Tribune Publishing Co - FORM 8-K/A - EX-99.3 - EXHIBIT 99.3 - November 20, 2017

Attached files

file filename
EX-99.2 - EXHIBIT 99.2 - Tribune Publishing Coa20178-kadailynewsinterimf.htm
EX-99.1 - EXHIBIT 99.1 - Tribune Publishing Coa20178-kadailynewsauditedf.htm
EX-23.1 - EXHIBIT 23.1 - Tribune Publishing Coauditorconsent.htm
8-K/A - 8-K/A - Tribune Publishing Coa20178-kadailynews.htm
EXHIBIT 99.3

TRONC, INC.
PRO FORMA COMBINED BALANCE SHEETS
As of June 25, 2017
(In thousands) (Unaudited)


 
 
tronc, Inc.
 
Daily News, L.P.
 
Pro forma Adjustments
 
Ref
 
Proforma Combined
Assets
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
Cash
 
$
174,200

 
$
8,924

 
$
—

 
 
 
$
183,124

Accounts receivable
 
159,230

 
14,465

 
—

 
 
 
173,695

Inventories
 
6,719

 
3,021

 
(843
)
 
(a)
 
8,897

Prepaid expenses
 
17,683

 
4,158

 
—

 
 
 
21,841

Total current assets
 
357,832

 
30,568

 
(843
)
 
 
 
387,557

 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment
 
 
 
 
 
 
 
 
 
 
Land
 
—

 
2,056

 
19,664

 
(b)
 
21,720

Machinery, equipment and furniture
 
110,455

 
9,896

 
2,995

 
(b)
 
123,346

Buildings and leasehold improvements
 
14,245

 
1,794

 
6,586

 
(b)
 
22,625

 
 
124,700

 
13,746

 
29,245

 
 
 
167,691

Accumulated depreciation
 
(66,249
)
 
(4,083
)
 
4,083

 
(b)
 
(66,249
)
 
 
58,451

 
9,663

 
33,328

 
 
 
101,442

Advance payments on property, plant and equipment
 
2,014

 
—

 
—

 
 
 
2,014

Property, plant and equipment, net
 
60,465

 
9,663

 
33,328

 
 
 
103,456

 
 
 
 
 
 
 
 
 
 
 
Other assets
 
 
 
 
 
 
 
 
 
 
Goodwill
 
122,631

 
—

 
—

 
 
 
122,631

Intangible assets, net
 
127,003

 
1,910

 
—

 
 
 
128,913

Software, net
 
49,683

 
—

 
—

 
 
 
49,683

Deferred income taxes
 
53,656

 
—

 
—

 
 
 
53,656

Other long-term assets
 
24,421

 
1,384

 
—

 
 
 
25,805

Total other assets
 
377,394

 
3,294

 
—

 
 
 
380,688

 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
795,691

 
$
43,525

 
$
32,485

 
 
 
$
871,701

 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these pro forma combined financial statements.
1

TRONC, INC.
PRO FORMA COMBINED BALANCE SHEETS
As of June 25, 2017
(In thousands) (Unaudited)


 
 
tronc, Inc.
 
Daily News, L.P.
 
Pro forma Adjustments
 
Ref
 
Proforma Combined
Liabilities and stockholders’ equity
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
21,845

 
$
100

 
$
—

 
 
 
$
21,945

Accounts payable
 
62,456

 
11,137

 
—

 
 
 
73,593

Employee compensation and benefits
 
46,474

 
6,558

 
—

 
 
 
53,032

Deferred revenue
 
78,806

 
2,661

 
—

 
 
 
81,467

Amounts due to related parties
 
—

 
102,882

 
(102,882
)
 
(c)
 
—

Other current liabilities
 
18,581

 
1,779

 
—

 
 
 
20,360

Total current liabilities
 
228,162

 
125,117

 
(102,882
)
 
 
 
250,397

 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
340,109

 
5,492

 
—

 
 
 
345,601

Deferred revenue
 
3,988

 
—

 
—

 
 
 
3,988

Pension and postretirement benefits payable
 
96,377

 
26,044

 
(436
)
 
(d)
 
121,985

Other obligations
 
62,205

 
25,019

 
(2,344
)
 
(e)
 
84,880

Total non-current liabilities
 
502,679

 
56,555

 
(2,780
)
 
 
 
556,454

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' equity (deficit)
 
64,850

 
(138,147
)
 
138,147

 
 
 
64,850

 
 
 
 
 
 
 
 
 
 
 
Total liabilities and stockholders’ equity
 
$
795,691

 
$
43,525

 
$
32,485

 
 
 
$
871,701




The accompanying notes are an integral part of these pro forma combined financial statements.
2

TRONC, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME (LOSS)
For the year ended December 25, 2016
(In thousands) (Unaudited)
 
 
tronc, Inc.
 
Daily News, L.P.
 
Pro forma Adjustments
 
Ref
 
Proforma Combined
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
$
1,606,378

 
$
144,777

 
$
—

 
 
 
$
1,751,155

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Compensation
 
597,293

 
100,774

 
—

 
 
 
698,067

Newsprint and ink
 
103,906

 
19,247

 
—

 
 
 
123,153

Outside services
 
494,478

 
18,587

 
—

 
 
 
513,065

Other operating expenses
 
300,089

 
29,783

 
—

 
 
 
329,872

Depreciation and amortization
 
57,499

 
1,096

 
2,122

 
(f)
 
60,717

Total operating expenses
 
1,553,265

 
169,487

 
2,122

 
 
 
1,724,874

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
53,113

 
(24,710
)
 
(2,122
)
 
 
 
26,281

Interest expense, net
 
(26,703
)
 
(2,882
)
 
2,449

 
(g)
 
(27,136
)
Loss on equity investments, net
 
(690
)
 
—

 
—

 
 
 
(690
)
Proceeds from the sale of tax credits
 
—

 
3,915

 
—

 
 
 
3,915

Reorganization items, net
 
(259
)
 
—

 
—

 
 
 
(259
)
Income (loss) before income taxes
 
25,461

 
(23,677
)
 
327

 
 
 
2,111

Income tax expense (benefit)
 
18,924

 
—

 
(9,238
)
 
(h)
 
9,686

Net income (loss)
 
$
6,537

 
$
(23,677
)
 
$
9,565

 
 
 
$
(7,575
)
 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these pro forma combined financial statements.
3

TRONC, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME (LOSS)
For the six months ended June 25, 2017
(In thousands) (Unaudited)
 
 
tronc, Inc.
 
Daily News, L.P.
 
Pro forma Adjustments
 
Ref
 
Proforma Combined
 
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
$
735,907

 
$
63,562

 
$
—

 
 
 
$
799,469

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Compensation
 
259,614

 
43,791

 
—

 
 
 
303,405

Newsprint and ink
 
46,372

 
8,677

 
—

 
 
 
55,049

Outside services
 
229,189

 
8,785

 
—

 
 
 
237,974

Other operating expenses
 
141,928

 
14,332

 
—

 
 
 
156,260

Depreciation and amortization
 
27,838

 
495

 
958

 
(f)
 
29,291

Total operating expenses
 
704,941

 
76,080

 
958

 
 
 
781,979

 
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
30,966

 
(12,518
)
 
(958
)
 
 
 
17,490

Interest expense, net
 
(12,881
)
 
(1,419
)
 
1,199

 
(g)
 
(13,101
)
Loss on equity investments, net
 
(1,272
)
 
—

 
—

 
 
 
(1,272
)
Premium on stock buyback
 
(6,031
)
 
—

 
—

 
 
 
(6,031
)
Income (loss) before income taxes
 
10,782

 
(13,937
)
 
241

 
 
 
(2,914
)
Income tax expense (benefit)
 
6,930

 
—

 
(5,506
)
 
(h)
 
1,424

Net income (loss)
 
$
3,852

 
$
(13,937
)
 
$
5,747

 
 
 
$
(4,338
)
 
 
 
 
 
 
 
 
 
 
 


The accompanying notes are an integral part of these pro forma combined financial statements.
4
TRONC, INC.
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1: BASIS OF PRESENTATION
The unaudited pro forma combined financial statements are based on tronc, Inc.’s (“tronc”) and Daily News, L.P.’s (“NYDN”) historical consolidated financial statements as adjusted to give effect to the acquisition of NYDN. The unaudited pro forma combined statements of operations for the six months ended June 25, 2017 and the year ended December 25, 2016 give effect to the NYDN acquisition as if it had occurred on December 28, 2015. The unaudited pro forma combined balance sheet as of June 25, 2017 gives effect to the NYDN acquisition as if it had occurred on June 25, 2017.
In management’s opinion, the unaudited pro forma combined financial statements have been developed on a reasonable and rational basis and reflect certain adjustments that, in the opinion of management, are necessary to fairly present tronc’s unaudited pro forma combined results of operations and unaudited pro forma combined financial position as of and for the periods indicated. The pro forma adjustments give effect to events that are (i) directly attributable to the acquisition of NYDN, (ii) factually supportable and (iii) with respect to the statement of operations, expected to have a continuing impact. The pro forma adjustments are based on the best information available to management and assumptions that management believes are reasonable given the information currently available; however, such adjustments are subject to change.
The unaudited pro forma financial statements are for illustrative and informational purposes only and are not intended to represent what tronc’s results of operations or financial position would have been had the acquisition occurred on the dates indicated above. The unaudited pro forma combined financial statements should not be considered indicative of tronc’s future results of operations or financial position and should be read in conjunction with the audited and unaudited consolidated financial statements and notes thereto of tronc and NYDN.
NOTE 2: PRELIMINARY PURCHASE PRICE ALLOCATION
On September 3, 2017, tronc completed the acquisition of 100% of the partnership interests in NYDN, for a cash purchase price of $1, subject to a post-closing working capital adjustment. The unaudited pro forma combined financial information includes various assumptions, including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed of NYDN based on management’s best estimates of fair value. The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities. Accordingly, the pro forma adjustments are preliminary and have been made solely for illustrative purposes.
The following table shows the preliminary allocation of the purchase price for NYDN to the acquired identifiable assets and assumed liabilities (in thousands):
Allocated Fair Value of Acquired Assets and Assumed Liabilities
 
 
Cash acquired as part of the purchase
 
$
3,305

Accounts receivable and other current assets
 
20,220

Property, plant and equipment, including assets under capital leases
 
48,347

Mastheads and intangible assets not subject to amortization
 
1,910

Other long-term assets
 
1,222

Accounts payable and other current liabilities
 
(17,203
)
Pension and postemployment benefits liability
 
(25,445
)
Workers compensation and auto insurance liability
 
(18,838
)
Other long-term liabilities
 
(13,518
)
Total identifiable net assets (liabilities)
 
—




5
TRONC, INC.
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(Unaudited)


NOTE 3: PRO FORMA ADJUSTMENTS
The pro forma adjustments are based on preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma combined financial information:
Adjustments to the pro forma condensed combined balance sheet
(a)
Reflects the preliminary fair value adjustment of $0.8 million to the acquired inventory.
(b)
Reflects the preliminary fair value adjustment of $33.3 million to the acquired property and equipment.
(c)
Reflects the amount of related party liabilities included in NYDN financial statements that were not assumed by tronc, Inc. as part of the acquisition.
(d)
Reflects the preliminary fair value adjustment to the pension plan based on acquisition date fair value.
(e)
Consists of preliminary fair value adjustments associated with leased properties and workers compensation liabilities based on acquisition date fair values.
Adjustments to the pro forma condensed statements of operations
(f)
Reflects the estimated impact on depreciation expense of the fair value adjustment to the acquired property and equipment discussed in Note 3(b).
(g)
Reflects the elimination of interest expense on the related party debt not assumed by tronc, Inc. as part of the acquisition.
(h)
Reflects the income tax effect of pro forma adjustments.



6

Stock widget

Investing forum

Tribune Publishing Co Reports