DallasNews Corporation ("DallasNews" or the "Company") intends for the
discussion of its financial condition and results of operations that follows to
provide information that will assist in understanding its financial statements,
the changes in certain key items in those statements from period to period, and
the primary factors that accounted for those changes, as well as how certain
accounting principles, policies and estimates affect its financial statements.
The following information should be read in conjunction with the Company's
consolidated financial statements and related notes filed as part of this
report. All dollar amounts presented herein, except share and per share amounts,
are in thousands, unless the context indicates otherwise.
This section and other parts of this Quarterly Report on Form 10-Q contain
certain forward-looking statements. Forward-looking statements are subject to
risks, uncertainties and other factors that could cause actual results to differ
materially from those statements. See Forward-Looking Statements of this
Quarterly Report for further discussion.
OVERVIEW
DallasNews Corporation, formerly A. H. Belo Corporation, and its subsidiaries
are referred to collectively herein as "DallasNews" or the "Company." DallasNews
was formed in February 2008 through a spin-off from its former parent company
and is registered on The Nasdaq Stock Market LLC (Nasdaq trading symbol: DALN).
DallasNews is the Dallas-based holding company of The Dallas Morning News and
Medium Giant.
The Company operates The Dallas Morning News (dallasnews.com), Texas' leading
newspaper and winner of nine Pulitzer Prizes, and various niche publications
targeting specific audiences. These operations generate revenue from sales of
advertising within the Company's newspaper and digital platforms, subscriptions
and retail sales of its newspapers, commercial printing and distribution
services primarily related to national newspapers, and preprint advertising.
In addition, the Company has a full-service agency, Medium Giant, with
capabilities including strategy, creative and media management with a focus on
strategic and digital marketing, and data intelligence that provide a measurable
return on investment to its clients.
The Company transferred its stock exchange listing from the New York Stock
Exchange ("NYSE") to The Nasdaq Stock Market LLC ("Nasdaq") and changed its
corporate name to DallasNews Corporation. The listing and trading of the
Company's Series A common stock on the NYSE ceased trading at market close on
June 28, 2021, and began trading on Nasdaq at market open on June 29, 2021,
under the ticker symbol "DALN."
In May 2021, at the Company's 2021 annual meeting of shareholders, its
shareholders approved a reverse stock split at a ratio of not less than
one-for-three and not more than one-for-five, with the exact ratio to be
determined by the Company's board of directors. Following the annual meeting,
the Company's board of directors approved a one-for-four reverse stock split of
its issued, outstanding and treasury shares of common stock, par value $0.01 per
share, which became effective June 8, 2021. As a result, every four shares of
the Company's issued and outstanding Series A common stock and Series B common
stock (and any such shares held in treasury) were converted into one share of
Series A common stock and Series B common stock, respectively. All fractional
shares were settled in cash in connection with the reverse stock split on
June 9, 2021. The par value of the Series A and Series B common stock was not
adjusted as a result of the reverse stock split and the Company reclassified an
amount equal to the reduction in the number of Company shares at par value to
additional paid-in capital.
Beginning in early 2020, the COVID-19 pandemic impacted, and may continue to
impact, the Company's customers, distribution partners, advertisers, production
facilities, and third parties, and could result in additional loss of
advertising revenue or supply chain disruption. If the pandemic were to affect a
significant number of the workforce employed in printing operations, the Company
may experience delays or be unable to produce, print and deliver its
publications and other third-party print publications on a timely basis. The
Company continues to evaluate for any future material impacts on its
consolidated financial statements.
Effective June 30, 2022, the Company and Charter DMN Holdings, LP (the
"Purchaser") entered into an agreement (the "Third Modification Agreement")
extending the maturity date of the promissory note of $22,400 (the "Promissory
Note"), for the sale of the real estate assets previously used as the Company's
headquarters, to July 29, 2022. The unpaid, original principal balance of the
Promissory Note accrued interest at the rate of 6.5 percent. On July 29, 2022,
the Company was paid in full, receiving cash proceeds of $22,516, including
interest, due from the Purchaser under the Third Modification Agreement.
In the third quarter, the Company made a board approved voluntary contribution
of $5,000 to the DallasNews Corporation Pension Plans (the "Pension Plans") and
its board declared a special, one-time $1.50 per share dividend, paid on
September 30, 2022, returning $8,029 to shareholders.
DallasNews Corporation Third Quarter 2022 on Form 10-Q 17
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Table of Contents
RESULTS OF OPERATIONS
Consolidated Results of Operations (unaudited)
This section contains discussion and analysis of net operating revenue,
operating costs and expense and other information relevant to an understanding
of results of operations for the three and nine months ended September 30, 2022
and 2021. Based on how the Company's chief operating decision-maker makes
decisions about allocating resources and assessing performance, the Company
determined it has one reportable segment.
The table below sets forth the components of the Company's operating loss.
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