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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, 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 October 21, 2022: 5,352,490 shares (consisting of 4,737,772 shares of Series A Common Stock and 614,718 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 Third Quarter 2022 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)

2022

2021

2022

2021

Net Operating Revenue:

Advertising and marketing services

$

17,525

$

18,101

$

51,246

$

53,471

Circulation

16,230

16,157

48,576

48,272

Printing, distribution and other

3,933

4,053

11,726

12,051

Total net operating revenue

37,688

38,311

111,548

113,794

Operating Costs and Expense:

Employee compensation and benefits

16,428

17,131

49,642

53,194

Other production, distribution and operating costs

19,691

20,041

58,665

59,282

Newsprint, ink and other supplies

3,161

2,439

8,059

7,158

Depreciation

699

1,018

2,127

3,127

Amortization

64

Loss on sale/disposal of assets, net

30

29

Asset impairments

232

102

232

Total operating costs and expense

39,979

40,891

118,595

123,086

Operating loss

(2,291)

(2,580)

(7,047)

(9,292)

Other income (loss), net

(94)

1,827

(48)

4,694

Loss Before Income Taxes

(2,385)

(753)

(7,095)

(4,598)

Income tax provision (benefit)

201

(2,384)

550

(1,982)

Net Income (Loss)

$

(2,586)

$

1,631

$

(7,645)

$

(2,616)

Per Share Basis

Net income (loss)

Basic

$

(0.48)

$

0.30

$

(1.43)

$

(0.49)

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 Third Quarter 2022 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)

2022

2021

2022

2021

Net Income (Loss)

$

(2,586)

$

1,631

$

(7,645)

$

(2,616)

Other Comprehensive Income (Loss), Net of Tax:

Amortization of actuarial losses

130

360

391

1,080

Total other comprehensive income, net of tax

130

360

391

1,080

Total Comprehensive Income (Loss)

$

(2,456)

$

1,991

$

(7,254)

$

(1,536)

See the accompanying Notes to the Consolidated Financial Statements.

 

DallasNews Corporation Third Quarter 2022 on Form 10-Q 4


DallasNews Corporation and Subsidiaries

Consolidated Balance Sheets

  

September 30,

December 31,

In thousands, except share amounts (unaudited)

2022

2021

Assets

Current assets:

Cash and cash equivalents

$

33,031

$

32,439

Accounts receivable (net of allowance of $435 and $551 at September 30, 2022

and December 31, 2021, respectively)

13,256

16,012

Notes receivable

22,400

Inventories

1,844

2,192

Prepaids and other current assets

3,714

3,485

Total current assets

51,845

76,528

Property, plant and equipment, at cost

313,583

312,979

Less accumulated depreciation

(305,773)

(304,157)

Property, plant and equipment, net

7,810

8,822

Operating lease right-of-use assets

15,449

17,648

Deferred income taxes, net

186

257

Other assets

2,096

2,197

Total assets

$

77,386

$

105,452

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

4,623

$

7,821

Accrued compensation and benefits

6,001

4,932

Other accrued expense

4,818

4,573

Contract liabilities

9,389

10,592

Total current liabilities

24,831

27,918

Long-term pension liabilities

9,546

14,275

Long-term operating lease liabilities

16,815

19,181

Other post-employment benefits

1,311

1,349

Other liabilities

158

152

Total liabilities

52,661

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 5,216,208 and 5,216,045 shares at September 30, 2022 and December 31, 2021, respectively

52

52

Series B: issued 614,747 and 614,910 shares at September 30, 2022 and December 31, 2021, respectively

6

6

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

(13,443)

(13,443)

Additional paid-in capital

494,563

494,563

Accumulated other comprehensive loss

(32,015)

(32,406)

Accumulated deficit

(424,438)

(406,195)

Total shareholders’ equity

24,725

42,577

Total liabilities and shareholders’ equity

$

77,386

$

105,452

See the accompanying Notes to the Consolidated Financial Statements.


DallasNews Corporation Third Quarter 2022 on Form 10-Q 5


DallasNews Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Nine Months Ended September 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

(2,616)

(2,616)

Other comprehensive income

1,080

1,080

Conversion of Series B to Series A

2,035

(2,035)

Dividends declared ($0.48 per share)

(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

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

(7,645)

(7,645)

Other comprehensive income

391

391

Conversion of Series B to Series A

163

(163)

Dividends declared ($1.98 per share)

(10,598)

(10,598)

Balance at September 30, 2022

5,216,208

614,747

$

58 

$

494,563 

(478,465)

$

(13,443)

$

(32,015)

$

(424,438)

$

24,725

Three Months Ended September 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 June 30, 2021

5,215,740 

615,215 

$

58 

$

494,563 

(478,465)

$

(13,443)

$

(31,748)

$

(408,262)

$

41,168 

Net income

1,631 

1,631 

Other comprehensive income

360 

360 

Conversion of Series B to Series A

5 

(5)