Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - Tribune Publishing Co | a20188-kcaliforniasalepres.htm |
| 8-K - 8-K - Tribune Publishing Co | a20188-kcaliforniasale.htm |
EXHIBIT 99.1
TRONC, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
As of April 1, 2018
(In thousands) (Unaudited)
tronc, Inc. | Forsalebyowner.com | California Properties | Debt Repayment | Proforma | ||||||||||||||||
Assets | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash | $ | 162,731 | $ | (38 | ) | (a) | $ | (5,990 | ) | (b) | $ | (347,981 | ) | (e) | $ | 242,915 | ||||
2,275 | (c) | 474,518 | (d) | (42,600 | ) | (f) | ||||||||||||||
Accounts receivable, net | 153,533 | (27 | ) | (a) | (41,630 | ) | (b) | — | 111,876 | |||||||||||
Inventories | 13,277 | (62 | ) | (a) | (4,522 | ) | (b) | — | 8,693 | |||||||||||
Prepaid expenses and other | 26,870 | (1 | ) | (a) | (3,123 | ) | (b) | — | 23,746 | |||||||||||
Total current assets | 356,411 | 2,147 | 419,253 | (390,581 | ) | 387,230 | ||||||||||||||
Property, plant and equipment | ||||||||||||||||||||
Machinery, equipment and furniture | 130,289 | (973 | ) | (a) | (12,481 | ) | (b) | — | 116,835 | |||||||||||
Buildings and leasehold improvements | 43,246 | — | (5,648 | ) | (b) | — | 37,598 | |||||||||||||
173,535 | (973 | ) | (18,129 | ) | — | 154,433 | ||||||||||||||
Accumulated depreciation | (77,788 | ) | 517 | (a) | 8,379 | (b) | (68,892 | ) | ||||||||||||
95,747 | (456 | ) | (9,750 | ) | — | 85,541 | ||||||||||||||
Advance payments on property, plant and equipment | 14,007 | — | (873 | ) | (b) | — | 13,134 | |||||||||||||
Property, plant and equipment, net | 109,754 | (456 | ) | (10,623 | ) | — | 98,675 | |||||||||||||
Other assets | ||||||||||||||||||||
Goodwill | 203,464 | (100 | ) | (a) | (76,990 | ) | (b) | — | 126,374 | |||||||||||
Intangible assets, net | 144,078 | — | (59,057 | ) | (b) | — | 85,021 | |||||||||||||
Software, net | 39,774 | — | (199 | ) | (b) | — | 39,575 | |||||||||||||
Restricted cash | — | — | — | 42,600 | (f) | 42,600 | ||||||||||||||
Deferred income taxes | 28,886 | 113 | (a) | (28,996 | ) | (b) | — | 3 | ||||||||||||
Other long-term assets | 30,818 | — | (1,844 | ) | (b) | — | 28,974 | |||||||||||||
Total other assets | 447,020 | 13 | (167,086 | ) | 42,600 | 322,547 | ||||||||||||||
Total assets | $ | 913,185 | $ | 1,704 | $ | 241,544 | $ | (347,981 | ) | $ | 808,452 | |||||||||
The accompanying notes are an integral part of these proforma combined financial statements.
1
TRONC, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
As of April 1, 2018
(In thousands) (Unaudited)
tronc, Inc. | Forsalebyowner.com | California Properties | Debt Repayment | Proforma | ||||||||||||||||
Liabilities and stockholders’ equity | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | $ | 21,829 | $ | — | $ | (342 | ) | (b) | $ | (21,090 | ) | (e) | $ | 397 | ||||||
Accounts payable | 75,281 | (49 | ) | (a) | (10,048 | ) | (b) | — | 65,184 | |||||||||||
Employee compensation and benefits | 56,421 | (31 | ) | (a) | (11,506 | ) | (b) | — | 44,884 | |||||||||||
Deferred revenue | 79,740 | (61 | ) | (a) | (22,715 | ) | (b) | — | 56,964 | |||||||||||
Other current liabilities | 24,291 | 578 | (g) | (2,704 | ) | (b) | (2,161 | ) | (g) | 127,440 | ||||||||||
107,436 | (g) | |||||||||||||||||||
Total current liabilities | 257,562 | 437 | 60,121 | (23,251 | ) | 294,869 | ||||||||||||||
Non-current liabilities | ||||||||||||||||||||
Long-term debt | 326,979 | — | (728 | ) | (b) | (319,174 | ) | (e) | 7,077 | |||||||||||
Deferred revenue | 3,534 | — | — | — | 3,534 | |||||||||||||||
Pension and postretirement benefits payable | 104,494 | — | (84,412 | ) | (b) | — | 20,082 | |||||||||||||
Other obligations | 90,201 | — | (25,522 | ) | (b) | — | 64,679 | |||||||||||||
Total non-current liabilities | 525,208 | — | (110,662 | ) | (319,174 | ) | 95,372 | |||||||||||||
Noncontrolling interest | 42,062 | — | — | — | 42,062 | |||||||||||||||
Stockholders' equity | 88,353 | 1,267 | (h) | 292,085 | (h) | (5,556 | ) | (h) | 376,149 | |||||||||||
Total liabilities and stockholders’ equity | $ | 913,185 | $ | 1,704 | $ | 241,544 | $ | (347,981 | ) | $ | 808,452 | |||||||||
The accompanying notes are an integral part of these proforma combined financial statements.
2
TRONC, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the three months ended April 1, 2018
(In thousands, except per share amounts)
(Unaudited)
tronc, Inc. | Forsalebyowner.com | California Properties | Debt Repayment | Proforma | ||||||||||||||||
Operating revenues | $ | 355,616 | $ | (922 | ) | (i) | $ | (116,122 | ) | (j) | $ | — | $ | 238,572 | ||||||
Operating expenses: | ||||||||||||||||||||
Compensation | 144,537 | (325 | ) | (i) | (33,232 | ) | (j) | — | 110,980 | |||||||||||
Newsprint and ink | 22,034 | — | (7,435 | ) | (j) | — | 14,599 | |||||||||||||
Outside services | 130,559 | (266 | ) | (i) | (31,265 | ) | (j) | — | 99,028 | |||||||||||
Other operating expenses | 62,598 | (61 | ) | (i) | (29,580 | ) | (j) | — | 32,957 | |||||||||||
Depreciation and amortization | 14,649 | (63 | ) | (i) | (1,567 | ) | (j) | — | 13,019 | |||||||||||
Total operating expenses | 374,377 | (715 | ) | (103,079 | ) | — | 270,583 | |||||||||||||
Loss from operations | (18,761 | ) | (207 | ) | (13,043 | ) | — | (32,011 | ) | |||||||||||
Interest expense, net | (6,594 | ) | — | 30 | (j) | 6,620 | (k) | 56 | ||||||||||||
Loss on equity investments, net | (729 | ) | — | — | — | (729 | ) | |||||||||||||
Other income, net | 4,388 | — | (725 | ) | — | 3,663 | ||||||||||||||
Loss before income taxes | (21,696 | ) | (207 | ) | (13,738 | ) | 6,620 | (29,021 | ) | |||||||||||
Income tax benefit | (7,185 | ) | (58 | ) | (i) | (3,845 | ) | (j) | 1,852 | (l) | (9,236 | ) | ||||||||
Net loss | (14,511 | ) | (149 | ) | (9,893 | ) | 4,768 | (19,785 | ) | |||||||||||
Less: Income attributable to noncontrolling interest | 262 | — | — | — | 262 | |||||||||||||||
Net loss attributable to tronc common stockholders | $ | (14,773 | ) | $ | (149 | ) | $ | (9,893 | ) | $ | 4,768 | $ | (20,047 | ) | ||||||
Net loss attributable to tronc common share: | ||||||||||||||||||||
Basic | $ | (0.42 | ) | $ | (0.58 | ) | ||||||||||||||
Diluted | $ | (0.42 | ) | $ | (0.58 | ) | ||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 34,801 | 34,801 | ||||||||||||||||||
Diluted | 34,801 | 34,801 | ||||||||||||||||||
The accompanying notes are an integral part of these proforma combined financial statements.
3
TRONC, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the year ended December 31, 2017
(In thousands, except per share amounts)
(Unaudited)
tronc, Inc. | Forsalebyowner.com | California Properties | Debt Repayment | Proforma | ||||||||||||||||
Operating revenues | $ | 1,524,018 | $ | (4,407 | ) | (i) | $ | (503,975 | ) | (j) | $ | — | $ | 1,015,636 | ||||||
Operating expenses: | ||||||||||||||||||||
Compensation | 549,363 | (2,968 | ) | (i) | (141,879 | ) | (j) | — | 404,516 | |||||||||||
Newsprint and ink | 94,340 | — | (35,099 | ) | (j) | — | 59,241 | |||||||||||||
Outside services | 468,044 | (2,717 | ) | (i) | (133,900 | ) | (j) | — | 331,427 | |||||||||||
Other operating expenses | 288,986 | (3,824 | ) | (i) | (122,011 | ) | (j) | — | 163,151 | |||||||||||
Depreciation and amortization | 56,696 | (250 | ) | (i) | (7,313 | ) | (j) | — | 49,133 | |||||||||||
Total operating expenses | 1,457,429 | (9,759 | ) | (440,202 | ) | — | 1,007,468 | |||||||||||||
Income from operations | 66,589 | 5,352 | (63,773 | ) | — | 8,168 | ||||||||||||||
Interest expense, net | (26,481 | ) | — | 147 | (j) | 25,826 | (k) | (508 | ) | |||||||||||
Premium on stock buyback | (6,031 | ) | — | — | — | (6,031 | ) | |||||||||||||
Income (loss) on equity investments, net | 3,139 | — | (5,842 | ) | (j) | — | (2,703 | ) | ||||||||||||
Income (loss) before income taxes | 37,216 | 5,352 | (69,468 | ) | 25,826 | (1,074 | ) | |||||||||||||
Income tax expense | 31,681 | 2,181 | (i) | (28,305 | ) | (j) | 10,523 | (l) | 16,080 | |||||||||||
Net income (loss) | $ | 5,535 | $ | 3,171 | $ | (41,163 | ) | $ | 15,303 | $ | (17,154 | ) | ||||||||
Net income (loss) per common share: | ||||||||||||||||||||
Basic | $ | 0.16 | $ | (0.50 | ) | |||||||||||||||
Diluted | $ | 0.16 | $ | (0.50 | ) | |||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 33,996 | 33,996 | ||||||||||||||||||
Diluted | 34,285 | 33,996 | ||||||||||||||||||
The accompanying notes are an integral part of these proforma combined financial statements.
4
TRONC, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the year ended December 25, 2016
(In thousands, except per share amounts)
(Unaudited)
tronc, Inc. | Forsalebyowner.com | California Properties | Proforma | |||||||||||||
Operating revenues | $ | 1,606,378 | $ | (10,601 | ) | (i) | $ | (532,408 | ) | (j) | $ | 1,063,369 | ||||
Operating expenses: | ||||||||||||||||
Compensation | 597,293 | (3,820 | ) | (i) | (149,952 | ) | (j) | 443,521 | ||||||||
Newsprint and ink | 103,906 | — | (41,378 | ) | (j) | 62,528 | ||||||||||
Outside services | 494,478 | (2,713 | ) | (i) | (145,073 | ) | (j) | 346,692 | ||||||||
Other operating expenses | 300,089 | (5,059 | ) | (i) | (119,072 | ) | (j) | 175,958 | ||||||||
Depreciation and amortization | 57,499 | (110 | ) | (i) | (6,026 | ) | (j) | 51,363 | ||||||||
Total operating expenses | 1,553,265 | (11,702 | ) | (461,501 | ) | 1,080,062 | ||||||||||
Income (loss) from operations | 53,113 | 1,101 | (70,907 | ) | (16,693 | ) | ||||||||||
Interest expense, net | (26,703 | ) | — | 142 | (j) | (26,561 | ) | |||||||||
Income (loss) on equity investments, net | (690 | ) | — | (797 | ) | (j) | (1,487 | ) | ||||||||
Reorganization items, net | (259 | ) | — | — | (259 | ) | ||||||||||
Income (loss) before income taxes | 25,461 | 1,101 | (71,562 | ) | (45,000 | ) | ||||||||||
Income tax expense (benefit) | 18,924 | 449 | (i) | (29,159 | ) | (j) | (9,786 | ) | ||||||||
Net income (loss) | $ | 6,537 | $ | 652 | $ | (42,403 | ) | $ | (35,214 | ) | ||||||
Net income (loss) per common share: | ||||||||||||||||
Basic | $ | 0.19 | $ | (1.04 | ) | |||||||||||
Diluted | $ | 0.19 | $ | (1.04 | ) | |||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 33,788 | 33,788 | ||||||||||||||
Diluted | 33,935 | 33,788 | ||||||||||||||
The accompanying notes are an integral part of these proforma combined financial statements.
5
TRONC, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the year ended December 27, 2015
(In thousands, except per share amounts)
(Unaudited)
tronc, Inc. | Forsalebyowner.com | California Properties | Proforma | |||||||||||||
Operating revenues | $ | 1,672,820 | $ | (12,879 | ) | (i) | $ | (514,056 | ) | (j) | $ | 1,145,885 | ||||
Operating expenses: | ||||||||||||||||
Compensation | 649,905 | (2,428 | ) | (i) | (165,251 | ) | (j) | 482,226 | ||||||||
Newsprint and ink | 122,339 | — | (44,084 | ) | (j) | 78,255 | ||||||||||
Outside services | 513,896 | (2,569 | ) | (i) | (144,498 | ) | (j) | 366,829 | ||||||||
Other operating expenses | 307,080 | (5,264 | ) | (i) | (109,888 | ) | (j) | 191,928 | ||||||||
Depreciation and amortization | 54,633 | (101 | ) | (i) | (3,565 | ) | (j) | 50,967 | ||||||||
Total operating expenses | 1,647,853 | (10,362 | ) | (467,286 | ) | 1,170,205 | ||||||||||
Income (loss) from operations | 24,967 | (2,517 | ) | (46,770 | ) | (24,320 | ) | |||||||||
Interest expense, net | (25,972 | ) | — | 75 | (j) | (25,897 | ) | |||||||||
Loss on equity investments, net | (1,164 | ) | — | (531 | ) | (j) | (1,695 | ) | ||||||||
Reorganization items, net | (1,026 | ) | — | — | (1,026 | ) | ||||||||||
Loss before income taxes | (3,195 | ) | (2,517 | ) | (47,226 | ) | (52,938 | ) | ||||||||
Income tax benefit | (430 | ) | (1,025 | ) | (i) | (19,242 | ) | (j) | (20,697 | ) | ||||||
Net loss | $ | (2,765 | ) | $ | (1,492 | ) | $ | (27,984 | ) | $ | (32,241 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic | $ | (0.11 | ) | $ | (1.24 | ) | ||||||||||
Diluted | $ | (0.11 | ) | $ | (1.24 | ) | ||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 25,990 | 25,990 | ||||||||||||||
Diluted | 25,990 | 25,990 | ||||||||||||||
The accompanying notes are an integral part of these proforma combined financial statements.
6
TRONC, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed consolidated financial statements of tronc, Inc. and subsidiaries (the “Company”) were derived from the Company’s historical consolidated financial statements. The unaudited pro forma balance sheet as of April 1, 2018 was adjusted to reflect the sale of Forsalebyowner.com for an aggregate purchase price of $2.5 million, which closed on May 23, 2018, and the Los Angeles Times, The San Diego Union-Tribune and various other titles of the Company’s California properties (the “California Properties”) for a gross purchase price of $500.0 million, which closed on June 18, 2018, as though the dispositions occurred on April 1, 2018.
The unaudited pro forma condensed consolidated statements of operations for the quarter ended April 1, 2018 and the years ended December 31, 2017, December 25, 2016 and December 27, 2015, were prepared as though the dispositions occurred on December 29, 2014, the first day of the Company’s fiscal year 2015, and as though the debt repayment discussed below occurred on December 26, 2016, the first day of the Company’s fiscal year 2017. Forsalebyowner.com and the California Properties will be reported as discontinued operations beginning with the Company’s second fiscal quarter ending July 1, 2018.
In connection with the completion of the sale of the California Properties, the Company terminated the ABL Credit Agreement, dated as of August 4, 2014 (as amended, amended and restated, extended, supplemented or otherwise modified) among tronc, Inc. (f/k/a Tribune Publishing Company), the several lenders party thereto and Bank of America, N.A., paid all outstanding amounts in connection therewith and backstopped and/or cash collateralized all outstanding letters of credit in connection therewith.
Also in connection with the completion of the sale of the California Properties, on June 20, 2018, the Company prepaid all outstanding amounts under the Term Loan Credit Agreement, dated as of August 4, 2014 (as amended, amended and restated, extended, supplemented or otherwise modified) among tronc, Inc. (f/k/a Tribune Publishing Company), the several lenders party thereto and JPMorgan Chase Bank, N.A., resulting in the termination of such credit agreement.
The unaudited pro forma condensed consolidated financial statements are furnished for informational purposes only and do not purport to reflect the Company’s financial position and results of operations had the dispositions occurred on the dates as indicated above. Further, these financial statements are not necessarily indicative of the Company’s future financial position and future results of operations and should be read in conjunction with the historical financial statements of the Company included in its Annual Report on Form 10‑K for the year ended December 31, 2017 and the Company’s Quarterly Report on Form 10-Q for the quarter ended April 1, 2018.
NOTE 2: 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) | To eliminate the assets and liabilities of Forsalebyowner.com. |
(b) | To eliminate the assets and liabilities of the California Properties. |
(c) | The cash adjustment amount includes gross proceeds of $2.5 million received from the sale of Forsalebyowner.com on May 23, 2018 and is decreased by selling expenses requiring payment at closing, which total approximately $0.2 million. |
(d) | The cash adjustment amount includes gross proceeds of $500.0 million received from the sale of the California Properties on June 18, 2018 and is decreased by preliminary working capital adjustments and selling expenses requiring payment at closing, which total approximately $25.5 million. |
(e) | The cash and long-term debt adjustment amounts represent repayment of the long-term debt. |
(f) | The cash and restricted cash adjustment amounts represent the cash collateralization of the outstanding letters of credit related to the termination of the ABL Credit Agreement. |
(g) | Other current liabilities adjustments represent estimated taxes payable related to the sale of Forsalebyowner.com, and the California Properties, offset by the estimated tax benefit related tot he loss on the early repayment of debt, calculated at the statutory rate. |
(h) | Stockholders’ equity was adjusted as a result of adjustments (a) through (f), which represents the estimated after-tax gain on the dispositions of Foresalebyowner.com and the California Properties, net of the estimated after-tax loss on the early repayment of debt. |
Adjustments to the pro forma condensed statements of operations
(i) | To eliminate the revenues and expenses of Forsalebyowner.com. |
(j) | To eliminate the revenues and expenses of the California Properties. |
(k) | To eliminate the interest expense related to the long-term debt repaid with the proceeds from the sale of the California Properties. |
(l) | Estimated income tax effect of the repayment of long-term debt. |
7