Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - MCCLATCHY COFinancial_Report.xls
EX-32.2 - EX-32.2 - MCCLATCHY COmni-20150329ex322e30a34.htm
EX-32.1 - EX-32.1 - MCCLATCHY COmni-20150329ex321f5587b.htm
EX-31.1 - EX-31.1 - MCCLATCHY COmni-20150329ex311a3d332.htm
EX-31.2 - EX-31.2 - MCCLATCHY COmni-20150329ex3125fe431.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 29, 2015

 

or

 

                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission file number: 1-9824

 

GRAPHIC

 

The McClatchy Company

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

52-2080478

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

2100 “Q” Street, Sacramento, CA

 

95816

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

 

 

916-321-1844

 

 

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes   No 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes   No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

Large accelerated filer 

Accelerated filer 

 

 

Non-accelerated filer (Do not check if smaller reporting company) 

Smaller reporting company 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b of the Exchange Act).

 

Yes   No 

 

As of April 27, 2015, the registrant had shares of common stock as listed below outstanding:

 

 

 

Class A Common Stock

62,770,799

Class B Common Stock

24,585,962

 

 

 

 

 


 

PART I – FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS.

 

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended

 

 

 

March 29,

 

March 30,

 

 

    

2015

 

2014

 

REVENUES — NET:

 

 

 

 

 

 

 

Advertising

 

$

151,247 

 

$

175,602 

 

Audience

 

 

93,209 

 

 

88,953 

 

Other

 

 

12,722 

 

 

11,616 

 

 

 

 

257,178 

 

 

276,171 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

Compensation

 

 

106,672 

 

 

108,552 

 

Newsprint, supplements and printing expenses

 

 

24,776 

 

 

27,277 

 

Depreciation and amortization

 

 

23,663 

 

 

40,295 

 

Other operating expenses

 

 

103,225 

 

 

104,745 

 

 

 

 

258,336 

 

 

280,869 

 

OPERATING LOSS

 

 

(1,158)

 

 

(4,698)

 

 

 

 

 

 

 

 

 

NON-OPERATING (EXPENSE) INCOME:

 

 

 

 

 

 

 

Interest expense

 

 

(22,338)

 

 

(33,412)

 

Interest income

 

 

63 

 

 

 

Equity income in unconsolidated companies, net

 

 

3,867 

 

 

9,558 

 

Gains related to equity investments

 

 

633 

 

 

 —

 

Other — net

 

 

(66)

 

 

62 

 

 

 

 

(17,841)

 

 

(23,788)

 

Loss from continuing operations before income taxes

 

 

(18,999)

 

 

(28,486)

 

Income tax benefit

 

 

(7,653)

 

 

(12,424)

 

LOSS FROM CONTINUING OPERATIONS

 

 

(11,346)

 

 

(16,062)

 

 

 

 

 

 

 

 

 

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES

 

 

 —

 

 

220 

 

NET LOSS

 

$

(11,346)

 

$

(15,842)

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(0.13)

 

$

(0.19)

 

Income from discontinued operations

 

 

 —

 

 

0.01 

 

Net loss per share

 

$

(0.13)

 

$

(0.18)

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(0.13)

 

$

(0.19)

 

Income from discontinued operations

 

 

 —

 

 

0.01 

 

Net loss per share

 

$

(0.13)

 

$

(0.18)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares used

 

 

 

 

 

 

 

to calculate basic and diluted earnings per share:

 

 

 

 

 

 

 

Basic

 

 

87,207 

 

 

86,475 

 

Diluted

 

 

87,207 

 

 

86,475 

 

See notes to the condensed consolidated financial statements.

 

 

1


 

 

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

(Unaudited; In thousands) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended

 

 

 

March 29,

 

March 30,

 

 

    

2015

 

2014

 

NET LOSS

 

$

(11,346)

 

$

(15,842)

 

OTHER COMPREHENSIVE INCOME (LOSS):

 

 

 

 

 

 

 

Pension and post retirement plans:

 

 

 

 

 

 

 

Unrealized net gain and other components of benefit plans, net of taxes of $(1,921) and $(1,254)    

 

 

2,881 

 

 

1,882 

 

Investment in unconsolidated companies:

 

 

 

 

 

 

 

Other comprehensive income (loss), net of taxes of $165 and $(484)

 

 

(247)

 

 

725 

 

Other comprehensive income

 

 

2,634 

 

 

2,607 

 

Comprehensive loss

 

$

(8,712)

 

$

(13,235)

 

 

See notes to the condensed consolidated financial statements.

 

 

2


 

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

    

March 29,

    

December 28,

 

 

 

2015

 

2014

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

73,542 

 

$

220,861 

 

Trade receivables (net of allowances of $4,824  in 2015 and $5,900 in 2014)

 

 

113,252 

 

 

144,565 

 

Other receivables

 

 

37,053 

 

 

36,780 

 

Newsprint, ink and other inventories

 

 

20,850 

 

 

19,491 

 

Deferred income taxes

 

 

1,054 

 

 

1,054 

 

Assets held for sale

 

 

7,738 

 

 

173 

 

Other current assets

 

 

17,748 

 

 

14,945 

 

 

 

 

271,237 

 

 

437,869 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

387,865 

 

 

404,238 

 

Intangible assets:

 

 

 

 

 

 

 

Identifiable intangibles — net

 

 

398,775 

 

 

410,915 

 

Goodwill

 

 

996,115 

 

 

996,115 

 

 

 

 

1,394,890 

 

 

1,407,030 

 

Investments and other assets:

 

 

 

 

 

 

 

Investments in unconsolidated companies

 

 

233,944 

 

 

230,473 

 

Other assets

 

 

62,365 

 

 

62,160 

 

 

 

 

296,309 

 

 

292,633 

 

 

 

$

2,350,301 

 

$

2,541,770 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

43,239 

 

$

49,095 

 

Accrued pension liabilities

 

 

8,529 

 

 

8,529 

 

Accrued compensation

 

 

30,668 

 

 

32,912 

 

Income taxes payable

 

 

9,782 

 

 

186,805 

 

Unearned revenue

 

 

66,075 

 

 

62,035 

 

Accrued interest

 

 

18,362 

 

 

10,592 

 

Other accrued liabilities

 

 

16,273 

 

 

14,957 

 

 

 

 

192,928 

 

 

364,925 

 

Non-current liabilities:

 

 

 

 

 

 

 

Long-term debt

 

 

995,890 

 

 

994,812 

 

Deferred income taxes

 

 

18,553 

 

 

26,162 

 

Pension and postretirement obligations

 

 

568,955 

 

 

574,024 

 

Financing obligations

 

 

33,945 

 

 

34,551 

 

Other long-term obligations

 

 

43,973 

 

 

43,911 

 

 

 

 

1,661,316 

 

 

1,673,460 

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock $.01 par value:

 

 

 

 

 

 

 

Class A (authorized 200,000,000 shares, issued 62,955,176 in 2015 and 62,600,676 in 2014)

 

 

630 

 

 

626 

 

Class B (authorized 60,000,000 shares, issued 24,585,962 in 2015 and 2014) 

 

 

246 

 

 

246 

 

Additional paid-in capital

 

 

2,224,385 

 

 

2,222,675 

 

Accumulated deficit

 

 

(1,314,730)

 

 

(1,303,384)

 

Treasury stock at cost, 187,313 shares in 2015 and 45,374  shares in 2014

 

 

(505)

 

 

(175)

 

Accumulated other comprehensive loss

 

 

(413,969)

 

 

(416,603)

 

 

 

 

496,057 

 

 

503,385 

 

 

 

$

2,350,301 

 

$

2,541,770 

 

 

See notes to the condensed consolidated financial statements.

 

 

3


 

 

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; In thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

 

    

2015

    

2014

    

CASH FLOWS FROM OPERATING ACTIVITIES:

    

 

 

    

 

 

 

Net loss

 

$

(11,346)

 

$

(15,842)

 

Less income from discontinued operations, net of tax

 

 

 —

 

 

220 

 

Loss from continuing operations

 

 

(11,346)

 

 

(16,062)

 

 

 

 

 

 

 

 

 

Reconciliation to net cash from operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

23,663 

 

 

40,295 

 

Loss on disposal of equipment (including asset impairments)

 

 

70 

 

 

886 

 

Contribution to qualified defined benefit pension plan

 

 

 —

 

 

(25,000)

 

Retirement benefit expense

 

 

2,493 

 

 

1,158 

 

Stock-based compensation expense

 

 

1,714 

 

 

946 

 

Equity income in unconsolidated companies

 

 

(3,867)

 

 

(9,558)

 

Gains related to equity investments

 

 

(633)

 

 

 —

 

Distributions of income from equity investments

 

 

 —

 

 

810 

 

Other

 

 

(1,706)

 

 

(1,115)

 

Changes in certain assets and liabilities:

 

 

 

 

 

 

 

Trade receivables

 

 

31,313 

 

 

40,030 

 

Inventories

 

 

(1,359)

 

 

(606)

 

Other assets

 

 

(3,413)

 

 

(2,135)

 

Accounts payable

 

 

(5,856)

 

 

(4,094)

 

Accrued compensation

 

 

(2,244)

 

 

3,501 

 

Income taxes

 

 

(186,231)

 

 

(17,021)

 

Accrued interest

 

 

7,770 

 

 

13,661 

 

Other liabilities

 

 

5,185 

 

 

1,276 

 

Net cash provided by (used in) continuing operations

 

 

(144,447)

 

 

26,972 

 

Net cash provided by discontinued operations

 

 

 —

 

 

662 

 

Net cash provided by (used in) operating activities

 

 

(144,447)

 

 

27,634 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(2,575)

 

 

(9,504)

 

Proceeds from sale of property, plant and equipment and other

 

 

 

 

269 

 

Equity investments and other-net

 

 

633 

 

 

(1,000)

 

Net cash used in continuing operations

 

 

(1,936)

 

 

(10,235)

 

Net cash used in discontinued operations

 

 

 —

 

 

(29)

 

Net cash used in investing activities

 

 

(1,936)

 

 

(10,264)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Other

 

 

(936)

 

 

(1,822)

 

Net cash used in financing activities

 

 

(936)

 

 

(1,822)

 

Increase (decrease) in cash and cash equivalents

 

 

(147,319)

 

 

15,548 

 

Cash and cash equivalents at beginning of period

 

 

220,861 

 

 

80,811 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD 

 

$

73,542 

 

$

96,359 

 

 

See notes to the condensed consolidated financial statements

 

 

4


 

 

THE MCCLATCHY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

 

1.  SIGNIFICANT ACCOUNTING POLICIES

 

Business and Basis of Accounting

 

The McClatchy Company (the “Company,” “we,” “us” or “our”) is a 21st century news and information publisher of well-respected publications such as the Miami HeraldThe Kansas City StarThe Sacramento BeeThe Charlotte Observer,  The (Raleigh) News and Observer, and the (Fort Worth) Star-Telegram. We operate media companies in 28 U.S. markets in 14 states, providing each of our communities with high-quality news and advertising services in a wide array of digital and print formats. We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the New York Stock Exchange under the symbol MNI.

 

We also own 15.0% of CareerBuilder LLC, which operates the nation’s largest online jobs website, CareerBuilder.com, and 33.3% of HomeFinder.com, LLC, which operates the online real estate website HomeFinder.com. 

 

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulation of the Securities and Exchange Commission requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The condensed consolidated financial statements include the Company and our subsidiaries. Intercompany items and transactions are eliminated. 

 

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, that are necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented.  The financial statements contained in this report are not necessarily indicative of the results to be expected for the full year.  These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 28, 2014 (“Form 10-K”). Each of the fiscal periods included herein comprise 13 weeks for the first-quarter periods.

 

Reclassifications and Corrections

 

Certain prior year amounts have been reclassified to conform to the current year presentation in our condensed consolidated financial statements related to; i) the presentation of the Anchorage Daily News, Inc. (“Anchorage”) as a discontinued operation (see Note 2, Divestiture),  ii) a correction of reporting wholesale fees associated with sales of certain third-party digital advertising products and services on a net basis, as a reduction of associated digital classified advertising revenues, rather than in other operating expenses, and iii) the early retrospective adoption of ASU No. 2015-03 relating to the classification of unamortized debt issuance costs, as described below. For the three months ended March 30, 2014, net revenues and other operating expenses included within operating loss were reduced by $4.5 million to correct the presentation of advertising sales related to certain third-party digital advertising products and services previously reported on a gross basis to a net basis, with wholesale fees reported as a reduction of the associated digital classified advertising revenues instead of other operating expenses. As of December 28, 2014, we reclassified unamortized debt issuance costs of $12.1 million from other assets to a reduction in long-term debt on the condensed consolidated balance sheet as a result of the retrospective adoption of ASU No. 2015-03. There were no other changes to the condensed consolidated financial statements.

 

Fair Value of Financial Instruments

 

We account for certain assets and liabilities at fair value.  The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value

5


 

measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

 

Level 1 – Unadjusted quoted prices available in active markets for identical investments as of the reporting date.

 

Level 2 – Observable inputs to the valuation methodology are other than Level 1 inputs and are either directly or indirectly observable as of the reporting date and fair value can be determined through the use of models or other valuation methodologies.

 

Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability, and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

 

Our policy is to recognize significant transfers between levels at the actual date of the event or circumstance that caused the transfer.  The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

 

Cash and cash equivalents, accounts receivable and accounts payable.  The carrying amount of these items approximates fair value.

 

Long-term debt.  The fair value of our long-term debt is determined using quoted market prices and other inputs that were derived from available market information, including the current market activity of our publicly-traded notes and bank debt, trends in investor demand for debt and market values of comparable publicly-traded debt. These are considered to be Level 2 inputs under the fair value measurements and disclosure guidance, and may not be representative of actual value. At March 29, 2015, the estimated fair value and carrying value of our long-term debt was $899.2 million and $995.9 million, respectively.

 

Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Our non-financial assets measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and equity method investments. All of these were measured using Level 3 inputs. We utilize valuation techniques that seek to maximize the use of observable inputs and minimize the use of unobservable inputs.

 

Property, plant and equipment

 

During the three months ended March 30, 2014, we completed the acquisition of a new production facility, which was valued at $6.5 million and we incurred $13.5 million in accelerated depreciation (i) related to the production equipment associated with outsourcing our printing process at one newspaper and (ii) resulting from moving the printing operations for another newspaper to the new production facility. No similar transactions were recorded during the three months ended March 29, 2015.  

 

Depreciation expense with respect to property, plant and equipment is summarized below:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

(in thousands)

 

2015

 

2014

 

Depreciation expense

 

$

11,523

 

$

25,982

 

 

Assets held for sale

 

During the three months ended March 29, 2015, we identified and began to actively market for sale one of our production facilities at one of our newspapers. These assets consist primarily of land and buildings. During the three months ended March 30, 2014, we identified and began to actively market for sale one of our production facilities for a newspaper at

6


 

which we outsourced our printing to a third-party. These assets consist primarily of undeveloped land and buildings. In connection with classifying these assets as assets held for sale, the carrying values of the land and buildings were reduced to their estimated fair value less selling costs, as determined based on the current market conditions and the selling prices. As a result, an impairment charge of $0.9 million was recorded in the three months ended March 30, 2014, and is included in other operating expenses on the condensed consolidated statements of operations.    

 

Intangible Assets and Goodwill

 

Intangible assets (primarily advertiser lists, subscriber lists and developed technology), mastheads and goodwill consisted of the following: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 28,

 

Amortization

 

March 29,

 

(in thousands)

    

2014

    

Expense

    

2015

 

Intangible assets subject to amortization

 

$

833,254 

 

$

 -

 

$

833,254 

 

Accumulated amortization

 

 

(615,378)

 

 

(12,140)

 

 

(627,518)

 

 

 

 

217,876 

 

 

(12,140)

 

 

205,736 

 

Mastheads

 

 

193,039 

 

 

 -

 

 

193,039 

 

Goodwill

 

 

996,115 

 

 

 -

 

 

996,115 

 

Total

 

$

1,407,030 

 

$

(12,140)

 

$

1,394,890 

 

 

Amortization expense with respect to intangible assets is summarized below:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

(in thousands)

 

2015

 

2014

 

Amortization expense

 

 $

12,140 

 

 $

14,313 

 

 

The estimated amortization expense for the remainder of fiscal year 2015 and the five succeeding fiscal years is as follows: 

 

 

 

 

 

 

Amortization

 

 

Expense

Year

    

(in thousands)

2015 (Remainder)

    

 $

36,236 

2016

 

 

47,986 

2017

 

 

48,907 

2018

 

 

47,275 

2019

 

 

23,769 

2020

 

 

418 

 

7


 

Accumulated Other Comprehensive Loss

 

Our accumulated other comprehensive loss (“AOCL”) and reclassifications from AOCL, net of tax, consisted of the following: 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Other

    

 

 

 

 

 

Minimum

 

Comprehensive

 

 

 

 

 

 

Pension and

 

Loss

 

 

 

 

 

 

Post-

 

Related to

 

 

 

 

 

 

Retirement

 

Equity

 

 

 

 

(in thousands)

 

Liability

 

Investments

 

Total

 

Balance at December 28, 2014

 

$

(407,552)

 

$

(9,051)

 

$

(416,603)

 

Other comprehensive income (loss) before reclassifications

 

 

 —

 

 

(247)

 

 

(247)

 

Amounts reclassified from AOCL

 

 

2,881 

 

 

 

 

2,881 

 

Other comprehensive income (loss)

 

 

2,881 

 

 

(247)

 

 

2,634 

 

Balance at March 29, 2015

 

$

(404,671)

 

$

(9,298)

 

$

(413,969)

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount Reclassified from AOCL (in thousands)

 

 

 

 

Three Months Ended

    

 

 

 

March 29,

 

March 30,

 

Affected Line in the Condensed

AOCL Component

    

2015

 

2014

 

Consolidated Statements of Operations

Minimum pension and post-retirement liability

 

$

4,802 

 

$

3,136 

 

Compensation

 

 

 

(1,921)

 

 

(1,254)

 

Benefit for income taxes

 

 

$

2,881 

 

$

1,882 

 

Net of tax

 

Income Taxes

 

We account for income taxes using the liability method.  Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

 

We recognize accrued interest related to unrecognized tax benefits in interest expense.  Accrued penalties are recognized as a component of income tax expense.

 

Earnings Per Share (EPS)

 

Basic EPS excludes dilution from common stock equivalents and reflects income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS is based upon the weighted average number of outstanding shares of common stock and dilutive common stock equivalents in the period.  Common stock equivalents arise from dilutive stock options, restricted stock units and restricted stock and are computed using the treasury stock method.  Anti-dilutive common stock equivalents are excluded from diluted EPS.  The weighted average anti-dilutive stock options that could potentially dilute basic EPS in the future, but were not included in the weighted average share calculation, consisted of the following:

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

(shares in thousands)

 

2015

 

2014

 

Anti-dilutive stock options

    

4,565 

 

3,668 

 

 

8


 

Cash Flow Information

 

Cash paid for interest and income taxes consisted of the following:

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

(in thousands)

 

2015

 

2014

 

Interest paid (net of amount capitalized)

    

$

12,695 

    

$

16,907 

 

Income taxes paid (net of refunds)

 

 

178,581 

 

 

4,691 

 

 

Other non-cash investing activities from continuing operations as of March 29, 2015, and March 30, 2014, related to purchases of property, plant and equipment (“PP&E”) on credit, were $0.2 million and $1.0 million, respectively.

 

Recently Issued Accounting Pronouncements 

 

In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. It is effective for annual and interim periods beginning on or after December 15, 2014. Early adoption is permitted but only for disposals that have not been reported in financial statements previously issued. We do not believe the adoption of this guidance will have an impact on our condensed consolidated financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers. ASU 2014-09 outlines a new, single comprehensive model from entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. It is effective for annual and interim periods beginning on or after December 15, 2016, and early adoption is not permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

 

In August 2014, the FASB issued ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnotes disclosures in certain circumstances. It is effective for annual and interim periods beginning on or after December 15, 2016, with early adoption permitted. We do not believe the adoption of this guidance will have an impact on our condensed consolidated financial statements.

 

In April 2015, the FASB issued ASU No. 2015-04, "Compensation – Retirement Benefits: Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets." ASU 2015-04 provides practical expedient, which permits a reporting entity with a fiscal year-end that does not coincide with a month-end, to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. It is effective for interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

 

In April 2015, the FASB issued ASU No. 2015-05, "Customer's Accounting for Fees Paid in a Cloud Computing Arrangement."  ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance does not change the accounting for service contracts. It is effective for interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

9


 

 

Recently Adopted Accounting Pronouncements

 

Effective December 29, 2014, we adopted the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” that was issued in April 2015. ASU 2015-03 amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of deferred charges.  It was effective for annual and interim periods beginning on or after December 15, 2015, however early adoption was permitted. As of March 29, 2015, and December 28, 2014, we reclassified unamortized debt issuance costs of $11.7 million and $12.1 million, respectively, from other assets to a reduction in long-term debt on the condensed consolidated balance sheet. There were no other changes to the condensed consolidated financial statements.

 

2.  DIVESTITURE

 

On May 5, 2014, we completed the sale of the outstanding capital stock of Anchorage to an assignee of Alaska Dispatch Publishing, LLC for $34 million in cash. The financial results of Anchorage have been reported as discontinued operations on our condensed consolidated financial statements for all periods presented herein.

 

The following table summarizes the financial information for the Anchorage’s operations for the three months ended March 30, 2014:

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 30,

 

(in thousands)

    

2014

 

Revenues

 

$

6,449 

 

Income from discontinued operations, before taxes

 

$

398 

 

Income tax provision

 

 

178 

 

Income from discontinued operations, net of tax, before loss on sale

 

$

220 

 

 

 

 

 

 

Gain on sale of discontinued operations

 

$

 —

 

Income tax provision

 

 

 —

 

Loss on sale of discontinued operations, net of tax

 

 

 —

 

Income from discontinued operations, net of tax

 

$

220 

 

 

3.  INVESTMENTS IN UNCONSOLIDATED COMPANIES

 

The carrying value of investments in unconsolidated companies consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

    

% Ownership

    

March 29,

    

December 28,

 

Company

    

Interest

    

2015

    

2014

 

CareerBuilder, LLC

 

15.0

 

$

230,805 

 

$

226,965 

 

Other

 

Various

 

 

3,139 

 

 

3,508 

 

 

 

 

 

$

233,944 

 

$

230,473 

 

 

Classified Ventures, LLC

 

On April 1, 2014, Classified Ventures, LLC sold its Apartments.com business for $585 million. Accordingly, during the second quarter ending June 29, 2014, we recorded our share of the net gain of $144.2 million, before taxes, as gains related to equity investments in condensed consolidated statements of operations. On April 1, 2014, we received a cash distribution of approximately $146.9 million from Classified Ventures, LLC, which is equal to our share of the net proceeds.

 

10


 

On October 1, 2014, we, along with Tribune Media Company, Graham Holdings Company and A.H. Belo Corporation (the “Selling Partners”) sold all of the Selling Partners’ ownership interests in Classified Ventures, LLC to Gannett Co., Inc. for a price that valued Classified Ventures, LLC at $2.5 billion. We recorded a gain on the sale of our ownership interest in Classified Ventures, LLC of $559.3 million, before taxes, during fourth quarter of fiscal year 2014. Our portion of the cash proceeds, net of transaction costs, was $631.8 million. Pursuant to the sale agreement, $25.6 million of net proceeds is being held in escrow until October 1, 2015. On October 1, 2014, we received our portion of the net cash proceeds, less the escrow, of $606.2 million. Upon the closing of the transaction, we entered into a new, five-year affiliate agreement with Cars.com that will allow us to continue to sell Cars.com products and services exclusively in our local markets.

 

Prior to the closing of the transaction,  Classified Ventures, LLC distributed approximately $6.0  million to us, representing our portion of the related cash accumulated from earnings of Classified Ventures, LLC. In April 2015, we received a final cash distribution of $7.5 million pursuant to the sale agreement, representing cash accumulated from earnings from Classified Ventures, LLC, the payment for which was dependent on their collection of a contingent receivable. The amount will be recorded as a gain on sale of equity investments during the quarter ending June 28, 2015.

 

McClatchy-Tribune Information Services

 

On May 7, 2014, we transferred our partnership interest in McClatchy-Tribune Information Services (“MCT”) to TCA News Service, LLC (“TCA”) for cash and future newswire content. Concurrently, we entered into a contributor agreement with MCT pursuant to which we both continue to be a contributor of newswire content to MCT for an agreed upon rate, and we will receive newswire content from MCT or its successor at no cost for approximately 10 years. During the second quarter of 2014, we recognized a $3.1 million intangible asset in the condensed consolidated balance sheets with respect to the value of the content we will receive from MCT at no cost under these agreements and a $1.7 million gain on sale of the equity investment in the gains related to equity investments in the condensed consolidated statements of operations.

 

 

4.  LONG-TERM DEBT

 

Our long-term debt consisted of the following: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Face Value at

 

Carrying Value

 

 

 

March 29,

 

March 29,

 

December 28,

 

(in thousands)

 

2015

 

2015

 

2014

 

Notes:

    

 

    

    

 

    

    

 

    

 

9.00% senior secured notes due in 2022

 

$

555,785 

 

$

544,057 

 

$

543,640 

 

5.750% notes due in 2017

 

 

111,299 

 

 

108,744 

 

 

108,489 

 

7.150% debentures due in 2027

 

 

89,188 

 

 

84,175 

 

 

84,076 

 

6.875% debentures due in 2029

 

 

276,230 

 

 

258,914 

 

 

258,607 

 

Long-term debt

 

$

1,032,502 

 

$

995,890 

 

$

994,812 

 

 

Our outstanding notes are stated net of unamortized debt issuance costs and unamortized discounts, if applicable, totaling $36.6  million and $37.6  million as of March 29, 2015 and December 28, 2014, respectively.

 

Debt Repurchases

 

We had no debt repurchases during the three months ended March 29, 2015 or March 30, 2014.

 

Credit Agreement

 

Our Third Amended and Restated Credit Agreement dated December 18, 2012, and as amended on October 21, 2014 (“Credit Agreement”) is secured by a first-priority security interest in certain of our assets as described below. The Credit Agreement, among other things provides for commitments of $65 million and a maturity date of December 18, 2019.  In addition, on October 21, 2014, we entered into a Collateralized Issuance and Reimbursement Agreement (“LC Agreement”). Pursuant to the terms of LC Agreement, we may request letters of credit be issued on our behalf in an

11


 

aggregate face amount not to exceed $35 million. We are required to provide cash collateral equal to 101% of the aggregate undrawn stated amount of each outstanding letter of credit.

 

As of March 29, 2015, there were $33.2 million face amounts of standby letters of credit outstanding under the LC Agreement. There were no borrowings outstanding under the Credit Agreement as of March 29, 2015.

 

Under the Credit Agreement, we may borrow at either the London Interbank Offered Rate plus a spread ranging from 275 basis points to 425 basis points, or at a base rate plus a spread ranging from 175 basis points to 325 basis points, in each case based upon our consolidated total leverage ratio. The Credit Agreement provides for a commitment fee payable on the unused revolving credit ranging from 50 basis points to 62.5 basis points, based upon our consolidated total leverage ratio.

 

Senior Secured Notes and Indenture

 

In December 2012, we issued the 9.00% Senior Secured Notes due in 2012 (“9.00% Notes”). Substantially all of our subsidiaries guarantee the obligations under the 9.00% Notes and the Credit Agreement. We own 100% of each of the guarantor subsidiaries and we have no significant independent assets or operations separate from the subsidiaries that guarantee our 9.00% Notes and the Credit Agreement. The guarantees provided by the guarantor subsidiaries are full and unconditional and joint and several, and the subsidiaries other than the subsidiary guarantors are minor.

 

In addition, we have granted a security interest to the banks that are a party to the Credit Agreement and the trustee under the indenture governing the 9.00% Notes that include, but are not limited to, intangible assets, inventory, receivables and certain minority investments as collateral for the debt. The security interest does not include any PP&E, leasehold interests or improvements with respect to such PP&E which would be reflected on our condensed consolidated balance sheets or shares of stock and indebtedness of our subsidiaries.

 

Covenants under the Senior Debt Agreements

 

The financial covenants under the Credit Agreement require us to comply with a maximum consolidated total leverage ratio measured quarterly.  As of March 29, 2015, and for the remainder of the term of the Amended Credit Agreement, we are required to maintain a consolidated total leverage ratio of not more than 6.00 to 1.00.   For purposes of consolidated total leverage ratio, debt is largely defined as debt, net of cash on hand in excess of $20 million. As of March 29, 2015, we were in compliance with all financial debt covenants.

 

The Credit Agreement also prohibits the payment of a dividend if a payment would not be permitted under the indenture for the 9.00% Notes (discussed below). Dividends under the indenture for the 9.00% Notes are allowed if the consolidated leverage ratio (as defined in the indenture) is less than 5.25 to 1.00 and we have sufficient amounts under our restricted payments basket (as defined in the indenture).

 

The indenture for the 9.00% Notes and the Credit Agreement include a number of restrictive covenants that are applicable to us and our restricted subsidiaries. The covenants are subject to a number of important exceptions and qualifications set forth in those agreements. These covenants include, among other things, restrictions on our ability to incur additional debt; make investments and other restricted payments; pay dividends on capital stock or redeem or repurchase capital stock or certain of our outstanding notes or debentures prior to stated maturity; sell assets or enter into sale/leaseback transactions; create specified liens; create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions; engage in certain transactions with affiliates; and consolidate or merge with or into other companies or sell all or substantially all of the Company’s and our subsidiaries’ assets, taken as a whole.

 

5.  EMPLOYEE BENEFITS

 

We maintain a noncontributory qualified defined benefit pension plan (“Pension Plan”) which covers certain eligible current and former employees, which has been frozen since March 31, 2009No new participants may enter the Pension Plan and no further benefits will accrue.  However, years of service continue to count toward early retirement calculations and vesting of benefits previously earned.

 

12


 

We also have a limited number of supplemental retirement plans to provide certain key current and former employees with additional retirement benefits.  These plans are funded on a pay-as-you-go basis and the accrued pension obligation is largely included in other long-term obligations.

 

The elements of retirement expense are as follows:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

(in thousands)

 

2015

 

2014

 

Pension plans:

    

 

    

 

 

    

 

Service Cost

 

$

2,920 

 

$

2,008 

 

Interest Cost

 

 

21,248 

 

 

22,751 

 

Expected return on plan assets

 

 

(26,571)

 

 

(26,865)

 

Prior service cost amortization

 

 

 —

 

 

 

Actuarial loss

 

 

5,549 

 

 

4,002 

 

Net pension expense

 

 

3,146 

 

 

1,899 

 

Net post-retirement benefit credit

 

 

(653)

 

 

(741)

 

Net retirement expenses

 

$

2,493 

 

$

1,158 

 

 

In January 2014, we contributed $25.0 million of cash to the Pension Plan.  We do not intend to make any contributions to the Pension Plan during fiscal year 2015.

 

We have a defined contribution plan (“401(k) plan”), which enables qualified employees to voluntarily defer compensation.  The 401(k) plan includes a matching company contribution and a supplemental contribution that is tied to our performance.  We suspended our matching contribution to the 401(k) plan in 2009 and as of March 29, 2015, we have not reinstated that benefit.

 

6.  COMMITMENTS AND CONTINGENCIES

 

In December 2008, carriers of The Fresno Bee filed a purported class action lawsuit against us and The Fresno Bee in the Superior Court of the State of California in Fresno County captioned Becerra v. The McClatchy Company (“Fresno case”) alleging that the carriers were misclassified as independent contractors and seeking mileage reimbursement.  In February 2009, a substantially similar lawsuit, Sawin v. The McClatchy Company, involving similar allegations was filed by carriers of The Sacramento Bee (“Sacramento case”) in the Superior Court of the State of California in Sacramento County. Both courts have certified the class in these cases.  The class consists of roughly 5,000 carriers in the Sacramento case and 3,500 carriers in the Fresno case.  The plaintiffs in both cases are seeking unspecified damages for mileage reimbursement.  With respect to the Sacramento case, in September 2013, all wage and hour claims were dismissed and the only remaining claim is an equitable claim under the California Civil Code for mileage.  In the Fresno case, in March 2014, all wage and hour claims were dismissed and the only remaining claim is an equitable claim for mileage reimbursement under the California Civil Code.

 

The court in the Sacramento case has trifurcated the trial into three separate phases:  the first phase addressed independent contractor status, the second phase will address liability, if any, and the third phase will address damages, if any.  On September 22, 2014, the court in the Sacramento case issued a tentative decision following the first phase, finding that the carriers that contracted directly with The Sacramento Bee during the period from February 2005 to July 2009 were misclassified as independent contractors.  We objected to the tentative decision but the court ultimately adopted it as final. The court has not yet established a date for the second and third phases of trial concerning whether The Sacramento Bee is liable to the carriers in the class for mileage reimbursement or owes any damages.

 

The court in the Fresno case has bifurcated the trial into two separate phases: the first phase will address independent contractor status and liability for mileage reimbursement and the second phase will address damages, if any.  The first phase of the Fresno case began in the fourth quarter of fiscal year 2014 and concluded in late March 2015. A decertification

13


 

motion was filed post-trial and the parties are awaiting hearing dates on that motion. If that motion is denied, the court will move forward in issuing a ruling on the first phase.

 

We are defending these actions vigorously and expect that we will ultimately prevail.  As a result, we have not established a reserve in connection with the cases.  While we believe that a material impact on our condensed consolidated financial position, results of operations or cash flows from these claims is unlikely, given the inherent uncertainty of litigation, a possibility exists that future adverse rulings or unfavorable developments could result in future charges that could have a material impact.  We have and will continue to periodically reexamine our estimates of probable liabilities and any associated expenses and make appropriate adjustments to such estimates based on experience and developments in litigation.

 

Other than the cases described above, we are subject to a variety of legal proceedings (including libel, employment, wage and hour, independent contractor and other legal actions) and governmental proceedings (including environmental matters) that arise from time to time in the ordinary course of our business.  We are unable to estimate the amount or range of reasonably possible losses for these matters.  However, we currently believe, after reviewing such actions with counsel, that the expected outcome of pending actions will not have a material effect on our condensed consolidated financial statements.  No material amounts for any losses from litigation that may ultimately occur have been recorded in the condensed consolidated financial statements as we believe that any such losses are not probable.

 

We have certain indemnification obligations related to the sale of assets including but not limited to insurance claims and multi-employer pension plans of disposed newspaper operations.  We believe the remaining obligations related to disposed assets will not be material to our financial position, results of operations or cash flows.

 

As of March 29, 2015, we had $33.2 million of standby letters of credit secured under the LC Agreement (see Note 4,  Long-Term Debt, for further discussion).

 

7.  STOCK PLANS

 

Stock Plans Activity

 

The following table summarizes the restricted stock units (“RSUs”) activity during the three months ended March 29, 2015:

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

Average Grant

 

 

 

 

Date Fair

 

    

 

    

Value

Nonvested — December 29,2014

 

1,329,550 

 

$

3.62 

Granted

 

1,201,500 

 

$

2.46 

Vested

 

(355,050)

 

$

3.96 

Forfeited

 

(1,700)

 

$

4.11 

Nonvested — March 29, 2015

 

2,174,300 

 

$

2.92 

 

The total fair value of the RSUs that vested during the three months ended March 29, 2015 was $0.8  million.

 

14


 

The following table summarizes the stock appreciation rights (“SARs”) activity during the three months ended March 29, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Weighted

    

Aggregate

 

 

 

Options/

 

Average

 

Intrinsic Value

 

 

    

SARs

    

Exercise Price

    

(in thousands)

 

Outstanding December 29,2014

 

3,848,750 

 

$

9.28 

 

$

1,542 

 

Forfeited

 

(3,500)

 

$

3.14 

 

 

 

 

Expired

 

(4,000)

 

$

72.95 

 

 

 

 

Outstanding March 29, 2015

 

3,841,250 

 

$

9.22 

 

$

25 

 

 

Stock-Based Compensation

 

All stock-based payments, including grants of stock appreciation rights, restricted stock units and common stock under equity incentive plans, are recognized in the financial statements based on their grant date fair values. At March 29, 2015, we had three stock-based compensation plans. Stock-based compensation expenses are reported in the compensation line item in the condensed consolidated statements of operations. Total stock-based compensation expense for the periods presented in this report, are as follows:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

(in thousands)

 

2015

 

2014

 

Stock-based compensation expense

    

$

1,714 

 

$

946 

 

 

 

 

15


 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-Looking Information

 

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, including statements relating to future financial performance and operations, trends in advertising, uses of cash, the refinancing of our debt and our pension plan obligations. These statements are based upon our current expectations and knowledge of factors impacting our business and are generally preceded by, followed by or are a part of sentences that include the words “believes,” “expects,” “anticipates,” “estimates” or similar expressions. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements. For all of those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, trends and uncertainties. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” in Part I, Item 1A of our 2014 Annual Report on Form 10-K as well as our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statements except as required under applicable law.

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of The McClatchy Company and its consolidated subsidiaries (the “Company,” “we,” “us” or “our”). This MD&A should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes to the financial statements (“Notes”) as of and for the three months ended March 29, 2015, included in Item 1 of this Quarterly Report on Form 10-Q, as well as with our audited consolidated financial statements and accompanying notes to the financial statements and MD&A contained in our 2014 Annual Report filed on Form 10-K with the Securities and Exchange Commission on March 13, 2015.

 

Overview

 

We are a 21st century news and information publisher of well-respected publications such as the Miami HeraldThe Kansas City StarThe Sacramento BeeThe Charlotte Observer,  The (Raleigh) News and Observer, and the (Fort Worth) Star-Telegram. We operate media companies in 28 U.S. markets in 14 states, providing each of these communities with high-quality news and advertising services in a wide array of digital and print formats. We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the New York Stock Exchange under the symbol MNI.

 

We also own 15.0% of CareerBuilder, LLC, which operates the nation’s largest online jobs website, CareerBuilder.com; and 33.3% of HomeFinder.com, LLC, which operates the online real estate website, HomeFinder.com.

 

The following table reflects our sources of revenues as a percentage of total revenues for the periods presented:

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

 

 

2015

 

2014

 

Revenues:

    

    

    

    

 

Advertising

 

58.8 

%  

63.6 

%  

Audience

 

36.2 

%  

32.2 

%  

Other

 

5.0 

%  

4.2 

%  

Total revenues

 

100.0 

%  

100.0 

%  

 

Our primary sources of revenues are print and digital advertising and audience subscriptions. All categories (retail, national and classified) of advertising discussed below include both print and digital advertising. Retail advertising revenues include advertising carried as a part of newspapers (run of press (“ROP”) advertising), advertising inserts placed in newspapers (“preprint advertising”) and/or advertising delivered digitally. Audience revenues include either print or digital

16


 

subscriptions, or a combination of both. Our print newspapers are delivered by independent contractors and large distributors. Other revenues include, among others, commercial printing and distribution revenues.

 

See “Results of Operations” below for a discussion of our revenue performance and contribution by category for the three months ended March 29, 2015, and March 30, 2014.

 

Recent Developments

 

Gains on Sale of Equity Investments

 

In April 2015, we received a final cash distribution of $7.5 million from Classified Ventures, LLC (previously owned equity method investment) that will be recorded as a gain on sale of equity investments during the quarter ending June 28, 2015.

 

Limited Share Repurchase Program

 

In April 2015, our Board of Directors authorized a new limited share repurchase program for the repurchase of up to $7.0 million of our Class A Common Stock through December 31, 2016. The shares will be repurchased from time to time depending on prevailing market prices, availability, and market conditions, among other things.

 

Results of Operations

 

The following table reflects our financial results on a consolidated basis for the three months ended March 29, 2015 and March 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 29,

 

March 30,

 

 

 

2015

 

2014

 

Loss from continuing operations

    

 $

(11,346)

    

 $

(16,062)

 

Income from discontinued operations, net of tax

 

 

 —

 

 

220 

 

Net loss

 

 $

(11,346)

 

 $

(15,842)

 

Net income (loss) per diluted common share:

 

 

 

 

 

 

 

Loss from continuing operations

 

 $

(0.13)

 

 $

(0.19)

 

Income from discontinued operations

 

 

 —

 

 

0.01 

 

Net loss per share

 

 $

(0.13)

 

 $

(0.18)

 

 

The decrease in the loss from continuing operations in the three months ended March 29, 2015, compared to the same period in 2014 is primarily related to decreases in depreciation expense and interest expense, offset partially by a 6.9% decrease in total revenues and lower equity investment income. 

 

17


 

Revenues

 

The following table summarizes our revenues by category:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 29,

 

March 30,

 

 

$

 

%

(in thousands)

 

2015

 

2014