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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: June 30, 2022

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 July 27, 2022: 5,352,490 shares (consisting of 4,737,638 shares of Series A Common Stock and 614,852 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 17

Item 4.

Controls and Procedures

 

PAGE 23

 

 

 

 

PART II 

 

 

Item 1.

Legal Proceedings

 

PAGE 24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

PAGE 24

Item 3.

Defaults Upon Senior Securities

 

PAGE 24

Item 4.

Mine Safety Disclosures

 

PAGE 24

Item 5.

Other Information

 

PAGE 24

Item 6.

Exhibits

 

PAGE 25

Signatures

 

PAGE 28

Exhibit Index

 

PAGE 29

DallasNews Corporation Second Quarter 2022 on Form 10-Q


PART I

Item 1. Financial Information

DallasNews Corporation and Subsidiaries

Consolidated Statements of Operations

Three Months Ended June 30,

Six Months Ended June 30,

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

2022

2021

2022

2021

Net Operating Revenue:

Advertising and marketing services

$

17,457

$

18,601

$

33,721

$

35,370

Circulation

16,250

16,093

32,346

32,115

Printing, distribution and other

3,866

3,974

7,793

7,998

Total net operating revenue

37,573

38,668

73,860

75,483

Operating Costs and Expense:

Employee compensation and benefits

16,804

18,116

33,214

36,063

Other production, distribution and operating costs

19,725

20,151

38,974

39,241

Newsprint, ink and other supplies

2,504

2,378

4,898

4,719

Depreciation

716

1,035

1,428

2,109

Amortization

64

Gain on sale/disposal of assets, net

(1)

Asset impairments

102

102

Total operating costs and expense

39,851

41,680

78,616

82,195

Operating loss

(2,278)

(3,012)

(4,756)

(6,712)

Other income, net

28

1,613

46

2,867

Loss Before Income Taxes

(2,250)

(1,399)

(4,710)

(3,845)

Income tax provision

165

83

349

402

Net Loss

$

(2,415)

$

(1,482)

$

(5,059)

$

(4,247)

Per Share Basis

Net loss

Basic

$

(0.45)

$

(0.28)

$

(0.95)

$

(0.79)

Number of common shares used in the per share calculation:

Basic

5,352,490

5,352,490

5,352,490

5,352,490

See the accompanying Notes to the Consolidated Financial Statements.

 

DallasNews Corporation Second Quarter 2022 on Form 10-Q 3


DallasNews Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended June 30,

Six Months Ended June 30,

In thousands (unaudited)

2022

2021

2022

2021

Net Loss

$

(2,415)

$

(1,482)

$

(5,059)

$

(4,247)

Other Comprehensive Income (Loss), Net of Tax:

Amortization of actuarial losses

131

360

261

720

Total other comprehensive income, net of tax

131

360

261

720

Total Comprehensive Loss

$

(2,284)

$

(1,122)

$

(4,798)

$

(3,527)

See the accompanying Notes to the Consolidated Financial Statements.

 

DallasNews Corporation Second Quarter 2022 on Form 10-Q 4


DallasNews Corporation and Subsidiaries

Consolidated Balance Sheets

  

June 30,

December 31,

In thousands, except share amounts (unaudited)

2022

2021

Assets

Current assets:

Cash and cash equivalents

$

26,560

$

32,439

Accounts receivable (net of allowance of $445 and $551 at June 30, 2022

and December 31, 2021, respectively)

13,600

16,012

Notes receivable

22,400

22,400

Inventories

1,770

2,192

Prepaids and other current assets

4,333

3,485

Total current assets

68,663

76,528

Property, plant and equipment, at cost

313,675

312,979

Less accumulated depreciation

(305,584)

(304,157)

Property, plant and equipment, net

8,091

8,822

Operating lease right-of-use assets

15,655

17,648

Deferred income taxes, net

210

257

Other assets

2,200

2,197

Total assets

$

94,819

$

105,452

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

5,873

$

7,821

Accrued compensation and benefits

4,635

4,932

Other accrued expense

4,762

4,573

Contract liabilities

10,683

10,592

Total current liabilities

25,953

27,918

Long-term pension liabilities

14,456

14,275

Long-term operating lease liabilities

16,864

19,181

Other post-employment benefits

1,324

1,349

Other liabilities

156

152

Total liabilities

58,753

62,875

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

Series A: issued 5,216,103 and 5,216,045 shares at June 30, 2022 and December 31, 2021, respectively

52

52

Series B: issued 614,852 and 614,910 shares at June 30, 2022 and December 31, 2021, respectively

6

6

Treasury stock, Series A, at cost; 478,465 shares held at June 30, 2022 and December 31, 2021

(13,443)

(13,443)

Additional paid-in capital

494,563

494,563

Accumulated other comprehensive loss

(32,145)

(32,406)

Accumulated deficit

(412,967)

(406,195)

Total shareholders’ equity

36,066

42,577

Total liabilities and shareholders’ equity

$

94,819

$

105,452

See the accompanying Notes to the Consolidated Financial Statements.


DallasNews Corporation Second Quarter 2022 on Form 10-Q 5


DallasNews Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Six Months Ended June 30, 2022 and 2021

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, 2020

5,213,710 

617,245 

$

233 

$

494,389 

(478,465)

$

(13,443)

$

(32,468)

$

(402,303)

$

46,408 

Net loss

(4,247)

(4,247)

Other comprehensive income

720 

720 

Conversion of Series B to Series A

2,030 

(2,030)

Dividends declared ($0.32 per share)

(1,712)

(1,712)

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 June 30, 2021

5,215,740 

615,215 

$

58 

$

494,563 

(478,465)

$

(13,443)

$

(31,748)

$

(408,262)

$

41,168 

Balance at December 31, 2021

5,216,045 

614,910 

$

58 

$

494,563 

(478,465)

$

(13,443)

$

(32,406)

$

(406,195)

$

42,577 

Net loss

(5,059)

(5,059)

Other comprehensive income

261 

261 

Conversion of Series B to Series A

58 

(58)

Dividends declared ($0.32 per share)

(1,713)

(1,713)

Balance at June 30, 2022

5,216,103 

614,852 

$

58 

$

494,563 

(478,465)

$

(13,443)

$

(32,145)

$

(412,967)

$

36,066

Three Months Ended June 30, 2022 and 2021

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 March 31, 2021

5,213,730 

617,225 

$

233 

$

494,389 

(478,465)

$

(13,443)

$

(32,108)

$

(405,924)

$

43,147 

Net loss

(1,482)

(1,482)

Other comprehensive income

360 

360 

Conversion of Series B to Series A

2,010 

(2,010)

Dividends declared ($0.16 per share)

(856)

(856)

Fractional shares paid out related to the reverse stock split

(1)