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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended: September 30, 2021

OR

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

Commission file no. 1-33741

Picture 1

DallasNews CORPORATION

(Exact name of registrant as specified in its charter)

Texas

 

38-3765318

(State or other jurisdiction of incorporation or organization)

 

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

 

 

P. O. Box 224866, Dallas, Texas 75222-4866

 

(214977-7342

(Address of principal executive offices, including zip code)

 

(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report.

None

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Series A Common Stock, $0.01 par value

DALN

The Nasdaq Stock Market LLC

Indicate by check mark whether 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 þ     No ¨ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).     Yes þ     No ¨ 

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

Large Accelerated Filer:  ¨

Accelerated Filer:  ¨

Non-Accelerated Filer:  þ

Smaller Reporting Company:  þ

Emerging Growth Company  ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      Yes ¨     No þ

Shares of Common Stock outstanding at October 21, 2021: 5,352,490 shares (consisting of 4,737,280 shares of Series A Common Stock and 615,210 shares of Series B Common Stock).


DALLASNEWS CORPORATION

FORM 10-Q

TABLE OF CONTENTS

 

 

Page

PART I

Item 1.

Financial Information

 

PAGE 3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

PAGE 18

Item 4.

Controls and Procedures

 

PAGE 26

 

 

 

 

PART II 

 

 

Item 1.

Legal Proceedings

 

PAGE 27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

PAGE 27

Item 3.

Defaults Upon Senior Securities

 

PAGE 27

Item 4.

Mine Safety Disclosures

 

PAGE 27

Item 5.

Other Information

 

PAGE 27

Item 6.

Exhibits

 

PAGE 28

Signatures

 

PAGE 31

Exhibit Index

 

PAGE 32

DallasNews Corporation Third Quarter 2021 on Form 10-Q


PART I

Item 1. Financial Information

DallasNews Corporation and Subsidiaries

Consolidated Statements of Operations

Three Months Ended September 30,

Nine Months Ended September 30,

In thousands, except share and per share amounts (unaudited)

2021

2020

2021

2020

Net Operating Revenue:

Advertising and marketing services

$

18,101

$

17,474

$

53,471

$

52,392

Circulation

16,157

16,111

48,272

48,248

Printing, distribution and other

4,053

4,157

12,051

12,860

Total net operating revenue

38,311

37,742

113,794

113,500

Operating Costs and Expense:

Employee compensation and benefits

17,131

16,499

53,194

52,512

Other production, distribution and operating costs

20,041

19,307

59,282

58,958

Newsprint, ink and other supplies

2,439

2,476

7,158

8,018

Depreciation

1,018

1,753

3,127

5,320

Amortization

63

64

191

Loss on sale/disposal of assets, net

30

61

29

56

Asset impairments

232

232

Total operating costs and expense

40,891

40,159

123,086

125,055

Operating loss

(2,580)

(2,417)

(9,292)

(11,555)

Other income, net

1,827

2,095

4,694

4,778

Loss Before Income Taxes

(753)

(322)

(4,598)

(6,777)

Income tax benefit

(2,384)

(224)

(1,982)

(1,644)

Net Income (Loss)

$

1,631

$

(98)

$

(2,616)

$

(5,133)

Per Share Basis

Net income (loss)

Basic and diluted (1)

$

0.30

$

(0.02)

$

(0.49)

$

(0.96)

Number of common shares used in the per share calculation:

Basic and diluted (1)

5,352,490

5,352,490

5,352,490

5,352,490

(1)Share and per share amounts have been retroactively adjusted to reflect the one-for-four reverse stock split effective June 8, 2021. See Note 1 – Basis of Presentation and Recently Issued Accounting Standards for additional information.

See the accompanying Notes to the Consolidated Financial Statements.

 

DallasNews Corporation Third Quarter 2021 on Form 10-Q 3


DallasNews Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended September 30,

Nine Months Ended September 30,

In thousands (unaudited)

2021

2020

2021

2020

Net Income (Loss)

$

1,631

$

(98)

$

(2,616)

$

(5,133)

Other Comprehensive Income, Net of Tax:

Amortization of actuarial losses

360

219

1,080

657

Total other comprehensive income, net of tax

360

219

1,080

657

Total Comprehensive Income (Loss)

$

1,991

$

121

$

(1,536)

$

(4,476)

See the accompanying Notes to the Consolidated Financial Statements.

 

DallasNews Corporation Third Quarter 2021 on Form 10-Q 4


DallasNews Corporation and Subsidiaries

Consolidated Balance Sheets

  

September 30,

December 31,

In thousands, except share amounts (unaudited)

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

34,659

$

42,015

Accounts receivable (net of allowance of $584 and $712 at September 30, 2021

and December 31, 2020, respectively)

14,249

16,562

Notes receivable

22,400

22,775

Inventories

2,201

1,974

Prepaids and other current assets

5,216

4,780

Total current assets

78,725

88,106

Property, plant and equipment, at cost

312,664

312,532

Less accumulated depreciation

(303,456)

(300,573)

Property, plant and equipment, net

9,208

11,959

Operating lease right-of-use assets

18,219

20,406

Intangible assets, net

64

Deferred income taxes, net

102

76

Other assets

2,203

2,604

Total assets

$

108,457

$

123,215

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

6,197

$

7,759

Accrued compensation and benefits

6,868

5,754

Other accrued expense

5,283

5,075

Contract liabilities

12,139

12,896

Total current liabilities

30,487

31,484

Long-term pension liabilities

14,317

18,520

Long-term operating lease liabilities

19,863

21,890

Other post-employment benefits

1,336

1,372

Other liabilities

151

3,541

Total liabilities

66,154

76,807

Shareholders’ equity:

Preferred stock, $0.01 par value; Authorized 2,000,000 shares; none issued

Common stock, $0.01 par value; Authorized 31,250,000 shares (1)

Series A: issued 5,215,745 and 5,213,710 shares at September 30, 2021

and December 31, 2020, respectively (1)

52

209

Series B: issued 615,210 and 617,245 shares at September 30, 2021

and December 31, 2020, respectively (1)

6

24

Treasury stock, Series A, at cost; 478,465 shares held at September 30, 2021 and December 31, 2020 (1)

(13,443)

(13,443)

Additional paid-in capital

494,563

494,389

Accumulated other comprehensive loss

(31,388)

(32,468)

Accumulated deficit

(407,487)

(402,303)

Total shareholders’ equity

42,303

46,408

Total liabilities and shareholders’ equity

$

108,457

$

123,215

(1)Share amounts have been retroactively adjusted to reflect the one-for-four reverse stock split effective June 8, 2021. The number of authorized shares of common stock was reduced proportionately. See Note 1 – Basis of Presentation and Recently Issued Accounting Standards for additional information.

See the accompanying Notes to the Consolidated Financial Statements.


DallasNews Corporation Third Quarter 2021 on Form 10-Q 5


DallasNews Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Nine Months Ended September 30, 2021 and 2020

Common Stock

Treasury Stock

In thousands, except share and per share amounts (unaudited)

Shares

Series A

Shares

Series B

Amount

Additional
Paid-in
Capital

Shares
Series A

Amount

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Total

Balance at December 31, 2019 (1)

5,213,654 

617,301 

$

233 

$

494,389 

(478,465)

$

(13,443)

$

(32,294)

$

(391,148)

$

57,737 

Net loss

(5,133)

(5,133)

Other comprehensive income

657 

657 

Conversion of Series B to Series A (1)

56 

(56)

Dividends declared ($0.64 per share) (1)

(3,425)

(3,425)

Balance at September 30, 2020 (1)

5,213,710 

617,245 

$

233 

$

494,389 

(478,465)

$

(13,443)

$

(31,637)

$

(399,706)

$

49,836 

Balance at December 31, 2020 (1)

5,213,710 

617,245 

$

233 

$

494,389 

(478,465)

$

(13,443)

$

(32,468)

$

(402,303)

$

46,408 

Net loss

(2,616)

(2,616)

Other comprehensive income

1,080

1,080

Conversion of Series B to Series A (1)

2,035

(2,035)

Dividends declared ($0.48 per share) (1)

(2,568)

(2,568)

Fractional shares paid out related to the reverse stock split

(1)

(1)

Reduction of shares at par value related to the reverse stock split

(175)

175 

Balance at September 30, 2021

5,215,745

615,210

$

58 

$

494,563 

(478,465)

$

(13,443)

$

(31,388)

$

(407,487)

$

42,303

Three Months Ended September 30, 2021 and 2020

Common Stock

Treasury Stock

In thousands, except share and per share amounts (unaudited)

Shares
Series A

Shares
Series B

Amount

Additional
Paid-in
Capital

Shares
Series A

Amount

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Total

Balance at June 30, 2020 (1)

5,213,710 

617,245 

$

233 

$

494,389 

(478,465)

$

(13,443)

$

(31,856)

$

(398,752)

$

50,571 

Net loss