment is not a key measure of performance used by the CODM. Accordingly, we have not disclosed asset information by segment. Additionally, equity income in unconsolidated investees, net, interest expense, other non-operating items, net, and provision for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level. |
Basis of presentation and summary of significant accounting policies (Policies) |
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Sep. 24, 2017 | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation: The condensed consolidated financial statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles (U.S. GAAP) applicable to interim periods. All intercompany accounts have been eliminated in consolidation. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 25, 2016. |
Use of Estimates | Use of estimates: The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and footnotes thereto. Actual results could differ from those estimates. Significant estimates and judgments inherent in the preparation of financial statements include the accounting for income taxes, pension and other post-employment benefits, allowances for doubtful accounts, equity-based compensation, depreciation and amortization, business combinations, litigation matters, contingencies, and the valuation of long-lived and intangible assets. |
Recent Accounting Standards | New accounting pronouncements adopted: The following are new accounting pronouncements that we adopted in the first nine months of 2017: Inventory: We adopted Financial Accounting Standards Board (FASB) guidance that requires entities using the first-in, first-out inventory costing method to subsequently value inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The impact of adopting this guidance was not material to our consolidated financial results. Compensation—Retirement Benefits: We early adopted FASB guidance requiring changes to the presentation of net periodic pension and other postretirement benefit costs. Specifically, this guidance requires entities to classify the service cost component of the net benefit cost in the same income statement line item as other employee compensation costs while all other components of net benefit cost must be presented as non-operating items. The guidance further requires such classification changes to be retrospectively applied beginning in the interim period in which the guidance is adopted. As a result of adopting this guidance, for the three and nine months ended September 25, 2016, total operating expenses decreased $2.8 million and $7.5 million, respectively. For the three and nine months ended September 25, 2016, cost of sales decreased $1.7 million and $5.1 million, respectively, while selling, general, and administrative expenses decreased $1.1 million and $2.4 million, respectively. Net income, retained earnings, and earnings per share remained unchanged. New accounting pronouncements not yet adopted: The following are new accounting pronouncements that we are evaluating for future impacts on our financial position: Revenue from Contracts with Customers: In August 2014, the FASB issued a new revenue standard, "Revenue from Contracts with Customers," which prescribes a single comprehensive model for entities to use in the accounting of revenue arising from contracts with customers. The new guidance will supersede virtually all existing revenue guidance under U.S. GAAP and is effective for fiscal years beginning after December 15, 2017. The core principle contemplated by this new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled in exchange for those goods or services. New disclosures about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers are also required. In April and May 2016, the FASB also issued clarifying updates to the new standard specifically to address certain core principles including the identification of performance obligations, licensing guidance, the assessment of the collectability criterion, the presentation of taxes collected from customers, non-cash considerations, contract modifications, and completed contracts at transition. We currently anticipate adopting the new revenue recognition standard using the modified retrospective approach in the fiscal year beginning January 1, 2018. This approach consists of recognizing the cumulative effect of initially applying the standard as an adjustment to opening retained earnings. As part of the modified retrospective approach, we will also amend our disclosures to reflect results under "legacy GAAP" for the initial year of adoption. To date, we have made progress in our assessment of the impact of adopting this new guidance, and steps towards implementation have been taken. Our approach to implementation has consisted of (1) performing a bottoms-up analysis of the impact of the standard on our portfolio of contracts, (2) reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to our existing revenue contracts, and (3) meeting with key stakeholders across the organization to discuss the impact of the standard on our existing contracts. We expect material impacts to the content and structure of our financial statements in the form of enhanced disclosures. Our preliminary evaluation and conclusions are subject to change as our assessment continues to progress. Our full evaluation is expected to be completed and finalized during the fourth quarter of 2017. Financial Assets and Financial Liabilities: In January 2016, the FASB issued guidance which revises the classification and measurement of investments in equity securities and the presentation of certain fair value changes in financial liabilities measured at fair value. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2017. We are currently evaluating the provisions of the updated guidance and assessing the impact on our consolidated financial statements. Leases: In February 2016, the FASB issued updated guidance modifying lease accounting for both lessees and lessors to increase transparency and comparability. Lessees are required to recognize lease assets and lease liabilities for those leases classified as operating leases under previous accounting standards and to disclose key information about leasing arrangements. This guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the provisions of the updated guidance and assessing the impact on our consolidated financial statements. Cash and Cash Equivalents, including Statement of Cash Flows and Restricted Cash: In November 2016, the FASB issued updated guidance requiring entities to explain, in their statements of cash flows, the change during the period in the total of cash, cash equivalents, and amounts generally described as "restricted cash" or "restricted cash equivalents." As a result, restricted cash and restricted cash equivalents must now be included within the total of cash and cash equivalents when reconciling the beginning and end of period totals shown on the statement of cash flows. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the provisions of this update and assessing the impact on our consolidated financial statements. Intangibles—Goodwill and Other: In January 2017, the FASB issued new guidance which simplifies the subsequent measurement of goodwill. The guidance permits an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, with such losses not exceeding the total amount of goodwill allocated to that reporting unit. This guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the provisions of the updated guidance and assessing the impact on our consolidated financial statements. |
Acquisitions (Tables) |
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Sep. 24, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The determination of the fair value of the assets acquired and liabilities assumed has been completed and the final allocation of the purchase price is as follows:
The determination of the fair value of the assets acquired and liabilities assumed has been completed and the final allocation of the purchase price is as follows:
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Business Acquisition, Pro Forma Information | The following table sets forth unaudited pro forma results of operations assuming the ReachLocal, NJMG, and JMG acquisitions, along with transactions necessary to finance the acquisitions, occurred at the beginning of 2016:
|
Restructuring activities and asset impairment charges (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||
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Sep. 24, 2017 | |||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||
Restructuring and Related Costs | The activity and balance of severance-related liabilities are as follows:
|
Pensions and other postretirement benefit plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit costs | Retirement plan costs include the following components:
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Supplemental equity information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity | The following table summarizes equity account activity:
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Schedule of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the components of, and the changes in, accumulated other comprehensive loss (net of tax):
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Reclassification out of Accumulated Other Comprehensive Income | Reclassifications out of accumulated other comprehensive loss related to these postretirement plans include the following:
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Earnings (loss) per share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table is a reconciliation of weighted average number of shares outstanding used to compute basic and diluted earnings (loss) per share (EPS):
|
Segment reporting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables present our segment information:
Pursuant to our adoption of new guidance surrounding the presentation of net periodic benefit costs as discussed in Note 1 — Basis of presentation and summary of significant accounting policies, net periodic benefit costs other than service costs are now included in the Other non-operating items, net line in the unaudited Condensed Consolidated Statements of Income (Loss). As a result of adopting this guidance, adjusted EBITDA increased $2.8 million and $7.5 million for the three and nine months ended September 25, 2016, respectively. We changed certain corporate allocations at the beginning of fiscal year 2017 and retrospectively applied that change. The following table presents our reconciliation of adjusted EBITDA to net income:
|
Acquisitions - Schedule of Assets Acquired, Liabilities Assumed (Details) - USD ($) $ in Thousands |
Sep. 24, 2017 |
Dec. 25, 2016 |
Aug. 31, 2016 |
Apr. 30, 2016 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 737,840 | $ 698,288 | ||
ReachLocal, Inc. [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash acquired | $ 13,195 | |||
Other current assets | 14,612 | |||
Property, plant and equipment | 13,486 | |||
Intangible assets | 88,500 | |||
Goodwill | 120,165 | |||
Other noncurrent assets | 9,852 | |||
Total assets acquired | 259,810 | |||
Current liabilities | 63,005 | |||
Noncurrent liabilities | 21,062 | |||
Total liabilities assumed | 84,067 | |||
Net assets acquired | $ 175,743 | |||
Journal Media Group, Inc. [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash acquired | $ 36,825 | |||
Other current assets | 54,571 | |||
Property, plant and equipment | 264,357 | |||
Intangible assets | 42,880 | |||
Goodwill | 25,258 | |||
Other noncurrent assets | 3,825 | |||
Total assets acquired | 427,716 | |||
Current liabilities | 71,519 | |||
Noncurrent liabilities | 61,151 | |||
Total liabilities assumed | 132,670 | |||
Net assets acquired | $ 295,046 |
Acquisitions - Pro Forma Information (Details) - Journal Media Group, Inc. [Member] $ / shares in Units, $ in Thousands |
9 Months Ended |
---|---|
Sep. 24, 2017
USD ($)
$ / shares
| |
Business Acquisition [Line Items] | |
Total revenues | $ 2,546,953 |
Net loss | $ (2,795) |
Loss per share - diluted (in dollars per share) | $ / shares | $ (0.02) |
Restructuring activities and asset impairment charges - Restructuring Reserve (Details) - Severance [Member] $ in Thousands |
9 Months Ended |
---|---|
Sep. 24, 2017
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Beginning balance | $ 18,651 |
Expense | 25,382 |
Payments | (35,411) |
Ending balance | $ 8,622 |
Income taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 24, 2017 |
Sep. 25, 2016 |
Sep. 24, 2017 |
Sep. 25, 2016 |
Dec. 31, 2017 |
Dec. 25, 2016 |
|
Income Tax Disclosure [Abstract] | ||||||
Income tax benefit | $ 16,801 | $ 9,223 | $ 19,595 | $ (4,157) | ||
Discrete Income Tax Expense (Benefit) | 20,100 | |||||
Reserve for uncertain tax positions | 14,700 | 14,700 | ||||
Effective income tax rate (as a percent) | 27.80% | 12.90% | ||||
Unrecognized tax benefits that would impact effective tax rate | 28,500 | 28,500 | $ 17,300 | |||
Accrued interest and penalties related to unrecognized tax benefits | 900 | 900 | $ 3,800 | |||
Estimated decrease in gross unrecognized tax positions within the next 12 months, maximum | $ 2,800 | $ 2,800 | ||||
Forecast | Foreign | Revenue | Geographic Concentration Risk | ||||||
Concentration Risk [Line Items] | ||||||
Concentration percentage (over 50%) | 50.00% |
Supplemental equity information - Equity Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2017 |
Sep. 25, 2016 |
Sep. 24, 2017 |
Sep. 25, 2016 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning Balance | $ 856,761 | $ 1,058,576 | ||
Comprehensive income: | ||||
Net income (loss) | $ 23,044 | $ (23,961) | 20,478 | 28,116 |
Other comprehensive income | 20,600 | 1,886 | 46,186 | 8,620 |
Comprehensive income (loss) | 43,644 | (22,075) | 66,664 | 36,736 |
Dividends declared | (54,427) | (55,936) | ||
Stock-based compensation | 14,897 | 14,986 | ||
Other activity | (20,226) | 19,544 | ||
Ending Balance | $ 863,669 | $ 1,073,906 | $ 863,669 | $ 1,073,906 |
Supplemental equity information - Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - Reclassification out of Accumulated Other Comprehensive Income [Member] - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2017 |
Sep. 25, 2016 |
Sep. 24, 2017 |
Sep. 25, 2016 |
|
Net Prior Service Credit [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total reclassifications, before tax | $ 756 | $ 470 | $ 2,267 | $ 1,539 |
Actuarial Loss [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total reclassifications, before tax | 18,222 | 16,025 | 54,445 | 47,212 |
Retirement Plans [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total reclassifications, before tax | 18,978 | 16,495 | 56,712 | 48,751 |
Income tax effect | (6,755) | (5,936) | (20,221) | (17,442) |
Total reclassifications, net of tax | $ 12,223 | $ 10,559 | $ 36,491 | $ 31,309 |
Supplemental equity information - Narrative (Details) - USD ($) shares in Millions |
1 Months Ended | 3 Months Ended |
---|---|---|
Jul. 31, 2015 |
Sep. 24, 2017 |
|
Equity [Abstract] | ||
Stock repurchase program, authorized amount | $ 150,000,000 | |
Stock repurchase program, period in force | 3 years | |
Stock repurchased during period (in shares) | 2 | |
Stock repurchased during period | $ 17,400,000 | |
Stock repurchase program, remaining authorized repurchase amount | $ 100,000,000 |
Fair value measurement - Narrative (Details) - USD ($) $ in Millions |
Sep. 24, 2017 |
Dec. 25, 2016 |
---|---|---|
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets held for sale | $ 22.5 | $ 4.5 |
Commitments, contingencies and other matters - Narrative (Details) |
1 Months Ended |
---|---|
Jan. 31, 2014
USD ($)
| |
Minimum [Member] | |
Loss Contingencies [Line Items] | |
Statutory penalty per incident | $ 500 |
Maximum [Member] | |
Loss Contingencies [Line Items] | |
Statutory penalty per incident | $ 1,500 |
Segment reporting - Reconciliation of EBITDA to Operating Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2017 |
Sep. 25, 2016 |
Sep. 24, 2017 |
Sep. 25, 2016 |
|
Segment Reporting [Abstract] | ||||
Net income (loss) | $ 23,044 | $ (23,961) | $ 20,478 | $ 28,116 |
Provision (benefit) for income taxes | (16,801) | (9,223) | (19,595) | 4,157 |
Interest expense | 4,613 | 3,652 | 12,322 | 8,509 |
Other non-operating items, net | 922 | 3,694 | 10,110 | 9,572 |
Operating income (loss) | 11,778 | (25,838) | 23,315 | 50,354 |
Severance-related charges | 5,117 | 5,137 | 25,382 | 26,831 |
Acquisition-related expenses | 2,059 | 14,416 | 4,652 | 29,055 |
Facility consolidation and asset impairment charges | 2,189 | 28,673 | 22,799 | 33,160 |
Other items | 2,924 | 0 | 2,587 | (1,200) |
Depreciation | 41,128 | 30,638 | 124,260 | 83,889 |
Amortization | 8,658 | 5,003 | 24,193 | 7,961 |
Adjusted EBITDA (non-GAAP basis) | $ 73,853 | $ 58,029 | $ 227,188 | $ 230,050 |
Segment reporting - Narrative (Details) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 25, 2016
USD ($)
|
Sep. 24, 2017
segment
|
Sep. 25, 2016
USD ($)
|
|
Segment Reporting Information [Line Items] | |||
Number of reportable segments | 2 | ||
Accounting Standards Update 2017-06 | New Accounting Pronouncement, Early Adoption, Effect | |||
Segment Reporting Information [Line Items] | |||
Increase of adjusted EBITDA | $ | $ 2.8 | $ 7.5 | |
Publishing [Member] | |||
Segment Reporting Information [Line Items] | |||
Number of operating segments | 2 |
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