ANNUAL REPORT
1345 Avenue of the Americas, 45th Floor New York, NY 10105 (212) 479-3160 www.newmediainv.com CORPORATE INFORMATION NEW MEDIA BUSINESS OVERVIEW* BOARD OF DIRECTORS
PORTFOLIO OVERVIEW NEW MEDIA REACH Wesley R. Edens Chairman of the Board OF OUR DAILY OPERATE IN OVER 485 MARKETS NEWSPAPERS HAVE ACROSS 31 STATES Theodore P. Janulis BEEN PUBLISHED FOR (1) 100% Board Member MORE THAN 50 YEARS
Kevin Sheehan Board Member (1)
560+ Laurence Tarica COMMUNITY (1) Board Member PUBLICATIONS Michael E. Reed
REACH OVER 19 MILLION Board Member
PEOPLE ON A WEEKLY BASIS (1) Member of Audit Committee, Nominating and 124 Corporate Governance Committee and Compensation Committee DAILY NEWSPAPERS CORPORATE OFFICERS
Michael E. Reed 1,450+ Chief Executive Officer & President IN MARKET 485+ SERVE OVER RELATED Gregory W. Freiberg WEBSITES SALES 190K Chief Financial Officer & Chief Accounting Officer REPRESENTATIVES SMALL & MEDIUM BUSINESSES Kirk Davis DIGITAL MARKETING Chief Operating Officer SERVICES BUSINESS Cameron MacDougall Secretary
CORPORATE HEADQUARTERS CUMULATIVE COMMON DIVIDENDS SINCE SPIN-OFF* New Media Investment Group Inc. 1345 Avenue of the Americas, 45th Floor New York, NY 10105 www.newmediainv.com $2.16 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM $1.83 Ernst & Young LLP Five Times Square New York, NY 10036-6530 $1.50 SHAREHOLDER SERVICES, TRANSFER AGENT AND REGISTRAR American Stock Transfer & Trust Company $1.17 6201 15th Avenue Brooklyn, NY 11219 $0.84 (800) 937-5449 STOCK EXCHANGE LISTING $0.54 New Media Investment Group Inc. is listed on the New York Stock Exchange (NYSE:NEWM)
$0.27 INVESTOR INFORMATION SERVICES New Media Investment Group Inc. 1345 Avenue of the Americas, 45th Floor New York, NY 10105 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Tel: (212) 479-3160 Email: [email protected]
*As of December 27, 2015. DEAR FELLOW SHAREHOLDERS:
2015 was another successful year for New Media Investment Group Inc. (“New Media”, “we”, or the “Company”) as we continue to execute on all aspects of our strategy. Since becoming a public company nearly two years ago, New Media’s business model has been consistent, and very productive with a total return to shareholders of over 65% as of year-end 2015. As the Company continues to mature, we remain focused on generating value for our shareholders by focusing on the following: 1) Grow our revenue and cash flows organically through new businesses, digital initiatives, and improved content and consumer subscription products 2) Acquire dominant sources of local media that are accretive and strategic additions to drive inorganic growth 3) Return a substantial portion of cash to shareholders in the form of a dividend supported by our strong cash flows and healthy margins
ORGANIC REVENUE AND CASH FLOW GROWTH Today, New Media is a leader in the large and fragmented local newspaper industry, and in fact, is the largest owner of daily newspapers in the country, as measured by the number of daily publications. Our portfolio of local media assets are the long standing, dominant sources of comprehensive, high quality, news in the towns they serve. Our focus on hyper-local news keeps our products relevant and valuable to both the consumers and businesses in our markets. With over 560 community publications, including 124 daily newspapers across 31 states, our portfolio provides great diversification as we are not overly exposed to any one customer, product, or market.
In addition to our core newspaper business, which continues to generate significant recurring cash flows, we are also seeing tremendous growth from Propel Marketing (“Propel”), our digital marketing services platform. Propel helps small and medium sized businesses (“SMBs”) navigate the complex digital sector by building them a presence, getting them found online, and helping them engage with current and new customers. In 2015, Propel generated $31.3 million of revenue, an increase of $12.8 million, or 69.2%, from the prior year, highlighting the tremendous growth we’re achieving in this business. We believe our ability to leverage our established, trusted local brands and our in-market salesforce uniquely positions New Media to partner with local businesses and gives us a very important strategic advantage in our markets.
INORGANIC GROWTH THROUGH STRATEGIC AND ACCRETIVE ACQUISITIONS Newspapers continue to be viewed as an out of favor sector, and the fragmented nature of the market creates a compelling acquisition strategy for New Media which is driving inorganic growth for the Company.
Our primary source of funding for all of our acquisitions is internally generated cash from operations. However, larger acquisitions, for example, acquisitions that expand us into new markets, require capital from the debt or equity markets. During the first quarter of 2015, New Media closed its two largest acquisitions to date, Halifax Media and Stephens Media, for $280.0 and $102.5 million, respectively. The acquisitions were transformational for the Company as they added well-established, leading providers of local news in the communities they serve, and significantly expanded New Media’s geographic footprint. To fund these acquisitions in 2015, we completed an equity offering raising gross proceeds of $151.9 million, added a net balance of $102.0 million of incremental debt through our existing term loan, and assumed $18.0 million of debt from Halifax Media. Finally, we were also able to increase the revolver capacity in our credit facility by $15.0 million to $40.0 million, increasing our liquidity position and ability to execute on our acquisition strategy. Since inception, New Media has completed 12 acquisitions with a gross purchase price of nearly $640 million which have been funded primarily with cash on the balance sheet and incremental debt on our term loan. Our acquisitions have been completed at an average 3.9x the acquired company’s LTM As Adjusted EBITDA, and at unlevered and levered yields of 24% and 32%, respectively. Our track record highlights our ability to execute on our acquisition strategy well within our targeted range of 3.5x-4.5x LTM As Adjusted EBITDA.
In addition to our exciting strategic and accretive acquisition strategy, in the fourth quarter of 2015, New Media announced that we completed the sale of the Las Vegas Review-Journal (“Las Vegas”) and its related publications for $140.0 million. The sale resulted in an approximate gain of 69% which further demonstrates our ability to create value for our shareholders as we execute on transactions.
As our operations team continues to integrate our new acquisitions into our growing family of local media assets, our sourcing team continues to work to identify acquisition targets that fit our financial and operational criteria. With a strong and growing pipeline of potential acquisitions, and significant recurring cash flow from our core newspaper business, we continue to believe New Media is well positioned to continue to consolidate the fragmented newspaper industry.
RETURN OF CAPITAL TO SHAREHOLDERS IN THE FORM OF A DIVIDEND From its 2015 operating cash flow, New Media declared a total of $1.32 of dividends per common share. Despite total revenues declining in the mid-single digit range today, we believe we can shield our cash flows from topline declines through measured expense reductions at our acquired properties. As New Media continues to grow free cash flow through organic and inorganic growth initiatives, we remain confident in our ability to continue to grow free cash flow, and subsequently our dividend.
2016 AND BEYOND New Media’s core business continues to produce strong cash flows and healthy profit margins. We believe New Media is well positioned to consolidate the fragmented local media market all while remaining a disciplined buyer. As we grow free cash flow through organic and inorganic initiatives, we see an opportunity to increase our dividend while simultaneously lowering our payout ratio. Given our increased liquidity, established track record of sourcing deals, success at growing digital revenue, and stable free cash flow, we believe New Media remains an attractive total return vehicle that will drive substantial returns for our shareholders.
Sincerely,
Michael E. Reed Chief Executive Officer and President February 25, 2016
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain items herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company’s future business strategy, expected revenue trends and our ability to continue to grow free cash flow and our dividend and deliver shareholder returns, growing our digital services business and revenues, pursuing and completing future acquisitions and strategic opportunities, and the availability of such acquisitions and opportunities and the expected benefits associated with acquisitions and strategic opportunities, including our ability to achieve synergies. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. The Company can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained herein. For a discussion of some of the risks and important factors that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Furthermore, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. ANNUAL REPORT
FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) _ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 27, 2015 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to ______Commission ¿le nXmber 001-36097 NeZ Media InYestment GroXp Inc. (E[act name of registrant as speci¿ed in its charter) Delaware 38-3910250 (State or other MXrisdiction of (I.R.S. Employer incorporation or organization) Identi¿cation No.) 1345 AYenXe of the Americas, New York, New York 10105 (Address of principal e[ecXtiYe of¿ces) (Zip Code) Telephone (212) 479-3160 (Registrant¶s telephone nXmber, inclXding area code) SecXrities Registered PXrsXant to Section 12(b) of the Act Title of each class Name of each e[change on which registered Common stock, par value $0.01 per share New York Stock Exchange SecXrities Registered PXrsXant to Section 12(g) of the Act None ,nGLcate E\ check mark LI the regLstrant Ls a wellknown seasoneG Lssuer, as Ge¿neG Ln 5ule 0 oI the SecurLtLes $ct. Yes _ No ,nGLcate E\ check mark LI the regLstrant Ls not reTuLreG to ¿le reports pursuant to SectLon 1 or SectLon 1 G oI the $ct. Yes No _ ,nGLcate E\ check mark whether the regLstrant 1 has ¿leG all reports reTuLreG to Ee ¿leG E\ SectLon 1 or 1 G oI the SecurLtLes Exchange $ct oI 1 GurLng the preceGLng 1 months or Ior such shorter perLoG that the regLstrant was reTuLreG to ¿le such reports , anG has Eeen suEMect to such ¿lLng reTuLrements Ior the past 0 Ga\s. Yes _ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive 'ata )ile reTuired to be submitted and posted pursuant to 5ule 0 of 5egulation S7 .0 of this chapter during the preceding 1 months or such shorter period that the registrant was reTuired to submit and post such ¿les . Yes _ No Indicate by check mark if disclosure of delinTuent ¿lers pursuant to Item 0 of 5egulation S. .0 of this chapter is not contained herein, and will not be contained, to the best of registrant¶s knowledge, in de¿nitive proxy or information statements incorporated by reference in 3art III of this )orm 10. or any amendment to this )orm 10.. _ Indicate by check mark whether the registrant is a large accelerated ¿ler, an accelerated ¿ler, a nonaccelerated ¿ler, or a smaller reporting company. See de¿nitions of ³large accelerated ¿ler´, ³accelerated ¿ler´ and ³smaller reporting company´ in 5ule 1b of the Exchange $ct. /arge accelerated ¿ler _ $ccelerated ¿ler Nonaccelerated ¿ler Smaller reporting company Indicate by check mark whether the registrant is a shell company as de¿ned in 5ule 1b of the Exchange $ct . Yes No _ 7he aggregate market value of the voting common eTuity held by nonaf¿liates of the registrant on -une , 01, the last business day of the registrant¶s most recently completed second ¿scal Tuarter, was approximately $ . million. 7he market value calculation was determined using a per share price of $1., the price at which the registrant¶s common stock was last sold on the New York Stock Exchange on such date. )or purposes of this calculation, shares held by nonaf¿liates excludes only those shares bene¿cially owned by the registrant¶s executive of¿cers, directors, and stockholders owning 10 or more of the registrant¶s outstanding common stock and, in each case, their immediate family members and af¿liates . $s of )ebruary , 01, ,10, shares of the registrant¶s common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE 3ortions of our de¿nitive proxy statement, to be ¿led with the Securities and Exchange Commission pursuant to 5egulation 1$ within 10 days of the Company¶s ¿scal yearend, are incorporated by reference into 3art III, Items 101 of this $nnual 5eport on )orm 10.. NEW MEDIA INVESTMENT GROUP INC. FORM 10-K FOR THE YEAR ENDED DECEMBER 27, 2015 TABLE OF CONTENTS
Page PART I Item 1 Business ...... 1 Item 1$5isk )actors...... Item 1B Unresolved Staff Comments ...... Item Properties ...... Item Legal Proceedings ...... Item Mine Safety Disclosures ...... 0
PART II Item Market for 5egistrant¶s Common ETuity, 5elated Stockholder Matters and Issuer Purchases of Equity Securities...... 1 Item Selected Financial Data ...... Item Management¶s Discussion and $nalysis of Financial Condition and 5esults of 2perations ...... Item $ 4uantitative and 4ualitative Disclosures $bout Market 5isk...... Item Financial Statements and Supplementary Data ...... Item Changes in and Disagreements with $ccountants on $ccounting and Financial Disclosure ...... 1 Item $ Controls and Procedures ...... 1 Item B 2ther Information ...... 1
PART III Item 10 Directors, Executive 2f¿cers and Corporate *overnance...... 1 Item 11 Executive Compensation ...... 1 Item 1 Security 2wnership of Certain Bene¿cial 2wners and Management and 5elated Stockholder Matters ...... 1 Item 1 Certain 5elationships and 5elated 7ransactions, and Director Independence ...... 1 Item 1 Principal $ccountant Fees and Services ...... 1
PART IV Item 1 Exhibits, Financial Statement Schedules ...... 10
i CAUTIONARY NOTE REGARDING FORWARD LOOKING INFORMATION Certain statements in this report on Form 10. may constitute forwardlooking statements within the meaning of the Private Securities Litigation 5eform $ct of 1 that reÀect our current views regarding, among other things, our future growth, results of operations, performance and business prospects and opportunities, as well as other statements that are other than historical fact. Words such as ³anticipate s ,´ ³expect s ´, ³intend s ´, ³plan s ´, ³target s ´, ³proMect s ´, ³believe s ´, ³will´, ³aim´, ³would´, ³seek s ´, ³estimate s ´ and similar expressions are intended to identify such forwardlooking statements. Forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of known and unknown risks, uncertainties and other factors that could lead to actual results materially different from those described in the forward-looking statements. We can give no assurance that our expectations will be attained. 2ur actual results, liquidity and ¿nancial condition may differ from the anticipated results, liquidity and ¿nancial condition indicated in these forward-looking statements. 7hese forward looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause our actual results to differ, possibly materially from expectations or estimates reÀected in such forward-looking statements, including, among others • general economic and market conditions; • economic conditions in the Northeast, Southeast and Midwest regions of the United States; • our ability to grow our digital business and digital audience and advertiser base; • the growing shift within the publishing industry from traditional print media to digital forms of publication; • our ability to acquire local media print assets at attractive valuations; • declining advertising and circulation revenues; • the risk that we may not reali]e the anticipated bene¿ts of our recent or potential future acquisitions; • the availability and cost of capital for future investments; • our indebtedness may restrict our operations and or require us to dedicate a portion of cash Àow from operations to the payment of principal and interest; • our ability to pay dividends consistent with prior practice or at all; • our ability to reali]e the bene¿ts of the Management $greement as de¿ned below ; • the impact of any material transactions with the Manager as de¿ned below or one of its af¿liates, including the impact of any actual, potential or predicted conÀicts of interest; • the competitive environment in which we operate; • our ability to recruit and retain key personnel. $dditional risk factors that could cause actual results to differ materially from our expectations include, but are not limited to, the risks identi¿ed by us under the heading ³5isk Factors´ in Item 1$ of this report. Such forward-looking statements speak only as of the date on which they are made. Except to the extent required by law, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reÀect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
ii PART I
Item 1. BXsiness General Overview
New Media Investment *roup Inc. ³New Media,´ ³Company,´ ³us,´ or ³we´ , was formed as a Delaware corporation on -une 1, 01. Pursuant to the 5estructuring as de¿ned below , Newcastle Investment Corp. ³Newcastle´ owned approximately . of New Media until February 1, 01, upon which date Newcastle distributed the shares that it held in New Media to its shareholders on a prorata basis. New Media had no operations until November , 01, when it assumed control of *ate+ouse Media, LLC formerly known as *ate+ouse Media, Inc. ³*ate+ouse´ or ³Predecessor´ and Local Media *roup +oldings LLC ³Local Media Parent´ . *ate+ouse was determined to be the predecessor to New Media, as the operations of *ate+ouse comprise substantially all of the business operations of the combined entities. Both New Media and Newcastle are externally managed and advised by an af¿liate of Fortress Investment *roup LLC ³Fortress´ . New Media is a company that owns, operates and invests in high quality local media assets. We have a particular focus on owning and acquiring strong local media assets in small to mid-size markets. With our collection of assets, we focus on two large business categories; consumers and small to medium size businesses ³SMBs´ . 2ur portfolio of media assets today spans across markets and 1 states. 2ur products include community print publications, websites, mobile sites and six yellow page directories. We reach over 1 million people per week and serve over 1 ,000 business customers. We are focused on growing our consumer revenues primarily through our penetration into the local consumer market that values comprehensive local news and receives their news primarily from our products. We believe our rich local content, our strong media brands, and multiple platforms for delivering content will impact our reach into the local consumers leading to growth in subscription income. We also believe our focus on smaller markets will allow us to be a dominant provider of valuable, unique local news to consumers in those markets. We believe that one result of our local consumer penetration in these smaller markets will be transaction revenues as we link consumers with local businesses. For our SMB business category, we focus on leveraging our strong local media brands, our in-market sales force and our high consumer penetration rates with a variety of products and services that we believe will help SMBs expand their marketing, advertising and other digital lead generation platforms. We also believe our strong position in our local markets will allow us to develop other products that will be of value to our SMBs in helping them run and grow their businesses. 2ur business strategy is to be the preeminent provider of local news, information, advertising and digital services in the markets we operate in today. We aim to grow our business organically through both our consumer and SMB strategies. We also plan to pursue strategic acquisitions of high quality local media assets at attractive valuation levels. Finally, we intend to distribute a substantial portion of our free cash Àow as a dividend to stockholders through a quarterly dividend, subject to satisfactory ¿nancial performance, approval by our board of directors the ³Board of Directors´ or ³Board´ and dividend restrictions in the New Media Credit $greement as de¿ned below . 7he Board of Directors’ determinations regarding dividends will depend on a variety of factors, including the Company’s U.S. generally accepted accounting principles ³*$$P´ net income, free cash Àow generated from operations or other sources, liquidity position and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future ¿nancial results. We believe that our focus on owning and operating dominant local-content-oriented media properties in small to mid- size markets puts us in a position to better execute our strategy. We believe that being the dominant provider of local news and information in the markets in which we operate and distributing that content across multiple print and digital platforms, gives us an opportunity to grow our audiences and reach. Further, we believe our strong local media brands and our in-market sales presence gives us the opportunity to expand our advertising and lead generation products with local business customers. Central to our business strategy are our digital marketing services products called Propel Marketing ³Propel´ . We launched the products in 01 and have seen rapid growth since then. 5evenues have grown from $1 million in 01 to $1. million in 01. We believe Propel and our other digital marketing service products, combined with our strong local brands and in market sales force, position this product group to be a key component to our overall organic growth strategy. We believe that Propel will allow us to capitalize on the following opportunities in the marketplace: 7here are approximately . million SMBs in the U.S. according to the 011 U.S. Census data. 2f these, approximately . million have 0 employees or less.
1 Many of the owners and managers of these SMBs do not have resources or expertise to navigate the fast evolving digital marketing sector, but are increasingly aware of the need to establish and maintain a digital presence in order to stay connected with current and future customers. Propel is designed to offer a complete set of turn-key digital marketing services to SMBs that provides transparent results to the business owners. Propel provides four broad categories of services: building businesses a presence, helping businesses to be located by consumers online, engaging with consumers, and growing their customer base. We believe our local media properties and local sales infrastructure are uniquely positioned to sell these digital marketing services to local business owners and give us distinct advantages, including: • our strong and trusted local brands, with of our daily newspapers having been publishing local content for more than 100 years; • our ability to market through our print and online properties, driving branding and traf¿c; and • our more than 1,0 local, direct, in-market sales professionals with long standing relationships with small businesses in the communities we serve. 2ur core products include: • 1 daily newspapers with total paid circulation of approximately 1. million; • weekly newspapers published up to three times per week with total paid circulation of approximately 1,000 and total free circulation of approximately .0 million; • 11 ³shoppers´ generally advertising-only publications with total circulation of approximately . million; • locally focused websites and mobile sites, which extend our businesses onto the internet and mobile devices with approximately million page views per month; • six yellow page directories, with a distribution of approximately ,000, that cover a population of approximately 0,000 people; and • Propel digital marketing services. In addition to our core products, we also opportunistically produce niche publications that address speci¿c local market interests such as recreation, sports, healthcare and real estate. Similarly, *ate+ouse Live, our events business, concentrates on local markets and interests. 2ur print and online products focus on the local community from a content, advertising, and digital marketing perspective. $s a result of our focus on small and midsize markets, we are usually the primary, and sometimes, the sole provider of comprehensive and in-depth local market news and information in the communities we serve. 2ur content is primarily devoted to topics that we believe are highly relevant and of interest to our audience such as local news and politics, community and regional events, youth sports, opinion and editorial pages, local schools, obituaries, weddings and police reports. More than of our daily newspapers have been published for more than 100 years and 100 have been published for more than 0 years. We believe that the longevity of our publications demonstrates the value and relevance of the local information that we provide and has created a strong foundation of reader loyalty and a highly recognized media brand name in each community we serve. $s a result of these factors, we believe that our publications have high local audience penetration rates in our markets, thereby providing advertisers with strong local market reach. We believe the large number of publications we have, our focus on smaller markets, and our geographic diversity also provide the following bene¿ts to our strategy: • Diversi¿ed revenue streams, both in terms of customers and markets; • 2perational ef¿ciencies realized from clustering of business assets; • 2perational ef¿ciencies realized from centralization of back of¿ce functions; • 2perational ef¿ciencies realized from improved buying power for key operating cost items through our increased size and scale; • $bility to provide consistent management practices and ensure best practices; and • Less competition and high barriers to entry.
7he newspaper industry has experienced declining revenue and pro¿tability dating back to 00 due to, among other things, advertisers’ shift from print to digital media and general market conditions. 2ur Predecessor was affected by this trend and experienced a history of net operating losses. 7he revenues derived from our SMB category come from a variety of print and digital advertising products, digital service products we offer through Propel, and commercial printing services. 2ur consumer category revenue comes primarily from subscription income as consumers pay for our deep, rich local contents, both in print and online, however primarily print today. 2ur operating costs consist primarily of labor, newsprint, and delivery costs. 2ur selling, general and administrative expenses consist primarily of labor costs. Compensation represents just under 0 of our operating expenses. 2ver the last few years, we have worked to drive ef¿ciencies through centralization of back of¿ce functions, outsourcing and leveraging our scale to purchase more effectively. $dditionally, we have taken steps to cluster our operations, thereby increasing the usage of facilities and equipment while increasing the productivity of our labor force. We expect to continue to employ these steps as part of our business and clustering strategy.
Local Media Acquisition Newcastle acquired Local Media *roup Inc. formerly known as Dow -ones Local Media *roup, Inc. ³Local Media´ on September , 01 from News Corp. Inc. and contributed to New Media 100 of the stock of Local Media Parent which owns all of Local Media’s stock on *ate+ouse’s emergence from bankruptcy on November , 01 the ³Effective Date´ . In exchange for the contribution of Local Media, Newcastle received shares of common stock, par value $0.01 per share, of New Media ³New Media Common Stock´ or our ³Common Stock´ , equal in value to the cost of the acquisition of Local Media by Newcastle ³Local Media $cquisition´ . Local Media Parent became a wholly owned subsidiary of New Media. *ate+ouse managed the assets of Local Media pursuant to a management and advisory agreement ³Local Media Management $greement´ . 7he agreement had a two-year term, with automatic renewal for successive two-year periods unless terminated. While the agreement was in effect, *ate+ouse received an annual management fee of $1.1 million, subject to adjustments up to a maximum annual management fee of $1. million , and an annual incentive compensation fee based on exceeding EBI7D$ targets of Local Media. 7he Local Media Management $greement was terminated effective -une , 01.
Restructuring and Spin-off from Newcastle Investment Corp. We acquired our operations as part of the restructuring the ³5estructuring´ of our Predecessor, *ate+ouse. 2n September , 01, *ate+ouse commenced the 5estructuring in which it sought con¿rmation of its bankruptcy plan sponsored by Newcastle, as the holder of the majority of the 2utstanding Debt as de¿ned as follows . 7he Plan relates to the 5estructuring of our Predecessor’s obligations under the amended and restated credit agreement by and among certain af¿liates of *ate+ouse, the lenders from time to time thereto and Cortland Products *roup, as administrative agent, dated February , 00 as amended, the ³00 Credit Facility´ and certain interest rate swaps collectively, the ³2utstanding Debt´ . 7he U.S. Bankruptcy Court for the District of Delaware con¿rmed the reorganization plan the ³Plan´ on November , 01 and *ate+ouse consequently emerged from Chapter 11 protection on November , 01. Pursuant to the 5estructuring, Newcastle offered to purchase the 2utstanding Debt in cash and at 0 of i $1,1 million of principal claims under the 00 Credit Facility, plus ii accrued and unpaid interest at the applicable contract non- default rate with respect thereto, plus iii all amounts, excluding any default interest, arising from transactions in connection with interest rate swaps secured under the 00 Credit Facility the ³Cash-2ut 2ffer´ on the Effective Date. 7he holders of the 2utstanding Debt had the option of receiving, in satisfaction of their 2utstanding Debt, their pro rata share of the i Cash-2ut 2ffer or ii New Media Common Stock and net proceeds, if any, of the *ate+ouse Credit Facilities. $ll pensions, trade and all other unsecured claims will be paid in the ordinary course. 2n the Effective Date 1 *ate+ouse became our wholly-owned subsidiary as a result of a the cancellation and discharge of the currently outstanding equity interests in *ate+ouse the holders of which received warrants issued by New Media and b the issuance of equity interests in the reorganized *ate+ouse to New Media; Local Media Parent, which was a wholly-owned subsidiary of Newcastle, following the Local Media $cquisition became a wholly-owned subsidiary of New Media as a result of Newcastle’s transfer of Local Media Parent to New Media; New Media entered into the Management $greement as de¿ned below with our Manager as de¿ned below , New Media entered into the *ate+ouse Management and $dvisory $greement the ³*ate+ouse Management $greement´ with *ate+ouse; and all of *ate+ouse’s 2utstanding Debt was cancelled and discharged and the holders of the 2utstanding Debt received, at their option, their pro rata share of the i Cash- 2ut 2ffer or ii New Media Common Stock and the net proceeds of the two certain 7erm Loan and Security $greements dated
November , 01 the ³*ate+ouse Credit Facilities´ . Pursuant to the Cash-2ut 2ffer, Newcastle offered to buy the claims of the holders of the 2utstanding Debt. $s a result of these transactions, Newcastle owned . of New Media as of the Effective Date. 7he *ate+ouse Management $greement was terminated effective -une , 01. 2n the Effective Date, New Media entered into a management agreement with FI* LLC the ³Manager´ the ³Management $greement´ pursuant to which the Manager will manage the operations of New Media. 7he annual management fee is 1.0 of New Media’s 7otal Equity as de¿ned in the Management $greement and the Manager is eligible to receive incentive compensation. 2n September , 01, Newcastle announced that its board of directors unanimously approved a plan to spin-off our Company. Newcastle’s board of directors made the determination to spin-off our assets because it believed that our value can be increased over time through a strategy aimed at acquiring local media assets and organically growing our digital marketing business. In order to effect the separation and spin-off of our Company, we ¿led a registration statement on Form S-1, as amended, which was declared effective by the Securities and Exchange Commission the ³SEC´ on -anuary 0, 01. Each share of Newcastle common stock outstanding as of :00 PM, Eastern 7ime, on February , 01, the 5ecord Date, entitled the holder thereof to receive 0.01 1 shares of our Common Stock the ³Distribution´ or the ³spin-off´ . 7he spin-off was completed on February 1, 01. Immediately thereafter, we became a publicly traded company independent from Newcastle trading on the New York Stock Exchange the ³NYSE´ under the ticker symbol ³NEWM.´
Acquisitions 2n February , 01, we completed the acquisition of ¿ve publications from Freedom Communications for a total purchase price of $. million, including working capital. 7he acquisition included two daily and three weekly publications serving Southern California with an aggregate circulation of approximately ,000. 2n -une 0, 01, we completed two acquisitions of 0 publications with a total purchase price of $1. million, including working capital. 7he acquisitions included six daily, ten weekly publications, and four shoppers serving areas of 7exas, 2klahoma, .ansas and 9irginia with an aggregate circulation of approximately ,000. 2n September , 01, we completed the acquisition of 7he Providence -ournal with a total purchase price of $. million, including working capital. 7he acquisition included one daily and two weekly publications serving areas of 5hode Island with a daily circulation of approximately ,000 and ,000 on Sunday. 2n December 1, 01, we completed the acquisition of Foster’s Daily Democrat along with other publications and related assets for $. million in cash, including working capital, from the Foster family. 7he publications are located around Dover, N+, and the daily newspaper has a circulation of approximately 1,000. 2n -anuary , 01, we completed the acquisition of substantially all of the assets from +alifax Media *roup for an aggregate purchase price of $. million, including working capital and net of assumed debt. 7he acquisition included daily publications, thirteen weekly publications, and ¿ve shoppers serving areas of $labama, Florida, Louisiana, Massachusetts, North Carolina, and South Carolina with a daily circulation of approximately ,000 and ,000 on Sunday. 2n March 1, 01, we completed the acquisition of the assets of Stephens Media, LLC ³Stephens Media´ for an aggregate purchase price of $110. million, including working capital. 7he acquisition includes nine daily newspapers, weekly publications and ¿fteen shoppers serving communities throughout the United States with a combined average daily circulation of approximately 1,000 and ,000 on Sunday. 2n -une 1, 01 and September , 01, we acquired substantially all the assets, properties and business of publishing operating certain newspapers for an aggregate purchase price of $.0 million, including estimated working capital. 7he acquisitions included two daily newspapers, twenty-eight weekly publications, and two shoppers serving Central 2hio and Southern Michigan.
Dispositions 2n December 10, 01, we completed the sale of the Las Vegas Review-Journal and related publications initially acquired in the Stephens Media acquisition , which are located in Las 9egas, Nevada for an aggregate sale price of $10.0 million plus working capital adjustment of $1.0 million. $s a result, a gain of $.0 million is included in gain loss on sale or disposal of assets on the consolidated statement of operations and comprehensive income loss for this period.
Subsequent Events Acquisitions 2n December 1, 01, we completed the acquisition of the Business Information Division of Dolan LLC ³Dolan´ for $.0 million in cash, plus working capital. We funded the acquisition with cash on the balance sheet. Dolan is a leading provider of industry-speci¿c news with print and online publications and an audience of over ,000 paid subscribers. 2n -anuary 1, 01, we completed the acquisition of substantially all of the publishing operations of the 7imes Publishing Company, including the Erie Times-News daily newspaper, for $11. million in cash, plus the assumption of the assumed liabilities. We funded the acquisition with cash on the balance sheet. Erie Times-News is a dominant source of local news and advertising in Erie, P$ with an average weekday circulation of over ,000 and ,000 on Sunday.
Dividends 2n February , 01, the Company announced a fourth quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend will be paid on March 1, 01, to shareholders of record as of the close of business on March , 01.
Corporate Entity StrXctXre 7he chart below sets forth our entity structure and that of our direct and indirect subsidiaries. 7his chart does not include all of our af¿liates and subsidiaries or our Manager and, in some cases, we have combined separate entities for presentation purposes.
IndXstry Overview We operate in what is sometimes referred to as the ³hyper-local´ or community news market and market within the media industry. Media companies that serve this segment provide highly focused local content and advertising that is generally unique to each market they serve and is not readily obtainable from other sources. Local publications include community newspapers, websites, shoppers, traders, real estate guides, special interest magazines and directories. Due to the unique local
nature of their content and audience, community publications compete for advertising customers with other forms of traditional media, including direct mail, directories, radio, television, and outdoor advertising. 7hey also compete with new local and national digital and social media businesses for advertising, digital services and customers. We believe that local print and online publications in smaller markets are the most effective medium for local retail advertising, which emphasizes the price of goods in an effort to move inventory on a regular basis, in contrast to radio, broadcast and cable, television, and the internet, which are generally used for image or branding advertising. In addition, we believe local print and online publications generally have the highest local audience penetration rates, which allows local advertisers to get their message to a large portion of the local audience. Finally, national digital competitors tend to have no local in-market sales presence which we believe gives the local community publications an advantage when selling these types of products and services. Locally focused media in small and midsize communities is distinct from national and urban media delivered through outlets such as television, radio, metropolitan and national newspapers and the internet. Larger media outlets tend to offer broad based information to a geographically scattered audience, which tends to be more of a commodity. In contrast, locally focused media delivers a highly focused product that is often the only source of local news and information in the market it serves. 2ur segment of the media industry is also characterized by high barriers to entry, both economic and social. Small and midsize communities can generally only sustain one newspaper. Moreover, the brand value associated with long-term reader and advertiser loyalty, and the high start-up costs associated with developing and distributing content and selling advertisements, help to limit competition. We also believe there is a growing need among small to mid-size businesses to be able to generate leads and interact with consumers across all the digital platforms, which takes many forms including websites, mobile sites, tablets and social media. 7hese local business owners and managers lack the time, expertise and resources to capitalize on the potential of these new consumer-reaching channels. National competitors in this category do not generally have a local in-market presence. Newly formed competitors lack a known and credible brand name in addition to generally not having a local in-market presence. We believe this represents a substantial opportunity for our local media business.
Advertising Market 7he primary sources of advertising revenue for local publications are small businesses, corporations, government agencies and individuals who reside in the market that a publication serves. By combining paid circulation publications with total market coverage ³7MC´ publications such as shoppers and other specialty publications tailored to the speci¿c attributes of a local community , local publications are able to reach nearly 100 of the households in a distribution area. $s macroeconomic conditions in advertising change due to increasing internet and mobile usage and the wide array of available information sources, we have seen advertisers shift their focus to incorporate a digital advertising and services component into their overall local marketing strategy. 7o that end, in addition to printed products, the majority of our local publications have an online presence that further leverages the local brand, ensures higher penetration into the market, and provides a digital alternative for local advertisers to reach consumers. We also have strong digital marketing services, Propel.
Digital Media 7he time spent online and on mobile devices each day by media consumers continues to grow and newspaper web and mobile sites offer a wide variety of content providing comprehensive, in-depth and up to the minute coverage of news and current events. 7he ability to generate, publish and archive more news and information than most other sources has allowed newspapers to produce some of the most visited sites on the internet. Newspaper websites have proven to be some of the most visited websites by online media news consumers. We believe that our local publications are well positioned to capitalize on their existing market presence and grow their total audience base by publishing proprietary local content digitally: via the internet, mobile websites and mobile applications. Local digital media include traditional classi¿eds, directories of business information, local advertising, databases, audience- contributed content and mobile applications. We believe this additional community-speci¿c content will further extend and expand both the reach and the brand of our publications with readers and advertisers. We believe that building a strong local digital business extends the core audience of a local publication. 7he opportunity created by the digital extension of the core audience makes local digital advertising an attractive complement for existing print advertisers, while opening up opportunities to attract new local advertisers that have not previously advertised with local publications. In addition, we believe that national advertisers have an interest in reaching buyers on a hyper- local level and, although they historically have not been signi¿cant advertisers in community publications, we believe the digital media offers them a powerful medium to reach local audiences. 7his opportunity is further enhanced by our behavioral targeting
products, which allow advertisers to reach speci¿c demographics of our audience and follow that audience across multiple websites, delivering advertisements across the platforms. Further, digital marketing services businesses are poised to bene¿t from the rise in internet marketing spend, which grew 1 between 01 and 01, and between 00 and 01, according to the 01 I$B Internet $dvertising 5evenue 5eport issued in $pril 01. We believe that a strong digital business will enhance our revenues. In addition, we believe that we have the expertise and sales resources to help other businesses maximize their digital opportunities. $ccordingly, we have launched our digital marketing services business, including Propel, which is designed to help SMBs utilize the digital space to generate leads, interact with consumers and grow their businesses. New Media’s digital revenue derived from advertising, circulation, and other revenue has grown since the launch of Propel in 01. New Media’s digital revenue was $10. million for the year ended December , 01, an growth as compared with the same period in 01, which had digital revenue of $. million. 2f this, $1. million, or of digital revenue for the year ended December , 01 was attributable to Propel. See ³5isk Factors²5isks 5elated to 2ur Business²We have invested in growing our digital business, including Propel, but such investments may not be successful, which could adversely affect our results of operations.´ We anticipate that the digital marketing services sector will continue to grow as SMBs move from print to digital marketing in connection with consumers spending more time online. $ccording to the 011 U.S. Census data, there are approximately . million SMBs in the US, . million of the SMBs have 0 employees or less, and these businesses are expected to spend $. billion on digital marketing by 01 according to the 01 U.S. Local Media Forecast by BI$.elsey . 2wners of these businesses often lack the resources and expertise to navigate the digital marketing services sector. $ recent study done by SC25E $ssociation in 01 indicated that of consumers search for local businesses online, of SMBs do not have a website, are not mobile compatible, and of SMBs with websites were found to not have a phone number on their home page. Propel offers SMBs digital services, including website design, search engine optimization, mobile websites, social media, retargeting and other advertising services. 2ur Predecessor believed, and we too believe, that Propel is well positioned to assist SMBs in the digital space and expect Propel to contribute meaningfully to future revenue growth. Propel is also able to leverage our local media properties and local sales infrastructure and give us distinct advantages, including: • our strong and trusted local brands, with of our daily newspapers having been publishing local content for more than 100 years; • our ability to market through our print and online properties, driving branding and traf¿c; and • our more than 1,0 local, direct, in-market sales professionals with long standing relationships with small businesses in the communities we serve.
Circulation 2verall daily newspaper print circulation, including national and urban newspapers, has been declining slowly over the past several years. Small and midsize local market newspapers have generally had smaller declines and more stability in their paid print circulation volumes due to the relevant and unique hyper-local news they produce combined with less competition than larger markets. In addition, we believe this unique and valuable hyper-local content along with multiple delivery platforms now available will allow smaller market newspapers to continue to raise prices, leading to stable circulation revenues. Data and technology now available to newspapers allow them to target pricing more at the household level rather than purely by market. 7his will lead to more effective pricing strategies and enhance stability for circulation revenues. $ccording to the Newspaper $ssociation of $merica, pay meters and pricing helped the newspaper industry grow circulation revenue by from 011 to 01.
OXr Strengths High Quality Assets with Leading Local Businesses. 2ur publications bene¿t from a long history in the communities we serve as one of the leading, and often sole, providers of comprehensive and in-depth local content. More than of our daily newspapers have been published for more than 100 years and 100 have been published for more than 0 years. 7his has resulted in brand recognition for our publications, reader loyalty and high local audience penetration rates, which are highly valued by local advertisers. We continue to build on long-standing relationships with local advertisers and our in-depth knowledge of the consumers in our local markets. We believe our local news content is unique and highly valued by consumers who live in our markets, and there are limited, and in some cases no competing sources of local content for our target customers. Large Locally Focused Sales Force. We have large and well known ³in-market´ local sales forces in the markets we serve, consisting of over 1,0 sales representatives, including dedicated to Propel and 1 third party sales af¿liations. 2ur sales forces are generally among the largest locally oriented media sales forces in their respective communities. We have long-standing
relationships with many local businesses and have the ability to be face to face with most local businesses due to these unique characteristics we enjoy. We believe our strong brands combined with our ³in-market´ presence give us a distinct advantage in selling and growing in the digital services sector given the complex nature of these products. We also believe that these qualities provide leverage for our sales force to grow additional future revenue streams in our markets, particularly in the digital sector. Ability to Acquire and Integrate New Assets. We have created a national platform for consolidating local media businesses and have demonstrated an ability to successfully identify, acquire and integrate local media asset acquisitions. 7ogether with our Predecessor, we have acquired over $. billion of assets since 00, including both traditional newspaper and directory businesses. We have a scalable infrastructure and platform to leverage for future acquisitions. Scale OXr Strategy We intend to create stockholder value through a variety of factors including organic growth driven by our consumer and SMB strategies, pursuing attractive strategic acquisitions of high quality local media assets, and through the distribution of a substantial portion of our free cash Àow as a dividend, subject to satisfactory ¿nancial performance, approval by our Board of Directors and dividend restrictions in the New Media Credit $greement. +owever, there is no guarantee that we will be able to accomplish any of these strategic initiatives. $ key component of our strategy is to acquire and operate traditional local media businesses and transform them from print-centric operations to dynamic multi-media operations through our existing online advertising and digital marketing services businesses. We will also leverage our existing platform to operate these businesses more ef¿ciently. We believe all of these initiatives will lead to revenue and cash Àow growth for New Media and will enable us to pay dividends to our stockholders. We intend to distribute a substantial portion of our free cash Àow as a dividend to stockholders, through a quarterly dividend, subject to satisfactory ¿nancial performance, approval by our Board of Directors and dividend restrictions in the New Media Credit $greement. 7he Board of Directors’ determinations regarding dividends will depend on a variety of factors, including the Company’s *$$P net income, free cash Àow generated from operations or other sources, liquidity position and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future ¿nancial results. 7he key elements of our strategy include: Maintain Our Leading Position in the Delivery of Proprietary Local Content in Our Communities. We seek to maintain our position as a leading provider of unique local content in the markets we serve and to leverage this position to strengthen our relationships with both readers and local businesses, thereby increasing penetration rates and market share. $ critical aspect of this approach is to continue to provide local content that is not readily obtainable elsewhere and to be able to deliver that content to our customers across multiple print and digital platforms. *row Our New Digital Marketing Services Business. We plan to scale and expand our digital marketing services, including Propel. We believe Propel will allow us to sell digital marketing services to SMBs both in and outside existing New Media markets. 7he SMB demand for digital service solutions is great and represents a rapidly expanding opportunity. $ccording to the 011 U.S. Census data, there are approximately . million SMBs in the U.S. and, according to a 01 U.S. Local Media Forecast by BI$.elsey, digital revenues are expected to grow to $. billion in 01, representing a . growth rate. 2wners of SMBs often lack the resources and expertise to navigate the digital marketing services sector, with of SMBs not having a website and not having mobile-friendly websites according to a SC25E $ssociation Small Business Study in 01. We believe local SMBs will turn to our trusted local media brands to help them navigate through developing their digital marketing presence and strategy. We believe our local media properties and local sales infrastructure gives us a distinct advantage to being the leading local provider of digital marketing services, through Propel. Pursue Strategic Accretive Acquisitions. We intend to capitalize on the highly fragmented and distressed local print industries which have greatly reduced valuation levels. We initially expect to focus our investments primarily in the local newspaper sector in small to mid-size markets. We believe we have a strong operational platform as well as scalable digital marketing services, including Propel. 7his platform, along with deep industry speci¿c knowledge and experience that our management team has can be leveraged to reduce costs, stabilize the core business and grow digital revenues at acquired properties. 7he size and fragmentation of the addressable print media market place in the United States, the greatly reduced valuation levels that exist in these industries, and our deep experience make this an attractive place for our initial consolidation focus and capital allocation. 2ver the longer term we also believe there may be opportunity to diversify and acquire these types of assets internationally, as well as other traditional local media assets such as broadcast 79, out of home advertising billboards and radio, in the United States and internationally. We also believe there may be opportunities to acquire other strong businesses that have strong local brands and local sales infrastructure or digital product companies, both of which could quickly scale for Propel. Stabili]e Our Core Business Operations. We have four primary drivers in our strategic plans to stabilize our core business operations, including: i identifying permanent structural expense reductions in our traditional business cost infrastructure and re-deploying a portion of those costs toward future growth opportunities, primarily on the digital side of our business; ii accelerating the growth of both our digital audiences and revenues through improvements to current products, new product development, training, opportunistic changes in hiring to create an employee base with a more diversi¿ed skill set and sharing of best practices; iii accelerating our consumer revenue growth through subscription pricing increases, pay meters for digital content and growth in our overall subscriber base; and iv stabilizing our core print advertising revenues through improvements to pricing, packaging of products for customers that will produce the best results for them, and more technology and training for sales management and sales representatives. 7he newspaper industry has experienced declining revenue and pro¿tability over the past several years due to, among other things, advertisers’ shift from print to digital media following the consumer shift, and general market conditions. 7he 5estructuring signi¿cantly reduced New Media’s interest expense. In addition, New Media intends to focus its business strategy on building its digital marketing business and growing its online advertising business, which we believe will offset some of the challenges experienced by *ate+ouse. With its improved capital structure and digital focus, combined with its strengths and strategy and dividend strategy, we believe that New Media will be able to grow stockholder value. +owever, there can be no assurance of this. See ³5isk Factors´ under Item 1$ of this $nnual 5eport on Form 10-.. Challenges We will likely face challenges commonly encountered by recently reorganized entities, including the risk that even under our improved capital structure, we may not be pro¿table. $s a publisher of locally based print and online media, we face a number of additional challenges, including the risks that: • the growing shift within the publishing industry from traditional print media to digital forms of publication may compromise our ability to generate suf¿cient advertising revenues; • investments in growing our digital business may not be successful, which could adversely affect our results of operations; • our advertising and circulation revenues may decline if we are unable to compete effectively with other companies in the local media industry; and • we may not be able to successfully acquire local print media assets at attractive valuations due to a rise in valuations from a more competitive landscape of acquirors. For more information about New Media’s risks and challenges, see ³5isk Factors´ under Item 1$ of this $nnual 5eport on Form 10-.. ProdXcts 2ur product mix consists of four publication types: i daily newspapers, ii weekly newspapers, iii shoppers and iv niche publications. Most of these publications have a digital presence as discussed in the following table. Some of the key characteristics of each of these types of publications are also summarized in the table below. Daily Newspapers Weekly Newspapers Shoppers Niche PXblications Cost: Paid Paid and free Paid and free Paid and free Distribution: Distributed four to Distributed one to three Distributed weekly Distributed weekly, seven days per week days per week monthly or on annual basis Format: Printed on newsprint, Printed on newsprint, Printed on newsprint, Printed on newsprint or folded folded folded or booklet glossy, folded, booklet, magazine or book Content: 0 editorial local 0 editorial local $lmost 100 ads, Niche content and news and coverage news and coverage primarily classi¿eds, targeted ads e.g., of community of community display and inserts Chamber of Commerce events, some national events, some national city guides, tourism headlines and 0 ads headlines for smaller guides and special including classi¿eds markets which interest publications cannot support a such as, seniors, golf, daily newspaper and real estate, calendars 0 ads including and directories classi¿eds Income: 5evenue from Paid: 5evenue Paid: 5evenue from Paid: 5evenue from advertisers, from advertising, advertising, rack/box advertising, rack/box subscribers, rack/box subscribers, rack/box sales sales sales sales Free: $dvertising Free: $dvertising Free: $dvertising revenue only, provide revenue only, provide revenue only 100% market coverage. 100% market coverage Internet $vailability: Maintain locally Major publications Major publications Selectively available oriented websites, maintain locally maintain locally online mobile sites and oriented websites and oriented websites mobile apps, for select mobile sites for select locations locations Overview of Operations We operate in three publication groups: Eastern US Publishing, Central US Publishing and Western US Publishing. We also operate over related websites and 0 mobile sites. 7he following table sets forth information regarding our publications. NXmber of PXblications CircXlation (1) Total Operating GroXp Dailies Weeklies Shoppers Paid Free CircXlation Eastern US Publishing...... 1 1 , 1 1,1,10 ,,0 Central US Publishing ...... 0,00 ,,001 , ,00 Western US Publishing ...... 101 1 , 1,1,0 1,, Total...... 1 11 1,0,1 , , ,0,1 1 Circulation statistics are estimated by our management as of December , 01. 10 Eastern 8S Publishing. Eastern US Publishing operates in six publication group clusters: the 1 New England Publishing *roup, Cape Publishing *roup, Providence Publishing *roup, Mid-$tlantic Publishing *roup, South $tlantic Publishing *roup, and Coastal Publishing *roup. New England Publishing *roup. We are one of the largest community newspaper publishers in Massachusetts by number of daily publications and also publish a large concentration of weekly newspapers, serving 11 communities in markets across eastern Massachusetts. 7he three largest daily newspapers in this region are: The Patriot Ledger founded in 1 with circulation of ,00 , the Enterprise founded in 10 with circulation of 1,1 and the MetroWest Daily News founded in 1 with circulation of 11, . We also have over 10 web sites, with more than . million combined monthly unique visitors in Massachusetts. Many of the towns within our Massachusetts footprint were founded in the 100s and our daily and weekly newspapers in the region have long been institutions within these communities. In fact, our Massachusetts publications have daily and weekly newspapers that are over 100 years old. 7he Boston designated market area ³DM$´ is the eighth largest market in the United States with . million households and . million people, and ranks ¿rst nationally in concentration of colleges and universities. Massachusetts has more than 1.0 million households in the region earning greater than $,000, and a substantial homeownership rate. We reach 1. million readers in the eastern Massachusetts market. Eastern Massachusetts is also an employment center for technology, biotechnology, healthcare and higher education. Cape Publishing *roup. 7his cluster includes Worcester, Massachusetts, the Cape Cod Media *roup, the Southcoast Media *roup, and the Seacoast Media *roup. In Worcester, Massachusetts, the Telegram & Gazette has been the premier daily newspaper in Central Massachusetts since 1. 7he Telegram & Gazette, with daily circulation of , and its website, telegram.com, covers all of Worcester county, as well as surrounding areas including editorial coverage and distribution in over 0 towns which represents over 0% of the towns in the state of Massachusetts. Coverage is in our primary market of Worcester county with secondary focus in Middlesex and +ampden counties. 7he Cape Cod Media *roup publishes one paid daily, one paid weekly newspaper and one shopper. 7he Àagship publication of the Cape Cod Media *roup is the Cape Cod Times. 7he Cape Cod Times, with a daily circulation of ,0 is the premier daily and Sunday local paper on Cape Cod. 7he Barnstable Patriot, the paid weekly newspaper, has a weekly circulation of ,0. 7he Southcoast Media *roup publishes one paid daily newspaper, four paid weekly newspapers and two shoppers. 7he Àagship publication of the Southcoast Media *roup is the Standard-Times. 7he Standard-Times, with a daily circulation of 1, , is the premier daily and Sunday local paper in the New Bedford, M$ area. 7he other paid weeklies, the Spectator, the Chronicle, the Middleboro Gazette and the Advocate, have weekly circulations of ,0 , 1, , , and 0, respectively. Seacoast Media *roup publishes two paid daily and seven paid weekly newspapers. 7he Àagship publication of the Seacoast Media *roup is the Portsmouth Herald. 7he Portsmouth Herald, with a daily circulation of ,, is the premier daily and Sunday local paper in coastal New +ampshire. 7he Hampton Union and the Exeter News-Letter are weeklies with circulations of , and 1, , respectively. 7he York County Coast Star and the York Weekly in southern Maine have weekly circulations of ,11 and 1,0, respectively. In addition, the group publishes Foster’s Daily Democrat, , circulation, and the Rochester (NH) Times and Sanford (ME) News, both paid weeklies. Seacoast Sunday is a regional Sunday newspaper for the entire market with circulation of 11,1 and is the second largest Sunday paper in New +ampshire. In addition, Coulter Press, publishers of two paid weeklies, The Item and The Banner, is older than Clinton, Massachusetts, the town it calls home. The Item, covering Clinton, Lancaster, Sterling, Bolton, Berlin and Boylston, was founded in -uly 1 , more than 10 years ago. Providence Publishing *roup. 7his cluster includes the Providence -ournal *roup, the Nantucket Island Media *roup, and Norwich, Connecticut. In Providence, 5hode Island is our Pulitzer Prize winning publication The Providence Journal, which publishes one paid daily newspaper and one shopper. The Providence Journal is the preeminent newspaper in its market and the oldest continuously- published daily newspaper in the United States. Its market includes all of 5hode Island as well as seven cities and towns in Bristol county Massachusetts with a daily circulation of ,. With an evolving digital platform, anchored by the market’s top local media website providencejournal.com offers an online source for award-winning news, sports, lifestyles, entertainment, editorials, and more and has monthly page views of over . million. 11 7he Nantucket Island Media *roup publishes The Inquirer and Mirror. With a weekly circulation of , , it has the largest circulation of any island newspaper. 2ur Norwich, Connecticut publication, The Bulletin, with a daily circulation of 10,1 , diversi¿es this group as the eastern Connecticut economy differs from the nation and New England markedly. Primary economic drivers include casinos, military submarine manufacture and pharmaceutical research. Major industrial employers in the region include *eneral Dynamics, P¿zer, Dow Chemical, Dominion 5esources and the United States Navy. Mid-Atlantic Publishing *roup. 7his cluster includes the +udson 9alley Media *roup and the Pocono Mountains Media *roup. 7he +udson 9alley Media *roup publishes one paid daily, two free weekly newspapers, and one shopper. 7he Àagship publication of the +udson 9alley Media *roup is the Times Herald-Record. With a daily circulation of ,0, the Times Herald- Record is the premier daily newspaper serving 2range, Ulster and Sullivan counties in New York and Pike county, Pennsylvania. 7he Pocono Mountains Media *roup publishes one paid daily, one free weekly newspaper, and one shopper. 7he Àagship publication of the Pocono Mountains Media *roup is the Pocono Record. 7he Pocono Record, with a daily circulation of 1,0, is the premier daily and Sunday local paper in the Pocono Mountains area. 7he +udson 9alley Media group’s commercial print division publishes 10 weekly, bi- weekly and monthly publications. 7hey are endorsed by both NY and N- Newspaper Publisher $ssociation groups. +udson 9alley Media also produces 2range and Ulster Magazine. Both are perfect bound glossy magazines. South Atlantic Publishing *roup. 7his cluster includes publications in North Carolina, South Carolina, and 7ennessee. 7he North Carolina cluster publishes ten daily newspapers and two weekly newspapers. In western North Carolina, we publish the Times-News in +endersonville daily circulation of , . 2ur Piedmont newspapers include The Star in Shelby daily circulation of , and The Gaston Gazette in *astonia daily circulation of 0, . Central North Carolina newspapers include The Dispatch in Lexington publishing six days per week with daily circulation of , , Times-News in Burlington daily circulation of 1,00 , and The Courier Tribune in $sheboro publishing six day per week with daily circulation of ,0 . Coastal publications in North Carolina include The Free Press in .inston daily circulation of ,1 , Sun Journal in New Bern daily circulation of , , The Daily News in -acksonville daily circulation of 11,1 , and Star News in Wilmington daily circulation of , . Combined, these newspapers won 11 editorial and advertising awards in the 01 North Carolina Press $ssociation contest of which 1 were ¿rst place awards including for Investigative 5eporting, City/County *overnment 5eporting, Deadline 5eporting, Business Writing, Photography, and 2verall $ppearance and Design. In South Carolina we operate one daily publication, Spartanburg Herald-Journal, with a daily circulation of ,. Spartanburg is the largest city, and the county seat of, Spartanburg county. 7he Herald-Journal’s primary distribution area is Spartanburg and Union counties. In 01, the Herald-Journal won awards issued by the South Carolina Press $ssociation, including 1 ¿rst-place awards and the President’s Cup for overall excellence. In Columbia, 7ennessee our daily publication is the Columbia Daily Herald, with daily circulation of ,. 7he Columbia Daily Herald publishes six days a week Sunday through Friday and serves Maury county, 7ennessee and the surrounding Middle 7ennessee region. 7he Columbia Daily Herald also publishes one weekly newspaper and one shopper. In 01, the Daily Herald won 7ennessee Press $ssociation awards for Best Education reporting, Sports Writing, Editorial and Breaking News. Coastal Publishing *roup. 7his cluster includes publications in Florida and $labama. 7he Florida cluster publishes nine daily newspapers, ten weekly newspapers, and four shoppers. 2n Florida’s east coast in Daytona Beach is our daily publication The Daytona Beach News-Journal, which serves 9olusia and Flagler counties with a daily circulation of ,00. The Daytona Beach News-Journal also publishes four shoppers with a total combined circulation of 1,1 and also operates a successful website news-journalonline.com that receives monthly page views of over . million. 7o the north is our two-time Pulitzer Prize winning daily publication, The Gainesville Sun, with daily circulation of ,0 and monthly page views of . million. The Gainesville Sun also produces GatorSports.com, our University of Florida athletics free website which has approximately . million monthly page views. 7o the south of *ainesville in the middle of Marion county is our daily publication, Ocala Star Banner, with daily circulation of ,0 1. 7he Ocala Star Banner also publishes a successful website ocala.com which receives monthly page views of over .1 million and monthly unique visitors over 10,000. In Central Florida, The Ledger in Lakeland has daily circulation of , and operates a robust commercial print operation generating millions of dollars a year. $lso in Central Florida, our Leesburg publication the Daily Commercial, with its daily circulation of 1,0, covers a region known for seaplanes, upscale retirement living and rural small towns. Located in an area contiguous to 2rlando, the Daily Commercial also publishes a weekly newspaper, South Lake Press and two websites that are 1 enjoying signi¿cant audience growth. 2n the West Coast of Florida serving Sarasota and Manatee counties is the Pulitzer Prize winning Herald-Tribune with daily circulation of 1, which operates a family of digital products anchored by the successful heraldtribune.com website that receives monthly page views of over . million. 7he Herald-Tribune was named a ³01 10 Newspapers 7hat Do It 5ight´ by Editor Publisher. In the northwest Florida panhandle, we publish two dailies and eight weeklies across a ten-county area stretching from Franklin in the east to Santa 5osa in the west, and north to the state line. 2ur daily in the East, the Panama City News Herald, with daily circulation of 1,1, was awarded a Pulitzer Prize in 1 for investigative journalism and in 01 won 0 awards in two statewide contests. It also operates a growing website, newsherald.com, which receives a monthly average of .0 million page views and over 1,000 monthly unique visitors. 7o the west in Fort Walton Beach, the Northwest Florida Daily News, with a circulation of 1, 0 also has a dominant website, nwfdailynews.com that receives monthly page views of over .0 million and 0,000 monthly unique visitors. 7heir staff also garnered statewide awards in 01, including in categories like sports writing, column writing and headline writing. In $labama we publish two daily publications; The Tuscaloosa News and The Gadsden Times. 2ur Pulitzer Prize winning, daily publication, The Tuscaloosa News, has daily circulation of 1, and a successful website Tuscaloosanews.com with more than 1. million page views per month. The Tuscaloosa News also publishes TideSports.com, a paid subscription- based website that focuses on University of $labama athletics. With daily circulation of 11,, The Gadsden Times is the oldest continually operating business in Etowah county. 7he following table sets forth information regarding the number of publications and production facilities in the Eastern US Publishing: ProdXction PXblications Facilities State of Operations Dailies Weeklies Shoppers Massachusetts ...... 10 Florida ...... 10 North Carolina...... 10 1 New +ampshire...... 0 New York...... 1 11 Pennsylvania ...... 1 10 Maine...... 0 00 7ennessee...... 1 1 1 1 $labama...... 0 0 1 Connecticut ...... 1 0 1 0 5hode Island ...... 1 0 1 1 South Carolina...... 1 0 0 1 Total...... 1 1 1 Central 8S Publishing. 2ur Central US Publishing operates in the states of Illinois, 2hio, New York, Michigan, Delaware, Pennsylvania, West 9irginia, and 9irginia. From the western shore of Lake Michigan to the eastern shore of the Mississippi 5iver and running over 00 miles north to south, Illinois is a picture of manufacturing, agricultural and recreational diversity. Coupled with major daily newspapers from our publications in 5ockford, Peoria, and the state capital of Spring¿eld, we are the largest publishing company in Illinois. Nineteen paid daily newspapers, paid weekly newspapers, and sixteen shoppers provide coverage across the state which, is supported by four print production facilities. $pproximately miles to the west of Chicago, Illinois is the Rockford Register Star supported by its , daily paid circulation base and its 7MC product The Weekly, with six zoned editions. 7he Rockford Register Star operates successful websites that receives a monthly average of over .1 million page views. The Journal (Freeport, IL) Standard is published 7uesday through Sunday. 7he newspaper’s coverage area includes Caroll, -o Daviess, 2gle and Stephenson counties. 7he newspaper has a daily circulation of ,. 7he -ournal Standard also publishes a website journalstandard.com and receives monthly page views of over ,000 and average monthly unique visitors over 1,000. 1 7he Peoria Journal Star with its daily paid circulation of , is the dominant newspaper in Peoria, 7azewell and Woodford counties and is also distributed in an additional 1 surrounding counties. 7here are two shoppers²The Marketplace and Pekin Extra²which have a combined weekly circulation of , 1. 7he Peoria facility provides print services to our neighboring New Media publications and commercial printing for Lee Enterprises’ The Pantagraph. 7he market includes manufacturing facilities for Caterpillar and .omatsu, and higher education at Bradley University, Illinois Central College and Midstate College. Peoria has a large medical community including 2SF +ealthcare, Methodist Medical Center, Proctor +ospital, University 2f Illinois College 2f Medicine and St. -ude Children’s +ospital Midwest $f¿liate. It has agricultural facilities $rcher Daniels Midland, L* Seeds and the USD$ $g Lab. 7he Journal Star has pjstar.com and pjstar.mobi with combined monthly page views of over .0 million per month. 7he combined monthly unique visitors are over ,000. 7he Spring¿eld State Journal-Register with a daily paid circulation of , covers the state capital of Illinois. 7he daily paid circulation includes a branded edition of ,1 of the Lincoln Courier. The State Journal-Register also has successful web sites with monthly page views of more than .0 million. The Columbus Dispatch is a metropolitan daily newspaper and is the trusted source for comprehensive news, politics, sports and entertainment coverage across Central 2hio. 2ne of the country’s strongest papers and the single daily in a top 0 media market, The Columbus Dispatch is located in Columbus, 2hio which is the largest city in 2hio and the fastest growing in the Midwest. 7he newspaper is distributed to homes and single copy outlets across Franklin county with a daily and Sunday circulation of 11, and 0,1, respectively. 7he Columbus Dispatch’s websites, which represent the primary online source for Columbus-area news, receives over .0 million monthly page views. 7he 2hio cluster is anchored in Canton, 2hio and covers Stark and 7uscarawas counties. It is comprised of three daily newspapers, one weekly publication and two shoppers. The Repository is a 0, daily newspaper that covers the entire area of Stark county. The Dover New Philadelphia Times Reporter is a 1, 1 daily publication located 0 miles south of Canton in 7uscarawas county. The Massillon Independent is a , circulation daily that circulates in western Stark county. The Suburbanite is a ,00 weekly publication that circulates in the afÀuent northern Stark county area. 7he 2hio facility also provides commercial print services to the Akron Beacon Journal. 7he 2hio cluster has very successful web sites with more than . million combined monthly page views and more than 0,000 combined monthly unique visitors. 7ogether the newspapers and web sites dominate their local markets. Central New York is anchored by the Observer-Dispatch in Utica, New York which has circulation of ,0 daily and ,1 Sunday subscribers. 7he Utica operations include one daily and two weekly newspapers in +amilton. Utica also has web sites with combined monthly unique visitors of more than ,000. In addition to the Observer – Dispatch, Times- Telegram, which has a daily circulation of , covering both the towns of +erkimer and Little Falls, rounds out our coverage in the Mohawk 9alley. $lso in New York we operate and own a combination of sixteen publications in Suburban 5ochester that span four counties and have a combined circulation of 111,0. 7his market has a tourism industry and is known for boutique wineries and recreational activities. 7he Àagship of Messenger Post Media is the , circulation Daily Messenger in Canandaigua. In southwestern New York, our operations are centered around ¿ve publications based in Steuben county. In Corning, The Leader, a , 1 circulation daily newspaper, dominates the eastern half of the county and shares its hometown namesake with Corning Incorporated. 7he Evening Tribune in +ornell circulates daily throughout the western half of the county. Situated directly between these two dailies in the county seat of Bath is the 10,0 circulation Steuben Courier, a free-distribution weekly. 7he Pennysaver Plus, a standalone shopper, solidi¿es this Àagship group. We also have a strong presence in the print advertising markets in three other New York counties that surround Steuben. In $llegany county to the west, the Wellsville Daily Reporter and its shopper, the Pennysaver Plus, cover most households. In Livingston county to the north, the Pennysaver Plus and the Genesee Country Express complement one another with combined circulation of ,11. In Yates county to the north and east, The Chronicle-Express and Chronicle Ad-Visor shopper distribute weekly to nearly 1,1 households centered around the county seat of Penn Yan. In nearby Chemung county, the 1,000 circulation Horseheads Shopper anchors our presence in this area. 7he majority of the southwestern New York cluster parallels Interstate across the central southern tier of New York State, which is bene¿ting from continued improvement and expansion under an omnibus federal highway appropriations bill. Moreover, the cluster has several colleges and universities nearby, including Cornell University, Ithaca College, Elmira College and +oughton College. 1 We have a strong presence in southern Michigan where six of our dailies, $drian, Monroe, Coldwater, +olland, +illsdale and Sturgis, along with two weekly and eight shoppers blanket the southern tier of the state and into Indiana. 7he 1,1 Sunday circulation Holland Sentinel is the Àagship publication of the group. 7his area has several large employers, including Delphi, Con$gra, 7ecumseh Products, .ellogg, -CI, +erman Miller, +ayworth, *entex, -ackson State Prison, and a number of colleges and universities. In Delaware, we publish seven weekly newspapers and various specialty papers that cover most of the state of Delaware and range from suburban Wilmington in the north to *eorgetown, Delaware at the southern end of the state. Circulation for the cluster is primarily free and totals approximately , weekly. 2ur +onesdale cluster, approximately 0 miles from Scranton, Pennsylvania, consists of four publications in the cities of +onesdale and +awley, Pennsylvania. 7he cluster was created from our daily and shopper operations in +onesdale and later supplemented by our acquisition of one weekly and one shopper in +awley. Local employers include *eneral Dynamics, Blue Cross/Blue Shield, Commonwealth 7elephone and various colleges and universities, medical centers and governmental agencies. 2ur Pennsylvania/West 9irginia cluster includes dailies in Waynesboro, Pennsylvania, .eyser and 5ipley, West 9irginia. We also have two weeklies in 5ipley and a commercial printing operation in 5avenswood, West 9irginia. 7he communities we serve in Central US Publishing are largely rural but also support educational institutions, government agencies including prisons and military bases , tourism, veterinary medicine and ethanol and agricultural chemical manufacturing. 7he area also includes automotive including recreational vehicles , boat, home construction products and furniture manufacturing businesses. 7he following table sets forth information regarding the number of publications and production facilities in Central US Publishing: ProdXction PXblications Facilities State of Operations Dailies Weeklies Shoppers Illinois ...... 1 1 2hio ...... New York...... 1 Michigan ...... 11 Delaware ...... 0 0 1 Pennsylvania ...... West 9irginia ...... 1 9irginia...... 1 0 0 1 Total...... 1 :estern 8S Publishing. Western US Publishing operates in the states of Missouri, $rkansas, 7exas, California, .ansas, Iowa, Louisiana, Minnesota, 2klahoma, Colorado, Nebraska, 2regon, North Dakota, and 7ennessee. 7he greatest concentration of circulation and market presence in Missouri is in the northern part of the state where we operate ¿ve daily newspapers, four weekly newspapers and ¿ve shoppers. We serve the ,000 square mile area from +annibal, on the state’s eastern border, to the western border and from Columbia in the south to the Iowa border in the north. Local employers include the University of Missouri and other colleges, local and federal governments, State Farm Insurance and M. 2ur southern Missouri operations are clustered around Lake of the 2zarks. Located midway between .ansas City and St. Louis and approximately 0 miles from Spring¿eld, Missouri, our three daily newspapers, seven weekly newspapers and three shoppers that serve the Lake of the 2zarks area reach approximately 1,000 people. Located in southwest Missouri and southeast .ansas is our -oplin cluster with three daily and seven weekly newspapers and four shoppers, serving a population of approximately 10,000. 7here are several colleges and universities in the area, a National *uard Fort, several large medical centers and a diverse mix of retail businesses, including the 10-store Northpark Mall. 7his group also includes our .ansas City cluster with nine publications two daily and ¿ve weekly newspapers and two shoppers located in the eastern .ansas cities of Leavenworth and Lansing and in Independence, Missouri. 7he Leavenworth Times was one of our original daily newspapers and the balance of the cluster was acquired afterward. In addition, we secured the military publication, The Fort Leavenworth Lamp, in Fort Leavenworth. 7he .ansas City cluster is home to several prominent companies, including +allmark, + 5 Block, Sprint, Cerner, *armin, and the University of .ansas. 1 7he Wichita cluster consists of two dailies, ¿ve weeklies and three shoppers in the towns of El Dorado, Pratt, Wellington, Newton and McPherson near Wichita, .ansas. 7he clustering of the small dailies in this area allows the group to sell advertising packages providing access to multiple communities. Major aircraft manufacturers Boeing, Bombardier, Cessna and 5aytheon have facilities nearby and McConnell $ir Force Base is a major component of the local economy. $lso located in the southwest is our operation in the state of 7exas, with publications four daily, nine weekly newspapers, and eleven shoppers . 7he group based in 7exas consists of two distinct operations. 7he ¿rst is a collection of small- market dailies and companion publications in central 7exas in the towns of Stephenville, Brownwood and Waxahachie. 7he second is a well-established shopper group serving the growing cities of the 5io *rande 9alley in south 7exas. 7hese shoppers serve Brownville, +arlingen, Laredo, Mc$llen, $lice and Corpus Christi, 7exas. 7he Herald Democrat principally serves *rayson county, 7exas, with the largest metropolitan area served located in Sherman, 7exas with a daily circulation of 1,. 7he Herald Democrat has a growing digital platform with their website heralddemocrat.com and extends the newspapers reach to consumer’s nationwide with monthly page views of over ,000. 7he Herald Democrat also publishes three weekly newspapers and ¿ve shoppers. In Louisiana, we have an operating cluster in the southwestern part of the state, located between Lake Charles and $lexandria. 7his cluster consists of ¿ve publications located in the cities of Leesville, Sulphur, De5idder and 9inton. Local employers include major manufacturers such as $lcoa, Firestone, International Paper and Proctor *amble. 2ur Baton 5ouge cluster consists of three dailies, four weeklies and three shoppers in the southeastern Louisiana cities of +ouma, 7hibadaux, Donaldsville, *onzales, and Plaquemine. Numerous petrochemical companies such as B$SF, Exxon Mobil and Dow Chemical, plus universities including Louisiana State, support the local economies. In Fort Smith, $rkansas is the Southwest Times-Record, which has been a primary news source in Northwest $rkansas for over a century with a daily circulation of ,0. 7he Southwest Times Record digital platform extends the newspaper’s reach to consumers nationwide through its website swtimes.com with monthly page views of over ,000. 7he Southwest Times Record also publishes ¿ve weekly newspapers and a shopper and principally serves Sebastian and Crawford counties in $rkansas and Le Flore and Sequoyah counties in 2klahoma with the largest metropolitan area served being Fort Smith, $rkansas. In Southeast $rkansas is our award-winning newspaper The Pine Bluff Commercial, which serves as the primary source of news in Central and Southeast $rkansas with daily circulation of ,10. The Pine Bluff Commercial also reaches its readers through their successful website pbcommercial.com with monthly page views of over 00,000. 7o the West in 2klahoma is the Examiner-Enterprise in Bartlesville, which is one of the state’s largest daily newspaper with circulation of ,0. 7he Examiner-Enterprise is an award-winning publication with awards including 2klahoma Press $ssociation recognition for website, editorials, photography, and news coverage. 7he Examiner-Enterprise also publishes one weekly newspaper and one shopper. We are represented in California by two daily newspapers in 5idgecrest and Yreka, ¿ve paid weekly papers in Dunsmuir, Mt. Shasta, Weed, *ridley and 7aft, and three shoppers in *ridley, Mt. Shasta and 5idgecrest. 7hese publications reach from northern California through the southern desert and China Lake naval base in 5idgecrest. In the Stockton, California area we publish one paid daily, one free weekly paper, and two shoppers. 7he Àagship publication of the area is the Record. 7he Record, with a daily circulation of ,1, is the premier daily and Sunday local paper in the Stockton, California area. In 2regon we publish two paid daily papers and one shopper with the Àagship publication being the Medford Mail Tribune. 7he Medford Mail Tribune, with a daily circulation of 1, , is the premier daily and Sunday local paper in southern 2regon. 7he other paid daily paper, the Ashland Daily Tidings, has a daily circulation of 1,0. La -unta, in the southeastern part of the state, represents the Colorado properties. $long with La -unta we also serve Bent county and Fowler and produce the weekly agricultural newspaper, The Ag Journal. We also have clusters in and around *rand Forks, North Dakota home to the *rand Forks $ir Force Base and the University of North Dakota , and Iowa, where Cargill, Con$gra, .raft, Winnebago and Fort Dodge $nimal +ealth, a division of Wyeth, each maintain signi¿cant operations. We are represented in southwestern Minnesota through seven paid weekly newspapers and four shoppers. St. -ames, 5edwood Falls, Sleepy Eye, *ranite Falls, Cottonwood, Wabasso, and Montevideo are all communities with populations of 10,000 and under. 7hese papers represent the primary local news and information source for these communities. 1 7he Ames Tribune is Central Iowa’s Pulitzer Prize-winning newspaper, with a daily circulation of ,1. 7he $mes 7ribune’s digital platform allows customers, both local and nationwide, to access content through its market-leading website, amestrib.com with over 0,000 monthly page views. Ames Tribune also publishes six weekly newspapers and ¿ve shoppers. 7he following table sets forth information regarding the number of publications and production facilities in the Western Publishing *roup: ProdXction PXblications Facilities State of Operations Dailies Weeklies Shoppers Missouri ...... 10 1 10 $rkansas...... 1 7exas ...... 11 1 California ...... .ansas ...... 0 Iowa ...... 0 Louisiana ...... Minnesota...... 1 0 2klahoma...... Colorado...... 1 0 1 Nebraska ...... 0 1 0 2regon ...... 0 1 1 North Dakota ...... 1 0 1 1 7ennessee...... 1 0 0 0 Total...... 101 1 1 Directories 7he core of our directory portfolio is comprised of the three yellow page directories, which are located in and around the Sacramento, California area, primarily in 5oseville, California. 7he three directories have an aggregate circulation of approximately ,000 and service 5oseville, $uburn/*rass 9alley/Nevada City and Folsom/El Dorado/Placerville, reaching four counties within the Sacramento region. 2ur SureWest Directories portfolio is highlighted by the 5oseville directory. 7he 5oseville directory is the incumbent with a circulation of approximately 10,000 and has served the local 5oseville community for over 100 years and has achieved more than 0% market share. We also own three additional directories including two Michigan and Indiana phone guides servicing St. -oseph county, Michigan and La*range county, Indiana, and Branch county, Michigan and Steuben county, Indiana, respectively, and one yellow page directory based in Mt. Shasta, California. Propel Marketing Propel is our digital marketing product line with digital products designed for SMBs. We believe the digital services industry represents a large and expanding opportunity. Propel is a product offering we created to attack that opportunity. 7here are approximately . million SMBs in the United States today and about . million have less than 0 employees according to the 011 U.S. Census data. $lthough these businesses are increasingly beginning to recognize the need to establish and maintain a strategy for the digital space, most do not have the time, expertise or resources to handle this themselves. Propel is a product line that can become the outsourced digital marketing services department for those SMBs. Propel’s products help an SMB build a presence across digital platforms, help them get found by consumers, help them engage with and grow their customer base. We pull these products together for the SMB with a proprietary customer dashboard which integrates activity and results for all Propel products. We also believe Propel gives us an opportunity to expand beyond our current geographic boundaries, as its product set could be of value to SMBs around the country. 1 RevenXe 2ur operations generate three primary types of revenue: i advertising, ii circulation including home delivery subscriptions, single copy sales and digital subscriptions and iii other primarily commercial printing and digital marketing services . In 01, these revenue streams accounted for approximately %, % and 10%, respectively, of our total revenue. 7he contribution of advertising, circulation and other revenue to our total revenue for New Media, known as the Successor Company for the years ended December , 01 and December , 01, two months ended December , 01 and the Predecessor Company for the ten months ended November , 01 was as follows: Predecessor SXccessor Company Company Year Ended Year Ended Two Months Ended Ten Months Ended December 27, 2015 December 28, 2014 December 29, 2013 November 6, 2013 (in thoXsands) 5evenue: $dvertising...... $ , $ , $ ,0 $ ,0 Circulation ...... , 1 ,1 , 11,10 Commercial printing and other.... 10, 1, 10, ,0 7otal revenue ...... $ 1,1 ,1 $ , $10,1 $ 1, 0 Advertising $dvertising revenue, which includes revenue generated from online and mobile products, is the largest component of our revenue, accounting for approximately %, % and % of our total revenue in 01, 01 and 01, respectively. We categorize advertising as follows: • Local 5etail²local retailers, local stores for national retailers, grocers, drug stores, department and furniture stores, local ¿nancial institutions, niche shops, restaurants and other consumer related businesses. • Local Classi¿ed²local legal, obituaries, employment, automotive, real estate and other advertising. • 2nline²banner, display, classi¿ed, behavioral targeting, audience extension, search and other advertising on websites or mobile devices. • National—national and major accounts such as wireless communications companies, airlines and hotels, generally placed with us through agencies. We believe that our advertising revenue tends to be less volatile than the advertising revenue of large metropolitan and national print media because we rely primarily on local, rather than national advertising and our classi¿ed revenue, tends to be more local market oriented job listing for example . We generally derive % or more of our advertising revenue from local advertising local retail, local classi¿ed and online and less than % from national advertising. We believe that local advertising tends to be less sensitive to economic cycles than national advertising because local businesses generally have fewer effective advertising channels through which they may reach their customers. 2ur advertising rate structures vary among our publications and are a function of various factors, including local market conditions, competition, circulation, readership and demographics. Management works with local newspaper management to set advertising rates and a portion of our publishers’ incentive compensation is based upon growing advertising revenue. 2ur sales compensation program emphasizes digital and new business growth. We share advertising concepts throughout our network of publishers and advertising directors including periodic special section programs, enabling them to utilize advertising products and sales strategies that are successful in other markets we serve. Substantially all of our advertising revenue is derived from a diverse group of local retailers and local classi¿ed advertisers, resulting in very limited customer concentration. No single advertiser accounted for more than 1% of our total revenue in 01, 01 or 01 and our 0 largest advertisers account for less than 10% of total revenue. 2ur advertising revenue tends to follow a seasonal pattern, with higher advertising revenue in months containing signi¿cant events or holidays. $ccordingly, our ¿rst quarter, followed by our third quarter, historically are our weakest quarters of the year in terms of revenue. Correspondingly, our second and fourth ¿scal quarters, historically are our strongest quarters. We expect that this seasonality will continue to affect our advertising revenue in future periods. 1 We have experienced declines in advertising revenue over the past few years, due primarily to the secular pressures on the business as consumers and advertisers shift time and spend from traditional media to the internet. We continue to search for organic growth opportunities, speci¿cally with digital advertising and ways to stabilize print revenue declines through strengthening local news product, value based pricing and training of sales staff. Circulation 2ur circulation revenue is derived from home delivery sales to subscribers, single copy sales at retail stores and vending racks and boxes, and digital subscriptions. We own 1 paid daily publications that range in circulation from approximately 00 to 11,000 and 1 paid weekly publications that range in circulation from approximately 100 to 1,000. Circulation revenue accounted for approximately %, 0% and % of our total revenue in 01, 01 and 01, respectively. Subscriptions are typically sold for three to twelve-month terms and often include promotions to extend the average subscription period or convert someone to become a subscriber. We also provide bundled print and digital subscriptions and employ pay meters for our website content at most of our daily publications. We implement marketing programs to increase readership through subscription and single copy sales, including company-wide and local circulation contests, direct mail programs, door-to-door sales and strategic alliances with local schools in the form of ³Newspapers in Education´ programs. In addition, since the adoption of the 7elemarketing Sales 5ule by the Federal 7rade Commission in 00, which created a national ³do not call´ registry, we have increased our use of ³E= Pay´ programs, kiosks, sampling programs, in-paper promotions and online promotions to increase our circulation. We encourage subscriber use of E= Pay, a monthly credit card charge or direct bank debit payment program, which has led to higher retention rates for subscribers. We also use an active stop-loss program for all expiring subscribers. $dditionally, in order to improve our circulation revenue and circulation trends, we periodically review the need for quality enhancements, such as: • Consumer research to better understand local content of interest; • Increasing the amount of unique hyper-local content; • Increasing the use of color and color photographs; • Improving graphic design, including complete redesigns; • Developing creative and interactive promotional campaigns; • Improving customer service and company wide customer retention efforts; and • Better use of demographic data to speci¿cally target pricing and customer acquisition opportunities. We believe that our unique and valuable hyper-local content allows us to continue to produce products of great relevance to our local market audiences. 7his allows us to be able to periodically raise prices, both for home delivery and on a single copy basis, resulting in increased circulation revenues. We also believe this unique hyper-local content will allow us to ¿nd ways to grow circulation revenues from our wide array of digital products. Other We provide commercial printing services to third parties on a competitive bid basis as a means to generate incremental revenue and utilize excess printing capacity. 7hese customers consist primarily of other publishers that do not have their own printing presses and do not compete with our publications. We also print other commercial materials, including Àyers, business cards and invitations. $dditionally, this category includes Propel which provides internet marketing solutions for SMBs and *ate+ouse Live, our events business. 2ther sources of revenue, including commercial printing and Propel, accounted for approximately 10%, 11% and % of our total revenue in 01, 01 and 01, respectively. Printing and Distribution We own and operate print facilities. 2ur print facilities produce eight publications on average and are generally located within 0 miles of the communities served. By clustering our production resources or outsourcing where cost bene¿cial, we are able to reduce the operating costs of our publications while increasing the quality of our small and midsize market publications that would typically not otherwise have access to high quality production facilities. We also believe that we are able to reduce future capital expenditure needs by having fewer overall pressrooms and buildings. We believe our superior production quality is critical to maintaining and enhancing our position as the leading provider of local news coverage in the markets we serve. $s other print media businesses look to reduce costs, we believe we have the opportunity to leverage our unutilized press time to grow our commercial print customer base and revenue. 1 7he distribution of our daily newspapers is typically outsourced to independent, locally based, third-party distributors that also distribute a majority of our weekly newspapers and non-newspaper publications. We continuously evaluate lower cost options for newspaper delivery. In addition, certain of our shopper and weekly publications are delivered via the U.S. Postal Service. Availability of Raw Materials for OXr BXsiness - Newsprint 7he basic raw material for our publications is newsprint. We generally maintain only a to -day inventory of newsprint. +istorically, the market price of newsprint has been volatile, reaching a high of approximately $ per metric ton in 00 and a low of $10 per metric ton in 00. +owever, from 010 to 01, there was much less volatility in newsprint pricing and we have bene¿ted from negotiating a ¿xed annual price for a majority of our newsprint. 7he average market price of newsprint during 01 was approximately $ per metric ton. In 01, we consumed approximately ,00 metric tons of newsprint inclusive of commercial printing and the cost of our newsprint consumption totaled approximately $. million. In contrast, in 01, we consumed approximately 11 , 00 metric tons of newsprint inclusive of commercial printing , and the cost of our newsprint consumption totaled approximately $. million. 2ur newsprint expense typically averages less than 10% of total revenue, which we believe generally compares favorably to larger, metropolitan newspapers. For our 01 and 01 purchases of newsprint, we negotiated a ¿xed price for approximately % and %, respectively, of our newsprint tons which allowed us to eliminate some of the volatility of the market price. We expect to purchase % of our newsprint with a ¿xed price again in 01. Competition Each of our publications competes for advertising revenue to varying degrees with traditional media outlets such as direct mail, yellow pages, radio, outdoor advertising, broadcast and cable television, magazines, local, regional and national newspapers, shoppers and other print and online media sources, including local blogs. We also increasingly compete with new digital and social media companies for advertising revenue. +owever, we believe that barriers to entry remain high in many of the markets we serve in terms of being the preeminent source for local news and information therein, because our markets are generally not large enough to support a second newspaper and because our local news gathering infrastructures, sales networks and relationships would be time consuming and costly to replicate. We also have highly recognized local brand names and long histories in the towns we serve. We also provide our readers with community-speci¿c content, which is generally not available from other media sources. We believe that our direct and focused coverage of the market and our cost effective advertising rates relative to more broadly circulated metropolitan newspapers allow us to tailor an approach for our advertisers. $s a result, our publications generally capture a large share of local advertising in the markets they serve. 7he level of competition and the primary competitors we face vary from market to market. Competition tends to be based on market penetration, demographic and quality factors, as opposed to price factors. 7he competitive environment in each of our operating regions is discussed in greater detail below. Eastern 8S Publishing. In Eastern US Publishing, the Boston Globe and boston.com, a metropolitan daily and website, respectively, owned by -ohn +enry, compete with us throughout eastern Massachusetts. In addition, we compete in Massachusetts with companies that publish a combined total of approximately 1 dailies and 0 weeklies, three major radio station operators, ¿ve local network television broadcasters, one cable company and numerous niche publications for advertising revenues. We believe that our publications generally deliver the highest household coverage in their respective markets. We believe our publications in these markets are generally the dominant media and that each has an audience far larger than the competitors. Daily newspapers owned by *annett Company, Inc. Poughkeepsie Journal in Poughkeepsie, New York and 1st Century Media, Inc. Daily Freeman in .ingston, New York , compete within the New York market. 2ur Cape Cod and New Bedford, Massachusetts newspapers experience competition from weekly newspapers, local radio stations, shopping guides, directories and niche publications. 2ur publication, the Providence Journal, is the dominant daily newspaper in its market. 2ther daily newspaper operators in the state include the Edward Sherman Company, which owns the Newport Daily News and numerous non-dailies serving the Newport 5hode Island area and Sun Publishing Company, owner of the Westerly Sun and three non-dailies in the state. 5ISN 2perations, Inc. publish four daily papers and ¿ve weekly publications serving communities in Providence county 0 and 5hode Island. 7hree other companies publish more than 1 weeklies in 5hode Island. 7he Providence market has seven local network television stations and three major radio station operators, one cable company and numerous print and online niche publications. 2ur publication The Gainesville Sun and Ocala Star Banner are the dominant media in their respective markets, primarily $lachua and Marion counties. We compete with four television stations, which is unusual for markets this size. *ainesville has its own DM$ and 2cala falls into the 2rlando DM$. 7here are no other dailies in the market other than a slow movement by the 9illages Daily Sun into Marion county 2cala , a concern due to their offering the lowest home delivery and single copy rates of any Florida daily. 7hey operate as part of one of the fastest growing developments in the county, 7he 9illages. We publish a weekly newspaper, Gainesville Guardian, in east *ainesville and also a very successful city magazine, Gainesville Magazine. In the Daytona Beach market, our publication The Daytona Beach News-Journal is the dominant media. Primary print competition for the west side of our coverage area is the Orlando Sentinel, owned by 7ribune Publishing. Smaller weekly competitive publications, including 7he 2bserver *roup and +ometown News are also in the market. Major radio and network television stations are out of the 2rlando market. In the Sarasota market, we believe our publications are generally the dominant media and have an audience far larger than the competitors for the main areas we serve. Daily newspapers owned by McClatchy Bradenton Herald and Sun Coast Media *roup Charlotte Sun border us on the north and south ends of our market respectively and distribute in our circulation area on the fringes. 7he Sarasota market has one local network television station and several local radio station operators and cable companies as well as numerous non-daily print and online niche publications. Located in central Florida, our publication, The Ledger, in Lakeland is bordered by the Orlando Sentinel to the east and the Tampa Tribune to the west. In addition, our competitors also include multiple weekly newspapers and two radio stations. The Ledger is the dominant media in the central Florida area it serves. In 7uscaloosa, the digital space is highly competitive with the competing site $L.com, owned by $dvance Local. Central 8S Publishing. Central US Publishing operates in 1 markets and we believe our publications are the dominant print advertising media in the vast majority of these markets. 7here are radio stations in or within 0 miles of every market in which we operate, but we do not believe that any of these radio station operators pose a signi¿cant competitive threat to our publications. Yellow page advertising is prevalent in all of our markets with either a local phone book or a regional phone book. We believe that, in most cases, yellow page advertising is geared more towards the professional services advertisers, such as attorneys and doctors, and not the local retail advertisers, as is the focus with our non-directory publications. Lee Enterprises publishes the Southern Illinoisan in Carbondale, which is a regional newspaper that competes with our dailies in Marion, Benton, West Frankfort and DuQuoin. In all four of these cases, we believe our publications are the dominant local daily, but do compete on a regional basis with the larger dailies. We also compete with shoppers or weekly newspapers. 7his competition comes from small independent operators and is not signi¿cant. We have very little television competition in this group because of our geographic location in relation to major markets. 7here are no local television af¿liates in our markets. In the Northeast market of this group we believe our publications are generally the dominant media. 7he competition we face in this region is from major newspaper companies: daily newspapers owned by *annett Company, Inc. 7he Star-*azette in Elmira, NY and the Chambersburg P$ Public-2pinion ; 7imes-Shamrock Company’s Scranton P$ 7he 7imes-7ribune and 7owanda Daily/Sunday 5eview; Community Newspaper +oldings, Inc.’s Sunbury Daily Item; and 2gden-Nutting’s Williamsport Sun-*azette. We believe our publications tend to be the dominant local publication in those markets. In the Columbus market, the advertising competition in print is minimal with just a weekly business journal and a few small monthly magazines. 2n the electronic and digital side, the competition is intense comprised of six network 79 stations, three cable companies, ten radio stations, and twelve digital agencies, with SM$57 1 being the most aligned with our Propel product set. In our *reat Lakes markets we believe our publications are generally the dominant media in those markets. 2ur only signi¿cant competition comes from regional television stations in $drian, Michigan. We also face competition from dozens of other competitors such as other local daily and weekly papers and niche publications, as well as radio and television stations, directories, direct mail and non-local internet websites, but none of these have proven to be signi¿cant. :estern 8S Publishing. In the southern regions of this group we believe our publications are generally the dominant media. 2ur major competition comes from regional daily newspapers, speci¿cally: The Advocate in Baton 5ouge, Louisiana; The American Press in Lake Charles, Louisiana; The Joplin Globe; and the Wichita Eagle. 7he community newspapers operate generally in isolated markets where the $merican Consolidated Media newspapers are by far the leading sources of local news 1 and print advertising. We also face competition from numerous other daily and weekly papers, local radio stations, shopping guides, directories and niche publications. In the Sherman, 7exas market we believe our publications are generally the dominant media in those markets with minor competition with The Dallas Morning News, which has minimal circulation, and it does not focus on coverage of local content. $ll weeklies in the Sherman, 7exas market are controlled by us, though there is some weekly competition in outlying 7exas and 2klahoma communities. 2ur publication, the Herald Democrat, also competes with local 79 stations and several locally-owned radio stations in the market. In $rkansas, there is some minor competition from the Northwest Arkansas Democrat-Gazette in northern Crawford county, $5, but they have limited circulation in the Fort Smith market, with some local news coverage. 7he Northwest Arkansas Democrat-Gazette circulates in the market with our publication The Pine Bluff Commercial, but does not deliver the community coverage that is most relevant to Pine Bluff and the surrounding counties making our publication the most relevant news source in the area. 7here are several locally-owned radio stations in the market that compete with The Pine Bluff Commercial. In the northern regions of this group we control every local weekly and daily paper in Story county, Iowa and have weeklies in other neighboring counties, which is why we believe our publications are the dominant news source in the area. 7he principal print competition is the Des Moines Register, but it does not deliver meaningful local community content. We face competition from other newspaper companies that include daily and weekly newspapers, local websites, local radio stations, local television stations, shopping guides, directories and niche publications. None of our competitors have proven to be signi¿cant. 2ur publications and websites have a rich history in our markets which we believe uniquely positions them for unmatched reach and relevancy in their local audiences. Employees $s of December , 01, we employed ,0 employees. We employ union personnel at a number of our core publications representing 1, employees. $s of December , 01, there were collective bargaining agreements covering union personnel. Most of our unionized employees work under collective bargaining agreements that expire in 01. We believe that relations with our employees are generally good and we have had no work stoppages at any of our publications. Environmental Matters We believe that we are in substantial compliance with all applicable laws and regulations for the protection of the environment and the health and safety of our employees based upon existing facts presently known to us. Compliance with federal, state, and local environmental laws and regulations relating to the discharge of substances into the environment, the disposal of hazardous wastes and other related activities has had, and will continue to have, an impact on our operations, but has, since the incorporation of our Predecessor in 1 , been accomplished without having a material adverse effect on its operations. While it is dif¿cult to estimate the timing and ultimate costs to be incurred due to uncertainties about the status of laws, regulations and technology, based on information currently known to us and insurance procured with respect to certain environmental matters, we do not expect environmental costs or contingencies to be material or to have a material adverse effect on our ¿nancial performance. 2ur operations involve risks in these areas, however, and we cannot assure you that we will not incur material costs or liabilities in the future which could adversely affect us. Corporate Governance and PXblic Information 7he address of New Media’s website is http://www.newmediainv.com/. Stockholders can access a wide variety of information on New Media’s website, under the ³Investor 5elations´ tab, including news releases, SEC ¿lings, information New Media is required to post online pursuant to applicable SEC rules, newspaper pro¿les and online links. New Media makes available via its website all ¿lings it makes under the Securities and Exchange $ct of 1 , as amended, including Forms 10-., 10-Q and -., and related amendments, as soon as reasonably practicable after they are ¿led with, or furnished to, the SEC. $ll such ¿lings are available free of charge. Neither the content of New Media’s corporate website nor any other website referred to in this report are incorporated by reference into this report unless expressly noted. 7he public may read and copy any information New Media ¿les with the SEC at the SEC’s public reference room at 100 F Street, NE, Washington, DC 0 . 7he public may obtain information on the operation of the public reference room by calling the SEC at 1-00-SEC-00. 7he SEC also maintains a website http://www.sec.gov where New Media’s ¿lings ¿led with the SEC are available free of charge. List of New Media’s Dailies, Weeklies, Shoppers, Websites and Directories $s of December , 01, New Media’s dailies, weeklies, shoppers, websites and directories were as listed below. New Media maintains registered trademarks in many of the masthead names listed below. Maintaining such trademarks allows us to exclusively use the masthead name to the exclusion of third parties. Eastern 8S Publishing State City Masthead CircXlation Type Massachusetts Brockton 7he Enterprise Daily www.enterprisenews.com Fall 5iver 7he +erald News Daily www.heraldnews.com Framingham 7he Metrowest Daily News Daily www.metrowestdailynews.com +yannis Cape Cod 7imes Daily www.capecodtimes.com Milford 7he Milford Daily News Daily www.milforddailynews.com New Bedford 7he Standard-7imes Daily www.southcoasttoday.com Quincy Patriot Ledger Daily www.patriotledger.com 7aunton 7aunton Daily *azette Daily www.tauntongazette.com Worcester 7elegram *azette Daily www.telegram.com $bington $bington Mariner Paid Weekly www.wickedlocal.com/abington $cton/5oxborough 7he Beacon Paid Weekly www.wickedlocal.com/acton $llston $llston/Brighton 7ab Paid Weekly www.wickedlocal.com/allston $rlington 7he $rlington $dvocate Paid Weekly www.wickedlocal.com/arlington Bedford Bedford Minuteman Paid Weekly www.wickedlocal.com/bedford Belmont Belmont Citizen-+erald Paid Weekly www.wickedlocal.com/belmont Beverly Beverly Citizen Paid Weekly www.wickedlocal.com/beverly Billerica Billerica Minuteman Paid Weekly www.wickedlocal.com/billerica Boxford 7ri-7own 7ranscript Paid Weekly www.wickedlocal.com/boxford Braintree Braintree Forum Paid Weekly www.wickedlocal.com/braintree Brewster 7he Cape Codder Paid Weekly www.wickedlocal.com/capecod Burlington Burlington Union Paid Weekly www.wickedlocal.com/burlington Cambridge Cambridge Chronicle 7ab Paid Weekly www.wickedlocal.com/cambridge State City Masthead CircXlation Type Carver Carver 5eporter Paid Weekly www.wickedlocal.com/carver Chelmsford Chelmsford Independent Paid Weekly www.wickedlocal.com/chelmsford Clinton 7he Item Paid Weekly Clinton 7he Banner Paid Weekly Cohasset Cohasset Mariner Paid Weekly www.wickedlocal.com/cohasset Concord 7he Concord -ournal Paid Weekly www.wickedlocal.com/concord Danvers Danvers +erald Paid Weekly www.wickedlocal.com/danvers Dedham Dedham 7ranscript Paid Weekly www.wickedlocal.com/dedham Dover Dover/Sherborn Press Paid Weekly www.wickedlocal.com/dover Easton Easton -ournal Paid Weekly www.wickedlocal.com/easton Framingham Westwood Press Paid Weekly www.wickedlocal.com/westwood *eorgetown *eorgetown 5ecord Paid Weekly www.wickedlocal.com/georgetown +amilton +amilton-Wenham Chronicle Paid Weekly www.wickedlocal.com/hamilton +anover +anover Mariner Paid Weekly www.wickedlocal.com/hanover +ingham 7he +ingham -ournal Paid Weekly www.wickedlocal.com/hingham +olbrook +olbrook Sun Paid Weekly www.wickedlocal.com/holbrook +opkinton +opkinton Crier Paid Weekly www.wickedlocal.com/hopkinton +udson +udson Sun Paid Weekly www.wickedlocal.com/hudson +yannis 7he 5egister Paid Weekly www.wickedlocal.com/barnstable +yannis Barnstable Patriot Paid Weekly www.barnstablepatriot.com Ipswich Ipswich Chronicle Paid Weekly www.wickedlocal.com/ipswich .ingston .ingston 5eporter Paid Weekly www.wickedlocal.com/kingston Lexington Lexington Minuteman Paid Weekly www.wickedlocal.com/lexington Lincoln Lincoln -ournal Paid Weekly www.wickedlocal.com/lincoln Littleton Littleton Independent Paid Weekly www.wickedlocal.com/littleton Malden Malden 2bserver Paid Weekly www.wickedlocal.com/malden Mans¿eld Mans¿eld News Paid Weekly ZZZZLFNHGORFDOFRPPDQV¿HOG State City Masthead CircXlation Type Marblehead Marblehead 5eporter Paid Weekly www.wickedlocal.com/marblehead Marion 7he Sentinel Paid Weekly www.wickedlocal.com/marion Marlborough Marlborough Enterprise Paid Weekly www.wickedlocal.com/marlborough Marsh¿eld Marsh¿eld Mariner Paid Weekly ZZZZLFNHGORFDOFRPPDUVK¿HOG Maynard/Stow 7he Beacon-9illager Paid Weekly www.wickedlocal.com/maynard Med¿eld Med¿eld Press Paid Weekly ZZZZLFNHGORFDOFRPPHG¿HOG Medford Medford 7ranscript Paid Weekly www.wickedlocal.com/medford Melrose Melrose Free Press Paid Weekly www.wickedlocal.com/melrose Middleboro Middleboro *azette Paid Weekly www.southcoasttoday.com Nantucket Nantucket Inquirer Mirror Paid Weekly www.ack.net www.discovernantucket.com Natick Natick Bulletin 7ab Paid Weekly www.wickedlocal.com/natick New Bedford $dvocate Paid Weekly New Bedford Chronicle Paid Weekly New Bedford Spectator Paid Weekly North $ndover North $ndover Citizen Paid Weekly www.wickedlocal.com/northandover Northborough/ 7he Northborough/Southborough 9illager Paid Weekly Southborough www.wickedlocal.com/northborough Norwell Norwell Mariner Paid Weekly www.wickedlocal.com/norwell Norwood Norwood 7ranscript Bulletin Paid Weekly www.wickedlocal.com/norwood Pembroke Pembroke Mariner Express Paid Weekly www.wickedlocal.com/pembroke Plymouth 2ld Colony Memorial Paid Weekly www.wickedlocal.com/plymouth Provincetown 7he Provincetown Banner Paid Weekly www.wikedlocal.com/provincetown 5eading 7he 5eading $dvocate Paid Weekly www.wickedlocal.com/reading 5ockland 5ockland Standard Paid Weekly www.wickedlocal.com/rockland 5oslindale 5oslindale 7ranscript Paid Weekly www.wickedlocal.com/roslindale Saugus Saugus $dvertiser Paid Weekly www.wickedlocal.com/saugus Scituate Scituate Mariner Paid Weekly www.wickedlocal.com/scituate Sharon Sharon $dvocate Paid Weekly www.wickedlocal.com/sharon State City Masthead CircXlation Type Shrewsbury Shrewsbury Chronicle Paid Weekly www.wickedlocal.com/shrewsbury Somerville Somerville -ournal Paid Weekly www.wickedlocal.com/somerville Stoughton Stoughton -ournal Paid Weekly www.wickedlocal.com/stoughton Sudbury 7he Sudbury 7own Crier Paid Weekly www.wickedlocal.com/sudbury Swampscott Swampscott 5eporter Paid Weekly www.wickedlocal.com/swampscott 7ewksbury 7ewksbury 5eporter Paid Weekly www.wickedlocal.com/tewksbury Wake¿eld Wake¿eld 2bserver Paid Weekly ZZZZLFNHGORFDOFRPZDNH¿HOG Walpole 7he Walpole 7imes Paid Weekly www.wickedlocal.com/walpole Waltham Waltham News 7ribune Paid Weekly www.wickedlocal.com/waltham Wareham Wareham Courier Paid Weekly www.wickedlocal.com/wareham Watertown Watertown 7ab Press Paid Weekly www.wickedlocal.com/watertown Wayland 7he Wayland 7own Crier Paid Weekly www.wickedlocal.com/wayland Wellesley 7he Wellesley 7ownsman Paid Weekly www.wickedlocal.com/wellesley West 5oxbury West 5oxbury 7ranscript Paid Weekly www.wickedlocal.com/west-roxbury Westborough Westborough News Paid Weekly www.wickedlocal.com/westborough Westford Westford Eagle Paid Weekly www.wickedlocal.com/westford Weston 7he Weston 7own Crier Paid Weekly www.wickedlocal.com/weston Weymouth Weymouth News Paid Weekly www.wickedlocal.com/weymouth Winchester 7he Winchester Star Paid Weekly www.wickedlocal.com/winchester Bellingham County *azette Free Weekly www.wickedlocal.com/franklin Boston Boston +omes Free Weekly www.linkbostonhomes.com Bourne Bourne Courier Free Weekly www.wickedlocal.com/bourne Bridgewater Bridgewater Independent Free Weekly www.wickedlocal.com/bridgewater Brookline Brookline 7ab Free Weekly www.wickedlocal.com/brookline Canton Canton -ournal Free Weekly www.wickedlocal.com/canton Danvers North Shore Sunday Free Weekly State City Masthead CircXlation Type Fall 5iver Fall 5iver Spirit Free Weekly www.southcoasttoday.com Fall 5iver 2-ornal Free Weekly www.ojournal.com Falmouth 7he Bulletin Free Weekly www.wickedlocal.com/falmouth Framingham Framingham 7ab Free Weekly www.wickedlocal.com/framingham *loucester Cape $nn Beacon Free Weekly Needham Needham 7imes Free Weekly www.wickedlocal.com/needham Newburyport 7he Newburyport Current Free Weekly www.wickedlocal.com/newburyport Newton Newton 7ab Free Weekly www.wickedlocal.com/newton North $ttleborough 7he North $ttleborough Free Press Free Weekly www.wickedlocal.com/northattleborough 5andolph 5andolph +erald Free Weekly www.wickedlocal.com/randolph 5aynham 5aynham Call Free Weekly www.wickedlocal.com/raynham Salem Salem *azette Free Weekly www.wickedlocal.com/salem Sandwich Sandwich Broadsider Free Weekly Stoneham Stoneham Sun Free Weekly www.wickedlocal.com/stoneham Wilmington Wilmington $dvocate Free Weekly www.wickedlocal.com/wilmington Woburn Woburn $dvocate Free Weekly www.wickedlocal.com/woburn Fall 5iver South Coast Life Shopper +yannis DollarSaver/7MC Shopper Middleboro Middleboro *azette Extra/7MC Shopper www.southcoasttoday.com New Bedford SouthCoast MarketPlace/7MC Shopper 7aunton Yellow -acket Shopper $mesbury www.wickedlocal.com/amesbury 2n-line 2nly $shland www.wickedlocal.com/ashland 2n-line 2nly $von www.wickedlocal.com/avon 2n-line 2nly Bellingham www.wickedlocal.com/bellingham 2n-line 2nly Berkley www.wickedlocal.com/berkley 2n-line 2nly Bolton www.wickedlocal.com/bolton 2n-line 2nly Boston www.wickedlocal.com/goodlife 2n-line 2nly Boxborough www.wickedlocal.com/boxborough 2n-line 2nly Brewster www.wickedlocal.com/brewster 2n-line 2nly Brockton www.wickedlocal.com/brockton 2n-line 2nly Chatham www.wickedlocal.com/chatham 2n-line 2nly Clinton www.wickedlocal.com/clinton 2n-line 2nly Dennis www.wickedlocal.com/dennis 2n-line 2nly Dighton www.wickedlocal.com/dighton 2n-line 2nly Duxbury www.wickedlocal.com/duxbury 2n-line 2nly State City Masthead CircXlation Type East Bridgewater www.wickedlocal.com/bridgewatereast 2n-line 2nly Eastham www.wickedlocal.com/eastham 2n-line 2nly Essex www.wickedlocal.com/essex 2n-line 2nly Fall 5iver www.wickedlocal.com/fall-river 2n-line 2nly Foxborough www.wickedlocal.com/foxborough 2n-line 2nly *loucester www.wickedlocal.com/gloucester 2n-line 2nly +alifax www.wickedlocal.com/halifax 2n-line 2nly +anson www.wickedlocal.com/hanson 2n-line 2nly +arvard www.wickedlocal.com/harvard 2n-line 2nly +arwich www.wickedlocal.com/harwich 2n-line 2nly +olliston www.wickedlocal.com/holliston 2n-line 2nly +opedale www.wickedlocal.com/hopedale 2n-line 2nly +ull www.wickedlocal.com/hull 2n-line 2nly Lakeville www.wickedlocal.com/lakeville 2n-line 2nly Lancaster www.wickedlocal.com/lancaster 2n-line 2nly Manchester www.wickedlocal.com/manchester 2n-line 2nly Mashpee www.wickedlocal.com/mashpee 2n-line 2nly Mattapoisett www.wickedlocal.com/mattapoisett 2n-line 2nly Medway www.wickedlocal.com/medway 2n-line 2nly Mendon www.wickedlocal.com/mendon 2n-line 2nly Middleborough www.wickedlocal.com/middleborough 2n-line 2nly Middleton www.wickedlocal.com/middleton 2n-line 2nly Milford www.wickedlocal.com/milford 2n-line 2nly Millis www.wickedlocal.com/millis 2n-line 2nly Milton www.wickedlocal.com/milton 2n-line 2nly Nantucket www.wickedlocal.com/nantucket 2n-line 2nly Norfolk www.wickedlocal.com/norfolk 2n-line 2nly North Boston www.wickedlocal.com/northofboston 2n-line 2nly Norton www.wickedlocal.com/norton 2n-line 2nly 2rleans www.wickedlocal.com/orleans 2n-line 2nly Plainville www.wickedlocal.com/plainville 2n-line 2nly Plymouth www.plymouthguide.com 2n-line 2nly Plympton www.wickedlocal.com/plympton 2n-line 2nly Quincy www.wickedlocal.com/quincy 2n-line 2nly 5ehoboth www.wickedlocal.com/rehoboth 2n-line 2nly 5ochester www.wickedlocal.com/rochester 2n-line 2nly 5ockport www.wickedlocal.com/rockport 2n-line 2nly Sandwich www.wickedlocal.com/sandwich 2n-line 2nly Sherborn www.wickedlocal.com/sherborn 2n-line 2nly Somerset www.wickedlocal.com/somerset 2n-line 2nly Southborough www.wickedlocal.com/southborough 2n-line 2nly Stow www.wickedlocal.com/stow 2n-line 2nly Swansea www.wickedlocal.com/swansea 2n-line 2nly 7aunton www.wickedlocal.com/taunton 2n-line 2nly 7ops¿eld ZZZZLFNHGORFDOFRPWRSV¿HOG 2n-line 2nly 7ruro www.wickedlocal.com/truro 2n-line 2nly Upton www.wickedlocal.com/upton 2n-line 2nly WellÀeet ZZZZLFNHGORFDOFRPZHOOÀHHW 2n-line 2nly Wenham www.wickedlocal.com/wenham 2n-line 2nly West Bridgewater www.wickedlocal.com/bridgewaterwest 2n-line 2nly State City Masthead CircXlation Type West Port www.wickedlocal.com/westport 2n-line 2nly Whitman www.wickedlocal.com/whitman 2n-line 2nly Wrentham www.wickedlocal.com/wrentham 2n-line 2nly Yarmouth www.wickedlocal.com/yarmouth 2n-line 2nly Florida Daytona Beach Daytona Beach News--ournal Daily www.news-journalonline.com Fort Walton Beach Northwest Florida Daily News Daily www.nwfdailynes.com www.destin.com www.emeraldcoast.com www.nwfvarsity.com *ainesville 7he *ainesville Sun Daily www.gainesville.com www.gatorsports.com Lakeland 7he Ledger Daily www.theledger.com Leesburg Daily Commercial Daily www.dailycommercial.com 2cala 2cala Star Banner Daily www.ocala.com Panama City Panama City News +erald Daily www.newsherald.com www.panamacity.com www.panhandlevarsity.com Sarasota +erald-7ribune Daily www.heraldtribune.com Winter +aven News Chief Daily www.newschief.com $palachicola 7he 7imes Paid Weekly www.apalachitimes.com Bonifay +olmes County 7imes $dvertiser Paid Weekly Chipley Washington County News Paid Weekly www.chipleypaper.com Crestview Crestview News Bulletin Paid Weekly www.crestviewbulletin.com Destin 7he Destin Log Paid Weekly www.thedestinlog.com Milton Santa 5osa Press *azette Paid Weekly www.srpressgazette.com Port St. -oe 7he Star Paid Weekly ZZZVWDUÀFRP Clermont South Lake Press Free Weekly www.southlakepress.com *ainesville *ainesville Sun Free Weekly Santa 5osa Beach 7he Walton Sun Free Weekly www.waltonsun.com Daytona Beach Daytona Pennysaver Shopper Daytona Beach Flagler Pennysaver Shopper Daytona Beach New Smyrna Pennysaver Shopper Daytona Beach West 9oluisa Pennysaver Shopper State City Masthead CircXlation Type North Carolina $sheboro 7he Courier-7ribune Daily www.courier-tribune.com Burlington 7imes-News Daily www.thetimesnews.com *astonia 7he *aston *azette Daily www.gastongazette.com +endersonville 7imes-News Daily www.blueridgenow.com -acksonville 7he Daily News Daily www.jdnews.com .inston 7he Free Press Daily www.kinston.com Lexington 7he Dispatch Daily www.the-dispatch.com New Bern Sun -ournal Daily www.newbernsj.com Shelby 7he Star Daily www.shelbystar.com Wilmington Star News Daily www.starnewsonline.com +avelock +avelock News Paid Weekly www.havenews.com Surf City 7opsail $dvertiser Free Weekly $sheboro C7 Marketplace Shopper New +ampshire Dover Foster’s Daily Democrat Daily Portsmouth Portsmouth +erald Daily www.seacoastonline.com Exeter Exeter News-Letter Paid Weekly +ampton +ampton Union Paid Weekly Portsmouth Seacoast Sunday Paid Weekly 5ochester 5ochester 7imes Paid Weekly +ampton Beachcomber Free Weekly New York Middletown 7imes +erald-5ecord Daily www.recordonline.com Middletown 7he *azette Free Weekly www.hudsonvalley.com Middletown Pointer 9iew Free Weekly www.pointerview.com Middletown Extra/7MC Shopper Pennsylvania Stroudsburg Pocono 5ecord Daily www.poconorecord.com Carbondale 7he 9illager Paid Weekly www.moscowvillager.com Carbondale Carbondale News Paid Weekly www.thecarbondalenews.com Stroudsburg Pike Monroe Life Free Weekly Stroudsburg Plus/7MC Shopper 0 State City Masthead CircXlation Type Maine .ennebunk York County Coast Star Paid Weekly www.seacoastonline.com Sanford Sanford News Paid Weekly York York Weekly Paid Weekly www.seacoastonline.com 7ennessee Columbia Columbia Daily +erald Daily www.columbiadailyherald.com Columbia Spring +ill $dvertiser News Paid Weekly www.advertisernews.biz www.brentwoodlife.net www.franklinlife.net Columbia 9alue *uide Shopper $labama *adsden 7he *adsden 7imes Daily www.gadsdentimes.com 7uscaloosa 7he 7uscaloosa News Daily www.tuscaloosanews.com www.tidesports.com Connecticut Norwich 7he Bulletin Daily www.norwichbulletin.com Norwich Bulletin Deals Shopper 5hode Island Providence 7he Providence -ournal Daily www.providencejournal.com Providence Providence -ournal Express Shopper South Carolina Spartanburg +erald--ournal Daily www.goupstate.com 1 Central 8S Publishing State City Masthead CircXlation Type Illinois Benton Benton Evening News Daily www.bentoneveningnews.com Canton Daily Ledger Daily www.cantondailyledger.com Carmi 7he Carmi 7imes Daily www.carmitimes.com Du Quoin Du Quoin Evening Call Daily www.duquoin.com El Dorado El Dorado Daily -ournal Daily Freeport 7he -ournal Standard Daily www.journalstandard.com *alesburg 7he 5egister-Mail Daily www.galesburg.com +arrisburg 7he Daily 5egister Daily www.dailyregister.com .ewanee Star-Courier Daily www.starcourier.com Lincoln 7he Courier Daily www.lincolncourier.com Macomb McDonough County 9oice Daily www.mcdonoughvoice.com Marion 7he Daily 5epublican Daily www.dailyrepublicannews.com Monmouth Daily 5eview $tlas Daily www.reviewatlas.com 2lney 7he 2lney Daily Mail Daily www.olneydailymail.com Pekin Pekin Daily 7imes Daily www.pekintimes.com Peoria -ournal Star Daily www.pjstar.com Pontiac Daily Leader Daily www.pontiacdailyleader.com 5ockford 5ockford 5egister Star Daily www.rrstar.com www.rockfordwoman.com www.rockfordparent.com Spring¿eld 7he State -ournal-5egister Daily www.sj-r.com $bingdon $bingdon $rgus-Sentinel Paid Weekly www.eaglepublications.com $ledo 7he 7imes 5ecord Paid Weekly www.aledotimesrecord.com $ugusta $ugusta Eagle-Scribe Paid Weekly www.eaglepublicatons.com Cambridge Cambridge Chronicle Paid Weekly www.cambridgechron.com Carmi 7he Weekly 7imes Paid Weekly Chester 5andolph County +erald 7ribune Paid Weekly www.randolphcountyheraldtribune.com State City 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Paid Weekly www.agjournalonline.com La-unta Fowler 7ribune Paid Weekly www.fowlertribune.com Las $nimas Bent County Democrat Paid Weekly www.bcdemocratonline.com Nebraska Nebraska City Nebraska City News Press Paid Weekly www.ncnewspress.com Syracuse Syracuse -ournal Democrat Paid Weekly www.journaldemocrat.com Nebraska City Penny Press 1 Shopper 2regon Medford $shland Daily 7idings Daily www.dailytidings.com Medford Mail 7ribune Daily www.mailtribune.com Medford Nickel Shopper www.medfordnickel.com North Dakota Devils Lake Devils Lake Daily -ournal Daily www.devilslakejournal.com Devils Lake 7he Country Peddler Shopper 7ennessee 2ak 5idge 7he 2ak 5idger Daily www.oakridger.com Item 1A. Risk Factors You should carefully consider the following risks and other information in this Annual Report in evaluating us and our FRPPRQVWRFN$Q\RIWKHIROORZLQJULVNVFRXOGPDWHULDOO\DQGDGYHUVHO\DIIHFWRXUUHVXOWVRIRSHUDWLRQVRU¿QDQFLDOFRQGLWLRQ The risk factors generally have been separated into the following groups: Risks Related to Our Business, Risks Related to Our Manager, and Risks Related to Our Common Stock. Risks Related to OXr BXsiness We depend to a great extent on the economies and the demographics of the local communities that we serve, and we are also susceptible to general economic downturns, which have had, and could continue to have, a material and adverse impact on our advertising and circulation revenues and on our pro¿tability. 2ur advertising revenues and, to a lesser extent, circulation revenues, depend upon a variety of factors speci¿c to the communities that our publications serve. 7hese factors include, among others, the size and demographic characteristics of the local population, local economic conditions in general and the economic condition of the retail segments of the communities that our publications serve. If the local economy, population or prevailing retail environment of a community we serve experiences a downturn, our publications, revenues and pro¿tability in that market could be adversely affected. 2ur advertising revenues are also susceptible to negative trends in the general economy that affect consumer spending. 7he advertisers in our newspapers and other publications and related websites are primarily retail businesses that can be signi¿cantly affected by regional or national economic downturns and other developments. Declines in the U.S. economy could also signi¿cantly affect key advertising revenue categories, such as help wanted, real estate and automotive. 8ncertainty and adverse changes in the general economic conditions of markets in which we participate may negatively affect our business. Current and future conditions in the economy have an inherent degree of uncertainty. $s a result, it is dif¿cult to estimate the level of growth or contraction for the economy as a whole. It is even more dif¿cult to estimate growth or contraction in various parts, sectors and regions of the economy, including the markets in which we participate. $dverse changes may occur as a result of weak global economic conditions, declining oil prices, wavering consumer con¿dence, unemployment, declines in stock markets, contraction of credit availability, declines in real estate values, or other factors affecting economic conditions in general. 7hese changes may negatively affect the sales of our products, increase exposure to losses from bad debts, increase the cost and decrease the availability of ¿nancing, or increase costs associated with publishing and distributing our publications. Our ability to generate revenues is correlated with the economic conditions of three geographic regions of the 8nited States. 2ur Company primarily generates revenue in three geographic regions: the Northeast, the Southeast, and the Midwest. During the year ended December , 01, approximately % of our total revenues were generated in three states in the Northeast: Massachusetts, 5hode Island, and New York. During the same period, approximately 1% of our total revenues were generated in two states in the Southeast: Florida and North Carolina. $lso during the same period, approximately 1 % of our total revenues were generated in two states in the Midwest: Illinois and 2hio. $s a result of this geographic concentration, our ¿nancial results, including advertising and circulation revenue, depend largely upon economic conditions in these principal market areas. $ccordingly, adverse economic developments within these three regions in particular could signi¿cantly affect our consolidated operations and ¿nancial results. Our indebtedness and any future indebtedness may limit our ¿nancial and operating activities and our ability to incur additional debt to fund future needs or dividends. $s of December , 01, New Media’s outstanding indebtedness consists primarily of the New Media Credit $greement. 7he New Media Credit $greement provides for i a $00 million senior secured term facility and ii a $ million senior secured revolving credit facility, with a $ million sub-facility for letters of credit and a $ million sub-facility for swing loans. In addition, we may request one or more new commitments for term loans or revolving loans from time to time up to an aggregate total of $ million, subject to certain conditions. 2n September , 01, the New Media Credit $greement was amended to provide for additional term loans under the Incremental Facility in an aggregate principal amount of $ million. 2n November 0, 01, the New Media Credit $greement was further amended to increase the amount available thereunder for incremental term loans from $ million to $ million in order to facilitate the ¿nancing of the acquisition of substantially all of the assets from +alifax Media *roup LLC. 2n -anuary , 01, the New Media Credit $greement was amended to provide for additional term loans and revolving commitments under the Incremental Facility in a combined aggregate principal amount of $1 million and to make certain amendments to the 5evolving Credit Facility as de¿ned below . 2n February 1, 01, the New Media Credit $greement was amended to, amongst other things, replace the existing term loans with a new class of replacement term loans with extended call protection. 2n March , 01, the New Media Credit $greement was amended to provide for $1 million in additional revolving commitments under the Incremental Facility. 2n May , 01, the New Media Credit $greement was amended to provide for $ million in additional term loans under the Incremental Facility. $s of December , 01, $0 was drawn under the 5evolving Credit Facility. 7he $dvantage Credit $greements, which arose from debt obligations assumed by us in connection with our acquisition of substantially all of the assets from +alifax Media *roup LLC on -anuary , 01, are comprised of; i debt in the principal amount of $10 million that bears interest at the rate of .% per annum, payable quarterly in arrears, maturing on December 1, 01 and ii debt in the principal amount of $ million that bears interest at the rate of LIB25 plus .% per annum with a minimum of 1% LIB25 payable quarterly in arrears, maturing on March 1, 01 . $s of December , 01, $1 million was outstanding under the $dvantage Credit $greements. $ll the above indebtedness and any future indebtedness we incur could: • require us to dedicate a portion of cash Àow from operations to the payment of principal and interest on indebtedness, including indebtedness we may incur in the future, thereby reducing the funds available for other purposes, including dividends or other distributions; • subject us to increased sensitivity to increases in prevailing interest rates; • place us at a competitive disadvantage to competitors with relatively less debt in economic downturns, adverse industry conditions or catastrophic external events; or • reduce our Àexibility in planning for or responding to changing business, industry and economic conditions. In addition, our indebtedness could limit our ability to obtain additional ¿nancing on acceptable terms or at all to fund future acquisitions, working capital, capital expenditures, debt service requirements, general corporate and other purposes, which would have a material effect on our business and ¿nancial condition. 2ur liquidity needs could vary signi¿cantly and may be affected by general economic conditions, industry trends, performance and many other factors not within our control. Each of the New Media Credit Agreement and Advantage Credit Agreements contains covenants that restrict our operations and may inhibit our ability to grow our business, increase revenues and pay dividends to our stockholders. 7he New Media Credit $greement contains various restrictions, covenants and representations and warranties. If we fail to comply with any of these covenants or breach these representations or warranties in any material respect, such noncompliance would constitute a default under the New Media Credit $greement subject to applicable cure periods , and the lenders could elect to declare all amounts outstanding under the agreements related thereto to be immediately due and payable and enforce their respective interests against collateral pledged under such agreements. 7he covenants and restrictions in the New Media Credit $greement generally restrict our ability to, among other things: • incur or guarantee additional debt; • make certain investments, loans or acquisitions; • transfer or sell assets; • make distributions on capital stock or redeem or repurchase capital stock; • create or incur liens; • enter into transactions with af¿liates; • consolidate, merge or sell all or substantially all of our assets; and • create restrictions on the payment of dividends or other amounts to us from our restricted subsidiaries. 7he $dvantage Credit $greements contain covenants substantially consistent with those contained in the New Media Credit Facilities in addition to those required for compliance with the New Markets 7ax Credit program. 7he restrictions described above may interfere with our ability to obtain new or additional ¿nancing or may affect the manner in which we structure such new or additional ¿nancing or engage in other business activities, which may signi¿cantly limit or harm our results of operations, ¿nancial condition and liquidity. $ default and any resulting acceleration of obligations under any of the New Media Credit $greement or the $dvantage Credit $greements could also result in an event of default and declaration of acceleration under our other existing debt agreements. Such an acceleration of our debt would have a material adverse effect on our liquidity and our ability to continue as a going concern. $ default under any of the New Media Credit $greement or the $dvantage Credit $greements could also signi¿cantly limit our alternatives to re¿nance both the debt under which the default occurred and other indebtedness. 7his limitation may signi¿cantly restrict our ¿nancing options during times of either market distress or our ¿nancial distress, which are precisely the times when having ¿nancing options is most important. We may not generate a suf¿cient amount of cash or generate suf¿cient funds from operations to fund our operations or repay our indebtedness. 2ur ability to make payments on our indebtedness as required depends on our ability to generate cash Àow from operations in the future. 7his ability, to a certain extent, is subject to general economic, ¿nancial, competitive, legislative, regulatory and other factors that are beyond our control. If we do not generate suf¿cient cash Àow from operations to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative ¿nancing plans, such as re¿nancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot provide assurance that any re¿nancing would be possible, that any assets could be sold, or, if sold, of the timeliness and amount of proceeds realized from those sales, that additional ¿nancing could be obtained on acceptable terms, if at all, or that additional ¿nancing would be permitted under the terms of our various debt instruments then in effect. Furthermore, our ability to re¿nance would depend upon the condition of the ¿nance and credit markets. 2ur inability to generate suf¿cient cash Àow to satisfy our debt obligations, or to re¿nance our obligations on commercially reasonable terms or on a timely basis, would materially affect our business, ¿nancial condition and results of operations. We may not be able to pay dividends in accordance with our announced intent or at all. We have announced our intent to distribute a substantial portion of our free cash Àow as a dividend to our stockholders, through a quarterly dividend, subject to satisfactory ¿nancial performance, approval by our Board of Directors and dividend restrictions in the New Media Credit $greement. 7he Board of Directors’ determinations regarding dividends will depend on a variety of factors, including the Company’s *$$P net income, free cash Àow generated from operations or other sources, liquidity position and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future ¿nancial results. $lthough we recently paid a third quarter 01 cash dividend of $0. per share of Common Stock and have paid regularly quarterly dividends since the third quarter of 01, there can be no guarantee that we will continue to pay dividends in the future or that this recent dividend is representative of the amount of any future dividends. 2ur ability to declare future dividends will depend on our future ¿nancial performance, which in turn depends on the successful implementation of our strategy and on ¿nancial, competitive, regulatory, technical and other factors, general economic conditions, demand and selling prices for our products and other factors speci¿c to our industry or speci¿c projects, many of which are beyond our control. 7herefore, our ability to generate free cash Àow depends on the performance of our operations and could be limited by decreases in our pro¿tability or increases in costs, capital expenditures or debt servicing requirements. 2ur Predecessor suspended the payments of dividends commencing with the second quarter of 00. We own substantially all of our Predecessor’s assets, and our Predecessor experienced revenue and cash Àow declines in the past. In addition, we may acquire additional companies with declining cash Àow as part of a strategy aimed at stabilizing cash Àow through expense reduction and digital expansion. If our strategy is not successful, we may not be able to pay dividends. $s a holding company, we are also dependent on our subsidiaries being able to pay dividends to us. 2ur subsidiaries are subject to restrictions on the ability to pay dividends under the various instruments governing their indebtedness. If our subsidiaries incur additional debt or losses, such additional indebtedness or loss may further impair their ability to pay dividends or make other distributions to us. In addition, the ability of our subsidiaries to declare and pay dividends to us will also be dependent on their cash income and cash available and may be restricted under applicable law or regulation. Under Delaware law, approval of the board of directors is required to approve any dividend, which may only be paid out of surplus or net pro¿t for the applicable ¿scal year. $s a result, we may not be able to pay dividends in accordance with our announced intent or at all. We have invested in growing our digital business, including Propel, but such investments may not be successful, which could adversely affect our results of operations. We continue to evaluate our business and how we intend to grow our digital business. Internal resources and effort are put towards this business and key partnerships have been entered into to assist with our digital business, including Propel. We continue to believe that our digital businesses, including Propel, offer opportunities for revenue growth to support and, in some cases, offset the revenue trends we have seen in our print business. 7here can be no assurances that the partnerships we have entered into or the internal strategy being employed will result in generating or increasing digital revenues in amounts necessary to stabilize or offset trends in print revenues. In addition, we have a limited history of operations in this area, and there can be no assurances that past performance will be indicative of future performance or future trends. If our digital strategy, including with regard to Propel, is not as successful as we anticipate, our ¿nancial condition, results of operations and ability to pay dividends could be adversely affected. $cquisitions have formed a signi¿cant part of our growth strategy in the past and are expected to continue to do so. If we are unable to identify suitable acquisition candidates or successfully integrate the businesses we acquire, our growth strategy may not succeed. $cquisitions involve numerous risks, including risks related to integration, and these risks could adversely affect our business, ¿nancial condition and results of operations. 2ur business strategy relies on acquisitions. We expect to derive a signi¿cant portion of our growth by acquiring businesses and integrating those businesses into our existing operations. We continue to seek acquisition opportunities, however we may not be successful in identifying acquisition opportunities, assessing the value, strengths and weaknesses of these opportunities or consummating acquisitions on acceptable terms. Furthermore, suitable acquisition opportunities may not even be made available or known to us. In addition, valuations of potential acquisitions may rise materially, making it economically unfeasible to complete identi¿ed acquisitions. $dditionally, our ability to realize the anticipated bene¿ts of the synergies between New Media and our recent or potential future acquisitions of assets or companies will depend, in part, on our ability to appropriately integrate the business of New Media and the businesses of other such acquired companies. 7he process of acquiring assets or companies may disrupt our business and may not result in the full bene¿ts expected. 7he risks associated with integrating the operations of New Media and recent and potential future acquisitions include, among others: • uncoordinated market functions; • unanticipated issues in integrating the operations and personnel of the acquired businesses; • the incurrence of indebtedness and the assumption of liabilities; • the incurrence of signi¿cant additional capital expenditures, transaction and operating expenses and non-recurring acquisition-related charges; • unanticipated adverse impact on our earnings from the amortization or write-off of acquired goodwill and other intangible assets; • not retaining key employees, vendors, service providers, readers and customers of the acquired businesses; and • the diversion of management’s attention from ongoing business concerns. If we are unable to successfully implement our acquisition strategy or address the risks associated with integrating the operations of New Media and past acquisitions or potential future acquisitions, or if we encounter unforeseen expenses, dif¿culties, complications or delays frequently encountered in connection with the integration of acquired entities and the expansion of operations, our growth and ability to compete may be impaired, we may fail to achieve acquisition synergies and we may be required to focus resources on integration of operations rather than other pro¿table areas. Moreover, the success of any acquisition will depend upon our ability to effectively integrate the acquired assets or businesses. 7he acquired assets or businesses may not contribute to our revenues or earnings to any material extent, and cost savings and synergies we expect at the time of an acquisition may not be realized once the acquisition has been completed. Furthermore, if we incur indebtedness to ¿nance an acquisition, the acquired business may not be able to generate suf¿cient cash Àow to service that indebtedness. Unsuitable or unsuccessful acquisitions could adversely affect our business, ¿nancial condition, results of operations, cash Àow and ability to pay dividends. If we are unable to retain and grow our digital audience and advertiser base, our digital businesses will be adversely affected. *iven the ever-growing and rapidly changing number of digital media options available on the internet, we may not be able to increase our online traf¿c suf¿ciently and retain or grow a base of frequent visitors to our websites and applications on mobile devices. 2ur Predecessor experienced declines in advertising revenue due in part to advertisers’ shift from print to digital media, and we may not be able to create suf¿cient advertiser interest in our digital businesses to maintain or increase the advertising rates of the inventory on our websites. In addition, the ever-growing and rapidly changing number of digital media options available on the internet may lead to technologies and alternatives that we are not able to offer or about which we are not able to advise. Such circumstances could directly and adversely affect the availability, applicability, marketability and pro¿tability of the suite of SMB services and the private ad exchange we offer as a signi¿cant part of our digital business. Speci¿cally, news aggregation websites and customized news feeds often free to users may reduce our traf¿c levels by driving interaction away from our websites or our digital applications. If traf¿c levels stagnate or decline, we may not be able to create suf¿cient advertiser interest in our digital businesses or to maintain or increase the advertising rates of the inventory on our digital platforms. We may also be adversely affected if the use of technology developed to block the display of advertising on websites proliferates. 7echnological developments and any changes we make to our business strategy may require signi¿cant capital investments. Such investments may be restricted by our current or future credit facilities. If there is a signi¿cant increase in the price of newsprint or a reduction in the availability of newsprint, our results of operations and ¿nancial condition may suffer. 7he basic raw material for our publications is newsprint. We generally maintain only a to -day inventory of newsprint, although our participation in a newsprint-buying consortium has helped ensure adequate supply. $n inability to obtain an adequate supply of newsprint at a favorable price or at all in the future could have a material adverse effect on our ability to produce our publications. +istorically, the price of newsprint has been volatile, reaching a high of approximately $ per metric ton in 00 and experiencing a low of almost $10 per metric ton in 00. 7he average price of newsprint during 01 was approximately $ per metric ton. 5ecent and future consolidation of major newsprint suppliers may adversely affect price competition among suppliers. Signi¿cant increases in newsprint costs for properties and periods not covered by our newsprint vendor agreement could have a material adverse effect on our ¿nancial condition and results of operations. Our Predecessor experienced declines in advertising revenue, and further declines, which could adversely affect our results of operations and ¿nancial condition, may occur. 2ur Predecessor previously experienced declines in advertising revenue, due primarily to the economic recession and advertisers’ shift from print to digital media. $dvertising revenue decreased by $ . million, or .0%, in the year ended December , 01, as compared to the year ended December 0, 01 for total company excluding Local Media. $dvertising revenue increased by $.0 million, or 1.%, in the year ended December , 01, as compared to the year ended December , 01, however, excluding acquisitions, there was a decrease in advertising revenue. $dvertising revenue increased by $11. million, or 0.%, in the year ended December , 01, as compared to the year ended December , 01, however, excluding acquisitions, there was a decrease in advertising revenue. We continue to search for organic growth opportunities, including in our digital advertising business, and for ways to stabilize print revenue declines through new product launches and pricing. +owever, there can be no assurance that our advertising revenue will not continue to decline. In addition, the range of advertising choices across digital products and platforms and the large inventory of available digital advertising space have historically resulted in signi¿cantly lower rates for digital advertising than for print advertising. Consequently, our digital advertising revenue may not be able to replace print advertising revenue lost as a result of the shift to digital consumption. Further declines in advertising revenue could adversely affect our results of operations and ¿nancial condition. Our Predecessor had a history of losses and ¿led a voluntary petition to reorgani]e under Chapter of the 8.S. Bankruptcy Code in . 2ur Predecessor experienced losses from continuing operations of approximately $. million and $1.0 million in 01 and 011, respectively. 2n September , 01, *ate+ouse ¿led a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code and emerged from Chapter 11 protection on November , 01. We may not be able to maintain pro¿table operations in the future and our failure to achieve pro¿tability in the future could adversely affect the trading price of our Common Stock and our ability to pay dividends and raise additional capital for growth. We compete with a large number of companies in the local media industry; if we are unable to compete effectively, our advertising and circulation revenues may decline. 2ur business is concentrated in newspapers and other print publications located primarily in small and midsize markets in the United States. 2ur revenues primarily consist of advertising and paid circulation. Competition for advertising revenues and paid circulation comes from direct mail, directories, radio, television, outdoor advertising, other newspaper publications, the internet and other media. For example, as the use of the internet and mobile devices has increased, we have lost some classi¿ed advertising and subscribers to online advertising businesses and our free internet sites that contain abbreviated versions of our publications. Competition for advertising revenues is based largely upon advertiser results, advertising rates, readership, demographics and circulation levels. Competition for circulation is based largely upon the content of the publication and its price and editorial quality. 2ur local and regional competitors vary from market to market, and many of our competitors for advertising revenues are larger and have greater ¿nancial and distribution resources than us. We may incur increased costs competing for advertising expenditures and paid circulation. We may also experience further declines of circulation or print advertising revenue due to alternative media, such as the internet. If we are not able to compete effectively for advertising expenditures and paid circulation, our revenues may decline. We are undertaking strategic process upgrades that could have a material adverse ¿nancial impact if unsuccessful. We are implementing strategic process upgrades of our business. $mong other things we are implementing the standardization and centralization of systems and processes, the outsourcing of certain ¿nancial processes and the use of new software for our circulation, advertising and editorial systems. $s a result of ongoing strategic evaluation and analysis, we have made and will continue to make changes that, if unsuccessful, could have a material adverse ¿nancial impact. Our business is subMect to seasonal and other Àuctuations, which affects our revenues and operating results. 2ur business is subject to seasonal Àuctuations that we expect to continue to be reÀected in our operating results in future periods. 2ur ¿rst ¿scal quarter of the year tends to be our weakest quarter because advertising volume is at its lowest levels following the December holiday season. Correspondingly, our second and fourth ¿scal quarters tend to be our strongest because they include heavy holiday and seasonal advertising. 2ther factors that affect our quarterly revenues and operating results may be beyond our control, including changes in the pricing policies of our competitors, the hiring and retention of key personnel, wage and cost pressures, distribution costs, changes in newsprint prices and general economic factors. We could be adversely affected by declining circulation. 2verall daily newspaper circulation, including national and urban newspapers, has declined in recent years. For the year ended December , 01, our circulation revenue increased by $1. million, or .%, as compared to the year ended December , 01, of which $10.1 million relates to acquisitions. 7here can be no assurance that our circulation revenue will not decline again in the future. 2ur Predecessor and us were able to maintain annual circulation revenue from existing operations in recent years through, among other things, increases in per copy prices. +owever, there can be no assurance that we will be able to continue to increase prices to offset any declines in circulation. Further declines in circulation could impair our ability to maintain or increase our advertising prices, cause purchasers of advertising in our publications to reduce or discontinue those purchases and discourage potential new advertising customers, all of which could have a material adverse effect on our business, ¿nancial condition, results of operations, cash Àows and ability to pay dividends. 7he increasing popularity of digital media could also adversely affect circulation of our newspapers, which may decrease circulation revenue and cause more marked declines in print advertising. Further, readership demographics and habits may change over time. If we are not successful in offsetting such declines in revenues from our print products, our business, ¿nancial condition and prospects will be adversely affected. 0 The value of our intangible assets may become impaired, depending upon future operating results. $s a result of the 5estructuring, which was considered a triggering event for the non-amortizable intangibles, our Predecessor performed a valuation analysis to determine if an impairment existed as of September , 01. 7he fair values of our Predecessor’s reporting units for goodwill and newspaper mastheads were estimated using the expected present value of future cash Àows, recent industry transaction multiples and using estimates, judgments and assumptions that management believed were appropriate in the circumstances and were consistent with the terms of the Plan. 7he estimates and judgments used in the assessment included multiples for revenue and EBI7D$, the weighted average cost of capital and the terminal growth rate. *iven the 5estructuring, our Predecessor determined that discounted cash Àows provided the best estimate of the fair value of its reporting units. 7he estimated fair value of the Large Daily reporting unit exceeded its carrying value and Step of the analysis was not necessary. 7he Small Community reporting unit failed the Step 1 goodwill impairment analysis. 2ur Predecessor performed Step of the analysis using consistent assumptions, as discussed above, and determined an impairment was not present for this reporting unit. 7he estimated fair value of each reporting unit’s mastheads exceeded their carrying values, using consistent assumptions as discussed above. 7he masthead fair value was estimated using the relief from royalty valuation method. For further information on goodwill and intangible assets, see Note to the condensed consolidated ¿nancial statements, ³*oodwill and Intangible $ssets´. Due to reductions in our Predecessor’s operating projections during the third quarter of 01 in conjunction with the 5estructuring, an impairment charge of $. million was recognized for advertiser relationships within the Predecessor’s Metro and Small Community reporting units, an impairment charge of $1 .1 million was recognized for subscriber relationships within the Company’s Metro and Small Community reporting units, an impairment charge of $.1 million was recognized for customer relationships within the Company’s Metro reporting unit and an impairment charge of $1. million was recognized for trade names and publication rights within the Directories business unit. During the fourth quarter of 01, we reorganized our management structure to align with the geography of the market served. $s a result, an additional impairment analysis was performed. 7he analysis of masthead values suggested impairment, and a charge of $. million was recorded in December. $t December , 01 the carrying value of our goodwill is $11.1 million, mastheads is $.0 million, and amortizable intangible assets is $1. million. We are subMect to environmental and employee safety and health laws and regulations that could cause us to incur signi¿cant compliance expenditures and liabilities. 2ur operations are subject to federal, state and local laws and regulations pertaining to the environment, storage tanks and the management and disposal of wastes at our facilities. Under various environmental laws, a current or previous owner or operator of real property may be liable for contamination resulting from the release or threatened release of hazardous or toxic substances or petroleum at that property. Such laws often impose liability on the owner or operator without regard to fault, and the costs of any required investigation or cleanup can be substantial. $lthough in connection with certain of our Predecessor’s acquisitions, as well as certain of our acquisitions, we have rights to indemni¿cation for certain environmental liabilities, these rights may not be suf¿cient to reimburse us for all losses that we might incur if a property acquired by us has environmental contamination. In addition, although in connection with certain of our acquisitions we have obtained insurance policies for coverage for certain potential environmental liabilities, these policies have express exclusions to coverage as well as express limits on amounts of coverage and length of term. $ccordingly these insurance policies may not be suf¿cient to provide coverage for us for all losses that we might incur if a property acquired by us has environmental contamination. 2ur operations are also subject to various employee safety and health laws and regulations, including those pertaining to occupational injury and illness, employee exposure to hazardous materials and employee complaints. Environmental and employee safety and health laws tend to be complex, comprehensive and frequently changing. $s a result, we may be involved from time to time in administrative and judicial proceedings and investigations related to environmental and employee safety and health issues. 7hese proceedings and investigations could result in substantial costs to us, divert our management’s attention and adversely affect our ability to sell, lease or develop our real property. Furthermore, if it is determined that we are not in compliance with applicable laws and regulations, or if our properties are contaminated, it could result in signi¿cant liabilities, ¿nes or the suspension or interruption of the operations of speci¿c printing facilities. Future events, such as changes in existing laws and regulations, new laws or regulations or the discovery of conditions not currently known to us, may give rise to additional compliance or remedial costs that could be material. 1 Sustained increases in costs of employee health and welfare bene¿ts may reduce our pro¿tability. Moreover, our pension plan obligations are currently underfunded, and we may have to make signi¿cant cash contributions to our plans, which could reduce the cash available for our business. In recent years, we and our Predecessor experienced signi¿cant increases in the cost of employee medical bene¿ts because of economic factors beyond our control, including increases in health care costs. $t least some of these factors may continue to put upward pressure on the cost of providing medical bene¿ts. $lthough we have actively sought to control increases in these costs, there can be no assurance that we will succeed in limiting cost increases, and continued upward pressure could reduce the pro¿tability of our businesses. 2ur pension and postretirement plans were underfunded by $11. million at December , 01. 2ur pension plan invests in a variety of equity and debt securities, many of which were affected by the disruptions in the credit and capital markets in 00 and 010. Future volatility and disruption in the stock markets could cause further declines in the asset values of our pension plans. In addition, a decrease in the discount rate used to determine minimum funding requirements could result in increased future contributions. If either occurs, we may need to make additional pension contributions above what is currently estimated, which could reduce the cash available for our businesses. We may not be able to protect intellectual property rights upon which our business relies and, if we lose intellectual property protection, our assets may lose value. 2ur business depends on our intellectual property, including, but not limited to, our titles, mastheads, content and services, which we attempt to protect through patents, copyrights, trade laws and contractual restrictions, such as con¿dentiality agreements. We believe our proprietary and other intellectual property rights are important to our success and our competitive position. Despite our efforts to protect our proprietary rights, unauthorized third parties may attempt to copy or otherwise obtain and use our content, services and other intellectual property, and we cannot be certain that the steps we have taken will prevent any misappropriation or confusion among consumers and merchants, or unauthorized use of these rights. If we are unable to procure, protect and enforce our intellectual property rights, we may not realize the full value of these assets, and our business may suffer. If we must litigate to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of third parties, such litigation may be costly and divert the attention of our management from day-to- day operations. We depend on key personnel and we may not be able to operate or grow our business effectively if we lose the services of any of our key personnel or are unable to attract quali¿ed personnel in the future. 7he success of our business is heavily dependent on our ability to retain our management and other key personnel and to attract and retain quali¿ed personnel in the future. Competition for senior management personnel is intense and we may not be able to retain our key personnel. $lthough our Predecessor entered into employment agreements with certain of our key personnel, these agreements do not ensure that our key personnel will continue in their present capacity with us for any particular period of time. We do not have key man insurance for any of our current management or other key personnel. 7he loss of any key personnel would require our remaining key personnel to divert immediate and substantial attention to seeking a replacement. $n inability to ¿nd a suitable replacement for any departing executive of¿cer on a timely basis could adversely affect our ability to operate or grow our business. A shortage of skilled or experienced employees in the media industry, or our inability to retain such employees, could pose a risk to achieving improved productivity and reducing costs, which could adversely affect our pro¿tability. Production and distribution of our various publications requires skilled and experienced employees. $ shortage of such employees, or our inability to retain such employees, could have an adverse impact on our productivity and costs, our ability to expand, develop and distribute new products and our entry into new markets. 7he cost of retaining or hiring such employees could exceed our expectations which could adversely affect our results of operations. A number of our employees are unioni]ed, and our business and results of operations could be adversely affected if current or additional labor negotiations or contracts were to further restrict our ability to maximi]e the ef¿ciency of our operations. $s of December , 01, we employed ,0 employees, of whom 1, or approximately 1% were represented by unions. % of the unionized employees are in four states: 2hio, 5hode Island, Illinois and Massachusetts and represent %, %, 1% and 1% of all our union employees, respectively. Most of our unionized employees work under collective bargaining agreements that expire in 01. $lthough our newspapers have not experienced a union strike in the recent past nor do we anticipate a union strike to occur, we cannot preclude the possibility that a strike may occur at one or more of our newspapers at some point in the future. We believe that, in the event of a newspaper strike, we would be able to continue to publish and deliver to subscribers, which is critical to retaining advertising and circulation revenues, although there can be no assurance of this. The collectability of accounts receivable under adverse economic conditions could deteriorate to a greater extent than provided for in our ¿nancial statements and in our proMections of future results. $dverse economic conditions in the United States have increased our exposure to losses resulting from ¿nancial distress, insolvency and the potential bankruptcy of our advertising customers. 2ur accounts receivable are stated at net estimated realizable value and our allowance for doubtful accounts has been determined based on several factors, including receivable agings, signi¿cant individual credit risk accounts and historical experience. If such collectability estimates prove inaccurate, adjustments to future operating results could occur. Our potential inability to successfully execute cost control measures could result in greater than expected total operating costs. We and our Predecessor have implemented general cost control measures, and we expect to continue such cost control efforts in the future. If we do not achieve expected savings as a result of such measures or if our operating costs increase as a result of our growth strategy, our total operating costs may be greater than expected. In addition, reductions in staff and employee bene¿ts could affect our ability to attract and retain key employees. We rely on revenue from the printing of publications for third parties that may be subject to many of the same business and industry risks that we are. In 01, we generated approximately .% of our revenue from printing third-party publications, and our relationships with these third parties are generally pursuant to short-term contracts. $s a result, if the macroeconomic and industry trends described herein such as the sensitivity to perceived economic weakness of discretionary spending available to advertisers and subscribers, circulation declines, shifts in consumer habits and the increasing popularity of digital media affect those third parties, we may lose, in whole or in part, a substantial source of revenue. $ decision by any of the three largest national publications or the major local publications to cease publishing in those markets, or seek alternatives to their current business practice of partnering with us, could materially impact our pro¿tability. Our possession and use of personal information and the use of payment cards by our customers present risks and expenses that could harm our business. 8nauthori]ed access to or disclosure or manipulation of such data, whether through breach of our network security or otherwise, could expose us to liabilities and costly litigation and damage our reputation. 2ur online systems store and process con¿dential subscriber and other sensitive data, such as names, email addresses, addresses, and other personal information. 7herefore, maintaining our network security is critical. $dditionally, we depend on the security of our third-party service providers. Unauthorized use of or inappropriate access to our, or our third-party service providers’ networks, computer systems and services could potentially jeopardize the security of con¿dential information, including payment card credit or debit information, of our customers. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, we or our third-party service providers may be unable to anticipate these techniques or to implement adequate preventative measures. Non-technical means, for example, actions by an employee, can also result in a data breach. $ party that is able to circumvent our security measures could misappropriate our proprietary information or the information of our customers or users, cause interruption in our operations, or damage our computers or those of our customers or users. $s a result of any such breaches, customers or users may assert claims of liability against us and these activities may subject us to legal claims, adversely impact our reputation, and interfere with our ability to provide our products and services, all of which may have an adverse effect on our business, ¿nancial condition and results of operations. 7he coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches. $ signi¿cant number of our customers authorize us to bill their payment card accounts directly for all amounts charged by us. 7hese customers provide payment card information and other personally identi¿able information which, depending on the particular payment plan, may be maintained to facilitate future payment card transactions. Under payment card rules and our contracts with our card processors, if there is a breach of payment card information that we store, we could be liable to the banks that issue the payment cards for their related expenses and penalties. In addition, if we fail to follow payment card industry data security standards, even if there is no compromise of customer information, we could incur signi¿cant ¿nes or lose our ability to give our customers the option of using payment cards. If we were unable to accept payment cards, our business would be seriously harmed. 7here can be no assurance that any security measures we, or our third-party service providers, take will be effective in preventing a data breach. We may need to expend signi¿cant resources to protect against security breaches or to address problems caused by breaches. If an actual or perceived breach of our security occurs, the perception of the effectiveness of our security measures could be harmed and we could lose customers or users. Failure to protect con¿dential customer data or to provide customers with adequate notice of our privacy policies could also subject us to liabilities imposed by United States federal and state regulatory agencies or courts. We could also be subject to evolving state laws that impose data breach noti¿cation requirements, speci¿c data security obligations, or other consumer privacy-related requirements. 2ur failure to comply with any of these laws or regulations may have an adverse effect on our business, ¿nancial condition and results of operations. Our ¿nancial results were affected by the adoption of fresh start reporting and may not reÀect historical trends. Pursuant to the Plan, we acquired substantially all of the assets of our Predecessor. 7he 5estructuring resulted in us becoming a new reporting entity and adopting fresh start accounting. $s required by fresh start accounting, our Predecessor’s assets and liabilities were adjusted to estimated fair value, and we recognized certain assets and liabilities not previously recognized in our Predecessor’s ¿nancial statements. $ccordingly, our ¿nancial condition and results of operations from and after the Effective Date are not comparable to the ¿nancial condition and results of operations reÀected in our Predecessor’s historical consolidated ¿nancial statements, including those presented herein. Risks Related to OXr Manager We are dependent on our Manager and may not ¿nd a suitable replacement if our Manager terminates the Management Agreement and the inability of our Manager to retain or obtain key personnel could delay or hinder implementation of our investment strategies, which could impair our ability to make distributions and could reduce the value of your investment. Some of our of¿cers and other individuals who perform services for us are employees of our Manager. We are reliant on our Manager, which has signi¿cant discretion as to the implementation of our operating policies and strategies, to conduct our business. We are subject to the risk that our Manager will terminate the Management $greement and that we will not be able to ¿nd a suitable replacement for our Manager in a timely manner, at a reasonable cost or at all. Furthermore, we are dependent on the services of certain key employees of our Manager whose compensation may be partially or entirely dependent upon the amount of incentive or management compensation earned by our Manager and whose continued service is not guaranteed, and the loss of such services could adversely affect our operations. If any of these people were to cease their af¿liation with us or our Manager, either we or our Manager may be unable to ¿nd suitable replacements, and our operating results could suffer. We believe that our future success depends, in large part, upon our Manager’s ability to hire and retain highly skilled personnel. Competition for highly skilled personnel is intense, and our Manager may be unsuccessful in attracting and retaining such skilled personnel. If we lose or are unable to obtain the services of highly skilled personnel, our ability to implement our investment strategies could be delayed or hindered and this could materially adversely affect our business, results of operations, ¿nancial condition and ability to make distributions to our stockholders. There are conÀicts of interest in our relationship with our Manager. 2ur Management $greement with our Manager was not negotiated between unaf¿liated parties, and its terms, including fees payable, although approved by the independent directors of both Newcastle our parent prior to the spin-off and New Media as fair, may not be as favorable to us as if they had been negotiated with an unaf¿liated third party. 7here are conÀicts of interest inherent in our relationship with our Manager insofar as our Manager and its af¿liates— including investment funds, private investment funds, or businesses managed by our Manager—invest in media assets and whose investment objectives overlap with our investment objectives. Certain investments appropriate for us may also be appropriate for one or more of these other investment vehicles. Certain members of our Board of Directors and employees of our Manager who may be of¿cers also serve as of¿cers and/or directors of these other entities. $lthough we have the same Manager, we may compete with entities af¿liated with our Manager or Fortress for certain target assets. From time to time, af¿liates of Fortress focus on investments in assets with a similar pro¿le as our target assets that we may seek to acquire. 7hese af¿liates may have meaningful purchasing capacity, which may change over time depending upon a variety of factors, including, but not limited to, available equity capital and debt ¿nancing, market conditions and cash on hand. Fortress had approximately $0. billion of assets under management as of December 1, 01. In addition, with respect to Fortress funds in the process of selling investments, our Manager may be incentivized to regard the sale of such assets to us positively, particularly if a sale to an unrelated third party would result in a loss of fees to our Manager. 2ur Management $greement with our Manager generally does not limit or restrict our Manager or its af¿liates from engaging in any business or managing other pooled investment vehicles that invest in investments that meet our investment objectives. 2ur Manager may engage in additional investment opportunities related to media assets in the future, which may cause our Manager to compete with us for investments or result in a change in our current investment strategy. In addition, our certi¿cate of incorporation provides that if Fortress or an af¿liate or any of their of¿cers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty, to the fullest extent permitted by law, to offer such corporate opportunity to us, our stockholders or our af¿liates. In the event that any of our directors and of¿cers who is also a director, of¿cer or employee of Fortress or its af¿liates acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or of¿cer of ours and such person acts in good faith, then to the fullest extent permitted by law such person is deemed to have fully satis¿ed such person’s ¿duciary duties owed to us and is not liable to us if Fortress or its af¿liates pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us. 7he ability of our Manager and its of¿cers and employees to engage in other business activities, subject to the terms of our Management $greement with our Manager, may reduce the amount of time our Manager, its of¿cers or other employees spend managing us. In addition, we may engage in material transactions with our Manager or another entity managed by our Manager or one of its af¿liates, which may present an actual, potential or perceived conÀict of interest. It is possible that actual, potential or perceived conÀicts could give rise to investor dissatisfaction, litigation or regulatory enforcement actions. $ppropriately dealing with conÀicts of interest is complex and dif¿cult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual or perceived conÀicts of interest. 5egulatory scrutiny of, or litigation in connection with, conÀicts of interest could have a material adverse effect on our reputation, which could materially adversely affect our business in a number of ways, including causing an inability to raise additional funds, a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities and a resulting increased risk of litigation and regulatory enforcement actions. 7he management compensation structure that we have agreed to with our Manager, as well as compensation arrangements that we may enter into with our Manager in the future in connection with new lines of business or other activities , may incentivize our Manager to invest in high risk investments. In addition to its management fee, our Manager is currently entitled to receive incentive compensation. In evaluating investments and other management strategies, the opportunity to earn incentive compensation may lead our Manager to place undue emphasis on the maximization of such measures at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative than lower-yielding investments. Moreover, because our Manager receives compensation in the form of options in connection with the completion of our equity offerings, our Manager may be incentivized to cause us to issue additional stock, which could be dilutive to existing stockholders. It would be dif¿cult and costly to terminate our Management Agreement with our Manager. It would be dif¿cult and costly for us to terminate our Management $greement with our Manager. $fter its initial three- year term, the Management $greement will be automatically renewed for one-year terms unless terminated i by a majority vote of at least two-thirds of our independent directors, or by a vote of the holders of a simple majority of the outstanding shares of our common stock, that there has been unsatisfactory performance by our Manager that is materially detrimental to us or ii a determination by a simple majority of our independent directors that the management fee payable to our Manager is not fair, subject to our Manager’s right to prevent such a termination by continuing to provide the services under the Management $greement at a fee that a simple majority of our independent directors have reasonably determined to be fair. 2ur Manager will be provided 0 days’ prior notice of any termination and will be paid a termination fee equal to the amount of the management fee earned by the Manager during the 1-month period preceding such termination. In addition, following any termination of the Management $greement, our Manager may require us to purchase its right to receive incentive compensation at a price determined as if our assets were sold for their then current fair market value or otherwise we may continue to pay the incentive compensation to our Manager. 7hese provisions may increase the effective cost to us of terminating the Management $greement, thereby adversely affecting our ability to terminate our Manager without cause. 2ur Board of Directors does not approve each investment decision made by our Manager. In addition, we may change our investment strategy without a stockholder vote, which may result in our making investments that are different, riskier or less pro¿table than our current investments. 2ur Manager has great latitude in determining the types and categories of assets it may decide are proper investments for us, including the latitude to invest in types and categories of assets that may differ from those in which we currently invest. 2ur Board of Directors periodically reviews our investment portfolio. +owever, our Board of Directors does not review or pre-approve each proposed investment or our related ¿nancing arrangements. In addition, in conducting periodic reviews, our Board of Directors relies primarily on information provided to them by our Manager. Furthermore, transactions entered into by our Manager may be dif¿cult or impossible to unwind by the time they are reviewed by our Board of Directors even if the transactions contravene the terms of the Management $greement. In addition, we may change our investment strategy, including our target asset classes, without a stockholder vote. 2ur investment strategy may evolve in light of existing market conditions and investment opportunities, and this evolution may involve additional risks depending upon the nature of the assets in which we invest and our ability to ¿nance such assets on a short- or long-term basis. Investment opportunities that present unattractive risk-return pro¿les relative to other available investment opportunities under particular market conditions may become relatively attractive under changed market conditions, and changes in market conditions may therefore result in changes in the investments we target. Decisions to make investments in new asset categories present risks that may be dif¿cult for us to adequately assess and could therefore reduce our ability to pay dividends on our common stock or have adverse effects on our liquidity or ¿nancial condition. $ change in our investment strategy may also increase our exposure to interest rate, real estate market or credit market Àuctuations. In addition, a change in our investment strategy may increase the guarantee obligations we agree to incur or increase the number of transactions we enter into with af¿liates. 2ur failure to accurately assess the risks inherent in new asset categories or the ¿nancing risks associated with such assets could adversely affect our results of operations and our ¿nancial condition. Our Manager will not be liable to us for any acts or omissions performed in accordance with the Management Agreement, including with respect to the performance of our investments. Pursuant to our Management $greement, our Manager will not assume any responsibility other than to render the services called for thereunder in good faith and will not be responsible for any action of our Board of Directors in following or declining to follow its advice or recommendations. 2ur Manager, its members, managers, of¿cers and employees will not be liable to us or any of our subsidiaries, to our Board of Directors, or our or any subsidiary’s stockholders or partners for any acts or omissions by our Manager, its members, managers, sub-advisers, of¿cers or employees, except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management $greement. We shall, to the full extent lawful, reimburse, indemnify and hold our Manager, its members, managers, of¿cers and employees, sub-advisers and each other person, if any, controlling our Manager, harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever including attorneys’ fees in respect of or arising from any acts or omissions of an indemni¿ed party made in good faith in the performance of our Manager’s duties under our Management $greement and not constituting such indemni¿ed party’s bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management $greement. Our Manager’s due diligence of investment opportunities or other transactions may not identify all pertinent risks, which could materially affect our business, ¿nancial condition, liquidity and results of operations. 2ur Manager intends to conduct due diligence with respect to each investment opportunity or other transaction it pursues. It is possible, however, that our Manager’s due diligence processes will not uncover all relevant facts, particularly with respect to any assets we acquire from third parties. In these cases, our Manager may be given limited access to information about the investment and will rely on information provided by the target of the investment. In addition, if investment opportunities are scarce, the process for selecting bidders is competitive, or the timeframe in which we are required to complete diligence is short, our ability to conduct a due diligence investigation may be limited, and we would be required to make investment decisions based upon a less thorough diligence process than would otherwise be the case. $ccordingly, investments and other transactions that initially appear to be viable may prove not to be over time, due to the limitations of the due diligence process or other factors. Because we are dependent upon our Manager and its af¿liates to conduct our operations, any adverse changes in the ¿nancial health of our Manager or its af¿liates or our relationship with them could hinder our Manager’s ability to successfully manage our operations. We are dependent on our Manager and its af¿liates to manage our operations and acquire and manage our investments. Under the direction of our Board of Directors, our Manager makes all decisions with respect to the management of our company. 7o conduct its operations, our Manager depends upon the fees and other compensation that it receives from us in connection with managing our company and from other entities and investors with respect to investment management services it provides. $ny adverse changes in the ¿nancial condition of our Manager or its af¿liates, or our relationship with our Manager, could hinder our Manager’s ability to successfully manage our operations, which would materially adversely affect our business, results of operations, ¿nancial condition and ability to make distributions to our stockholders. For example, adverse changes in the ¿nancial condition of our Manager could limit its ability to attract key personnel. Risks Related to oXr Common Stock There can be no assurance that the market for our stock will provide you with adequate liquidity. 7he market price of our common stock may Àuctuate widely, depending upon many factors, some of which may be beyond our control. 7hese factors include, without limitation: • our business pro¿le and market capitalization may not ¿t the investment objectives of any stockholder; • a shift in our investor base; • our quarterly or annual earnings, or those of other comparable companies; • actual or anticipated Àuctuations in our operating results; • changes in accounting standards, policies, guidance, interpretations or principles; • announcements by us or our competitors of signi¿cant investments, acquisitions or dispositions; • the failure of securities analysts to cover our Common Stock; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; • overall market Àuctuations; and • general economic conditions. Stock markets in general and recently have experienced volatility that has often been unrelated to the operating performance of a particular company. 7hese broad market Àuctuations may adversely affect the trading price of our Common Stock. $dditionally, these and other external factors have caused and may continue to cause the market price and demand for our Common Stock to Àuctuate, which may limit or prevent investors from readily selling their shares of Common Stock, and may otherwise negatively affect the liquidity of our common stock. Sales or issuances of shares of our common stock could adversely affect the market price of our Common Stock. Sales of substantial amounts of shares of our Common Stock in the public market, or the perception that such sales might occur, could adversely affect the market price of our Common Stock. 7he issuance of our common stock in connection with property, portfolio or business acquisitions or the settlement of awards that may be granted under our Incentive Plan as de¿ned below or otherwise could also have an adverse effect on the market price of our Common Stock. Failure to maintain effective internal control over ¿nancial reporting in accordance with Section of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price. $s a public company, we are required to maintain effective internal control over ¿nancial reporting in accordance with Section 0 of the Sarbanes-2xley $ct of 00. 7he acquisitions of Stephens Media, LLC, +alifax Media *roup, 7he Columbus Dispatch and the Monroe News have resulted in a change to our internal control over ¿nancial reporting which has materially affected our internal control over ¿nancial reporting. Internal control over ¿nancial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. We cannot assure you that our internal control over ¿nancial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over ¿nancial reporting, our independent registered public accounting ¿rm will not be able to certify as to the effectiveness of our internal control over ¿nancial reporting. Matters impacting our internal controls may cause us to be unable to report our ¿nancial information on a timely basis, or may cause us to restate previously issued ¿nancial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. 7here could also be a negative reaction in the ¿nancial markets due to a loss of investor con¿dence in us and the reliability of our ¿nancial statements. Con¿dence in the reliability of our ¿nancial statements is also likely to suffer if we or our independent registered public accounting ¿rm reports a material weakness in our internal control over ¿nancial reporting. 7his could materially adversely affect us by, for example, leading to a decline in our share price and impairing our ability to raise capital, if and when desirable. The percentage ownership of existing shareholders in New Media may be diluted in the future. We may issue equity in order to raise capital or in connection with future acquisitions and strategic investments, which would dilute investors’ percentage ownership in New Media. In addition, your percentage ownership may be diluted if we issue equity instruments such as debt and equity ¿nancing. 7he percentage ownership of existing shareholders in New Media may also be diluted in the future as result of the issuance of ordinary shares in New Media upon the exercise of 10-year warrants the ³New Media Warrants´ . 7he New Media Warrants collectively represent the right to acquire New Media Common Stock, which in the aggregate are equal to % of New Media Common Stock as of the Effective Date calculated prior to dilution from shares of New Media Common Stock issued pursuant to Newcastle’s contribution of Local Media Parent and assignment of related stock purchase agreement to New Media the ³Local Media Contribution´ at a strike price of $. calculated based on a total equity value of New Media prior to the Local Media Contribution of $1. billion as of the Effective Date. $s a result, New Media Common Stock may be subject to dilution upon the exercise of such New Media Warrants. Furthermore, the percentage ownership in New Media may be diluted in the future because of additional equity awards that we expect will be granted to our Manager pursuant to our Management $greement. Upon the successful completion of an offering of shares of our Common Stock or any shares of preferred stock, we will grant our Manager options equal to 10% of the number of shares being sold in the offering, with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser. 7he Board of Directors of New Media approved the Incentive Plan, which provides for the grant of equity and equity-based awards, including restricted stock, stock options, stock appreciation rights, performance awards, restricted stock units, tandem awards and other equity-based and non-equity based awards, in each case to our Manager, to the directors, of¿cers, employees, service providers, consultants and advisors of our Manager who perform services for us, and to our directors, of¿cers, employees, service providers, consultants and advisors. $ny future grant would cause further dilution. We initially reserved 1 million shares of our Common Stock for issuance under the Incentive Plan; on the ¿rst day of each ¿scal year beginning during the ten-year term of the Incentive Plan and in and after calendar year 01, that number will be increased by a number of shares of our Common Stock equal to 10% of the number of shares of our Common Stock newly issued by us during the immediately preceding ¿scal year. In -anuary 01 and 01, the number of shares reserved for issuance under the Incentive Plan was increased by ,00 and , representing 10% of the shares of Common Stock newly issued in ¿scal year 01 and 01, respectively. Provisions in our amended and restated certi¿cate of incorporation and amended and restated bylaws and of Delaware law may prevent or delay an acquisition of our company, which could decrease the trading price of our Common Stock. 2ur amended and restated certi¿cate of incorporation, amended and restated bylaws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover. 7hese provisions provide for: • a classi¿ed board of directors with staggered three-year terms; • amendment of provisions in our amended and restated certi¿cate of incorporation and amended and restated bylaws regarding the election of directors, classes of directors, the term of of¿ce of directors, the ¿lling of director vacancies and the resignation and removal of directors only upon the af¿rmative vote of at least 0% of the then issued and outstanding shares of our capital stock entitled to vote thereon provided, however, that for so long as Newcastle and certain other af¿liates of Fortress and permitted transferees collectively, the ³Fortress Stockholders´ bene¿cially own at least 0% of our issued and outstanding Common Stock, such provisions may be amended with the af¿rmative vote of a majority of the voting interest of stockholders entitled to vote or by a majority of the entire Board of Directors ; • amendment of provisions in our amended and restated certi¿cate of incorporation regarding corporate opportunity only upon the af¿rmative vote of at least 0% of the then issued and outstanding shares of our capital stock entitled to vote thereon; • removal of directors only for cause and only with the af¿rmative vote of at least 0% of the voting interest of stockholders entitled to vote in the election of directors provided, however, that for so long as the Fortress Stockholders bene¿cially own at least 0% of our issued and outstanding Common Stock, directors may be removed with or without cause with the af¿rmative vote of a majority of the voting interest of stockholders entitled to vote ; • our Board to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval; • provisions in our amended and restated certi¿cate of incorporation and amended and restated bylaws prevent stockholders from calling special meetings of our stockholders provided, however, that for so long as the Fortress Stockholders bene¿cially own at least 0% of our issued and outstanding Common Stock, Fortress Stockholders may call special meetings of our stockholders ; • advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings; • a prohibition, in our amended and restated certi¿cate of incorporation, stating that no holder of shares of our Common Stock will have cumulative voting rights in the election of directors, which means that the holders of majority of the issued and outstanding shares of our Common Stock can elect all the directors standing for election; and • action by our stockholders outside a meeting, in our amended and restated certi¿cate of incorporation and our amended and restated bylaws, only by unanimous written consent provided, however, that for so long as the Fortress Stockholders bene¿cially own at least 0% of our issued and outstanding Common Stock, our stockholders may act without a meeting by written consent of a majority of the voting interest of stockholders entitled to vote . Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is considered favorable to stockholders. 7hese anti-takeover provisions could substantially impede the ability of public stockholders to bene¿t from a change in control or a change in our management and Board and, as a result, may adversely affect the market price of our Common Stock and your ability to realize any potential change of control premium. Item 1B. Unresolved Staff Comments Not applicable. Item 2. Properties We own and operate print facilities across the United States. *ate+ouse’s print facilities range in size from approximately ,000 to 01,000 square feet combined printing and of¿ce space . *ate+ouse’s executive of¿ces are located in Pittsford, New York, where we lease approximately ,0 square feet under a lease terminating in 2ctober 0. We maintain our properties in good condition and believe that our current facilities are adequate to meet the present needs of our business. We do not believe any individual property is material to our ¿nancial condition or results of operations. Item 3. Legal Proceedings We are and may become involved from time to time in legal proceedings in the ordinary course of our business, including but not limited to with respect to such matters as libel, invasion of privacy, intellectual property infringement, wrongful termination actions and complaints alleging employment discrimination, and regulatory investigations and inquiries. In addition, we are involved from time to time in governmental and administrative proceedings concerning employment, labor, environmental and other claims. Insurance coverage mitigates potential loss for certain of these matters. +istorically, such claims and proceedings have not had a material adverse effect on our consolidated results of operations or ¿nancial position. $lthough we are unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, we do not expect our current and any threatened legal proceedings to have a material adverse effect on our business, ¿nancial position or consolidated results of operations. *iven the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on our ¿nancial results. Item 4. Mine Safety DisclosXres Not applicable. 0 PART II Item 5. Market for Registrant’s Common ETXity, Related Stockholder Matters and IssXer PXrchases of ETXity SecXrities Market Information New Media Common Stock trades on the NYSE under the trading symbol ³NEWM´ since the spin-off from Newcastle. $ ³when-issued´ trading market for New Media’s Common Stock on the NYSE began on February , 01 and ³regular-way´ trading of New Media Common Stock began on February 1, 01. Prior to February , 01, there was no public market for New Media Common Stock. Set forth in the table below for the periods presented are the high and low sale prices for New Media Common Stock as reported on the NYSE. HIGH LOW Fiscal Year Ending December , 01: First Quarter ...... $ . $ 0. Second Quarter ...... $ . $1.0 7hird Quarter ...... $ 1. $1. Fourth Quarter ...... $ 0.0 $1. 1 Fiscal Year Ending December , 01: First Quarter since February , 01 ...... $ 1. $ 10. Second Quarter ...... $ 1. $1. 7hird Quarter ...... $ 1. $1. Fourth Quarter ...... $ . $1. From the most recent available Company information, on February 1, 01 there were approximately holders of record. Dividends New Media currently intends to distribute a substantial portion of free cash Àow as a dividend to stockholders, through a quarterly dividend, subject to satisfactory ¿nancial performance, Board approval and dividend restrictions in the New Media Credit $greement. 7he Board of Directors’ determinations regarding dividends will depend on a variety of factors, including the Company’s *$$P net income, free cash Àow generated from operations or other sources, liquidity position and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future ¿nancial results. 2n -uly 1, 01, the Company announced a second quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend was paid on $ugust 1, 01 to shareholders of record as of the close of business on $ugust 1, 01. 2n 2ctober 0, 01, the Company announced a third quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend was paid on November 0, 01, to shareholders of record as of the close of business on November 1, 01. 2n February , 01, the Company announced a fourth quarter 01 cash dividend of $0.0 per share of New Media Common Stock. 7he dividend was paid on March 1 , 01, to shareholders of record as of the close of business on March 11, 01. 2n $pril 0, 01, the Company announced a ¿rst quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend was paid on May 1, 01, to shareholders of record as of the close of business on May 1, 01. 2n -uly 0, 01, the Company announced a second quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend was paid on $ugust 0, 01, to shareholders of record as of the close of business on $ugust 1, 01. 2n 2ctober , 01, the Company announced a third quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend was on November 1 , 01, to shareholders of record as of the close of business on November 1, 01. 2n February , 01, the Company announced a fourth quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend will be paid on March 1, 01, to shareholders of record as of the close of business on March , 01. Unregistered Sales of ETXity SecXrities In connection with the restructuring of *ate+ouse, on the Effective Date New Media issued 0,000,000 shares of New Media Common Stock pursuant to the Plan in accordance with Section 11 a 1 of the U.S. Bankruptcy Code the ³Bankruptcy Code´ . 1 $dditionally, on the Effective Date, New Media issued 1,, 10-year warrants at a strike price of $. per share to the former equity holders of *ate+ouse pursuant to the Plan, in accordance with Section 11 a of the Bankruptcy Code. Item 6. Selected Financial Data 7he following table presents our selected historical ¿nancial data as of and for each of the years in the ¿ve year period ended December , 01. 7he information in this table should be read in conjunction with the information under ³Management’s Discussion and $nalysis of Financial Condition and 5esults of 2perations´, ³Business´ and our historical consolidated ¿nancial statements and the related notes thereto included elsewhere in this report. 7he selected consolidated statements of operations and comprehensive income loss data and other data for the years ended December 0, 01 and -anuary 1, 01 and the selected consolidated balance sheets data at December , 01, December 0, 01 and -anuary 1, 01 have been derived from the audited consolidated ¿nancial statements of our Predecessor that are not included in this report. SXccessor Company Predecessor Company Two Months Ten Months Year Ended Year Ended Ended Ended Year Ended Year Ended December 27, December 28, December 29, November 6, December 30, -anXary 1, 2015 2014 2013 2013 2012(2) 2012 (in thoXsands, e[cept per share data) Statement of Operations Data 5evenues: $dvertising ...... $ , $ , $ ,0$,0 $ 0,1$,1 Circulation ...... , 1 ,1 , 11,10 11, 11, Commercial printing and other ...... 10, 1, 10, ,0,0 , 7otal revenues ...... 1,1 ,1 , 10,1 1, 0 , 1,0 2perating costs and expenses: 2perating costs ...... , ,0 ,1 ,0 , 1, Selling, general and administrative ...... 0, 11, , 1, 1,001, Depreciation and amortization...... , 1,0 , ,0 , , Integration and reorganization costs ...... ,0 , 1, 1, , , Impairment of long-lived assets...... — — — 1, —1, *ain loss on sale or disposal of assets ...... 1,01 1, 1,1 1, *oodwill and mastheads impairment ...... ,00———— 2perating income loss 10, , , , , ,0 Interest expense, amortization of deferred ¿nancing costs, loss on early extinguishment of debt, gain loss on derivative instruments, reorganization items, net, and other...... ,0, 1, 1, , ,1 Income loss from continuing operations before income taxes ...... 1,01 , ,0 ,0 , Income tax expense bene¿t ...... ,0,1 1 1 0 1,0 Income loss from continuing operations ...... ,1 ,0 ,0 ,0 , 0, 0 Loss from discontinued operations, net of income taxes...... — — — 1,0 ,0 Net income loss ...... ,1 ,0 ,0 ,0 ,0 1, Net loss attributable to noncontrolling interest ...... — — — 0 —— Net income loss attributable to New Media ...... $ ,1 $ ,0 $ ,0 $ ,1 $ ,0 $ 1, Basic net income loss from continuing operations attributable to New Media per share...... $ 1. $ 0.10 $0. $1. $ 0. $ 0. Diluted income loss from continuing operations attributable to New Media per share...... $ 1. $ 0.10 $0. $1. $ 0. $ 0. Basic net income loss attributable to New Media common stockholders per share...... $ 1. $ 0.10 $0. $1. $ 0.1 $ 0. Diluted net income loss attributable to New Media common stockholders per share...... $ 1. $ 0.10 $0. $1. $ 0.1 $ 0. Dividends declared per share...... $ 1. $0. $—$—$—$— Other Data $djusted EBI7D$ 1 ...... $ 1, $ ,1$1,0 $ , $ , $ 0, Cash interest paid...... $ 1, $1,11$ $ ,0 $ , $ , 1 We de¿ne $djusted EBI7D$ as net income loss from continuing operations before income tax expense bene¿t , interest/¿nancing expense, depreciation and amortization and non-cash impairments. $djusted EBI7D$ is not a measurement of ¿nancial performance under *$$P and should not be considered in isolation or as an alternative to income from operations, net income loss , cash Àow from continuing operating activities or any other measure of performance or liquidity derived in accordance with *$$P. We believe this non-*$$P measure, as we have de¿ned it, is helpful in identifying trends in our day-to-day performance because the items excluded have little or no signi¿cance in our day-to-day operations. 7his measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current ¿nancial goals as well as achieve optimal ¿nancial performance. $djusted EBI7D$ provides an indicator for management to determine if adjustments to current spending decisions are needed. $djusted EBI7D$ provides us with a measure of ¿nancial performance, independent of items that are beyond the control of management in the short-term, such as depreciation and amortization, taxation and interest expense associated with our capital structure. 7his metric measures our ¿nancial performance based on operational factors that management can impact in the short-term, namely the cost structure or expenses of the Company. $djusted EBI7D$ is one of the metrics used by senior management and the board of directors to review the ¿nancial performance of our business on a monthly basis. Not all companies calculate $djusted EBI7D$ using the same methods; therefore, the $djusted EBI7D$ ¿gures set forth herein may not be comparable to $djusted EBI7D$ reported by other companies. $ substantial portion of our $djusted EBI7D$ must be dedicated to the payment of interest on our outstanding indebtedness and to service other commitments, thereby reducing the funds available to us for other purposes. $ccordingly, $djusted EBI7D$ does not represent an amount of funds that is available for management’s discretionary use. See ³Management’s Discussion and $nalysis of Financial Condition and 5esults of 2perations´ in Item of this report. 7he year ended December 0, 01 included a rd week of operations for approximately 0% of the business. 7he table below shows the reconciliation of income loss from continuing operations to $djusted EBI7D$ for the periods presented: SXccessor Company Predecessor Company Year Ended Year Ended Year Ended Two Months Ended Ten Months Ended December 30, Year Ended December 27, 2015 December 28, 2014 December 29, 2013 November 6, 2013 2012(3) -anXary 1, 2012 (in thoXsands) Income loss from continuing operations ...... $ ,1 $ ,0 $ ,0 $ ,0$ , $ 0, 0 Income tax expense bene¿t ...... ,0,1 1 1 0 1,0 Loss gain on derivative instruments 1 ...... — 1— 1 1, 1 Loss on early extinguishment of debt ...... — ,0 — ——— $mortization of deferred ¿nancing costs...... ,1 1,0 11 1, 1,0 Interest expense ...... , 1, 1,0 , , ,0 Impairment of long-lived assets...... — — — 1, —1, Depreciation and amortization...... , 1,0 , ,0 , , *oodwill and mastheads impairment...... ,00———— $djusted EBI7D$ from continuing operations .... $ 1, a $ ,1 b $1,0 c $ , d $ , e $ 0, f a $djusted EBI7D$ for the year ended December , 01 included net expenses of $1, , comprised of transaction and project costs, non-cash compensation, and other expenses of $ ,, integration and reorganization costs of $,0 and a $1,01 gain on the sale or disposal of assets. b $djusted EBI7D$ for the year ended December , 01 included net expenses of $1,, comprised of transaction and project costs, non-cash compensation, and other expenses of $1,0, integration and reorganization costs of $, and a $1, loss on the sale or disposal of assets. c $djusted EBI7D$ for the two months ended December , 01 included net expenses of $,, comprised of transaction and project costs and other expenses of $,0, integration and reorganization costs of $1, and a $ loss on the sale or disposal of assets. d $djusted EBI7D$ for the ten months ended November , 01 included net expenses of $ 0, , comprised of transaction and project costs, non-cash compensation, and other expenses of $ , , integration and reorganization costs of $1, and a $1,1 loss on the sale or disposal of assets. $djusted EBI7D$ also does not include $1 of EBI7D$ generated from our discontinued operations. e $djusted EBI7D$ for the year ended December 0, 01 included net expenses of $11,00 , comprised of transaction and project costs, non-cash compensation, and other expenses of $,, integration and reorganization costs of $, and a $1, loss on the sale or disposal of assets. $djusted EBI7D$ also does not include $ of EBI7D$ generated from our discontinued operations. f $djusted EBI7D$ for the year ended -anuary 1, 01 included net expenses of $10,, comprised of transaction and project costs, non-cash compensation, and other expenses of $,, integration and reorganization costs of $, and a $ loss on the sale or disposal of assets. $djusted EBI7D$ also does not include $ of EBI7D$ generated from our discontinued operations. 1 Non-cash loss gain on derivative instruments is related to interest rate swap agreements which are ¿nancing related and are excluded from $djusted EBI7D$. Non-cash write-off of deferred ¿nancing costs are similar to interest expense and amortization of ¿nancing fees and are excluded from $djusted EBI7D$. 7he year ended December 0, 01 included a rd week of operations for approximately 0% of the business. As of SXccessor Company Predecessor Company December 27, December 28, December 29, December 30, -anXary 1, 2015 2014 2013 2012 2012 (in thoXsands) Balance Sheet Data 7otal assets...... $ 1,00, $ 0, $ , $ , $ 10,0 7otal long-term obligations, including current maturities ...... , ,11 1,11 1,1, 1,1,1 Stockholders’ equity de¿cit ...... ,0 ,1 , ,1 0, Item 7. Management’s DiscXssion and Analysis of Financial Condition and ResXlts of Operations 7he following discussion of our ¿nancial condition and results of operations should be read in conjunction with our historical consolidated ¿nancial statements and notes to those statements appearing in this report. 7he discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors under the heading ³5isk Factors´ and elsewhere in this report that could cause our actual future growth, results of operations, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, such forward-looking statements. See ³Cautionary Note 5egarding Forward Looking Information´ at the beginning of this report. Comparability of Information $s a result of the restructuring of *ate+ouse Media, LLC formerly known as *ate+ouse Media, Inc. ³*ate+ouse´ or ³Predecessor´ the ³5estructuring´ , all *ate+ouse debt, including derivative liabilities and deferred ¿nancing assets, was eliminated on November , 01, the con¿rmation date of the pre-packaged plan under Chapter 11 of title 11 of the United States Bankruptcy Code the ³Plan´ . Fresh start accounting also led to changes in the basis of our assets and liabilities including property, plant and equipment and intangible assets that will impact future depreciation and amortization expense levels. $s a result of the adoption of fresh start accounting, New Media’s ³New Media,´ ³Company,´ ³us,´ or ³we´ reorganized company post-emergence ¿nancial statements will generally not be comparable with the ¿nancial statements of *ate+ouse prior to emergence, including historical ¿nancial information in this $nnual 5eport on Form 10-.. Overview New Media is a company that owns, operates and invests in high quality local media assets. We have a particular focus on owning and acquiring strong local media assets in small to mid-size markets. With our collection of assets, we focus on two large business categories; consumers and small to medium size businesses ³SMBs´ . 2ur portfolio of media assets today spans across markets and 1 states. 2ur products include community print publications, websites, mobile sites and six yellow page directories. We reach over 1 million people per week and serve over 1 ,000 business customers. We are focused on growing our consumer revenues primarily through our penetration into the local consumer market that values comprehensive local news and receives their news primarily from our products. We believe our rich local content, our strong media brands, and multiple platforms for delivering content will impact our reach into the local consumers leading to growth in subscription income. We also believe our focus on smaller markets will allow us to be a dominant provider of valuable, unique local news to consumers in those markets. We believe that one result of our local consumer penetration in these smaller markets will be transaction revenues as we link consumers with local businesses. For our SMB business category, we focus on leveraging our strong local media brands, our in-market sales force and our high consumer penetration rates with a variety of products and services that we believe will help SMBs expand their marketing, advertising and other digital lead generation platforms. We also believe our strong position in our local markets will allow us to develop other products that will be of value to our SMBs in helping them run and grow their businesses. 2ur business strategy is to be the preeminent provider of local news, information, advertising and digital services in the markets we operate in today. We aim to grow our business organically through what we believe are both our consumer and SMB strategies. We also plan to pursue strategic acquisitions of high quality local media assets at attractive valuation levels. Finally, we intend to distribute a substantial portion of our free cash Àow as a dividend to stockholders through a quarterly dividend, subject to satisfactory ¿nancial performance and approval by our board of directors the ³Board of Directors´ or ³Board´ and dividend restrictions in the New Media Credit $greement as de¿ned below . 7he Board of Directors’ determinations regarding dividends will depend on a variety of factors, including the Company’s U.S. generally accepted accounting principles ³*$$P´ net income, free cash Àow generated from operations or other sources, liquidity position and potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future ¿nancial results. 2ur focus on owning and operating dominant local content oriented media properties in small to mid-size markets, we believe, puts us in a position to better execute on our strategy. We believe that being the dominant provider of local news and information in the markets in which we operate, and distributing that content across multiple print and digital platforms, gives us an opportunity to grow our audiences and reach. Further, we believe our strong local media brands and our in-markets presence gives us the opportunity to expand our advertising and lead generation products with local business customers. Central to our business strategy are our digital marketing services products called Propel Marketing ³Propel´ . We launched the products in 01 and have seen rapid growth since then. 5evenues have grown from $1 million in 01 to $1. million in 01. We believe Propel and our digital marketing service products, combined with our strong local brands and in market sales force, position this business to be a key component to our overall organic growth strategy. 7he opportunity Propel looks to seize upon is as follows: 7here are approximately . million SMBs in the U.S. according to the 011 U.S. Census data. 2f these, approximately . million have 0 employees or less. Many of the owners and managers of these SMBs do not have the bandwidth, expertise or resource to navigate the fast evolving digital marketing sector, but they increasingly know they have to be present there to stay connected with current and future customers. Propel is designed to offer a complete set of digital marketing services to SMBs that are turn-key with results that are transparent to the business owners. Propel provides four broad categories of services: building businesses a presence, helping businesses to be located by consumers online, engaging with consumers, and growing their customer base. We believe our local media properties and local sales infrastructure are uniquely positioned to sell these digital marketing services to local business owners and give us distinct advantages, including: • our strong and trusted local brands, with % of our daily newspapers having been publishing local content for more than 100 years; • our ability to market through our print and online properties, driving branding and traf¿c; and • our more than 1,0 local, direct, in-market sales professionals with long standing relationships with small businesses in the communities we serve. 2ur core products include: • 1 daily newspapers with total paid circulation of approximately 1. million; • weekly newspapers published up to three times per week with total paid circulation of approximately 1,000 and total free circulation of approximately .0 million; • 11 ³shoppers´ generally advertising-only publications with total circulation of approximately . million; • locally focused websites and mobile sites, which extend our businesses onto the internet and mobile devices with approximately million page views per month; • six yellow page directories, with a distribution of approximately ,000, that cover a population of approximately 0,000 people; and • Propel digital marketing services. In addition to our core products, we also opportunistically produce niche publications that address speci¿c local market interests such as recreation, sports, healthcare and real estate. Similarly, *ate+ouse Live, our events business, concentrates on local markets and interests. 2ur advertising revenue tends to follow a seasonal pattern, with higher advertising revenue in months containing signi¿cant events or holidays. $ccordingly, our ¿rst quarter, followed by our third quarter, historically are our weakest quarters of the year in terms of revenue. Correspondingly, our second and fourth ¿scal quarters, historically, are our strongest quarters. We expect that this seasonality will continue to affect our advertising revenue in future periods. 2ur Predecessor has experienced on-going declines in print advertising revenue streams and increased volatility of operating performance, despite our geographic diversity, well-balanced portfolio of products, broad customer base and reliance on smaller markets. We may experience additional declines and volatility in the future. 7hese declines in print advertising revenue have come with the shift from traditional media to the internet for consumers and businesses. We believe our local advertising tends to be less sensitive to economic cycles than national advertising because local businesses generally have fewer advertising channels through which to reach their target audience. We are making investments in digital platforms, such as Propel, as well as online, and mobile applications, to support our print publications in order to capture this shift as witnessed by our Predecessor’s digital advertising revenue growth, which doubled between 00 and 01. 2ur operating costs consist primarily of labor, newsprint, and delivery costs. 2ur selling, general and administrative expenses consist primarily of labor costs. Compensation represents just under 0% of our operating expenses. 2ver the last few years, we have worked to drive ef¿ciencies and centralization of work throughout our Company. $dditionally, we have taken steps to cluster our operations thereby increasing the usage of facilities and equipment while increasing the productivity of our labor force. We expect to continue to employ these steps as part of our business and clustering strategy. 7he Company’s operating segments Eastern US Publishing, Central US Publishing, and Western US Publishing are aggregated into one reportable business segment. Industry 7he newspaper industry and the Company have experienced declining same store revenue and pro¿tability over the past several years. $s a result, we previously implemented plans to reduce costs and preserve cash Àow. We have also invested in potential growth opportunities, primarily in the digital space. We believe the cost reductions and the new digital initiatives, together with the 5estructuring described below, will provide the appropriate capital structure and ¿nancial resources necessary to invest in the business and ensure our future success and provide suf¿cient cash Àow to enable us to meet our commitments for the next year. *eneral economic conditions, including declines in consumer con¿dence, high unemployment levels, declines in real estate values, and other trends, have also impacted the markets in which we operate. $dditionally, media companies continue to be impacted by the migration of consumers and businesses to an internet and mobile-based, digital medium. 7hese conditions may continue to negatively impact print advertising and other revenue sources as well as increase operating costs in the future, even after an economic recovery. We expect that we will have adequate capital resources and liquidity to meet our working capital needs, borrowing obligations and all required capital expenditures for at least the next twelve months. We periodically perform testing for impairment of goodwill and newspaper mastheads in which the fair value of our reporting units for goodwill impairment testing and individual newspaper mastheads were estimated using the expected present value of future cash Àows and recent industry transaction multiples, using estimates, judgments and assumptions, that we believe were appropriate in the circumstances. Should general economic, market or business conditions decline, and have a negative impact on estimates of future cash Àow and market transaction multiples, we may be required to record additional impairment charges in the future. Restructuring 2n September , 01, our Predecessor, *ate+ouse, and its af¿liated debtors the ³Debtors´ announced that our Predecessor, the $dministrative $gent as de¿ned below , Newcastle Investment Corp. ³Newcastle´ and other lenders the ³Participating Lenders´ under the $mended and 5estated Credit $greement by and among certain af¿liates of our Predecessor, the lenders from time to time party thereto and Cortland Products Corp., as administrative agent the ³$dministrative $gent´ , dated February , 00 the ³00 Credit Facility´ entered into the 5estructuring Support $greement, effective September , 01 the ³Support $greement´ , in which the parties agreed to support, subject to the terms and conditions of the Support $greement, the 5estructuring pursuant to the consummation of the Plan. 7he Support $greement relates to the 5estructuring of our Predecessor’s obligations under the 00 Credit Facility and certain interest rate swaps secured thereunder collectively, the ³2utstanding Debt´ and our Predecessor’s equity pursuant to the Plan. 2n September 0, 01, our Predecessor commenced a pre-packaged solicitation of the Plan the ³Solicitation´ . Under the Support $greement, which terminated on the Effective Date as de¿ned below , each of the Participating Lenders agreed to a support and take any reasonable action in furtherance of the 5estructuring, b timely vote their 2utstanding Debt to accept the Plan and not change or withdraw such vote, c support approval of the Disclosure Statement as de¿ned below and con¿rmation of the Plan, as well as certain relief to be requested by Debtors from the Bankruptcy Court as de¿ned below , d refrain from taking any action inconsistent with the con¿rmation or consummation of the Plan, and e not propose, support, solicit or participate in the formulation of any plan other than the Plan. +olders of 2utstanding Debt suf¿cient to meet the requisite threshold of % in amount and majority in number calculated without including any insider necessary for acceptance of the Plan under the Bankruptcy Code voted to accept the Plan in the Solicitation. 100% of the holders of the 2utstanding Debt voted to accept the Plan under the terms of the Support $greement. $s a result, Debtors commenced Chapter 11 cases and sought approval of the disclosure statement for the Plan the ³Disclosure Statement´ and con¿rmation of the Plan therein. 7he Plan was con¿rmed by the U.S. Bankruptcy Court for the District of Delaware the ³Bankruptcy Court´ on November , 01 and our Predecessor effected the transactions contemplated by the Plan to emerge from bankruptcy protection on November , 01. 2n the Effective Date as de¿ned below , Newcastle owned .% of New Media’s total equity. 2n September , 01, our Predecessor ¿led voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code, case number 1-10. 2n November , 01 the Bankruptcy Court con¿rmed the Plan. 2ur Predecessor effected the transactions contemplated by the Plan and emerged from Chapter 11 protection on November , 01 the ³Effective Date´ . 7he Plan discharged claims and interests against our Predecessor primarily through the a issuance of shares of common stock in a new holding company, New Media ³New Media Common Stock´ or our ³Common Stock´ and/or payment of cash to holders of claims in connection with the 00 Credit Facility and related interest rate swaps, b reinstatement of certain claims, c entry into the Management $greement as de¿ned below , d issuance of warrants by New Media to former equity holders in our Predecessor and e entry into the *ate+ouse Credit Facilities as de¿ned below the net proceeds of which were distributed to holders that elected to receive New Media Common Stock. See Note to the consolidated ¿nancial statements, ³9oluntary 5eorganization Under Chapter 11.´ Pursuant to the 5estructuring, Newcastle purchased the 2utstanding Debt claims in cash and at 0% of i $1,1 million of principal of claims under the 00 Credit Facility, plus ii accrued and unpaid interest at the applicable contract non-default rate with respect thereto, plus iii all amounts, excluding any default interest, arising from transactions in connection with interest rate swaps secured under the 00 Credit Facility the ³Cash-2ut 2ffer´ on the Effective Date. 7he holders of the 2utstanding Debt had the option of receiving, in satisfaction of their 2utstanding Debt, their pro rata share of the i Cash-2ut 2ffer or ii New Media Common Stock and the net proceeds, if any, of new debt facilities *ate+ouse Credit Facilities as de¿ned below . Newcastle received its pro rata share of New Media Common Stock and the $1 million in net proceeds of the *ate+ouse Credit Facilities as de¿ned below for all 2utstanding Debt it holds, including 2utstanding Debt purchased in the Cash-2ut 2ffer. $ll pensions, trade and all other unsecured claims will be paid in the ordinary course. 2n the Effective Date, New Media entered into a management agreement with FI* LLC the ³Manager´ ³Management $greement´ pursuant to which the Manager will manage the operations of New Media. 7he annual management fee is 1.0% of New Media’s 7otal Equity as de¿ned in the Management $greement and the Manager is eligible to receive incentive compensation. 2n $ugust , 01, our Predecessor entered into a management agreement the ³Local Media Management $greement´ with and among Local Media *roup +oldings LLC ³Local Media Parent´ to manage the operations of its direct subsidiary Local Media *roup Inc. ³Local Media´ . 7he Company determined that the Local Media Management $greement resulted in Local Media being a variable interest entity ³9IE´ and has consolidated Local Media’s ¿nancial position and results of operations from September , 01. 2n September , 01, Local Media Parent completed its acquisition of thirty three publications from News Corp Inc. Local Media was not part of the bankruptcy ¿ling. +owever, as part of the Plan, Newcastle agreed to contribute 100% of the stock of Local Media Parent to New Media as of the Effective Date. 7he contribution was made to New Media to assign Newcastle’s rights under the stock purchase agreement to which it acquired Local Media as of the Effective Date. Consideration received by Newcastle was the New Media Common Stock collectively equal to the cost of the acquisition of Local Media by Newcastle as adjusted pursuant to the Plan upon emergence from Chapter 11 on the Effective Date. 7he Company accounted for the consolidation of Local Media under the purchase method of accounting in accordance with $ccounting Standards Codi¿cation ³$SC´ 7opic 0, ³Business Combinations´, as New Media received a controlling ¿nancial interest in Local Media as of the Effective Date. 7he Local Media Management $greement was terminated effective -une , 01. Upon *ate+ouse’s emergence from Chapter 11, New Media adopted fresh start reporting in accordance with $SC 7opic , ³5eorganizations´ ³$SC ´ . Under fresh start accounting, a new entity is deemed to have been created on the Effective Date for ¿nancial reporting purposes and our Predecessor’s recorded amounts of assets and liabilities will be adjusted to reÀect their estimated fair values. $s a result of the adoption of fresh start accounting, New Media’s reorganized company post-emergence ¿nancial statements will generally not be comparable with the ¿nancial statements of our Predecessor prior to emergence, including the historical ¿nancial information in this report. See Note to the consolidated ¿nancial statements, ³9oluntary 5eorganization Under Chapter 11.´ Spin-off from Newcastle 2n February 1, 01, Newcastle completed the spin-off of the Company. Each share of Newcastle common stock outstanding as of :00 PM, Eastern 7ime, on February , 01, the 5ecord Date, entitled the holder thereof to receive 0.01 1 shares of New Media Common Stock the ³spin-off´ . 2n February 1, 01 New Media became a separate, publicly traded company trading on the New York Stock Exchange the ³NYSE´ under the ticker symbol ³NEWM´. $s a result of the spin-off, the fees included in the management agreement with the Manager became effective. Management Agreement 2n the Effective Date, New Media entered into the Management $greement pursuant to which the Manager manages the operations of New Media. 7he annual management fee is 1.0% of New Media’s 7otal Equity as de¿ned in the Management $greement and the Manager is eligible to receive incentive compensation. 2n March , 01, the Company’s independent directors on the Board approved an amendment to the Management $greement. See Note 1 ³5elated Party 7ransactions´ to the consolidated ¿nancial statements for further discussion. We recognized $ . million and $. million for management fees and $0. million and $0.1 million for incentive compensation within selling, general and administrative expense on the consolidated statements of operations and comprehensive income loss and $ . million and $. million in management fees and $. million and $0 in incentive compensation was paid to Fortress during the years ended December , 01 and December , 01, respectively. No management fees or incentive compensation was incurred during the year ended December , 01. Acquisitions 2n February , 01, we completed the acquisition of ¿ve publications from Freedom Communications for a total purchase price of $. million, including working capital. 7he acquisition included two daily and three weekly publications serving Southern California with an aggregate circulation of approximately ,000. 2n -une 0, 01, we completed two acquisitions of 0 publications with a total purchase price of $1. million, including working capital. 7he acquisitions included six daily, ten weekly publications, and four shoppers serving areas of 7exas, 2klahoma, .ansas and 9irginia with an aggregate circulation of approximately ,000. 2n September , 01, we completed the acquisition of 7he Providence -ournal with a total purchase price of $. million, including working capital. 7he acquisition included one daily and two weekly publications serving areas of 5hode Island with a daily circulation of approximately ,000 and ,000 on Sunday. 2n December 1, 01, we completed the acquisition of Foster’s Daily Democrat along with other publications and related assets for $. million in cash, including working capital, from the Foster family. 7he publications are located around Dover, N+, and the daily newspaper has a circulation of approximately 1,000. 2n -anuary , 01, we completed the acquisition of substantially all of the assets from +alifax Media *roup for an aggregate purchase price of $. million, including working capital and net of assumed debt. 7he acquisition included daily publications, thirteen weekly publications, and ¿ve shoppers serving areas of $labama, Florida, Louisiana, Massachusetts, North Carolina, and South Carolina with a daily circulation of approximately ,000 and ,000 on Sunday. 2n March 1, 01, we completed the acquisition of the assets of Stephens Media, LLC ³Stephens Media´ for an aggregate purchase price of $110. million, including working capital. 7he acquisition includes nine daily newspapers, weekly publications and ¿fteen shoppers serving communities throughout the United States with a combined average daily circulation of approximately 1,000 and ,000 on Sunday. 2n -une 1, 01 and September , 01, we acquired substantially all the assets, properties and business of publishing/operating certain newspapers for an aggregate purchase price of $.0 million, including estimated working capital. 7he acquisitions included two daily newspapers, twenty-eight weekly publications, and two shoppers serving Central 2hio and Southern Michigan. Dispositions 2n December 10, 01, we completed the sale of the Las 9egas 5eview--ournal and related publications ³5eview- -ournal´ initially acquired in the Stephens Media acquisition which are located in Las 9egas, Nevada for an aggregate sale price of $10.0 million plus working capital adjustment of $1.0 million. $s a result, a gain of $.0 million is included in gain loss on sale or disposal of assets on the consolidated statement of operations and comprehensive income loss for this period. SXbseTXent Events Acquisitions 2n December 1, 01, we completed the acquisition of the Business Information Division of Dolan LLC ³Dolan´ for $.0 million in cash, plus working capital. We funded the acquisition with cash on the balance sheet. Dolan is a leading provider of industry-speci¿c news with print and online publications and an audience of over ,000 paid subscribers. 2n -anuary 1, 01, we completed the acquisition of substantially all of the publishing operations of the 7imes Publishing Company, including the Erie 7imes-News daily newspaper, for $11. million in cash, plus the assumption of liabilities. We funded the acquisition with cash on the balance sheet. Erie Times-News is a dominant source of local news and advertising in Erie, P$ with an average weekday circulation of over ,000 and ,000 on Sunday. Dividends 2n February , 01, the Company announced a fourth quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend will be paid on March 1, 01, to shareholders of record as of the close of business on March , 01. Critical AccoXnting Policy DisclosXre 7he preparation of ¿nancial statements in conformity with *$$P requires management to make decisions based on estimates, assumptions and factors it considers relevant to the circumstances. Such decisions include the selection of applicable principles and the use of judgment in their application, the results of which could differ from those anticipated. Due to the bankruptcy ¿ling, we have applied debtor-in-possession accounting and fresh start accounting as described in $SC for the applicable periods of 01. 7he following accounting policies require signi¿cant estimates and judgments. Business Combinations 7he Company accounts for acquisitions in accordance with the provisions of $SC 0. $SC 0 provides guidance for recognition and measurement of identi¿able assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree at fair value. In a business combination, the assets acquired, liabilities assumed and noncontrolling interest in the acquiree are recorded as of the date of acquisition at their respective fair values with limited exceptions. $ny excess of the purchase price consideration transferred over the estimated fair values of net assets acquired is recorded as goodwill. 7ransaction costs are expensed as incurred. 7he operating results of the acquired business are reÀected in the Company’s consolidated ¿nancial statements after the date of the acquisition. *oodwill and Long-Lived Assets 7he application of the purchase method of accounting for business combinations and fresh start accounting related to reorganization require the use of signi¿cant estimates and assumptions in the determination of the fair value of assets and liabilities in order to properly allocate the purchase price consideration or enterprise value between assets that are depreciated and amortized from goodwill. 2ur estimates of the fair values of assets and liabilities are based upon assumptions believed to be reasonable, and when appropriate, include assistance from independent third-party valuation ¿rms. 5efer to Note , ³$cquisitions and Dispositions´ of the consolidated ¿nancial statements. $s a result of the application of fresh start accounting and recent acquisitions, we have a signi¿cant amount of goodwill. *oodwill at December , 01 was $11.1 million. We assess the potential impairment of goodwill and intangible assets with inde¿nite lives on an annual basis as of the end of our second ¿scal quarter in accordance with the provisions of Financial $ccounting Standards Board ³F$SB´ $SC 7opic 0 “Intangibles—Goodwill and Other.” We perform our impairment analysis on each of our reporting units. 7he Company has the option to qualitatively assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company elects to perform a qualitative assessment and concludes it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no further assessment of that reporting unit’s goodwill is necessary; otherwise goodwill must be tested for impairment using a two-step process. 7he reporting units have discrete ¿nancial information and are regularly reviewed by management. 7he fair value of the applicable reporting unit is compared to its carrying value. Calculating the fair value of a reporting unit requires us to make signi¿cant estimates and assumptions. We estimate fair value by applying third-party market value indicators to projected cash Àows and/or projected earnings before interest, taxes, depreciation, and amortization. In applying this methodology, we rely on a number of factors, including current operating results and cash Àows, expected future operating results and cash Àows, future business plans, and market data. If the carrying value of the reporting unit exceeds the estimate of fair value, we calculate the impairment as the excess of the carrying value of goodwill over its implied fair value. We account for long-lived assets in accordance with the provisions of $SC 7opic 0, “Property, Plant and Equipment”. We assess the recoverability of our long-lived assets, including property, plant and equipment and de¿nite lived intangible assets, whenever events or changes in business circumstances indicate the carrying amount of the assets, or related group of assets, may not be fully recoverable. Factors leading to impairment include signi¿cant under-performance relative to historical or projected results, signi¿cant changes in the manner of use of the acquired assets or the strategy for our overall business and signi¿cant negative industry or economic trends. 7he assessment of recoverability is generally based on management’s estimates by comparing the sum of the estimated undiscounted cash Àows generated by the underlying asset, or other appropriate grouping of assets, to its carrying value to determine whether an impairment existed at its lowest level of identi¿able cash Àows. +owever, in some cases the market approach is used to estimate the fair value, particularly when there is a change in the use of an asset. If the carrying amount of the asset is greater than the expected undiscounted cash Àows to be generated by such asset, an impairment is recognized to the extent the carrying value of such asset exceeds its fair value. 7he fair values of our reporting units for goodwill impairment testing and individual newspaper mastheads are estimated using the expected present value of future cash Àows, recent industry transaction multiples and using estimates, judgments and assumptions that management believes are appropriate in the circumstances. 7he sum of the fair values of the reporting units are reconciled to our current market capitalization based upon the stock market price plus an estimated control premium. Signi¿cant judgment is required in determining the fair value of our goodwill and long-lived assets to measure impairment, including the determination of multiples of revenue and $djusted EBI7D$ and future earnings projections. 7he estimates and judgments that most signi¿cantly affect the future cash Àow estimates are assumptions related to revenue, and in particular, potential changes in future advertising including the impact of economic trends and the speed of conversion of advertising and readership to online products from traditional print products ; trends in newsprint prices; and other operating expense items. We performed annual impairment testing of goodwill and inde¿nite lived intangible assets during the second quarter of 01, 01 and 01. $dditionally, we performed impairment testing of goodwill and inde¿nite lived intangibles during the fourth quarter of 01 due to operational management changes. See Note to the consolidated ¿nancial statements ³*oodwill and Intangible $ssets,´ for a discussion of the impairment charges taken. Newspaper mastheads newspaper titles are not subject to amortization and are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. 7he impairment test consists of a comparison of the fair value of each group of mastheads with their carrying amount. We used a relief from royalty approach which utilizes a discounted cash Àow model to determine the fair value of each newspaper masthead. 2ur judgments and estimates of future operating results in determining the reporting unit fair values are consistently applied in determining the fair value of mastheads. We performed impairment tests on newspaper mastheads as of December , 01, -une , 01, -une , 01 and -une 0, 01. See Note to the consolidated ¿nancial statements, ³*oodwill and Intangible $ssets,´ for a discussion of the impairment charges taken. Intangible assets subject to amortization primarily advertiser and subscriber lists are tested for recoverability whenever events or change in circumstances indicate that their carrying amounts may not be recoverable. 7he carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash Àows expected to result from the use of such asset group. We performed impairment assessments on long lived assets including intangible assets subject to amortization as of December , 01, -une , 01, -une , 01, September , 01 and -une 0, 01. Due to reductions in the Company’s operating projections during the third quarter of 01 in conjunction with the bankruptcy process, an impairment charge was recognized for intangible assets subject to amortization. See Note to the consolidated ¿nancial statements, ³*oodwill and Intangible $ssets,´ for a discussion of the impairment charges taken. 7he newspaper industry and the Company have experienced declining same store revenue and pro¿tability over the past several years. Should general economic, market or business conditions decline, and have a negative impact on estimates of future cash Àow and market transaction multiples, we may be required to record additional impairment charges in the future. 0 Revenue Recognition $dvertising revenue is recognized upon publication of the advertisement. Circulation revenue from subscribers is billed to customers at the beginning of the subscription period and is recognized on a straight-line basis over the term of the related subscription. Circulation revenue from single copy sales is recognized based on date of publication, net of provisions for related returns. 5evenue for commercial printing is recognized upon delivery. Directory revenue is recognized on a straight-line basis over the period in which the corresponding directory is distributed. Income Taxes We account for income taxes under the provisions of $SC 7opic 0, “Income Taxes” ³$SC 0´ . Under this method, deferred tax assets and liabilities are determined based on the difference between the ¿nancial statement and tax bases of assets and liabilities using tax rates in effect for the year in which the differences are expected to affect taxable income. 7he assessment of the realizability of deferred tax assets involves a high degree of judgment and complexity. 9aluation allowances are established when necessary to reduce deferred tax assets to the amounts that are expected to be realized. When we determine that it is more likely than not that we will be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax asset would be made and reÀected either in income or as an adjustment to goodwill. 7his determination will be made by considering various factors, including our expected future results, that in our judgment will make it more likely than not that these deferred tax assets will be realized. F$SB issued Interpretation No. , “Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109” and now codi¿ed as $SC 0. $SC 0 prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its ¿nancial statements uncertain tax positions that a company has taken or expects to take on a tax return. Under $SC 0, the ¿nancial statements will reÀect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values. Pension and Postretirement Liabilities $SC 7opic 1, ³&RPSHQVDWLRQ²5HWLUHPHQW%HQH¿WV´ requires recognition of an asset or liability in the consolidated balance sheet reÀecting the funded status of pension and other postretirement bene¿t plans such as retiree health and life, with current-year changes in the funded status recognized in the statement of stockholders’ equity. 7he determination of pension plan obligations and expense is based on a number of actuarial assumptions. 7wo critical assumptions are the expected long-term rate of return on plan assets and the discount rate applied to pension plan obligations. For other postretirement bene¿t plans, which provide for certain health care and life insurance bene¿ts for qualifying retired employees and which are not funded, critical assumptions in determining other postretirement bene¿t obligations and expense are the discount rate and the assumed health care cost-trend rates. 2ur only pension plan has assets valued at $0. million as of December , 01 and the plan’s bene¿t obligation is $.1 million resulting in the plan being % funded. 7o determine the expected long-term rate of return on pension plan’s assets, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets, input from the actuaries and investment consultants, and long-term inÀation assumptions. We used an assumption of .% for our expected return on pension plan assets for 01. If we were to reduce our rate of return by 0 basis points then the expense for 01 would have increased approximately $0.1 million. 7he assumed health care cost-trend rate also affects other postretirement bene¿t liabilities and expense. $ 100 basis point increase in the health care cost trend rate would result in an increase of approximately $0. million in the December , 01 postretirement bene¿t obligation and a 100 basis point decrease in the health care cost trend rate would result in a decrease of approximately $0. million in the December , 01 postretirement bene¿t obligation. Self-Insurance Liability Accruals We maintain self-insured medical and workers’ compensation programs. We purchase stop loss coverage from third parties which limits our exposure to large claims. We record a liability for healthcare and workers’ compensation costs during the period in which they occur as well as an estimate of incurred but not reported claims. 1 ResXlts of Operations 7he following table summarizes our historical results of operations for New Media, otherwise known as the Successor Company for the years ended December , 01, December , 01, the two months ended December , 01, and the Predecessor Company for the ten months ended November , 01. We believe the comparison of combined results for the year ended December , 01 versus the years ended December , 01 and December , 01, provides the best analysis of our results of operations, while the adoption of fresh start accounting presents the results of operations of a new reporting entity, the only consolidated statement of operations items impacted by the bankruptcy reorganization under Chapter 11 are depreciation and amortization expense, interest expense, and reorganization items. 7hose effects of fresh start accounting are discussed in more detail in the respective sections below. 5eferences to ³same store´ results below take into account material acquisitions and divestitures of the Company by adjusting prior year performance to include or exclude ¿nancial results as if the Company had owned or divested a business for the comparable period. 7he 9ictorville, $merican Consolidated Media Southwest *roup, Petersburg, Fosters, and Monroe Publishing Company ³7uck-In´ acquisitions were not considered material. SXccessor Predecessor SXccessor Company Combined Company Company Two Months Ten Months Year Ended Year Ended Year Ended Ended Ended December 27, December 28, December 29, December 29, November 6, 2015 2014 2013 2013 2013 (in thoXsands) 5evenues: $dvertising...... $ , $ , $ ,1 $ ,0$,0 Circulation ...... , 1 ,11, , 11,10 Commercial printing and other...... 10, 1, , 10, ,0 7otal revenues ...... 1,1 ,1 , 1,110,1 1, 0 2perating costs and expenses: 2perating costs...... , ,0 ,0 ,1 ,0 Selling, general and administrative...... 0, 11, 1,1 , 1, Depreciation and amortization ...... , 1,0 , , ,0 Integration and reorganization costs...... ,0 , , 1, 1, Impairment of long-lived assets ...... — — 1, — 1, *ain loss on sale or disposal of assets .... 1,01 1, 1,1 0 1,1 Mastheads impairment ...... ,00———— 2perating income loss ...... 10, , ,1 , , Interest expense ...... , 1, , 1,0 , $mortization of deferred ¿nancing costs...... ,1 1,0 1,01 11 Loss on early extinguishment of debt ...... — ,0 —— — Loss on derivative instruments ...... — 11 —1 2ther expense income ...... 0 1 1 1,00 5eorganization items, net...... — — ,1 — ,1 Income loss from continuing operations before income taxes . . . 1,01 ,0 , ,0 Income tax expense bene¿t ...... ,0,1 1 1 Income loss from continuing operations...... $ ,1 $ ,0 $ , $ ,0 $ ,0 Same store revenue for the year ended December , 01 decreased by $. million, or . %. 7he decrease in same store revenue was comprised of a $. million, or .1%, decrease in advertising revenue and a $. million, or .%, decrease in commercial printing and other revenue, which was offset by a $1. million, or 0.%, increase in circulation revenue. Same store advertising revenue declines were primarily driven by declines on the print side of our business in the local retail and preprint categories due to secular pressures and a continuing uncertain economic environment. 7hese secular trends and economic conditions have also led to a decline in our print circulation volumes, which have been partially offset by price increases in select locations. 7he $. million decrease in commercial printing and other revenue is due in part to a decrease in commercial printing of $ . million, primarily due to the acquisition of commercial print customers, which is partially offset by an increase in Propel revenue. Operating Costs. 2perating costs for the year ended December , 01 increased by $.1 million, or .%, to $. million from $. million for the year ended December , 01. 7he increase in operating costs of $.1 million includes operating costs from all acquisitions of $01.0 million, which were partially offset by a $1. million decrease in the costs related to the remaining operations. 7his decline in operating costs related to the remaining operations was primarily due to a decrease in newsprint, hauling and delivery, and postage expenses of $. million, $. million, and $1. million, respectively. Selling, *eneral and Administrative. Selling, general and administrative expenses for the year ended December , 01 increased by $1 . million, or 1.%, to $0. million from $11. million for the year ended December , 01. 7he increase of $1 . million includes selling, general and administrative expenses from all acquisitions of $1 . million. 7he additional $. million increase in selling, general and administrative expenses was primarily due to a $.0 million increase in management and incentive fees, which was partially offset by a decrease in professional and consulting fees, compensation, postage, repairs and maintenance, and hauling and delivery expenses of $. million, $. million, $0. million, $0. million, and $0.1 million, respectively. Integration and Reorgani]ation Costs. During the year ended December , 01 and December , 01, we recorded integration and reorganization costs of $.1 million and $. million, respectively, primarily resulting from severance costs related to acquisition-related synergies and the continued consolidation of our operations resulting from our ongoing implementation of our plans to reduce costs and preserve cash Àow. *ain Loss on Sale or Disposal of Assets. 7he gain on sale or disposal of assets for the year ended December , 01 is primarily comprised of a gain on sale of the 5eview--ournal of $.1 million, which is partially offset by losses on sales or disposal of less signi¿cant assets of $.0 million. Mastheads Impairment. During the year ended December , 01 we recorded a $. million impairment on our mastheads due to declines in revenue projections and reductions in certain groups’ royalty rates. 7here were no such charges during the year ended December , 01. Interest Expense. Interest expense for the year ended December , 01 increased by $1. million to $ . million from $1. million for the year ended December , 01. 7he increase in interest expense was primarily due to the increase in our total outstanding debt. Amorti]ation of Deferred Financing Costs. $mortization of deferred ¿nancing costs for the year ended December , 01 increased by $1. million, or 1.%, to $. million from $1.0 million for the year ended December , 01, primarily due to the write-off of deferred ¿nancing costs related to the 01 Incremental 5evolver as de¿ned below . Loss on Early Extinguishment of Debt. During the year ended December , 01 we recorded a loss of $ .0 million due to the early extinguishment of long-term debt. 7here were no such charges during the year ended December , 01. Income Tax Expense Bene¿t . During the year ended December , 01, we recorded an income tax expense of $. million related to a deferred tax liability for inde¿nite-lived assets where book basis exceeded tax basis, alternative minimum tax and state taxes. During the year ended December , 01, we recorded an income tax expense of $. million related to a deferred tax liability for inde¿nite-lived assets where book basis exceeded tax basis. Income Loss from Continuing Operations. Income from continuing operations for the year ended December , 01 was $. million and loss from continuing operations for the year ended December , 01 was $. million. 2ur net income from continuing operations increased due to the factors noted above. Reorgani]ation Items, Net. Costs directly attributable to the bankruptcy ¿ling are reported as reorganization items, net during the Predecessor ten month period ending November , 01. 5eorganization items, net primarily relates to the gain on extinguishment of debt of $. million and the revaluation of assets of $. million which were partially offset by $11. million of third party bankruptcy fees and a $. million credit agreement amendment fee. 7here were no such charges during the year ended December , 01. Income Tax Expense Bene¿t . During the year ended December , 01, we recorded an income tax expense of $. million related to a deferred tax liability for inde¿nite-lived assets where book basis exceeded tax basis. During the year ended December , 01, we recorded an income tax expense of $0. million due to the state tax related to the bankruptcy ¿ling. Net Income Loss from Continuing Operations. Net loss from continuing operations for the year ended December , 01 was $. million and net income from continuing operations for the year ended December , 01 was $ . million. 2ur net loss from continuing operations increased due to the factors noted above. LiTXidity and Capital ResoXrces 2ur primary cash requirements are for working capital, debt obligations and capital expenditures. We have no material outstanding commitments for capital expenditures. We expect our 01 capital expenditure to total between $10.0 million and $1.0 million. 7he 01 capital expenditures will be primarily comprised of projects related to the consolidation of print operations and system upgrades. 2ur long term debt and debt service obligations were signi¿cantly reduced following the 5estructuring. For more information on our long term debt and debt service obligations, see Note 10 ³Indebtedness´ of the consolidated ¿nancial statements. $s a holding company, we have no operations of our own and accordingly we have no independent means of generating revenue, and our internal sources of funds to meet our cash needs, including payment of expenses, are dividends and other permitted payments from our subsidiaries. We expect to fund our operations through cash provided by operating activities, the incurrence of debt or the issuance of additional equity securities. 7he Company expects that it will have adequate capital resources and liquidity to meet its working capital needs, borrowing obligations and all required capital expenditures for at least the next twelve months. 2ur leverage may adversely affect our business and ¿nancial performance and restrict our operating Àexibility. 7he level of our indebtedness and our on-going cash Àow requirements may expose us to a risk that a substantial decrease in operating cash Àows due to, among other things, continued or additional adverse economic developments or adverse developments in our business, could make it dif¿cult for us to meet the ¿nancial and operating covenants contained in our credit facilities. In addition, our leverage may limit cash Àow available for general corporate purposes such as capital expenditures and our Àexibility to react to competitive, technological and other changes in our industry and economic conditions generally. Cash Flows 7he following table summarizes our historical cash Àows. Predecessor SXccessor Company Company Two Months Ten Months Year Ended Year Ended Ended Ended December 27, December 28, December 29, November 6, 2015 2014 2013 2013 in thousands Cash provided by used in operating activities...... $ 11,1 $ 1, $1,10$ , Cash used in investing activities ...... , 1,0 1, , Cash provided by used in ¿nancing activities...... 0,0 1,0 , 0 ,0 Cash Flows from Operating Activities. Net cash provided by operating activities for the year ended December , 01 was $11. million. 7he net cash provided by operating activities resulted from net income of $. million, depreciation and amortization of $. million, a net increase in cash provided by working capital of $1. million, an impairment of mastheads of $. million, non-cash interest expense of $.1 million, non-cash compensation expense of $1. million, an increase in deferred income taxes of $1. million, and amortization of deferred ¿nancing costs of $0. million, partially offset by a gain on the sale or disposal of assets of $1.1 million and an increase funding of pension and other post-retirement obligations of $1.0 million. 7he increase in cash provided by working capital primarily resulted from an increase in accrued expenses, which was partially offset by a decrease in accounts payable. Net cash provided by operating activities for the year ended December , 01 was $1. million. 7he net cash provided by operating activities resulted from depreciation and amortization of $1. million, a non-cash loss on early extinguishment of debt of $. million, deferred income taxes of $. million, loss on the sale of assets of $1. million, amortization of deferred ¿nancing costs of $1.0 million and non-cash interest expense of $0. million, partially offset by a net decrease in cash provided by working capital of $. million, a net loss of $. million, and an increase funding of pension and other post-retirement obligations of $1. million. 7he decrease in cash provided by working capital primarily resulted from a decrease in accounts payable and accrued expenses. Net cash provided by operating activities for the two months ended December , 01 was $1. million. 7he net cash provided by operating activities resulted from net income of $. million, depreciation and amortization of $. million, a net increase in cash provided by working capital of $. million, and amortization of deferred ¿nancing costs of $0. million. 7he increase in cash provided by working capital primarily resulted from an increase in accrued expenses and accounts payable partially offset by an increase in accounts receivable. Net cash used in operating activities for the ten months ended November , 01 was $.0 million. 7he net cash used in operating activities resulted from non-cash reorganization items, net of $ . million and an increase funding of pension and other post-retirement obligations of $1.1 million, partially offset by net income of $. million, an impairment of long-lived assets of $ 1. million, an increase in non-cash interest related to unrealized losses upon dedesignation of cash Àow hedges of $. million, depreciation and amortization of $. million, a net increase in cash provided by working capital of $.0 million, a $. million loss on the sale of assets, and amortization of deferred ¿nancing costs of $0. million. 7he increase in cash provided by working capital primarily resulted from an increase in accrued expenses. Cash Flows from Investing Activities. Net cash used in investing activities for the year ended December , 01 was $ . million. During the year ended December , 01, we used $1.1 million, net of cash acquired, for acquisitions and $10. million for capital expenditures, which was offset by $1. million received from the sale of publications and other assets. Net cash used in investing activities for the year ended December , 01 was $1. million. During the year ended December , 01, we used $. million, net of cash acquired, for acquisitions and $.0 million for capital expenditures, which was offset by $1.0 million received from the sale of publications and other assets. Net cash used in investing activities for the two months ended December , 01 was $1. million. During the two months ended December , 01, we used $1. million for capital expenditures, which was offset by $0.1 million received from the sale of publications and other assets. Net cash used in investing activities for the ten months ended November , 01 was $. million. During the ten months ended November , 01, we used $. million for capital expenditures, which was offset by $0. million received from the sale of publications and other assets. Cash Flows from Financing Activities. Net cash provided by ¿nancing activities for the year ended December , 01 was $0. million due to the issuance of common stock of $1 . million from the public offering, net of underwriters’ discount and offering costs, borrowings under term loans of $1. million, and borrowings under the revolving credit facility of $ .0 million, which were offset by repayments under the revolving credit facility of $10.0 million, payment of dividends of $. million, repayments under long-term debt of $.1 million, and the payment of debt issuance costs of $0. million. Net cash provided by ¿nancing activities for the year ended December , 01 was $1.1 million due to borrowings under term loans of $1. million, the issuance of common stock of $11. million from the public offering, net of underwriters’ discount and offering costs, and borrowings under the revolving credit facility of $.1 million, which were offset by repayments under long-term debt of $1. million, repayments under the revolving credit facility of $.1 million, payment of dividends of $1. million, and the payment of debt issuance costs of $. million. Net cash used in ¿nancing activities for the two months ended December , 01 was $. million due to the payment of dividends of $1 .0 million and the payment of debt issuance costs of $. million offset by borrowings under the *ate+ouse Credit Facilities of $1 .0 million. Net cash used in ¿nancing activities for the ten months ended November , 01 was $.0 million due to a repayment under the 00 Credit Facility of $. million which was offset by additional paid-in capital of $1. million related to the 9IE Local Media. Changes in Financial Position 7he discussion that follows highlights signi¿cant changes in our ¿nancial position and working capital from December , 01 to December , 01. Accounts Receivable. $ccounts receivable increased by $.1 million from December , 01 to December , 01, which relates to $. million of accounts receivable assets acquired in the year ended December , 01, which was partially offset by $11. million of accounts receivable assets sold and the timing of cash collections and lower same store revenue recognized in the year ended December , 01 compared to 01. Inventory. Inventory increased by $. million from December , 01 to December , 01, which relates primarily to inventory assets acquired in the year ended December , 01. Prepaid Expenses. Prepaid expenses increased by $. million from December , 01 to December , 01, which relates primarily to prepaid expenses acquired in the year ended December , 01. Property, Plant, and Equipment. Property, plant, and equipment increased by $101.0 million from December , 01 to December , 01, of which $1 0. million relates to property, plant, and equipment assets acquired and $10.1 million of which was used for capital expenditures, which was partially offset by depreciation of $1. million, $.1 million of property, plant, and equipment assets sold or disposed of, and $. million of property, plant, and equipment assets classi¿ed as held for sale in 01. *oodwill. *oodwill increased by $.1 million from December , 01 to December , 01, of which $. million relates to goodwill acquired which was offset by $. million of goodwill sold in 01. Intangible Assets. Intangible assets increased by $1. million from December , 01 to December , 01, of which $1 . million relates to intangible assets acquired in 01, which was offset by $1. million of intangible assets sold or disposed of in 01, $1. million of amortization, and a $. million masthead impairment. Current Portion of Long-term Debt. Current portion of long-term debt increased by $1. million from December , 01 to December , 01, due to the increase in long-term debt to current portion of long-term debt of $.1 million resulting from an increase in total debt outstanding under the credit agreement, which was partially offset by repayments under current portion of long-term debt of $0. million. Accrued Expenses. $ccrued expenses increased by $. million from December , 01 to December , 01, of which $1. million relates primarily to accrued expenses acquired in 01, an increase in the management and incentive fees payable of $1.0 million, an increase in accrued interest of $. million due to the timing of interest payments and higher debt levels, an increase in accrued bonus of $. million, and an increase in health insurance of $.0 million. Deferred Revenue. Deferred revenue increased $. million from December , 01 to December , 01, which relates primarily to deferred revenue acquired in 01. Long-term Debt. Long-term debt increased by $1. million from December , 01 to December , 01, due to borrowings under term loans of $1. million, which includes a $.1 million original issue discount, borrowings under the revolving credit facility of $ .0 million, debt assumed from the +alifax Media *roup acquisition of $1.0 million, and $.1 million non-cash interest expense. 7hese increases were offset by repayments under the revolving credit facility of $10.0 million, a $.1 million reclassi¿cation from long-term debt to current portion of long-term debt, and repayments under long-term debt of $. million. Long-term Liabilities, Less Current Portion. Long-term liabilities, less current portion increased $. million from December , 01 to December , 01, of which $.0 million relates to the long-term portion of workers compensation due to the increase in employees in 01 and $1. million relates to the long-term portion of lease liabilities resulting from leases assumed in connection with assets acquired in 01. Additional Paid-in Capital. $dditional paid-in capital increased $10. million from December , 01 to December , 01, which resulted primarily from the issuance of common stock from the public offering of $10.1 million, net of underwriters’ discount and offering costs and $1. million from non-cash compensation expense, which was partially offset by dividends of $0. million. Retained Earnings. 5etained earnings increased $0. million from December , 01 to December , 01, due to net income of $. million which was offset by the payment of dividends of $. million. Indebtedness $s part of the 5estructuring, our Predecessor’s previous long-term debt was extinguished pursuant to the Support $greement on the Effective Date of the Plan. *ateHouse Credit Facilities ± terminated -une , 7he 5evolving Credit, 7erm Loan and Security $greement the ³First Lien Credit Facility´ dated November , 01 by and among *ate+ouse, *ate+ouse Media Intermediate +oldco, LLC formerly known as *ate+ouse Media Intermediate +oldco, Inc. ³*MI+´ , certain wholly-owned subsidiaries of *MI+, all of which are wholly owned subsidiaries of New Media collectively with *MI+ and *ate+ouse, the ³Loan Parties´ , PNC Bank, National $ssociation, as the administrative agent, Crystal Financial LLC, as term loan B agent, and each of the lenders party thereto provided for i a term loan $ in the aggregate principal amount of $ million, ii a term loan B in the aggregate principal amount of $0 million, and iii a revolving credit facility in an aggregate principal amount of up to $0 million. 7he 7erm Loan and Security $greement the ³Second Lien Credit Facility´ and together with the First Lien Credit Facility, the ³*ate+ouse Credit Facilities´ dated November , 01 by and among the Loan Parties, Mutual Quest Fund and each of the lenders party thereto provided for a term loan in an aggregate principal amount of $0 million. 7he *ate+ouse Credit Facilities were secured by a ¿rst and second priority security interest in substantially all the assets of the Loan Parties. 7he *ate+ouse Credit Facilities imposed upon *ate+ouse certain ¿nancial and operating covenants, including, among others, requirements that *ate+ouse satisfy certain ¿nancial tests, including a minimum ¿xed charge coverage ratio of not less than 1.0 to 1.0, a maximum leverage ratio of not greater than . to 1.0, a minimum EBI7D$ and a limitation on capital expenditures, and restrictions on *ate+ouse’s ability to incur additional debt, incur liens and encumbrances, consolidate, amalgamate or merge with any other person, pay dividends, dispose of assets, make certain restricted payments, engage in transactions with af¿liates, materially alter the business it conducts and taking certain other corporate actions. 7he *ate+ouse Credit Facilities were paid in full on -une , 01. Local Media Credit Facility ± terminated -une , Certain of Local Media Parent’s subsidiaries together, the ³Borrowers´ and Local Media Parent entered into a Credit $greement, dated as of September , 01, with a syndicate of ¿nancial institutions with Credit Suisse $*, Cayman Islands Branch, as administrative agent the ³Local Media Credit Facility´ . 7he Local Media Credit Facility provided for: a a $ million term loan facility; and b a $10 million revolving credit facility, with a $ million sub-facility for letters of credit and a $ million sub-facility for swing loans. 2n 2ctober , 01, CS assigned the revolving loan commitment to Capital 2ne Business Corp and the revolving credit facility was activated. 7he Local Media Credit Facility contained ¿nancial covenants that required Local Media Parent and the Borrowers to maintain a a Leverage 5atio of not more than . to 1.0 and a Fixed Charge Coverage 5atio as de¿ned in the Local Media Credit Facility of at least .0 to 1.0, each measured at the end of each ¿scal quarter for the four-quarter period then ended. 7he Local Media Credit Facility contained af¿rmative and negative covenants applicable to Local Media and the Borrowers customarily found in loan agreements for similar transactions, including, but not limited to, restrictions on their ability to incur indebtedness, create liens on assets, engage in certain lines of business, engage in mergers or consolidations, dispose of assets, make investments or acquisitions, engage in transactions with af¿liates, pay dividends or make other restricted payments. 7he Local Media Credit Facility contained customary events of default, including, but not limited to, defaults based on a failure to pay principal, interest, fees or other obligations, subject to speci¿ed grace periods other than with respect to principal ; any material inaccuracy of representation or warranty; breach of covenants; default in other material indebtedness; a Change of Control as de¿ned in the Local Media Credit Facility ; bankruptcy and insolvency events; material judgments; certain E5IS$ events; and impairment of collateral. 7he Local Media Credit Facility was amended on 2ctober 1, 01 and on February , 01. 7he 2ctober 1, 01 amendment corrected a typographical mistake. 7he February , 01 amendment provided that among other things, sales of real property collateral and reinvestment of the proceeds from such sales could only be made with the consent of the $dministrative $gent, modi¿ed the properties included in the real property collateral, and set forth in detail the documentary post-closing requirements with respect to the real property collateral. 7he Local Media Credit Facility was paid in full on -une , 01. New Media Credit Agreement 2n -une , 01, New Media +oldings II LLC the ³New Media Borrower´ , a wholly owned subsidiary of New Media, entered into a credit agreement the ³New Media Credit $greement´ among the New Media Borrower, New Media +oldings I LLC ³+oldings´ , the lenders party thereto, 5BS Citizens, N.$. and Credit Suisse Securities US$ LLC as joint lead arrangers and joint bookrunners, Credit Suisse $*, Cayman Islands Branch as syndication agent and Citizens Bank of Pennsylvania as administration agent which provides for i a $00 million senior secured term facility the ³7erm Loan Facility´ and ii a $ million senior secured revolving credit facility of which $0 was drawn as of December , 01 , with a $ million sub-facility for letters of credit and a $ million sub-facility for swing loans, the ³5evolving Credit Facility´ and together with the 7erm Loan Facility, the ³Senior Secured Credit Facilities´ . In addition, the New Media Borrower may request one or more new commitments for term loans or revolving loans from time to time up to an aggregate total of $ million the ³Incremental Facility´ subject to certain conditions. 2n -une , 01, the New Media Borrower borrowed $00 million under the 7erm Loan Facility the ³7erm Loans´ . 7he 7erm Loans mature on -une , 00 and the maturity date for the 5evolving Credit Facility is -une , 01 . 7he proceeds of the 7erm Loans, which included a $. million original issue discount, were used to repay in full all amounts outstanding under the *ate+ouse Credit Facilities and the Local Media Credit Facility and to pay fees associated with the ¿nancing, with the balance going to the Company for general corporate purposes. 2n November 0, 01, the New Media Credit $greement was amended to increase the amount of the Incremental Facility that may be requested after the date of the amendment from $ million to $ million. 2n -anuary , 01, the New Media Credit $greement was amended to provide for the 01 Incremental 7erm Loan as de¿ned below and the 01 Incremental 5evolver as de¿ned below . 2n February 1, 01, the New Media Credit $greement was amended to provide for the replacement of the existing term loans under the 7erm Loan Facility including the 01 Incremental 7erm Loan and the 01 Incremental 7erm Loan with a new class of replacement term loans the ³5eplacement 7erm Loans´ on the same terms as the existing term loans except that the 5eplacement 7erm Loans are subject to a 1.00% prepayment premium for any prepayments made in connection with certain repricing transactions effected within six months of the date of the amendment. 7his amendment was considered a modi¿cation and the related $0.1 million of fees were expensed during the ¿rst quarter. 2n March , 01, the New Media Credit $greement was amended to provide for $1 million in additional revolving commitments under the Incremental Facility. In connection with this transaction, the Company incurred approximately $0. million of fees and expenses which were capitalized as deferred ¿nancing costs. 2n May , 01, the New Media Credit $greement was amended to provide for the May 01 Incremental 7erm Loan as de¿ned below . $s of September , 01, $1 million was drawn under the 5evolving Credit Facility. 7he New Media Credit $greement contains customary representations and warranties and customary af¿rmative and negative covenants applicable to +oldings, the New Media Borrower and the New Media Borrower’s subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. 7he New Media Credit $greement contains a ¿nancial covenant that requires +oldings I, the New Media Borrower and the New Media Borrower’s subsidiaries to maintain a maximum total leverage ratio of .:1.00. 7he New Media Credit $greement contains customary events of default. 7he foregoing descriptions of the Senior Secured Credit Facilities are quali¿ed in their entirety by reference to the Senior Secured Credit Facilities. 7he New Media Credit $greement was amended on -uly 1, 01 to cure an omission. In connection with the -une , 01 transaction, one lender under the New Media Credit $greement was also a lender under the *ate+ouse Credit Facilities. 7his portion of the transaction was accounted for as a modi¿cation under $SC Subtopic 0-0, ³'HEW0RGL¿FDWLRQVDQG([WLQJXLVKPHQWV´ ³$SC Subtopic 0-0´ , as the difference between the present value of the cash Àows under the New Media Credit $greement and the present value of the cash Àows under the *ate+ouse Credit Facilities was less than 10%. 7he unamortized deferred ¿nancing costs and original issuance discount balances as of the re¿nance date pertaining to this lender’s portion of the *ate+ouse Credit Facilities will be amortized over the terms of the new facility. 7he remaining portion of the *ate+ouse Credit Facilities and the Local Media Credit Facility debt re¿nancing constituted an extinguishment of debt under $SC Subtopic 0-0, and was accounted for accordingly. In connection with this 01 transaction, the Company incurred approximately $10. million of fees and expenses, of which $. million were recognized as original issue discount and $1. million were capitalized as deferred ¿nancing costs. 7hese amounts will be amortized over the term of the new Senior Secured Credit Facilities. $dditionally, the Company recorded a loss on early extinguishment of debt of $ .0 million associated with this transaction, which consisted of the write-off of unamortized deferred ¿nancing costs and other expenses not eligible for capitalization under $SC Subtopic 0-0. 2n September , 01, the New Media Credit $greement was amended to provide for additional term loans under the Incremental Facility in an aggregate principal amount of $ million such term loans, the ³01 Incremental 7erm Loan,´ and such amendment, the ³01 Incremental $mendment´ in connection with the acquisition of the assets of 7he Providence -ournal. 7he 01 Incremental 7erm Loan is on terms identical to the term loans that were extended pursuant to the New Media Credit $greement and will mature on -une , 00. In addition, the New Media Borrower was required to pay an upfront fee of .00% and an underwriter fee of 1.0% of the aggregate amount of the 01 Incremental 7erm Loan as of the effective date of the 01 Incremental $mendment. 7his amendment was considered a modi¿cation and the related $0. million of fees were expensed. 2n -anuary , 01, the New Media Credit $greement was amended such amendment, the ³01 Incremental $mendment´ to provide for $10 million in additional term loans the ³01 Incremental 7erm Loan´ and $0 million in additional revolving commitments the ³01 Incremental 5evolver´ under the Incremental Facility and to make certain amendments to the 5evolving Credit Facility in connection with the +alifax Media acquisition. 7he 01 Incremental 7erm Loan is on terms identical to the term loans that were extended pursuant to the New Media Credit $greement and will mature on -une , 00. In addition, the New Media Borrower was required to pay an upfront fee of 1.00% and an underwriter fee of .% of the aggregate amount of the 01 Incremental 7erm Loan and the 01 Incremental 5evolver as of the effective date of the 01 Incremental $mendment. 2n -anuary 0, 01, the outstanding loans under the 01 Incremental 5evolver were repaid with the proceeds of a common stock offering by New Media and the 01 Incremental 5evolver commitments were terminated. In connection with this transaction, we incurred approximately $. million of fees and expenses. 7he lender fees for the 01 Incremental 7erm Loan increased the original issue discount by $. million. 7hird party expenses of $0.1 million were allocated to new lenders, capitalized as deferred ¿nancing costs, and will be amortized over the remaining term of the loan. 7hird party expenses of $0. million were allocated to existing lenders and were expensed during the ¿rst quarter. Lender fees and third party expenses of $1. million were allocated to the 01 Incremental 5evolver, capitalized, and written off to amortization of deferred ¿nancing costs after the balance of the 01 Incremental 5evolver was repaid. 2n May , 01, the New Media Credit $greement was amended such amendment, the ³May 01 Incremental $mendment´ to provide for $ million in additional term loans the ³May 01 Incremental 7erm Loan´ under the Incremental Facility. 7he 01 Incremental 7erm Loan is on terms identical to the 5eplacement 7erm Loans and will mature on -une , 00. In addition, the New Media Borrower was required to pay an upfront fee of 1.00% and an underwriter fee of .% of the aggregate amount of the May 01 Incremental 7erm Loan as of the effective date of the May 01 Incremental $mendment. In connection with this transaction, the Company incurred approximately $0. million of fees and expenses. 7his amendment was considered a modi¿cation and the related $0.1 million of third-party fees were expensed during the second quarter. 7he lender fees for the May 01 Incremental 7erm Loan increased the original issue discount by $0. million. $s of December , 01, we are in compliance with all of the covenants and obligations under the New Media Credit $greement. 5efer to Note 10 to the condensed consolidated ¿nancial statements, ³Indebtedness,´ for further discussion of the New Media Credit $greement. Advantage Credit Agreements In connection with the purchase of the assets of +alifax Media, which closed on -anuary , 01, C$ Daytona +oldings, Inc. the ³Florida $dvantage Borrower´ and C$ $labama +oldings, Inc. the ³$labama $dvantage Borrower´, and, collectively with the Florida $dvantage Borrower, the ³$dvantage Borrowers´ , each subsidiaries of the Company, agreed to assume all of the obligations of +alifax Media and its af¿liates required to be performed after the closing date in respect of each of i that certain Consolidated $mended and 5estated Credit $greement dated -anuary , 01 among +alifax Media $cquisition LLC, $dvantage Capital Community Development Fund ;;9III, L.L.C., and Florida Community Development Fund II, L.L.C., as amended pursuant to that certain First $mendment to Consolidated $mended and 5estated Credit $greement dated -une , 01 and that certain Second $mendment to Consolidated $mended and 5estated Credit $greement, dated -une 1, 01, and all rights and obligations thereunder and related thereto the ³+alifax Florida Credit $greement´ , and ii that certain Credit $greement dated -une 1, 01 between +alifax $labama, LLC and Southeast Community Development Fund 9, L.L.C. the ³+alifax $labama Credit $greement´ and, together with the +alifax Florida Credit $greement, the ³$dvantage Credit $greements´ , respectively. In consideration therefore, the amount of cash payable by the Company to +alifax Media on the closing date was reduced by approximately $1 million, representing the aggregate principal amount outstanding plus the aggregate amount of accrued interest through the closing date under the $dvantage Credit $greements the debt under the +alifax Florida Credit $greement, the ³$dvantage Florida Debt´; the debt under the +alifax $labama Credit $greement, the ³$dvantage $labama Debt´; and the $dvantage Florida Debt and the $dvantage $labama Debt, collectively, the ³$dvantage Debt´ . 2n May , 01, the +alifax $labama Credit $greement was amended to cure an omission. 0 7he $dvantage Florida Debt is in the principal amount of $10 million and bears interest at the rate of .% per annum, payable quarterly in arrears, maturing on December 1, 01. 7he $dvantage $labama Debt is in the principal amount of $ million and bears interest at the rate of LIB25 plus .% per annum with a minimum of 1% LIB25 payable quarterly in arrears, maturing on March 1, 01 . 7he $dvantage Debt is secured by a perfected second priority security interest in all the assets of the Borrowers and certain other subsidiaries of the Company, subject to the limitation that the maximum amount of secured obligations is $1 million. 7he $dvantage Credit Facilities are unconditionally guaranteed by +oldings I and certain subsidiaries of the New Media Borrowers and are required to be guaranteed by all future material wholly-owned domestic subsidiaries, subject to certain exceptions. 7he $dvantage Debt is subordinated to the New Media Credit Facilities pursuant to an intercreditor agreement. 7he $dvantage Credit $greements contain covenants substantially consistent with those contained in the New Media Credit Facilities in addition to those required for compliance with the New Markets 7ax Credit program. 7he $dvantage Borrowers are permitted to make voluntary prepayments at any time without premium or penalty. 7he $dvantage Borrowers are required to repay borrowings under the $dvantage Credit $greements without payment of a premium with i net cash proceeds of certain debt obligations except as otherwise permitted under the $dvantage Credit $greements and ii net cash proceeds from non-ordinary course asset sales subject to reinvestment rights and other exceptions . 7he $dvantage Credit $greements contain customary representations and warranties and customary af¿rmative and negative covenants applicable to the $dvantage Borrowers and certain of the Company subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. 7he $dvantage Credit $greements contain a ¿nancial covenant that requires +oldings I, the New Media Borrower and the New Media Borrower’s subsidiaries to maintain a maximum total leverage ratio of . to 1.00. 7he $dvantage Credit $greements contain customary events of default. $s of December , 01, we are in compliance with all of the covenants and obligations under the $dvantage Credit $greements. 5efer to Note 10 to the condensed consolidated ¿nancial statements, ³Indebtedness,´ for further discussion of the $dvantage Credit $greements. SXmmary DisclosXre AboXt ContractXal Obligations and Commercial Commitments 7he following table reÀects a summary of our contractual cash obligations, including estimated interest payments where applicable, as of December , 01: 2016 2017 2018 2019 2020 Thereafter Total (In ThoXsands) Debt obligations...... $0,11 $ ,0 $ 0,0 $ , $ , —$ ,0 Noncompete payments...... 0 00 00———0 2perating lease obligations ...... 1,011,0 1,0 10, 0 10,0 ,1 1,10 Letters of credit ...... ,1 —————,1 7otal...... $0,1 $ ,0 $ ,1 $ , $ ,0 $ ,1 $ , 7he table above excludes future cash requirements for pension and postretirement obligations. 7he periods in which these obligations will be settled in cash are not readily determinable and are subject to numerous future events and assumptions. We estimate cash requirements for these obligations in 01 totaling approximately $0. million. See Note 1 ³Pension and Postretirement Bene¿ts´ to the consolidated ¿nancial statements, included herein. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements reasonably likely to have a current or future effect on our ¿nancial statements, ¿nancial condition, revenues, expenses, results of operations, liquidity or capital resources that are material to investors. 1 Contractual Commitments Credit Amendment 2n or around September , 01, *ate+ouse and certain lenders including Newcastle constituting the ³5equired Lenders´ under the 00 Credit $greement entered into $mendment $greement to the 00 Credit $greement effective September , 01 the ³Credit $mendment´ . Pursuant to the terms of the Credit $mendment, *ate+ouse obtained the following improvement in terms: a clari¿ed and expanded de¿nition of ³Eligible $ssignee´; an increase in the base amount in the formula used to calculate the ³Permitted Investments´ basket from $ million to a base of $0 million; the removal of the requirement that *ate+ouse’s annual ¿nancial statements not have a ³going concern´ or like quali¿cation to the audit; the removal of a cross default from any Secured +edging $greement to the 00 Credit $greement; the removal of a Bankruptcy Default, as de¿ned therein, arising from actions in furtherance of or indicating consent to the speci¿ed actions; and a waiver of any prior Default or Event of Default, as de¿ned therein, including without limitation from the negotiation, entry into, or performance of the Support $greement or the investment commitment letter entered into in connection with the 5estructuring pursuant to which the Plan Sponsor as de¿ned below agreed to purchase the Cash-2ut 2ffer claims. In consideration of the changes described above, *ate+ouse agreed to pay each of the lenders party to the Credit $mendment that timely executed and delivered its signature to the Credit $mendment and the Support $greement, an amendment fee equal to .% multiplied by the aggregate outstanding amount of the loans held including through trades pending settlement by such lender, unless waived in writing. Newcastle and certain other lenders elected to waive their amendment fee pursuant to the Credit $mendment. Newcastle indemni¿ed other lenders with respect to their entry into the Credit $mendment, subject to the limitations set forth in the Credit $mendment. Such fee amounted to $. million. Derivative InstrXments 7he bankruptcy ¿ling on September , 01, was a termination event under our Predecessor’s interest rate swap agreements. For more detailed information on our historical interest rate swap agreements, See item $ in this $nnual 5eport on Form 10-.. No other material changes were made to our contractual commitments during the period from December , 01 to December , 01. Recently IssXed AccoXnting PronoXncements In $pril 01, the F$SB issued $ccounting Standard Update ³$SU´ No. 01-0, ³Presentation of Financial Statements and Property, Plant, and Equipment: 5eporting Discontinued 2perations and Disclosures of Disposals of Components of an Entity´. $SU No. 01-0 changes the criteria for reporting discontinued operations while enhancing disclosures in this area and is effective for annual and interim periods beginning after December 1, 01. 7he amendments in $SU No. 01-0 did impact the Company’s assessment of the disposition of the Las 9egas 5eview--ournal and related publications. In May 01, the F$SB issued $SU No. 01-0 , ³5evenue from Contracts with Customers.´ $SU No. 01-0 will replace all current U.S. *$$P guidance on this topic and eliminate all industry-speci¿c guidance. 7he new revenue recognition standard provides a uni¿ed model to determine when and how revenue is recognized. 7he core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reÀects the consideration to which the entity expects to be entitled in exchange for those goods or services. 7his guidance would have been effective for annual and interim reporting periods beginning after December 1, 01. In $ugust 01, the F$SB issued $SU No. 01-1, ³5evenue from Contracts with Customers: Deferral of the Effective Date´ which defers for one year the effective date of the new revenue standard $SU No. 01-0 for public and non-public entities reporting under U.S. *$$P. 7he standard is to be applied using one of two retrospective application methods. 7he F$SB is permitting entities to adopt the standard as of the original effective date. We are currently reviewing the amendments in $SU No. 01-0 and application methods but do not expect them to have a material impact on the ¿nancial statements. In $ugust 01, the F$SB issued $SU No. 01-1, ³Disclosure of Uncertainties about an Entity’s $bility to Continue as a *oing Concern´, that establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and setting rules for how this information should be disclosed in the ¿nancial statements. 7his guidance is effective for ¿scal years, and interim periods within those years, beginning on or after December 1, 01, with early adoption permitted. We will adopt this guidance on December , 01 and do not expect it to have a material impact on our ¿nancial statements upon adoption. In February 01, the F$SB issued $SU No. 01-0, ³Consolidation 7opic 10 - $mendments to the Consolidation $nalysis´ ³$SU No. 01-0´ . $SU No. 01-0 eliminates the deferral of Statement of Financial $ccounting Standards No. 1, $mendments to F$SB Interpretation No. 5 previously provided to investment companies and certain other entities pursuant to $SC 10-10--. $SU No. 01-0 also amends the evaluation of whether 1 fees paid to a decision maker or service provider represent a variable interest, a limited partnership or similar entity has the characteristics of a variable interest entity ³9IE´ and a reporting entity is the primary bene¿ciary of a 9IE. $SU No. 01-0 eliminates certain conditions for evaluating whether a fee paid to a decision maker or a service provider represents a variable interest. Fees received by a decision maker or service provider are no longer considered variable interests and are now excluded from the evaluation of whether the reporting entity is the primary bene¿ciary of a 9IE if the fees are both customary and commensurate with the level of effort required for the services provided and the decision maker or service provider does not hold other interests in the entity being evaluated that would absorb more than an insigni¿cant amount of the expected losses or returns of the entity. If the reporting entity determines that it does not have a variable interest in an entity, no further consolidation analysis is performed as the reporting entity would not be required to consolidate the entity. 7he effective date of $SU 01-0 is for ¿scal years and interim periods within those ¿scal years, beginning after December 1, 01 for public companies and early adoption is permitted. We have elected to early adopt $SU No. 01-0, and the guidance was applied to our analysis of the management agreement with DB Nevada +oldings, Inc. 7he fees received under the Management $greement do not represent a variable interest. In $pril 01, the F$SB issued $SU No. 01-0, ³Interest—Imputation of Interest´ 7opic , which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. 7he recognition and measurement guidance of debt issuance costs are not affected by the amendments in this update. 7he standard will be effective for us beginning in the ¿rst quarter of 01 and requires us to apply the new guidance on a retrospective basis on adoption. In $ugust 01, the F$SB issued $SU No. 01- 1, ³Presentation and Subsequent Measurement of Debt Issuance Costs $ssociated with Line-of-Credit $rrangements´, which addresses the presentation of debt issuance costs related to line-of-credit arrangements. 7hese amendments are not expected to have a material impact on the ¿nancial statements. In $pril 01, the F$SB issued $SU No. 01-0, ³Compensation ± 5etirement Bene¿ts´ 7opic 1 , which allows entities with a ¿scal year-end that does not coincide with a month-end to measure de¿ned bene¿t plan assets and obligations using the month-end that is closest to the entity’s ¿scal year-end. 7he practical expedient, if elected, relieves an employer from having to adjust the asset values to the appropriate fair values as of its ¿scal year end. We have decided to early adopt $SU No. 01-0 as of December , 01. 7he adoption did not have a material impact on our ¿nancial statements. In $pril 01, the F$SB issued $SU No. 01-0, ³Customer’s $ccounting for Fees Paid in a Cloud Computing $rrangement´ Subtopic 0-0 , which clari¿es the circumstances under which a cloud computing arrangement contains a software license. 7he standard will be effective for us beginning in the ¿rst quarter of 01. Entities may adopt the guidance retrospectively or prospectively to arrangements entered into, or materially modi¿ed, after the effective date. 7he amendments in $SU No. 01-0 are not expected to have a material impact on the ¿nancial statements. In -uly 01, the F$SB issued $SU No. 01-11, ³Simplifying the Measurement of Inventory´ 7opic 0 , which simpli¿es the measurement of inventory by requiring certain inventory to be measured at the ³lower of cost and net realizable value´ and options that currently exist for ³market value´ will be eliminated. 7he $SU de¿nes net realizable value as the ³estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.´ 7he standard will be effective for us beginning in the ¿rst quarter of 01. Entities should adopt the guidance prospectively, and early adoption is permitted. 7he amendments in $SU No. 01-11 are not expected to have a material impact on the ¿nancial statements. In September 01, the F$SB issued $SU No. 01-1, ³Simplifying the $ccounting for Measurement-Period $djustments´ 7opic 0 , which eliminates the requirement to restate prior period ¿nancial statements for measurement period adjustments. 7he $SU requires that the cumulative impact of a measurement period adjustment be recognized in the reporting period in which the adjustment is recognized. 7he standard will be effective for us beginning in the ¿rst quarter of 01. Entities should adopt the guidance prospectively, and early adoption is permitted. 7he amendments in $SU No. 01-1 are not expected to have a material impact on the ¿nancial statements. In November 01, the F$SB issued $SU No. 01-1 ³Balance Sheet Classi¿cation of Deferred 7axes´, which requires that all deferred tax assets and liabilities be classi¿ed as non-current in a classi¿ed balance sheet to simplify the reporting of deferred taxes. We adopted $SU No. 01-1 retroactively to the year ended December , 01. 7he F$SB indicated that the primary reason for the change was that segregation of deferred income tax assets and liabilities as current or non-current was not bene¿cial for ¿nancial reporting purposes since the classi¿cation may not accurately reÀect the time period in which the deferred tax amounts are recovered or settled. Non-GAAP Financial MeasXres $ non-*$$P ¿nancial measure is generally de¿ned as one that purports to measure historical or future ¿nancial performance, ¿nancial position or cash Àows, but excludes or includes amounts that would not be so adjusted in the most comparable *$$P measure. In this report, we de¿ne and use $djusted EBI7D$, a non-*$$P ¿nancial measure, as set forth below. AdMXsted EBITDA We de¿ne $djusted EBI7D$ as follows: Income loss from continuing operations before: • Income tax expense bene¿t ; • interest/¿nancing expense; • depreciation and amortization; and • non-cash impairments. Management’s 8se of Adjusted EBITDA $djusted EBI7D$ is not a measurement of ¿nancial performance under *$$P and should not be considered in isolation or as an alternative to income from operations, net income loss , cash Àow from continuing operating activities or any other measure of performance or liquidity derived in accordance with *$$P. We believe this non-*$$P measure, as we have de¿ned it, is helpful in identifying trends in our day-to-day performance because the items excluded have little or no signi¿cance on our day-to-day operations. 7his measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current ¿nancial goals as well as achieve optimal ¿nancial performance. We believe that it also provides an indicator for management to determine if adjustments to current spending decisions are needed. $djusted EBI7D$ provides us with a measure of ¿nancial performance, independent of items that are beyond the control of management in the short-term, such as depreciation and amortization, taxation and interest expense associated with our capital structure. 7his metric measures our ¿nancial performance based on operational factors that management can impact in the short- term, namely the cost structure or expenses of the Company. $djusted EBI7D$ is one of the metrics used by senior management and New Media’s Board of Directors to review the ¿nancial performance of our business on a monthly basis. Limitations of Adjusted EBITDA $djusted EBI7D$ has limitations as an analytical tool. It should not be viewed in isolation or as a substitute for *$$P measures of earnings or cash Àows. Material limitations in making the adjustments to our earnings to calculate $djusted EBI7D$ and using this non-*$$P ¿nancial measure as compared to *$$P net income loss , include: the cash portion of interest/ ¿nancing expense, income tax bene¿t provision and charges related to gain loss on sale of facilities represent charges gains , which may signi¿cantly affect our ¿nancial results. 5eaders of our ¿nancial statements may ¿nd this item important in evaluating our performance, results of operations and ¿nancial position. We use non-*$$P ¿nancial measures to supplement our *$$P results in order to provide a more complete understanding of the factors and trends affecting our business. $djusted EBI7D$ is not an alternative to net income, income from operations or cash Àows or any other measure of performance or liquidity provided by or used in operations as calculated and presented in accordance with *$$P. 5eaders of our ¿nancial statements should not rely on $djusted EBI7D$ as a substitute for any such *$$P ¿nancial measure. We strongly urge readers of our ¿nancial statements to review the reconciliation of income loss from continuing operations to $djusted EBI7D$, along with our consolidated ¿nancial statements included elsewhere in this report. We also strongly urge readers of our ¿nancial statements to not rely on any single ¿nancial measure to evaluate our business. In addition, because $djusted EBI7D$ is not a measure of ¿nancial performance under *$$P and is susceptible to varying calculations, the $djusted EBI7D$ measure, as presented in this report, may differ from and may not be comparable to similarly titled measures used by other companies. We use $djusted EBI7D$ as a measure of our core operating performance, which is evidenced by the publishing and delivery of news and other media and excludes certain expenses that may not be indicative of our core business operating results. We consider the unrealized gain loss on derivative instruments and the gain loss on early extinguishment of debt to be ¿nancing related costs associated with interest expense or amortization of ¿nancing fees. $ccordingly, we exclude ¿nancing related costs such as the early extinguishment of debt because they represent the write-off of deferred ¿nancing costs and we believe these non-cash write-offs are similar to interest expense and amortization of ¿nancing fees, which by de¿nition are excluded from $djusted EBI7D$. $dditionally, the non-cash gains losses on derivative contracts, which are related to interest rate swap agreements to manage interest rate risk, are ¿nancing costs associated with interest expense. Such charges are incidental to, but not reÀective of, our core operating performance and it is appropriate to exclude charges related to ¿nancing activities such as the early extinguishment of debt and the unrealized gain loss on derivative instruments which, depending on the nature of the ¿nancing arrangement, would have otherwise been amortized over the period of the related agreement and does not require a current cash settlement. Similar to depreciation and amortization, goodwill and masthead impairment charges are non-cash write- offs that are not directly related to core operating performance. 7he table below shows the reconciliation of income loss from continuing operations to $djusted EBI7D$ for the periods presented: SXccessor Company Predecessor Company Two Months Ten Months Year Ended Year Ended Ended Ended Year Ended Year Ended December December December November 6, December -anXary 1, 27, 2015 28, 2014 29, 2013 2013 30, 2012(3) 2012 (in thoXsands) Income loss from continuing operations ...... $ ,1 $ ,0 $ ,0 $,0$ , $ 0, 0 Income tax expense bene¿t ...... ,0,1 1 1 0 1,0 Loss gain on derivative instruments 1 ...... — 1— 1 1, 1 Loss on early extinguishment of debt ...... — ,0 — ——— $mortization of deferred ¿nancing costs...... ,1 1,0 11 1, 1,0 Interest expense ...... , 1, 1,0 , , ,0 Impairment of long-lived assets...... — — — 1, —1, Depreciation and amortization...... , 1,0 , ,0 , , *oodwill and mastheads impairment...... ,00———— $djusted EBI7D$ from continuing operations .... $1, a $ ,1 b $1,0 c $ , d $ , e $ 0, f a $djusted EBI7D$ for the year ended December , 01 included net expenses of $1, , comprised of transaction and project costs, non-cash compensation, and other expenses of $ ,, integration and reorganization costs of $,0 and a $1,01 gain on the sale or disposal of assets. b $djusted EBI7D$ for the year ended December , 01 included net expenses of $1,, comprised of transaction and project costs, non-cash compensation, and other expenses of $1,0, integration and reorganization costs of $, and a $1, loss on the sale or disposal of assets. c $djusted EBI7D$ for the two months ended December , 01 included net expenses of $,, comprised of transaction and project costs and other expenses of $,0, integration and reorganization costs of $1, and a $ loss on the sale or disposal of assets. d $djusted EBI7D$ for the ten months ended November , 01 included net expenses of $ 0, , comprised of transaction and project costs, non-cash compensation, and other expenses of $ , , integration and reorganization costs of $1, and a $1,1 loss on the sale or disposal of assets. $djusted EBI7D$ also does not include $1 of EBI7D$ generated from our discontinued operations. e $djusted EBI7D$ for the year ended December 0, 01 included net expenses of $11,00 , comprised of transaction and project costs, non-cash compensation, and other expenses of $,, integration and reorganization costs of $, and a $1, loss on the sale or disposal of assets. $djusted EBI7D$ also does not include $ of EBI7D$ generated from our discontinued operations. f $djusted EBI7D$ for the year ended -anuary 1, 01 included net expenses of $10,, comprised of transaction and project costs, non-cash compensation, and other expenses of $,, integration and reorganization costs of $, and a $ loss on the sale or disposal of assets. $djusted EBI7D$ also does not include $ of EBI7D$ generated from our discontinued operations. 1 Non-cash gain loss on derivative instruments is related to interest rate swap agreements which are ¿nancing related and are excluded from $djusted EBI7D$. Non-cash write-off of deferred ¿nancing costs are similar to interest expense and amortization of ¿nancing fees and are excluded from $djusted EBI7D$. 7he year ended December 0, 01 included a rd week of operations for approximately 0% of the business. Item 7A. 4Xantitative and 4Xalitative DisclosXres AboXt Market Risk We are exposed to market risk from changes in interest rates and commodity prices. Changes in these factors could cause Àuctuations in earnings and cash Àow. In the normal course of business, exposure to certain of these market risks is managed as described below. Interest Rates 2n September , 01, we ¿led for bankruptcy and on November , 01, we emerged from bankruptcy with a new capital structure. 7he interest rate discussion below is based on our capital structure and interest rates pre-¿ling and post emergence. Pre Bankruptcy Filing 7he pre-¿ling discussion is based on our Predecessor’s average long-term debt of $1,11. million and interest rate swaps totaling $.0 million during the pre-¿ling period. 2n $ugust 1, 00, our Predecessor terminated interest rate swaps with a total notional amount of $0.0 million. $t September , 01, after consideration of the interest rate swaps described below, $. million of the remaining principal amount of our term loans were subject to Àoating interest rates. 2n February , 00, our Predecessor executed an interest rate swap in the notional amount of $100.0 million with a forward starting date of February , 00. 7he interest rate swap had a term of seven years. Under this swap, our Predecessor paid an amount to the swap counterparty representing interest on a notional amount at a rate of .1% and received an amount from the swap counterparty representing, interest on the notional amount at a rate equal to the one month LIB25. 2n $pril , 00, our Predecessor executed an additional interest rate swap in the notional amount of $0.0 million with a forward starting date of $pril 1, 00. 7he interest rate swap had a term of seven years. Under this swap, our Predecessor paid an amount to the swap counterparty representing interest on a notional amount at a rate of . 1% and received an amount from the swap counterparty representing interest on the notional amount at a rate equal to one month LIB25. 2n $pril 1, 00, our Predecessor executed an additional interest rate swap in the notional amount of $00.0 million with a forward starting date of $pril 0, 00. 7he interest rate swap had a term of seven years. Under this swap, our Predecessor paid an amount to the swap counterparty representing interest on a notional amount at a rate of .0 % and received an amount from the swap counterparty representing interest on the notional amount at a rate equal to one month LIB25. 2n September 1, 00, our Predecessor executed an additional interest rate swap based on a notional amount of $.0 million with a forward starting date of September 1, 00. 7he interest rate swap had a term of seven years. Under the swap, our Predecessor paid an amount to the swap counterparty representing interest on a notional amount at a rate of . 1% and received an amount from the swap counterparty representing interest on the notional amount at a rate equal to one month LIB25. 7he bankruptcy ¿ling on September , 01, was a termination event under our Predecessor’s interest rate swap agreements. 2ur Predecessor’s debt structure and interest rate risks were primarily managed through the use of Àoating rate debt and interest rate swaps. Post Emergence 7he post emergence discussion is based on average long-term debt of $. million during the year ended December , 01. 7here were no interest rate swaps in place during this period. $s of December , 01, we have $. million of term debt, with a minimum variable rate plus a ¿xed margin. 2n the term debt the minimum variable rate is 1.0% and the ¿xed margin is .%. 2ur primary exposure is to LIB25. $ 100 basis point change in LIB25 would change our interest expense on an annualized basis by approximately $. million, based on average Àoating rate debt outstanding for the year ended December , 01 and after consideration of minimum variable rates. Commodities Certain operating expenses of ours are sensitive to commodity price Àuctuations. Primary commodity price exposures are newsprint, energy costs and, to a lesser extent, ink. We manage these risks through annual ¿xed pricing agreements for our newsprint purchases and annual contracts with independent contractors or third party distributers for our newspaper distributions. $ $10 per metric ton newsprint price change would result in a corresponding annualized change in our income from continuing operations before income taxes of $1. million based on newsprint usage for the year ended December , 01 of approximately 11 , 00 metric tons. Item 8. Financial Statements and SXpplementary Data NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS Page Consolidated Financial Statements 5eport of Independent 5egistered Public $ccounting Firm ...... Consolidated Balance Sheets as of December , 01 and December , 01...... Consolidated Statements of 2perations and Comprehensive Income Loss for the year ended December , 01 Successor Company , the year ended December , 01 Successor Company , the two months ended December , 01 Successor Company and the ten months ended November , 01 Predecessor Company ...... 0 Consolidated Statements of Stockholders’ Equity De¿cit for the year ended December , 01 Successor Company , the year ended December , 01 Successor Company , the two months ended December , 01 Successor Company and the ten months ended November , 01 Predecessor Company ...... 1 Consolidated Statements of Cash Flows for the year ended December , 01 Successor Company , the year ended December , 01 Successor Company , the two months ended December , 01 Successor Company and the ten months ended November , 01 Predecessor Company ...... Notes to Consolidated Financial Statements ...... REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 7he Board of Directors and Stockholders of New Media Investment *roup Inc. We have audited the accompanying consolidated balance sheets of New Media Investment *roup Inc. and subsidiaries as of December , 01 and December , 01 and the related consolidated statements of operations and comprehensive income loss , shareholders’ equity de¿cit and cash Àows for the year ended December , 01, the year ended December , 01, the period from November , 01 to December , 01, and the period from December 1, 01 through November , 01 Predecessor . 2ur audits also included the ¿nancial statement schedule listed in the Index at Item 1 a . 7hese ¿nancial statements and schedule are the responsibility of the Company’s management. 2ur responsibility is to express an opinion on these ¿nancial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company $ccounting 2versight Board United States . 7hose standards require that we plan and perform the audit to obtain reasonable assurance about whether the ¿nancial statements are free of material misstatement. $n audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the ¿nancial statements. $n audit also includes assessing the accounting principles used and signi¿cant estimates made by management, as well as evaluating the overall ¿nancial statement presentation. We believe that our audits provide a reasonable basis for our opinion. $s discussed in Note 1 and to the consolidated ¿nancial statements, on November , 01, the Bankruptcy Court entered an order con¿rming the plan of reorganization, which became effective November , 01. $ccordingly, the accompanying consolidated ¿nancial statements have been prepared in conformity with $ccounting Standards Codi¿cation - 10, ³5eorganizations´, for the Successor Company as a new entity with assets, liabilities and a capital structure having carrying amounts not comparable with prior periods as described in Note 1 and . In our opinion, the ¿nancial statements referred to above present fairly, in all material respects, the consolidated ¿nancial position of New Media Investment *roup and subsidiaries at December , 01 and December , 01, and the consolidated results of their operations and their cash Àows for the year ended December , 01, the year ended December , 01, the period from November , 01 to December , 01, and the period from December 1, 01 through November , 01 Predecessor , in conformity with U.S. generally accepted accounting principles. $lso, in our opinion, the related ¿nancial statement schedule, when considered in relation to the basic ¿nancial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company $ccounting 2versight Board United States , New Media Investment *roup Inc. and subsidiaries’ internal control over ¿nancial reporting as of December , 01, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring 2rganizations of the 7readway Commission 01 framework and our report dated February , 01 expressed an unquali¿ed opinion thereon. /s/ Ernst Young LLP New York, New York February , 01 6HHDFFRPSDQ\LQJQRWHVWRFRQVROLGDWHG¿QDQFLDOVWDWHPHQWV NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thoXsands, e[cept share data) December 27, December 28, 2015 2014 ASSETS Current assets: Cash and cash equivalents ...... $ 1, $1,0 5estricted cash ...... , , $ccounts receivable, net of allowance for doubtful accounts of $, and $, at December , 01 and December , 01, respectively ...... 1, 0,11 Inventory...... 1, , Prepaid expenses...... 1, ,1 2ther current assets...... 11, 10, 7otal current assets ...... 1, 10 , 1 Property, plant, and equipment, net of accumulated depreciation of $,0 and $0,1 at December , 01 and December , 01, respectively ...... , , *oodwill ...... 11,11 1,0 Intangible assets, net of accumulated amortization of $,1 and $,0 at December , 01 and December , 01, respectively...... 0, 1, Deferred ¿nancing costs, net ...... ,1 , 2ther assets...... , ,0 7otal assets...... $ 1,00, $ 0, LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Current portion of long-term liabilities...... $ $ 0 Current portion of long-term debt...... ,0 ,0 $ccounts payable ...... ,1 ,0 $ccrued expenses...... , ,01 Deferred revenue ...... , ,0 7otal current liabilities...... 1, ,0 Long-term liabilities: Long-term debt ...... ,0 1 ,0 Long-term liabilities, less current portion ...... ,1 ,0 Deferred income taxes ...... , ,1 Pension and other postretirement bene¿t obligations...... 11,0 1, 7otal liabilities ...... ,1 0 , Stockholders’ equity: Common stock, $0.01 par value, ,000,000,000 shares authorized at December , 01 and December , 01; ,10, and ,, issued and outstanding at December , 01 and December , 01, respectively ...... $dditional paid-in capital ...... 0,0 ,0 $ccumulated other comprehensive loss ...... ,1 , 5etained earnings ...... , ,001 7otal stockholders’ equity ...... ,0 ,1 7otal liabilities and stockholders’ equity ...... $ 1,00, $ 0, 6HHDFFRPSDQ\LQJQRWHVWRFRQVROLGDWHG¿QDQFLDOVWDWHPHQWV NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thoXsands, e[cept per share data) Predecessor SXccessor Company Company Two Months Ten Months Year Ended Year Ended Ended Ended December 27, December 28, December 29, November 6, 2015 2014 2013 2013 5evenues: $dvertising ...... $ , $ , $ ,0$,0 Circulation...... , 1 ,1 , 11,10 Commercial printing and other ...... 10, 1, 10, ,0 7otal revenues ...... 1,1 ,1 , 10,1 1, 0 2perating costs and expenses: 2perating costs ...... , ,0 ,1 ,0 Selling, general, and administrative ...... 0, 11, , 1, Depreciation and amortization ...... , 1,0 , ,0 Integration and reorganization costs ...... ,0 , 1, 1, Impairment of long-lived assets ...... — — — 1, *ain loss on sale or disposal of assets ...... 1,01 1, 1,1 Mastheads impairment ...... ,00——— 2perating income loss ...... 10, , , , Interest expense ...... , 1, 1,0 , $mortization of deferred ¿nancing costs...... ,1 1,0 11 Loss on early extinguishment of debt ...... — ,0 —— Loss on derivative instruments ...... — 1— 1 2ther expense income ...... 0 1 1,00 5eorganization items, net...... — — — , 1 Income loss from continuing operations before income taxes ...... 1,01 , ,0 Income tax expense bene¿t ...... ,0,1 1 1 Income loss from continuing operations ...... ,1 ,0 ,0 ,0 Loss from discontinued operations, net of income taxes...... — — — 1,0 Net income loss ...... ,1 ,0 ,0 ,0 Net loss attributable to noncontrolling interest ...... — — — 0 Net income loss attributable to New Media ...... $ ,1 $ ,0 $ ,0 $ ,1 Income loss per share: Basic: Income loss from continuing operations attributable to New Media . $ 1. $ 0.10 $0. $1. Net income loss attributable to New Media ...... $ 1. $ 0.10 $0. $1. Diluted: Income loss from continuing operations attributable to New Media . $ 1. $ 0.10 $0. $1. Net income loss attributable to New Media ...... $ 1. $ 0.10 $0. $1. Dividends declared per share...... $ 1. $0. $—$— 2ther comprehensive income: Derivative instrument items: *ain on derivative instruments, net of income taxes of $0 ...... $ — $ — $ — $ 1 , 5eclassi¿cation of accumulated other comprehensive loss related to derivative instruments, net of income taxes of $0 ...... — — — ,1 7otal derivative items, net of income taxes of $0 ...... — — — , Pension and other postretirement bene¿t items: Net actuarial gain loss ...... 1, , $mortization of net actuarial loss ...... —— — 7otal pension and other postretirement bene¿t items, net of income taxes of $0 ...... 1,11 , 2ther comprehensive income loss , net of tax...... 1,11 , ,1 Comprehensive income loss ...... , ,1 , , Comprehensive loss attributable to noncontrolling interest...... — — — 0 Comprehensive income loss attributable to New Media...... $ , $ ,1 $ , $ ,1 6HHDFFRPSDQ\LQJQRWHVWRFRQVROLGDWHG¿QDQFLDOVWDWHPHQWV 0 0 11 0 — 0 0 0 1 0 1 1 ,000 , , , ,0 , , ,0 , ,1 , ,1 , , , , , , 0,1 1 1 $ 0 0 0 0 , , Non- bsidiary Total X interest in interest s controlling controlling $ 10 — — 10 nt X $ ry stock X —$ —$—— — —$ —$ —$ —$ —— —— —— — —— — —— — Treas , , 0 0 1 ——— — 1 1 ——— —1 0 ——— — ——— — ——— — , , , ,1 ,001 — $ — $ — $ , , , , lated 0, X cit) 10, ¿ m X de 1, earnings Retained (acc $ $ $ $ 1 1— —1, 11——— — ——— — — — ——— — — ——— — — ——— —11 — ——— — — ——— — — ——— —1, 1 — ——— —1 — — ——— — ,1 , , , , , , lated X m other other X income (loss) Acc comprehensive comprehensive $ $ $ ——$ —$ $—$——$— 0$ 0 0 0 1 ,000 , ,0 , , , , , 0, 1, 0,0 0, 0 1 11 1 cept share data) cept share Additional [ paid-in capital $ $ $ 01 00 $ 00 00 $ — nt Shares Amo X sands, e X $ $ $ 0—— — ——— —— (In tho , , , , ,00 Common stock 0, 1 10, 1 , , , , ,000,000 , Shares Amo 0,000,000 $ 0,000,000 0,000,000 6HHDFFRPSDQ\LQJQRWHVWRFRQVROLGDWHG¿QDQFLDOVWDWHPHQWV NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES INC. GROUP INVESTMENT MEDIA NEW ...... — — — 1, ...... — — — ...... — — — ...... — — — ...... — — — 1 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) EQUITY STOCKHOLDERS’ OF STATEMENTS CONSOLIDATED ...... cit and accumulated ¿ ...... — — ...... — — 1, ...... — — , Successor Company ...... Company Successor , , Predecessor Company...... Predecessor , ...... Company Successor , , Successor Company ...... Company Successor , , Predecessor Company ...... Company Predecessor , 01 01 01 01 01 , , , , 0, ...... 1 ...... ...... — — — — loss cation of accumulated other comprehensive loss related to derivative ¿ warrants of $ other comprehensive income ...... income comprehensive other — — — with emergence from Chapter 11 of the Bankruptcy Code from Chapter 11 with emergence instruments, net of income taxes of $0...... of taxes income of net —instruments, — — ain on derivative instruments, net of income taxes $0 estricted share grants estricted share grants eclassi Disposal of non wholly owned subsidiary — — — — — — — Balance at December Cancellation of Predecessor Company common stock, net fair value new Balance at December Balance at December Elimination of Predecessor Company accumulated de Issuance of new common stock and contribution Local Media in connection Net actuarial loss and prior service cost, net of income taxes $0 Net loss...... Net 5 — — — — Balance at November Common stock cash dividend ...... dividend Non-cash compensation expense cash discount Issuance of common stock, net underwriter’s stock Common — — Net income * income...... Net — — — — 5 5 Net actuarial gain and prior service cost, net of income taxes $0 Non-cash compensation expense Net income...... Net — — — — Net actuarial gain and prior service cost, net of income taxes $0 Issuance of common stock, net of underwriter’s discount Issuance of common stock, net underwriter’s Net actuarial gain and prior service cost, net of income taxes $0 Common stock cash dividend ...... dividend cash stock Common — — Common stock cash dividend ...... dividend cash stock Common — — Non-cash compensation expense Balance at December 1 NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thoXsands) Predecessor SXccessor Company Company Year Ended Year Ended Two Months Ended Ten Months Ended December 27, 2015 December 28, 2014 December 29, 2013 November 6, 2013 Cash Àows from operating activities: Net income loss ...... $ ,1 $ ,0 $ ,0 $ ,0 $djustments to reconcile net income loss to net cash provided by used in operating activities: ...... Depreciation and amortization...... , 1,0 , , $mortization of deferred ¿nancing costs...... 1,0 11 *ain loss on derivative instruments ...... — —1 Non-cash compensation expense...... 1,1 — Non-cash interest expense ...... ,1 1 — Non-cash reorganization costs, net ...... — — — ,0 Non-cash interest related to unrealized losses upon designation of cash Àow hedges...... — — — ,1 Non-cash loss on early extinguishment of debt ...... — , —— Deferred income taxes...... 1,1 ,1— — *ain loss on sale or disposal of assets...... 1,01 1, ,1 Pension and other postretirement bene¿t obligations ...... 1,00 1,0 — 1,1 Impairment of long-lived assets...... — — — 1, Mastheads impairment...... ,00 — — — Changes in assets and liabilities: $ccounts receivable, net ...... , 1,1 ,0 ,10 Inventory...... ,01 1, 10 Prepaid expenses...... 1 1 1 1, 2ther assets...... 1,1 1,0 , $ccounts payable ...... 1, , $ccrued expenses ...... ,1 , , ,1 Deferred revenue...... 1,0 1 2ther long-term liabilities...... ,11,0 Net cash provided by used in operating activities...... 11,1 1, 1,10 , Cash Àows from investing activities: Purchases of property, plant, and equipment ...... 10,1 ,01 1, , Proceeds from sale of publications, other assets and insurance ...... 1, 1,0 1 $cquisitions, net of cash acquired ...... 1,1 ,1 —— Net cash used in investing activities ...... , 1,0 1, , Cash Àows from ¿nancing activities: Capital contribution to Local Media...... — — — 1,10 Payment of debt issuance costs...... ,10 , 0 — Borrowings under term loans ...... 1, 1, 1 ,000 — Borrowings under revolving credit facility...... ,000 ,0 —— 5epayments under long-term debt ...... ,1 1, — , 5epayments under revolving credit facility ...... 10,000 ,0 —— Payment of offering costs...... 1, 1,0 —— Issuance of common stock, net of underwriter’s discount ...... 10, 11, —— Payment of dividends ...... ,0 1,1 1 ,000 — Net cash provided by used in ¿nancing activities...... 0,0 1,0 , 0 ,0 Net increase decrease in cash and cash equivalents ..... , 1, 11,0 1,0 Cash and cash equivalents at beginning of period...... 1,0 1,11 0,1, Cash and cash equivalents at end of period ...... $ 1, $1,0 $ 1,11 $ 0,1 Supplemental disclosures on cash Àow information:...... Cash interest paid ...... $ 1, $1,11$ $ ,0 Cash income taxes paid...... $ 1, $—$—$— 6HHDFFRPSDQ\LQJQRWHVWRFRQVROLGDWHG¿QDQFLDOVWDWHPHQWV NEW MEDIA INVESTMENT GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thoXsands, e[cept share data) (1) Description of BXsiness, Basis of Presentation and SXmmary of Signi¿cant AccoXnting Policies a Description of Business New Media Investment *roup Inc. ³New Media,´ ³Company,´ ³us,´ ³our,´ or ³we´ , formerly known as *ate+ouse Media, Inc. ³*ate+ouse´ or ³Predecessor´ , was formed as a Delaware corporation on -une 1, 01. New Media was capitalized and issued 1,000 common shares to Newcastle Investment Corp. ³Newcastle´ . Newcastle owned approximately .% of New Media until February 1, 01, upon which date Newcastle distributed the shares that it held in New Media to its shareholders on a prorata basis. New Media had no operations until November , 01, when it assumed control of *ate+ouse and Local Media *roup +oldings LLC ³Local Media Parent´ . 7he Company’s Predecessor and certain of its subsidiaries collectively, the ³Debtors´ ¿led voluntary petitions under Chapter 11 of title 11 of the U.S. Bankruptcy Code the ³Bankruptcy Code´ , in the U.S. Bankruptcy Court for the District of Delaware the ³Bankruptcy Court´ on September , 01. 2n November , 01 the ³Con¿rmation Date´ , the Bankruptcy Court con¿rmed the plan of reorganization the ³Plan´ or ³Plan of 5eorganization´ and on November , 01 the ³Effective Date´ , the Debtors emerged from Chapter 11. *ate+ouse was determined to be the predecessor to New Media, as the operations of *ate+ouse comprise substantially all of the business operations of the combined entities. $s such, the consolidated ¿nancial statements presented herein for all periods prior to November , 01 reÀect the historical consolidated ¿nancial statements of *ate+ouse and its subsidiaries. Further, the 5eorganization 9alue, as de¿ned below, of *ate+ouse at the Con¿rmation Date, as de¿ned below, approximated fair value as of November , 01. 7he Company is a leading U.S. publisher of local newspapers and related publications that are generally the dominant source of local news and print advertising in their markets. $s of December , 01, the Company owned and operated publications located in 1 states. 7he majority of the Company’s paid daily newspapers have been published for more than 100 years and are typically the only paid daily newspapers of general circulation in their respective nonmetropolitan markets. 7he Company’s publications generally face limited competition as a result of operating in small and midsized markets that can typically support only one newspaper. 7he Company has strategically clustered its publications in geographically diverse, nonmetropolitan markets in the Midwest and Eastern United States, which limits its exposure to economic conditions in any single market or region. $s of December , 01, the Company’s operating segments Eastern US Publishing, Central US Publishing, Western US Publishing are aggregated into one reportable business segment. b Basis of Presentation 7he consolidated ¿nancial statements include the accounts of New Media and its subsidiaries. $ll signi¿cant intercompany accounts and transactions have been eliminated. $s discussed in Note ³9oluntary 5eorganization Under Chapter 11´, the Debtors emerged from Chapter 11 protection and adopted fresh start accounting in accordance with Financial $ccounting Standards Board ³F$SB´ $ccounting Standards Codi¿cation ³$SC´ , 7opic , ³Reorganizations” ³$SC ´ . 7he adoption of fresh start accounting resulted in the Company becoming a new entity for ¿nancial reporting purposes as of November , 01. $ccordingly, the consolidated ¿nancial statements on November , 01 and subsequent periods are not comparable, in various material respects, to the Company’s consolidated ¿nancial statements prior to that date. Fresh start accounting requires resetting the historical net book value of assets and liabilities to fair value by allocating the entity’s reorganization value ³5eorganization 9alue´ to its assets and liabilities pursuant to $SC 7opic 0, ³Business Combinations´ ³$SC 0´ . 7he excess reorganization value over the fair value of tangible and identi¿able intangible assets is recorded as goodwill on the consolidated balance sheet. Deferred taxes are determined in conformity with $SC 7opic 0, ³Income Taxes´ ³$SC 0´ . In addition, $SC requires that ¿nancial statements, for periods including and subsequent to a Chapter 11 ¿ling, distinguish transactions and events that are directly associated with the reorganization proceedings and the ongoing operations of the business, as well as additional disclosures. Effective September , 01, expenses, gains and losses directly associated with the reorganization proceedings were reported as reorganization items in the accompanying consolidated statements of operations. In addition, liabilities subject to compromise in the Chapter 11 cases were distinguished from liabilities not subject to compromise and from post-petition liabilities. Liabilities subject to compromise were reported at amounts allowed or expected to be allowed under Chapter 11 bankruptcy proceedings. 7he ³Company,´ when used in reference to the period subsequent to the application of fresh start accounting on November , 01, refers to the ³Successor Company,´ and when used in reference to periods prior to fresh start accounting, refers to the ³Predecessor Company.´ Further, references to the ³7en months ended November , 01´ refer to the period from December 1, 01 to November , 01 and references to the ³7wo months ended December , 01´ refer to the period from November , 01 to December , 01. c Newspaper Industry 7he newspaper industry and the Company have experienced declining same store revenue and pro¿tability over the past several years. $s a result, the Company continues to implement, plans to reduce costs and preserve cash Àow. 7his includes cost reduction programs and the sale of non-core assets. 7he Company believes these initiatives will provide it with the ¿nancial resources necessary to invest in the business and provide suf¿cient cash Àow to enable the Company to meet its commitments. d 8se of Estimates 7he preparation of ¿nancial statements in conformity with U.S. generally accepted accounting principles ³*$$P´ requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ¿nancial statements and the reported amounts of revenues and expenses during the reporting period. $ctual results could differ from those estimates. Examples of signi¿cant estimates include fresh start accounting, pension and postretirement bene¿t obligation assumptions, income taxes, allowance for doubtful accounts, self-insurance liabilities, goodwill impairment analysis, stock- based compensation, and valuation of property, plant and equipment and intangible assets. $ctual results could differ from those estimates. e Fiscal f Accounts Receivable $ccounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. 7he Company’s allowance for doubtful accounts is based upon several factors including the length of time the receivables are past due, historical payment trends and current economic factors. 7he Company generally does not require collateral. In connection with the application of fresh start accounting on November , 01, the carrying value of accounts receivable was adjusted to fair value, eliminating the allowance for doubtful accounts. g Inventory Inventory consists principally of newsprint, which is valued at the lower of cost or market. Cost is determined using the ¿rst-in, ¿rst-out ³FIF2´ method. In 01 and 01, the Company purchased approximately % and % of its newsprint from one vendor, respectively. h Property, Plant and Equipment Property, plant and equipment are recorded at cost. 5outine maintenance and repairs are expensed as incurred. Depreciation is calculated under the straight-line method over the estimated useful lives, principally to 0 years for buildings and improvements, 1 to 0 years for machinery and equipment, and 1 to 10 years for furniture, ¿xtures and computer software. Leasehold improvements are amortized under the straight-line method over the shorter of the lease term or estimated useful life of the asset. $s part of fresh start accounting, property, plant and equipment were restated to fair value and the depreciable lives were updated to reÀect the remaining estimated useful life of the assets. i Business Combinations 7he Company accounts for acquisitions in accordance with the provisions of $SC 0. $SC 0 provides guidance for recognition and measurement of identi¿able assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree at fair value. In a business combination, the assets acquired, liabilities assumed and noncontrolling interest in the acquiree are recorded as of the date of acquisition at their respective fair values with limited exceptions. $ny excess of the purchase price consideration transferred over the estimated fair values of net assets acquired is recorded as goodwill. 7ransaction costs are expensed as incurred. 7he operating results of the acquired business are reÀected in the Company’s consolidated ¿nancial statements after the date of the acquisition. j *oodwill, Intangible, and Long-Lived Assets Intangible assets consist of noncompete agreements, advertiser, subscriber and customer relationships, mastheads, trade names and publication rights. *oodwill is not amortized pursuant to $SC 7opic 0 ³Intangibles – Goodwill and Other´ ³$SC 0´ . Mastheads are not amortized because it has been determined that the useful lives of such mastheads are inde¿nite. In accordance with $SC 0, goodwill and intangible assets with inde¿nite lives are tested for impairment annually or when events indicate that an impairment could exist which may include an economic downturn in a market, a change in the assessment of future operations or a decline in the Company’s stock price. 7he Company performs an annual impairment assessment on the last day of its ¿scal second quarter. $s required by $SC 0, the Company performs its impairment analysis on each of its reporting units. 7he Company has the option to qualitatively assess whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company elects to perform a qualitative assessment and concludes it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no further assessment of that reporting unit’s goodwill is necessary; otherwise goodwill must be tested for impairment using a two-step process. 7he reporting units have discrete ¿nancial information which are regularly reviewed by management. 7he fair value of the applicable reporting unit is compared to its carrying value. Calculating the fair value of a reporting unit requires signi¿cant estimates and assumptions by the Company. 7he Company estimates fair value by applying third-party market value indicators to projected cash Àows and/ or projected earnings before interest, taxes, depreciation, and amortization. In applying this methodology, the Company relies on a number of factors, including current operating results and cash Àows, expected future operating results and cash Àows, future business plans, and market data. If the carrying value of the reporting unit exceeds the estimate of fair value, the Company calculates the impairment as the excess of the carrying value of goodwill over its implied fair value. 5efer to Note ³*oodwill and Intangible $ssets´ for additional information on the impairment testing of goodwill and inde¿nite lived intangible assets. 7he Company accounts for long-lived assets in accordance with the provisions of $SC 7opic 0, ³Property, Plant and Equipment´ ³$SC 0´ . 7he Company assesses the recoverability of its long-lived assets, including property, plant and equipment and de¿nite lived intangible assets, whenever events or changes in business circumstances indicate the carrying amount of the assets, or related group of assets, may not be fully recoverable. Impairment indicators include signi¿cant under performance relative to historical or projected future operating losses, signi¿cant changes in the manner of use of the acquired assets or the strategy for the Company’s overall business, and signi¿cant negative industry or economic trends. 7he assessment of recoverability is based on management’s estimates by comparing the sum of the estimated undiscounted cash Àows generated by the underlying asset, or other appropriate grouping of assets, to its carrying value to determine whether an impairment existed at its lowest level of identi¿able cash Àows. If the carrying amount of the asset is greater than the expected undiscounted cash Àows to be generated by such asset, an impairment is recognized to the extent the carrying value of such asset exceeds its fair value. k Revenue Recognition $dvertising revenue is recognized upon publication of the advertisement. Circulation revenue from subscribers is billed to customers at the beginning of the subscription period and is recognized on a straight-line basis over the term of the related subscription. Circulation revenue from single-copy income is recognized based on date of publication, net of provisions for related returns. 5evenue for commercial printing is recognized upon delivery. l Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the ¿nancial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 7he effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 7he Company has determined that it is more likely than not that its existing deferred tax assets will not be realized, and accordingly has provided a full valuation allowance. $ny changes in the scheduled reversals of deferred taxes may require an additional valuation allowance against the remaining deferred tax assets. $ny increase or decrease in the valuation allowance could result in an increase or decrease in income tax expense in the period of adjustment. 7he Company accounts for uncertain tax positions under the provisions of $SC 0. 7he Company does not anticipate signi¿cant increases or decreases in our uncertain tax positions within the next twelve months. 7he Company recognizes penalties and interest relating to uncertain tax positions in tax expense. m Fair 9alue of Financial Instruments 7he carrying value of the Company’s cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to the short maturity of these instruments. $n estimate of the fair value of the Company’s debt is disclosed in Note 10 ³Indebtedness´. 7he Company accounts for derivative instruments in accordance with $SC 7opic 1, ³Derivatives and Hedging´ ³$SC 1´ and $SC 7opic 0 ³Fair Value Measurements and Disclosures´ ³$SC 0´ . 7hese standards require an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. $dditionally, the fair value adjustments will affect either accumulated other comprehensive loss income or net income loss depending on whether the derivative instrument quali¿es as an effective hedge for accounting purposes and, if so, the nature of the hedging activity. 7he fair value of the Company’s derivative ¿nancial instruments is disclosed in Note 11 ³Derivative Instruments´. n Cash Equivalents Cash equivalents represent highly liquid certi¿cates of deposit which have original maturities of three months or less. o Deferred Financing Costs Deferred ¿nancing costs consist of costs incurred in connection with debt ¿nancings. Such costs are amortized on a straight-line basis, which approximates the effective interest method, over the estimated remaining term of the related debt. p Advertising Costs $dvertising costs are expensed in the period incurred. 7he Company incurred total advertising expenses for the Successor Company for the years ended December , 01 and December , 01 and the two months ended December , 01, and the Predecessor Company for the ten months ended November , 01 of $11,, $,1 , $0 and $, , respectively. q Earnings loss per share Basic earnings loss per share is computed as net income loss available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share reÀects the potential dilution that could occur from common shares issued through common stock equivalents. r Stock-based Employee Compensation $SC 7opic 1, ³Compensation – Stock Compensation´ requires that all share-based payments to employees and the board of directors, including grants of employee stock options, be recognized in the consolidated ¿nancial statements over the service period generally the vesting period based on fair values measured on grant dates. s Pension and Postretirement Liabilities $SC 7opic 1, ³&RPSHQVDWLRQ±5HWLUHPHQW%HQH¿WV´ requires recognition of an asset or liability in the consolidated balance sheet reÀecting the funded status of pension and other postretirement bene¿t plans such as retiree health and life, with current-year changes in the funded status recognized in accumulated other comprehensive loss income. For the Successor Company for the years ended December , 01 and December , 01 and the two months ended December , 01, and the Predecessor Company for the ten months ended November , 01, a total of $1,11, $ , , $ and $ , net of taxes of $0, $0, $0 and $0 after valuation allowance, respectively, was recognized in other comprehensive income loss income see Note 1 ³Pension and Postretirement Bene¿ts´ . t Self-Insurance Liability Accruals 7he Company maintains self-insured medical and workers’ compensation programs. 7he Company purchases stop loss coverage from third parties which limits our exposure to large claims. 7he Company records a liability for healthcare and workers’ compensation costs during the period in which they occur as well as an estimate of incurred but not reported claims. u Reclassi¿cations Certain amounts in the prior periods consolidated ¿nancial statements have been reclassi¿ed to conform to the current year presentation. v Recently Issued Accounting Pronouncements In $pril 01, the F$SB issued $ccounting Standard Update ³$SU´ No. 01-0, ³Presentation of Financial Statements and Property, Plant, and Equipment: 5eporting Discontinued 2perations and Disclosures of Disposals of Components of an Entity´ ³$SU No. 01-0´ . $SU No. 01-0 changes the criteria for reporting discontinued operations while enhancing disclosures in this area and is effective for annual and interim periods beginning after December 1, 01. 7he amendments in $SU No. 01-0 did impact the Company’s assessment of the disposition of the Las 9egas 5eview--ournal and related publications. In May 01, the F$SB issued $SU No. 01-0 , ³5evenue from Contracts with Customers.´ $SU No. 01-0 will replace all current U.S. *$$P guidance on this topic and eliminate all industry-speci¿c guidance. 7he new revenue recognition standard provides a uni¿ed model to determine when and how revenue is recognized. 7he core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reÀects the consideration to which the entity expects to be entitled in exchange for those goods or services. 7his guidance would have been effective for annual and interim reporting periods beginning after December 1, 01. In $ugust 01, the F$SB issued $SU No. 01-1, ³5evenue from Contracts with Customers: Deferral of the Effective Date´ which defers for one year the effective date of the new revenue standard $SU No. 01-0 for public and non-public entities reporting under U.S. *$$P. 7he standard is to be applied using one of two retrospective application methods. 7he F$SB is permitting entities to adopt the standard as of the original effective date. 7he Company is currently reviewing the amendments in $SU No. 01-0 and application methods but does not expect them to have a material impact on the ¿nancial statements. In $ugust 01, the F$SB issued $SU No. 01-1, ³Disclosure of Uncertainties about an Entity’s $bility to Continue as a *oing Concern´, that establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and setting rules for how this information should be disclosed in the ¿nancial statements. 7his guidance is effective for ¿scal years, and interim periods within those years, beginning on or after December 1, 01, with early adoption permitted. 7he Company will adopt this guidance on December , 01 and do not expect it to have a material impact on the Company’s ¿nancial statements upon adoption. In February 01, the F$SB issued $SU No. 01-0, ³Consolidation 7opic 10 - $mendments to the Consolidation $nalysis´ ³$SU No. 01-0´ . $SU No. 01-0 eliminates the deferral of Statement of Financial $ccounting Standards No. 1, $mendments to F$SB Interpretation No. 5 previously provided to investment companies and certain other entities pursuant to $SC 10-10--. $SU No. 01-0 also amends the evaluation of whether 1 fees paid to a decision maker or service provider represent a variable interest, a limited partnership or similar entity has the characteristics of a variable interest entity ³9IE´ and a reporting entity is the primary bene¿ciary of a 9IE. $SU No. 01-0 eliminates certain conditions for evaluating whether a fee paid to a decision maker or a service provider represents a variable interest. Fees received by a decision maker or service provider are no longer considered variable interests and are now excluded from the evaluation of whether the reporting entity is the primary bene¿ciary of a 9IE if the fees are both customary and commensurate with the level of effort required for the services provided and the decision maker or service provider does not hold other interests in the entity being evaluated that would absorb more than an insigni¿cant amount of the expected losses or returns of the entity. If the reporting entity determines that it does not have a variable interest in an entity, no further consolidation analysis is performed as the reporting entity would not be required to consolidate the entity. 7he effective date of $SU No. 01-0 is for ¿scal years and interim periods within those ¿scal years, beginning after December 1, 01 for public companies and early adoption is permitted. We have elected to early adopt $SU No. 01-0, and the guidance was applied to our analysis of the management agreement with DB Nevada +oldings, Inc. 7he fees received under the Management $greement do not represent a variable interest. In $pril 01, the F$SB issued $SU No. 01-0, ³Interest—Imputation of Interest´ 7opic , which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. 7he recognition and measurement guidance of debt issuance costs are not affected by the amendments in this update. 7he standard will be effective for the Company beginning in the ¿rst quarter of 01 and requires the Company to apply the new guidance on a retrospective basis on adoption. In $ugust 01, the F$SB issued $SU No. 01-1, ³Presentation and Subsequent Measurement of Debt Issuance Costs $ssociated with Line-of-Credit $rrangements´, which addresses the presentation of debt issuance costs related to line-of-credit arrangements. 7hese amendments are not expected to have a material impact on the ¿nancial statements. In $pril 01, the F$SB issued $SU No. 01-0, ³Compensation ± 5etirement Bene¿ts´ 7opic 1 , which allows entities with a ¿scal year-end that does not coincide with a month-end to measure de¿ned bene¿t plan assets and obligations using the month-end that is closest to the entity’s ¿scal year-end. 7he practical expedient, if elected, relieves an employer from having to adjust the asset values to the appropriate fair values as of its ¿scal year end. 7he Company decided to early adopt $SU No. 01-0 as of December , 01. 7he adoption did not have a material impact on the ¿nancial statements. In $pril 01, the F$SB issued $SU No. 01-0, ³Customer’s $ccounting for Fees Paid in a Cloud Computing $rrangement´ Subtopic 0-0 , which clari¿es the circumstances under which a cloud computing arrangement contains a software license. 7he standard will be effective for the Company beginning in the ¿rst quarter of 01. Entities may adopt the guidance retrospectively or prospectively to arrangements entered into, or materially modi¿ed, after the effective date. 7he amendments in $SU No. 01-0 are not expected to have a material impact on the ¿nancial statements. In -uly 01, the F$SB issued $SU No. 01-11, ³Simplifying the Measurement of Inventory´ 7opic 0 , which simpli¿es the measurement of inventory by requiring certain inventory to be measured at the ³lower of cost and net realizable value´ and options that currently exist for ³market value´ will be eliminated. 7he $SU de¿nes net realizable value as the ³estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.´ 7he standard will be effective for the Company beginning in the ¿rst quarter of 01. Entities should adopt the guidance prospectively, and early adoption is permitted. 7he amendments in $SU No. 01-11 are not expected to have a material impact on the ¿nancial statements. In September 01, the F$SB issued $SU No. 01-1, ³Simplifying the $ccounting for Measurement-Period $djustments´ 7opic 0 , which eliminates the requirement to restate prior period ¿nancial statements for measurement period adjustments. 7he $SU requires that the cumulative impact of a measurement period adjustment be recognized in the reporting period in which the adjustment is recognized. 7he standard will be effective for the Company beginning in the ¿rst quarter of 01. Entities should adopt the guidance prospectively, and early adoption is permitted. 7he amendments in $SU No. 01-1 are not expected to have a material impact on the ¿nancial statements. In November 01, the F$SB issued $SU No. 01-1 ³Balance Sheet Classi¿cation of Deferred 7axes´ ³$SU No. 01-1´ , which requires that all deferred tax assets and liabilities be classi¿ed as non-current in a classi¿ed balance sheet to simplify the reporting of deferred taxes. 7he Company has adopted $SU No. 01-1 retroactively to the year ended December , 01. 7he F$SB indicated that the primary reason for the change was that segregation of deferred income tax assets and liabilities as current or non-current was not bene¿cial for ¿nancial reporting purposes since the classi¿cation may not accurately reÀect the time period in which the deferred tax amounts are recovered or settled. w Accumulated Other Comprehensive Income Loss 7he changes in accumulated other comprehensive income loss by component for the years ended December , 01 and December , 01 are outlined below. Net actXarial loss and prior service cost Balance at December , 01 ...... $ 2ther comprehensive loss before reclassi¿cations ...... , Net current period other comprehensive loss, net of taxes ...... , Balance at December , 01 ...... $ , 2ther comprehensive income before reclassi¿cations...... 1, $mounts reclassi¿ed from accumulated other comprehensive loss 1 ...... Net current period other comprehensive income, net of taxes...... 1,11 Balance at December , 01 ...... $ ,1 1 7his accumulated other comprehensive income loss component is included in the computation of net periodic bene¿t cost. See Note 1 ³Pension and Postretirement Bene¿ts´. 7he following table presents reclassi¿cations out of accumulated other comprehensive income loss for the Successor Company for the years ended December , 01 and December , 01, two months ended December , 01, and for the Predecessor Company for the ten months ended November , 01. AmoXnts Reclassi¿ed from AccXmXlated Other Comprehensive Income (Loss) Predecessor SXccessor Company Company Affected Line Item in the Two months Ten months Consolidated Statements Year ended Year ended ended ended of Operations and December 27, December 28, December 29, November Comprehensive Income 2015 2014 2013 6,2013 (Loss) Loss on interest rate swap agreements, designated as cash Àow hedges ...... $ — $ — $ — $ 0, Interest expense $mortization of prior service cost ...... — — — 1 $mortization of unrecognized loss ...... — — 1 5eclassi¿cation of unrealized losses upon dedesignation of cash Àow hedges...... — — — ,1 Interest expense Income loss from $mounts reclassi¿ed from accumulated continuing operations other comprehensive loss ...... — — , before income taxes Income tax bene¿t ...... — — — — Income tax bene¿t $mounts reclassi¿ed from accumulated other comprehensive loss, net of taxes...... $ $— $— $, Net income loss 1 7his accumulated other comprehensive income loss component is included in the computation of net periodic bene¿t cost and recognized in income loss from continuing operations before income taxes. See Note 1 ³Pension and Postretirement Bene¿ts´. (2) VolXntary Reorganization Under Chapter 11 2ur Predecessor and certain of its subsidiaries commenced voluntary Chapter 11 bankruptcy proceedings in the Bankruptcy Court on September , 01 the ³Petition Date´ . Concurrent with the bankruptcy ¿ling, our Predecessor ¿led and requested con¿rmation of the Plan. 2n September , 01, our Predecessor entered into a restructuring support agreement ³5S$´ with Cortland Products Corp., as administrative agent the ³$dministrative $gent´ and certain of the lenders under the 00 Credit Facility as de¿ned below , including Newcastle and its af¿liates. Pursuant to its 5S$, the Company solicited votes on the Plan from holders of claims under the Company’s 00 Credit Facility and certain related interest rate swaps. 7he Plan was accepted by the only impaired class of creditors entitled to vote on it. Speci¿cally, 100% of holders of secured debt voted to accept the Plan. No creditors voted to reject the Plan. Pension, trade and all other unsecured creditors of the Company were not impaired under the prepackaged Plan, and their votes were not solicited. 7he Company’s common stock was canceled under the Plan, and holders of secured debt had the option of receiving a cash distribution equal to 0% of their claims, or stock in New Media, a holding company that owns *ate+ouse and Local Media Parent, as described below. 7he key terms of the Plan were as follows: 7he Plan proposed a restructuring of the Company pursuant to a pre-packaged restructuring under Chapter 11 of the Bankruptcy Code whereby each Creditor as de¿ned below had the option of exchanging its holdings in the 2utstanding Debt as de¿ned below for either its pro rata share of cash or common stock in New Media such common stock, ³New Media Common Stock´ with ownership interests in the reorganized Company such reorganized Company, ³New *ate+ouse´ . 7he Plan included the restructuring of the following indebtedness of the Company the ³2utstanding Debt´ : a Indebtedness under the 00 Credit Facility, consisting of a ³5evolving Credit Facility,´ a ³7erm Loan Facility,´ a ³Delayed Draw 7erm Loan Facility´ and an ³Incremental 7erm Loan Facility´ collectively, the ³00 Credit Facility Claims´ . 7he 00 Credit Facility Claims consisted of a i 5evolving Credit Facility of $0 at September , 01, ii 7erm Loan Facility of and $, at and September , 01, iii Delayed Draw 7erm Loan Facility of $, at September , 01, and iv Incremental 7erm Loan Facility of $,0 at September , 01. b Swap Liability, including i $100,000 notional amount executed February , 00, ii $0,000 notional amount executed $pril , 00, iii $00,000 notional amount executed $pril 1, 00 and iv $,000 notional amount executed September 1, 00. $s of September , 01 the carrying value of the Swap Liability was $,0. +olders of the 2utstanding Debt are referred to herein as ³Creditors.´ 7he Plan restructured the 2utstanding Debt as follows: a Each Creditor of the 2utstanding Debt received, in full and ¿nal satisfaction of its respective claim, at its election with respect to all or any portion of its claims to be made in connection with solicitation of the Plan, its pro rata share of: i. Cash pursuant to the Cash-2ut 2ffer described below under ³Cash-2ut 2ffer´ the ³Cash-2ut 2ption´ ; or ii. $ New Media Common Stock subject to dilution as discussed herein and B the Net Proceeds as de¿ned below , net of certain transaction costs collectively, the ³New Media Equity 2ption´ . Creditors that did not make an election during the solicitation period with respect to their claims were deemed to have elected the Cash-2ut 2ption. b Pension, trade and all other unsecured claims were unimpaired by the Plan. c 7he interest of holders of equity interests in the Company, including warrants, rights and options to acquire such equity interests ³Former Equity +olders´ , were cancelled, and Former Equity +olders received 10-year warrants, collectively representing the right to acquire, in the aggregate, equity equal to % of the issued and outstanding shares of New Media the ³New Media Warrants´ subject to dilution as of the Effective Date, with the strike price per share of $. calculated based on a total equity value of New Media prior to the Local Media Contribution as de¿ned below of $1,00,000 as of the Effective Date. New Media Warrants do not have the bene¿t of antidilution protections, other than customary protections including for stock splits and stock dividends. Cash-Out Offer In connection with the Plan, Newcastle ³Plan Sponsor´ or its designated af¿liates offered to purchase, in cash, an amount equal to 0% of the sum of a $1,1,0 of principal of the claims under the 00 Credit Facility, plus b accrued and unpaid interest at the applicable contract non-default rate with respect thereto, plus c all amounts due under and subject to the terms of the interest rate swaps secured under the 00 Credit Facility for the avoidance of doubt, excluding any default interest on the Effective Date of the Plan. 7he Cash-2ut 2ffer was coterminous with the solicitation period. 100 New Media Equity Option Instead of the Cash-2ut 2ffer, each Creditor could have elected to receive, in satisfaction of its claims, a pro rata share of New Media Common Stock and the Net Proceeds as de¿ned below , net of certain transaction costs. New Media listed New Media Common Stock the ³Listing´ on the New York Stock Exchange ³NYSE´ on February 1, 01 and may continue to raise equity capital. 7he Listing was not a condition precedent to the effectiveness of the Plan. Under the Plan, New Media did not impose any transfer restrictions on New Media Common Stock. Registration Rights $s of the Effective Date of the Plan, New Media entered into a registration rights agreement with certain holders of the 2utstanding Debt that received 10% or more of the New Media Common Stock, to provide customary registration rights. Financing 7he Company was to use commercially reasonable efforts based on market conditions and other factors, to raise up to $1,000 of new debt, including a $10,000 facility to fund distributions and other payments under the Plan the ³Financing´ . 7he distribution was made to holders of New Media Common Stock, including Plan Sponsor or its designated af¿liates on account of the Cash-2ut 2ffer, on the Effective Date the ³Net Proceeds´ . 7he Net Proceeds distributed to holders of the 2utstanding Debt totaled $1 ,000. 7he Financing was not a condition precedent to the effectiveness of the Plan. Contribution of Local Media *roup Holdings LLC 7he Plan Sponsor acquired Local Media *roup, Inc. ³Local Media´ , a publisher of weekly newspaper publications, on September , 01. Subject to the terms of the Plan, the Plan Sponsor contributed Local Media Parent and assigned its rights under the related stock purchase agreement to New Media on the Effective Date the ³Local Media Contribution´ in exchange for shares of New Media Common Stock equal in value to the cost of the Local Media $cquisition as de¿ned below as adjusted pursuant to the Plan based upon the equity value of New Media as of the Effective Date prior to the contribution. Management Agreement 2n the Effective Date, New Media entered into a management agreement with FI* LLC the ³Manager´ as amended and restated, the ³Management $greement´ pursuant to which the Manager manages the operations of New Media. 7he annual management fee is 1.0% of New Media’s 7otal Equity as de¿ned in the Management $greement and the Manager is eligible to receive incentive compensation. 2n March , 01, the Company’s independent directors on the Board approved an amendment to the Management $greement. See Note 1 ³5elated Party 7ransactions´ for further discussion. Releases 7o the fullest extent permitted by applicable law, the restructuring included a full release from liability of the Company, Plan Sponsor, the $dministrative $gent, the Creditors, and all current and former direct and indirect members, partners, subsidiaries, af¿liates, funds, managers, managing members, of¿cers, directors, employees, advisors, principals, attorneys, professionals, accountants, investment bankers, consultants, agents, and other representatives including their respective members, partners, subsidiaries, af¿liates, funds, managers, managing members, of¿cers, directors, employees, advisors, principals, attorneys, professionals, accountants, investment bankers, consultants, agents, and other representatives by the Company, Plan Sponsor and the Creditors from any claims or causes of action related to or arising out of the Company, the 2utstanding Debt or the 5estructuring on or prior to the Effective Date, except for any claims and causes of action for fraud, gross negligence or willful misconduct. Con¿rmation of the Plan 2n November , 01, the Bankruptcy Court con¿rmed the Plan. Investment Commitment Letter 2n September , 01 the Plan Sponsor and the Company entered into an investment commitment letter in connection with the restructuring, pursuant to which Plan Sponsor agreed to purchase the Cash-2ut 2ffer claims, described above. 7he investment commitment letter provides that, on account of the claims purchased in the Cash-2ut 2ffer on the Effective Date of the Plan, Plan Sponsor will receive its pro rata share of a New Media Common Stock and b Net Proceeds, net of transaction expenses associated with transactions under the Plan. 101 Fresh Start Accounting Upon con¿rmation of the Plan by the Bankruptcy Court on the Effective Date, the Company satis¿ed the remaining material conditions to complete the implementation of the Plan, and as a result, the Company adopted fresh start accounting as i the reorganization value of the assets of the Successor Company immediately before the date of con¿rmation of the Plan was less than the total of all post-petition liabilities and allowed claims and ii the holders of the Predecessor’s voting shares immediately before con¿rmation of the Plan received less than 0% of the voting shares of the emerging entity. 7he Bankruptcy Court con¿rmed the Plan based upon an estimated enterprise value of the Company between $,000 and $1,000, which was estimated using various valuation methods, including i a comparison of the Company and its projected performance to the market values of comparable companies; ii a review and analysis of several recent transactions of companies in similar industries to the Company; and iii a calculation of the present value of the future cash Àows of the Company based on its projections. 7he Company concluded the enterprise value was $ , 1 based upon the Cash-2ut 2ffer and equity distribution plus estimated transaction fees. 7he determination of the estimated reorganization value was based on a discounted cash Àow analysis. 7his value was reconciled to the transaction value as outlined within the Plan and was within a reasonable range of comparable market multiples. 7he assumptions used in the calculations for the discounted cash Àow analysis included projected revenue, costs, and cash Àows through 01 and represented the Company’s best estimates at the time the analysis was prepared. While the Company considers such estimates and assumptions reasonable, they are inherently subject to signi¿cant business, economic and competitive uncertainties, many of which are beyond the Company’s control and, therefore, may not be realized. Upon adoption of fresh start accounting, the recorded amounts of assets and liabilities were adjusted to reÀect their 5eorganization 9alues. $ccordingly, the reported historical ¿nancial statements of the Predecessor prior to the adoption of fresh start accounting for periods ended on or prior to November , 01 are not comparable to those of the Successor Company. In applying fresh start accounting, the Company followed these principles: 7he 5eorganization 9alue, which represents the concluded enterprise value plus excess cash and cash equivalents and non-interest bearing liabilities, of the Predecessor was allocated to the entity’s net assets in conformity with $SC 0. 7he 5eorganization 9alue exceeded the sum of the fair value assigned to assets and liabilities. 7his excess was recorded as Successor Company goodwill as of November , 01. Each liability existing as of the fresh start accounting date, other than deferred taxes, has been stated at the fair value, and determined at appropriate risk adjusted interest rates. Deferred taxes were reported in conformity with applicable income tax accounting standards, principally $SC 0. Reorganization Items, Net In accordance with $SC the Company segregated reorganization items related to the Plan in its consolidated statement of operations and comprehensive income loss . $ summary of reorganization items, for the Predecessor Company is presented in the following table: Predecessor Company Ten Months Ended November 6, 2013 Write-off of deferred ¿nancing costs...... $ Credit agreement amendment fees...... , 0 Bankruptcy fees ...... 11, Net gain on reorganization adjustments...... , Net gain on fresh start adjustments ...... , $djustment to the allowed claim for derivative instruments...... ,01 5eorganization items, net...... $ ,1 For the Predecessor Company for the ten months ended November , 01, the Company paid approximately $, for reorganization items. 10 (3) AcTXisitions and Dispositions Acquisitions Stephens Media, LLC 2n March 1, 01, a wholly owned subsidiary of the Company completed its acquisition of the assets of Stephens Media, LLC ³Stephens Media´ for an aggregate purchase price of $110,, including working capital. 7he Stephens Media acquisition was ¿nanced with cash on hand. 7he purchase price was allocated to the fair value of the net assets acquired and any excess value over the tangible and identi¿able intangible assets was recorded as goodwill. 7he acquisition includes nine daily newspapers, thirty-¿ve weekly publications and ¿fteen shoppers serving communities throughout the United States with a combined average daily circulation of approximately 1 and on Sunday. 7he acquisition was completed because of the attractive nature of the newspaper assets and cash Àows as well as the cost saving opportunities. 7he purchase price reÀects a working capital adjustment of $1 paid in -uly 01. 7he Company accounted for the material business combination of Stephens Media under the acquisition method of accounting. 7he net assets, including goodwill, have been recorded in the consolidated balance sheet at their fair values in accordance with $SC 0. 7he following table summarizes the fair values of Stephens Media assets and liabilities: Current assets...... $ 1,1 Property, plant and equipment ...... , Licensing agreements...... 1,10 $dvertiser relationships ...... ,0 0 Subscriber relationships...... ,00 Customer relationships...... 10 Mastheads ...... , 0 *oodwill ...... , 7otal assets ...... 11 , Current liabilities ...... ,0 7otal liabilities ...... ,0 Net assets...... $ 110, 7he Company obtained a third party independent valuation to assist in the determination of the fair values of certain assets acquired and liabilities assumed. 7he property, plant and equipment valuation includes an analysis of recent comparable sales and offerings of land parcels in each of the subject’s markets. 7he estimated fair value is supported by the consideration paid and was determined using standard generally accepted appraisal practices and valuation procedures. 7he valuation ¿rm used the three basic approaches to value: the cost approach used for equipment where an active secondary market is not available and building improvements , the direct sales comparison market approach used for land and equipment where an active secondary market is available and the income approach used for intangible assets . 7hese approaches used are based on the cost to reproduce assets, market exchanges for comparable assets and the capitalization of income. Useful lives range from 1 to 1 years for personal property and to years for real property. 7he valuation utilized a relief from royalty method, an income approach, to determine the fair value of mastheads. .ey assumptions utilized in this valuation include revenue projections, a royalty rate of .0%, a long-term growth rate of 0.0%, a tax rate of 0.0% and a discount rate of .0%. 7he following intangible assets were valued using the income approach, speci¿cally the excess earnings method: subscriber relationships, advertiser relationships and customer relationships. In determining the fair value of these intangible assets, the excess earnings approach values the intangible asset at the present value of the incremental after-tax cash Àows attributable only to the asset after deducting contributory asset charges. 7he incremental after-tax cash Àows attributable to the subject intangible asset are then discounted to their present value. $ static pool approach using historical attrition rates was used to estimate attrition rates of .0% to 10.0% for advertiser relationships, subscriber relationships and customer relationships. 7he long term growth rate was estimated to be 0.0% and the discount rate was estimated at .0%. 7he licensing agreement asset was valued using a discounted cash Àow analysis, an income approach. In determining the fair value of this intangible asset, the discounted cash Àow approach values the intangible asset at the present value of the incremental after-tax cash Àows attributable to the asset. 7he terms of the licensing agreement provide for a $,00 annual payment. $ discount rate 10 of 10.0% and income tax rate of 0.0% were used in the discounted cash Àow calculation. $mortizable lives range from 1 to 1 years for subscriber relationships, advertiser relationships and customer relationships, while mastheads are considered a non- amortizable intangible asset and the licensing agreement is amortized over the remaining contract life of approximately years. 7rade accounts receivable, having an estimated fair value of $1,1, were included in the acquired assets. 7he gross contractual amount of these receivables was $1, and the contractual cash Àows not expected to be collected were estimated at $1,1 as of the acquisition date. 7he Company recorded approximately $0 of selling, general and administrative expense for acquisition related costs for Stephens Media during the year ended December , 01. From the date of acquisition through December , 01, Stephens Media had revenues of $ , and net income of $,1, including gain on sale of assets of $,0. For tax purposes, the amount of goodwill that is expected to be deductible is $,0, after the allocation of goodwill to the 5eview--ournal as de¿ned below . Halifax Media Group 2n -anuary , 01, the Company completed its acquisition of substantially all of the assets from +alifax Media *roup for an aggregate purchase price of $, , including working capital and net of assumed debt. 2f the purchase price, $1,000 is being held in an escrow account, to be available for application against indemni¿cation and certain other obligations of the sellers arising during the ¿rst twelve months following the closing, with the remainder not so applied or subject to claims being delivered to the sellers. Subsequently, the escrow period was extended four months. 7he acquisition includes twenty-four daily publications, thirteen weekly publications, and ¿ve shoppers serving areas of $labama, Florida, Louisiana, Massachusetts, North Carolina, and South Carolina with a daily circulation of approximately and on Sunday. 7he acquisition was completed because of the attractive nature of the newspaper assets and cash Àows as well as the cost saving opportunities. 7he purchase price reÀects a working capital adjustment of $0 received in $ugust 01. In conjunction with the acquisition on -anuary , 01, the New Media Credit $greement as de¿ned below was amended to provide for the 01 Incremental 7erm Loan as de¿ned below under the Incremental Facility as de¿ned below in an aggregate principal amount of $10,000, the 01 Incremental 5evolver as de¿ned below under the Incremental Facility as de¿ned below in an aggregate principal amount of $0,000 and to make certain amendments to the 5evolving Credit Facility as de¿ned below in connection with the acquisition of the assets of +alifax Media *roup. In addition, the New Media Borrower as de¿ned below was required to pay an upfront fee of 1.00% of the aggregate amount of the 01 Incremental 7erm Loan and 01 Incremental 5evolver as of the effective date of the amendment. 7he remaining amount of the purchase price was funded by operating cash. 2n -anuary 0, 01, the Company repaid the outstanding loans under the 01 Incremental 5evolver and the 01 Incremental 5evolver commitments were terminated. 7he Company accounted for the material business combination of +alifax Media *roup under the acquisition method of accounting. 7he net assets, including goodwill have been recorded in the consolidated balance sheet at their fair values in accordance with $SC 0. 7he following table summarizes the fair values of +alifax Media *roup assets and liabilities: Current assets...... $ ,11 Property, plant and equipment ...... , $dvertiser relationships ...... ,00 Subscriber relationships...... ,00 Customer relationships...... 11,00 Mastheads ...... , 00 *oodwill ...... 1, 7otal assets ...... , Liabilities ...... ,0 Debt assumed...... 1,000 7otal liabilities ...... ,0 Net assets ...... $ , 10 7he Company obtained a third party independent valuation to assist in the determination of the fair values of certain assets acquired and liabilities assumed. 7he property, plant and equipment valuation included an analysis of recent comparable sales and offerings of land parcels in each of the subject’s markets. 7he estimated fair value is supported by the consideration paid and was determined using standard generally accepted appraisal practices and valuation procedures. 7he valuation ¿rm used three basic approaches to value: the cost approach used for equipment where an active secondary market is not available and building improvements , the direct sales comparison market approach used for land and equipment where an active secondary market is available and the income approach used for intangible assets . 7he approaches used are based on the cost to reproduce assets, market exchanges for comparable assets and the capitalization of income. Useful lives range from 1 to 1 years for personal property and to years for real property. 7he valuation utilized a relief from royalty method, an income approach, to determine the fair value of mastheads. .ey assumptions utilized in this valuation include revenue projections, a royalty rate of .0%, long-term growth rate of 0.0%, tax rate of 0.0% and discount rate of 1.0%. 7he Company valued the following intangible assets using the income approach, speci¿cally the excess earnings method: subscriber relationships, advertiser relationships and customer relationships. In determining the fair value of these intangible assets, the excess earnings approach will value the intangible asset at the present value of the incremental after-tax cash Àows attributable only to the asset after deducting contributory asset charges. 7he incremental after- tax cash Àows attributable to the subject intangible asset are then discounted to their present value. $ static pool approach using historical attrition rates was used to estimate attrition rates of .0% to 10.0% for advertiser relationships, subscriber relationships and customer relationships. 7he long-term growth rate was estimated to be 0.0% and the discount rate was estimated at 1.%. $mortizable lives range from 1 to 1 years for subscriber relationships, advertiser relationships and customer relationships, while mastheads are considered a non-amortizable intangible asset. 7rade accounts receivable, having an estimated fair value of $,, were included in the acquired assets. 7he gross contractual amount of these receivables was $, and the contractual cash Àows not expected to be collected were estimated at $,011 as of the acquisition date. 7he Company recorded approximately $1, of selling, general and administrative expense for acquisition related costs for +alifax Media *roup during the year ended December , 01. From the date of acquisition through December , 01, +alifax Media *roup had revenues of $, and net income of $0,. For tax purposes, the amount of goodwill that is expected to be deductible is $1,. 2015 Other Acquisitions 7he Company acquired substantially all the assets, properties and business of publishing/operating certain newspapers on -une 1, 01 and September , 01 ³01 2ther $cquisitions´ , which included two daily newspapers, twenty-eight weekly publications, and two shoppers serving Central 2hio and Southern Michigan for an aggregate purchase price of $,01, including estimated working capital. 7he acquisition completed on -une 1, 01 was ¿nanced with $,000 of additional term debt under the New Media Credit $greement and the remaining amount from operating cash. 7he acquisition completed on September , 01 was ¿nanced from operating cash. 7he rationale for the acquisitions was primarily due to the attractive nature of the newspaper assets and cash Àows combined with cost saving opportunities available by clustering with the Company’s nearby newspapers. 7he fair value determination of the assets acquired and liabilities assumed are preliminary based upon all information available to us at the present time. 7he Company has accounted for these transactions under the acquisition method of accounting. 7he net assets, including goodwill have been recorded in the consolidated balance sheet at their preliminary fair values in accordance with $SC 0, pending ¿nalization of working capital settlement. 10 7he following table summarizes the preliminary fair values of the assets and liabilities: Current assets...... $ 0, Property, plant and equipment ...... 0,00 Noncompete agreements ...... $dvertiser relationships ...... Subscriber relationships...... 1,1 Customer relationships...... Mastheads ...... , 1 *oodwill ...... ,1 7otal assets ...... ,0 Current liabilities ...... 1, 7otal liabilities ...... 1, Net assets ...... $ ,01 7he Company obtained third party independent valuations or performed similar calculations internally to assist in the determination of the fair values of certain assets acquired and liabilities assumed. 7he three basic approaches were used to estimate the fair values: the cost approach used for equipment where an active secondary market is not available and building improvements , the direct sales comparison market approach used for land and equipment where an active secondary market is available and the income approach used for subscriber relationships, advertiser relationships, customer relationships and mastheads . 7he Company recorded approximately $1 of selling, general and administrative expense for acquisition related costs for the 01 2ther $cquisitions during the year ended December , 01, respectively. For tax purposes, the amount of goodwill that is expected to be deductible is $,1 . The Providence Journal 2n September , 01, the Company completed its acquisition of the assets of 7he Providence -ournal Company for an aggregate purchase price of $,, including working capital. 7he acquisition was completed because of the attractive nature of the newspaper assets and cash Àows as well as the cost saving opportunities available by clustering with the Company’s nearby newspapers. 7he purchase price reÀects a working capital adjustment of $ paid in November 01. 7he Company accounted for the material acquisition of 7he Providence -ournal under the acquisition method of accounting. 7he net assets, including goodwill have been recorded in the consolidated balance sheet at their fair values in accordance with $SC 0. 7he Providence -ournal acquisition was ¿nanced with $ ,000 of revolving debt, $,000 of additional term debt under the New Media Credit $greement, and the remaining amount from operating cash. 7he Providence -ournal consists of one daily and one weekly publications serving areas of 5hode Island with a daily circulation of approximately and on Sunday. 7he results of operations for 7he Providence -ournal were included in the Company’s consolidated ¿nancial statements from September , 01. 7he following table summarizes the estimated fair values of 7he Providence -ournal assets and liabilities: Current assets...... $ 10,0 Property, plant and equipment ...... ,00 $dvertiser relationships ...... 1,0 Subscriber relationships...... 1,10 Customer relationships...... 1,10 Mastheads ...... ,00 *oodwill ...... , 7otal assets ...... ,01 Current liabilities ...... , 7otal liabilities ...... , Net assets ...... $ , 10 7he Company obtained a third party independent valuation to assist in the determination of the fair values of certain assets acquired and liabilities assumed. 7he property, plant and equipment valuation included an analysis of recent comparable sales and offerings of land parcels in each of the subject’s markets. 7he estimated fair value is supported by the consideration paid and was determined using standard generally accepted appraisal practices and valuation procedures. 7he valuation ¿rm used the three basic approaches to value: the cost approach used for equipment where an active secondary market is not available and building improvements , the direct sales comparison market approach used for land and equipment where an active secondary market is available and the income approach used for intangible assets . 7he approaches used are based on the cost to reproduce assets, market exchanges for comparable assets and the capitalization of income. Useful lives range from 1 to 1 years for personal property and to years for real property. 7he valuation utilized a relief from royalty method, an income approach, to determine the fair value of mastheads. .ey assumptions utilized in this valuation include revenue projections, a royalty rate of 1.%, long-term growth rate of 0%, tax rate of 0.0% and discount rate of 1.%. 7he Company valued the following intangible assets using the income approach, speci¿cally the excess earnings method: subscriber relationships, advertiser relationships and customer relationships. In determining the fair value of these intangible assets, the excess earnings approach values the intangible asset at the present value of the incremental after-tax cash Àows attributable only to the asset after deducting contributory asset charges. 7he incremental after-tax cash Àows attributable to the subject intangible asset are then discounted to their present value. $ static pool approach using historical attrition rates was used to estimate attrition rates of .0% to 10.0% for advertiser relationships, subscriber relationships and customer relationships. 7he long term growth rate was estimated to be 0.0% and the discount rate was estimated at .0%. $mortizable lives range from 1 to 1 years for subscriber relationships, advertiser relationships and customer relationships, while mastheads are considered a non-amortizable intangible asset. 7rade accounts receivable, having an estimated fair value of $,1, were included in the acquired assets. 7he gross contractual amount of these receivables was $,0 and the contractual cash Àows not expected to be collected were estimated at $11 as of the acquisition date. For tax purposes, the amount of goodwill that is expected to be deductible is $,. 2014 Other Acquisitions 7he Company acquired substantially all the assets, properties and business of publishing/operating certain newspapers on the following dates: February , 01, -une 0, 01 and December 1, 01 ³01 2ther $cquisitions´ , which included eight daily, seventeen weekly publications, and eleven shoppers serving areas of California, 7exas, 2klahoma, .ansas, 9irginia, New +ampshire and Maine for an aggregate purchase price of $ ,0 , including working capital. 7he rationale for the acquisitions was primarily due to the attractive nature of the community newspaper assets and cash Àows combined with cost saving opportunities available by clustering with the Company’s nearby newspapers. 7he Company has accounted for these transactions under the acquisition method of accounting. 7he net assets, including goodwill have been recorded in the consolidated balance sheet at their fair values in accordance with $SC 0. 7he following table summarizes the fair values of the assets and liabilities: Current assets...... $ ,0 Property, plant and equipment ...... 1, Noncompete agreements ...... 00 $dvertiser relationships ...... ,1 Subscriber relationships...... 1, Customer relationships...... Mastheads ...... 1, *oodwill ...... , 0 7otal assets ...... , Current liabilities ...... ,0 7otal liabilities ...... ,0 Net assets...... $ ,0 10 7he Company obtained third party independent valuations or performed similar calculations internally to assist in the determination of the fair values of certain assets acquired and liabilities assumed. 7he three basic approaches were used to estimate the fair values: the cost approach used for equipment where an active secondary market is not available and building improvements , the direct sales comparison market approach used for land and equipment where an active secondary market is available and the income approach used for subscriber relationships, advertiser relationships, customer relationships and mastheads . For tax purposes, the amount of goodwill that is expected to be deductible is $, 0. Dispositions 2n December 10, 01, the Company completed its sale of the Las Vegas Review-Journal and related publications ³5eview--ournal´ initially acquired in the Stephens Media acquisition which are located in Las 9egas, Nevada for an aggregate sale price of $10,000 plus working capital adjustment of $1,000. $s a result, a pre-tax gain of $,0, net of selling expenses, is included in gain loss on sale or disposal of assets on the consolidated statement of operations and comprehensive income loss for this period, since the disposition did not qualify for treatment as a discontinued operation under $SU No. 01- 0. From the date of acquisition through December 10, 01, the 5eview--ournal had revenues of $, and net income of $,. 7he carrying amount of assets and liabilities included as part of the disposal group were: Current assets...... $ 1, Property, plant and equipment ...... , Intangible assets...... 1,10 *oodwill ...... , 7otal assets ...... 0,0 Current liabilities ...... , 7otal liabilities ...... , Net assets...... $ , 7he Company entered into a Management and $dvisory $greement with DB Nevada +oldings, Inc. in conjunction with the sale of the 5eview--ournal on December 10, 01. Under the terms of the agreement, the Company is authorized to manage and conduct business and oversee the assets and operations. 7he Company analyzed the terms of the agreement based on the guidance in $SU No. 01-0 and concluded that the fees received from the 5eview--ournal do not represent a variable interest. Pro-Forma Results 7he unaudited pro forma condensed consolidated statement of operations information for 01 and 01, set forth below, presents the results of operations as if the consolidation of the newspapers from 7he Providence -ournal, +alifax Media *roup, and Stephens Media had occurred on December 0, 01. 7he pro forma information excludes results of operations of the 5eview--ournal, as well as the gain on sale of assets. 7he results of operations of the 01 2ther $cquisitions and 01 2ther $cquisitions are not material to the Company’s 01, 01 or 01 results of operations and have been excluded from the pro- forma results. 7hese amounts are not necessarily indicative of future results or actual results that would have been achieved had the acquisitions occurred as of the beginning of such period. Year ended Year ended December 27, 2015 December 28, 2014 5evenues ...... $ 1,1,11 $ 1,10, Income loss from continuing operations ...... $ 1, $ , Income loss from continuing operations per common share: ...... Basic...... $ 0. $0.1 Diluted ...... $ 0. $0.0 10 (4) Share-Based Compensation 7he Company and Predecessor recognized compensation cost for share-based payments of $1,1 , $ , $0 and $ for the Successor Company for the years ended December , 01 and December , 01, two months ended December , 01, and for the Predecessor Company for the ten months ended November , 01, respectively. 7he total compensation cost not yet recognized related to non-vested awards as of December , 01 was $, , which is expected to be recognized over a weighted average period of .1 years through February 01. Restricted Share *rants ³RS*s´ 2n February , 01, the Board of Directors of New Media adopted the New Media Investment *roup Inc. Nonquali¿ed Stock 2ption and Incentive $ward Plan the ³Incentive Plan´ that authorized up to 1,000,000 shares that can be granted under the Incentive Plan. 2n the same date, the New Media Board adopted a form of the New Media Investment *roup Inc. Non-2f¿cer Director 5estricted Stock *rant $greement the ³Form *rant $greement´ to govern the terms of awards of restricted stock ³New Media 5estricted Stock´ granted under the Incentive Plan to directors who are not of¿cers or employees of New Media the ³Non-2f¿cer Directors´ . 2n February , 01, the New Media Board adopted a form of the New Media Investment *roup Inc. Employee 5estricted Stock *rant $greement the ³Form Employee *rant $greement´ to govern the terms of awards of New Media 5estricted Stock granted under the Incentive Plan to employees of New Media and its subsidiaries the ³Employees´ . Both the Form *rant $greement and the Form Employee *rant $greement provide for the grant of New Media 5estricted Stock that vests in equal annual installments on each of the ¿rst, second and third anniversaries of the grant date, subject to continued service, and immediate vesting in full upon death or disability. If service terminates for any other reason, all unvested shares of New Media 5estricted Stock will be forfeited. $ny dividends or other distributions that are declared with respect to the shares of New Media 5estricted Stock will be paid at the time such shares vest. During the period prior to the lapse and removal of the vesting restrictions, a grantee of a restricted stock grant ³5S*´ will have all the rights of a stockholder, including without limitation, the right to vote and the right to receive all dividends or other distributions. $s a result, the 5S*s are reÀected as outstanding common stock. 7he value of the 5S*s on the date of issuance is recognized as selling, general and administrative expense over the vesting period with an increase to additional paid-in-capital. 2n March 1, 01, a grant of restricted shares totaling 1,0 shares was made to the Company’s Non-2f¿cer Directors, , of which vested on March 1, 01. During the year ended December , 01, grants of restricted shares totaling , shares were made to the Company’s Employees. $s of December , 01, December , 01, December , 01, and November , 01, there were ,, 1,0, 0, and 0 5S*s, respectively, issued and outstanding with a weighted average grant date fair value of $1., $1.1, $0.00, and $0.00, respectively. $s of December , 01, the aggregate intrinsic value of unvested 5S*s was $,1. 5S* activity was as follows: SXccessor Company Predecessor Company Year Ended Year Ended Two Months Ended Ten Months Ended December 27, December 28, December 29, December 29, 2015 2014 2013 2013 Weighted-Average Weighted-Average Weighted-Average Weighted-Average NXmber of Grant Date Fair NXmber of Grant Date Fair NXmber of Grant Date Fair NXmber of Grant Date Fair RSGs ValXe RSGs ValXe RSGs ValXe RSGs ValXe Unvested at beginning of year. . . 1,0 $ 1.1 — $ — — $ — , $ .0 *ranted.... , .01 1,0 1.1 — — — — 9ested..... , 1.1 — — — — , .0 Unvested at end of year..... , $ 1. 1,0 $ 1.1 — $ — — $ — $s part of the Plan discussed in Note ³9oluntary 5eorganization Under Chapter 11´, all Predecessor share-based awards were cancelled. 10 (5) RestrXctXring 2ver the past several years, and in furtherance of the Company’s cost reduction and cash preservation plans outlined in Note 1 ³Description of Business, Basis of Presentation and Summary of Signi¿cant $ccounting Policies´, the Company has engaged in a series of individual restructuring programs, designed primarily to right size the Company’s employee base, consolidate facilities and improve operations, including those of recently acquired entities. 7hese initiatives impact all of the Company’s geographic regions and are often inÀuenced by the terms of union contracts within the region. $ll costs related to these programs, which primarily reÀect involuntary severance expense, are accrued at the time of announcement or over the remaining service period. Information related to restructuring program activity for the years ended December , 01 and December , 01 is outlined below. Severance and Related Costs Other Costs (1) Total Balance at December , 01 ...... $ 1, $ $1, 5estructuring provision included in Integration and 5eorganization ...... , — , 5eversal of prior accruals included in Integration and 5eorganization...... — 5estructuring accrual assumed from acquisition ...... 0 — 0 Cash payments receipts ...... ,11 ,1 Balance at December , 01 ...... $ 1, $— $1, 5estructuring provision included in Integration and 5eorganization ...... ,0 , 5eversal of prior accruals included in Integration and 5eorganization...... — 5estructuring accrual transferred with disposition of the 5eview--ournal ...... 1 — 1 2ther restructuring expenses ...... — 1 1 Cash payments...... ,1 00 ,1 Balance at December , 01 ...... $ ,1 $ $ ,1 1 2ther costs primarily included costs to consolidate operations. 7he restructuring reserve balance is expected to be paid out over the next twelve months. 7he following table summarizes the costs incurred and cash paid in connection with these restructuring programs for the years ended December , 01 and December , 01. Year ended Year ended December 27, 2015 December 28, 2014 Severance and related costs ...... $ ,0 $ , 5eversal of prior accruals ...... Severance costs assumed from acquisition ...... — 0 2ther costs...... — Cash payments...... ,1 ,1 (6) Property, Plant and ETXipment Property, plant and equipment consisted of the following: December 27, 2015 December 28, 2014 Land...... $ , $ ,1 Buildings and improvements ...... 1 , 1 ,1 Machinery and equipment ...... ,0 1 , 0 Furniture, ¿xtures, and computer software ...... , 1,10 Construction in progress ...... , ,0 , , Less: accumulated depreciation ...... ,0 0,1 7otal ...... $ , $ , 110 Depreciation expense for the Successor Company for the years ended December , 01 and December , 01, two months ended December , 01, and for the Predecessor Company for the ten months ended November , 01 was $1,0, $,, $, and $1,1, respectively. (7) Goodwill and Intangible Assets *oodwill and intangible assets consisted of the following: December 27, 2015 Gross carrying AccXmXlated Net carrying amoXnt amortization amoXnt $mortized intangible assets: $dvertiser relationships ...... 1,00 1, 1 , Customer relationships ...... 1 , 1, 1,1 Subscriber relationships ...... , , , 2ther intangible assets ...... 10 7otal...... $ 0, $ ,1 $ 1, Nonamortized intangible assets: *oodwill ...... $ 11,11 Mastheads...... ,00 7otal...... $ ,1 December 28, 2014 Gross Carrying AccXmXlated Net Carrying AmoXnt Amortization AmoXnt $mortized intangible assets: $dvertiser relationships ...... $ ,10 $ , $ 0, Customer relationships ...... , 0 , Subscriber relationships ...... , , , 2ther intangible assets ...... 0 7otal...... $ 11,0 $ ,0 $10, Nonamortized intangible assets: *oodwill ...... $ 1,0 Mastheads...... 1, 7otal...... $ 1, $s of December , 01, the weighted average amortization periods for amortizable intangible assets are 1. years for advertiser relationships, 1. years for customer relationships, 1. years for subscriber relationships, and 10.0 years for trade names. 7he weighted average amortization period in total for all amortizable intangible assets is 1. years. $mortization expense for the Successor Company for the years ended December , 01 and December , 01, two months ended December , 01, and the Predecessor Company for the ten months ended November , 01 was $1, , $,, $1,0 and $1,, respectively. Estimated future amortization expense as of December , 01, is as follows: For the years ending the Sunday closest to December 1: 01 ...... 1, 01 ...... 1, 01 ...... 1, 01 ...... 1, 00 ...... 1,1 7hereafter...... 1 , 7otal ...... $ 1, 111 7he changes in the carrying amount of goodwill for the years ended December , 01 and December , 01 are as follows: Net balance at December , 01 ...... $ 1, 11 *oodwill acquired in business combinations ...... ,11 Balance at December , 01 ...... 1,0 Net balance at December , 01 ...... $ 1,0 *oodwill acquired in business combinations ...... , *oodwill from divestitures ...... , Balance at December , 01 ...... 11,11 Net balance at December , 01 ...... $ 11,11 $s of December , 01 and December , 01, goodwill in the amount $,1 and $,1, respectively, was deductible for income tax purposes. 7he Company’s annual impairment assessment is made on the last day of its ¿scal second quarter. $s part of the annual impairment assessment, as of -une 0, 01, the fair values of the Company’s reporting units for goodwill impairment testing and newspaper mastheads were estimated using the expected present value of future cash Àows, recent industry transaction multiples and using estimates, judgments and assumptions that management believed were appropriate in the circumstances. 7he estimates and judgments used in the assessment included multiples for revenue and EBI7D$, the weighted average cost of capital and the terminal growth rate. *iven the then current market conditions, the Company determined that recent transactions provided the best estimate of the fair value of its reporting units. $s a result of the annual assessment performed no impairment of goodwill was identi¿ed. $dditionally, the estimated fair value exceeded carrying value for all mastheads. 7he total Company’s estimate of fair value was reconciled to its then market capitalization based upon the stock market price and fair value of debt plus an estimated control premium. 7he bankruptcy ¿ling was considered a triggering event for the non amortizable intangibles and the Company performed a valuation analysis to determine if an impairment existed as of September , 01. 7he fair values of the Company’s reporting units for goodwill and newspaper mastheads were estimated using the expected present value of future cash Àows, recent industry transaction multiples and using estimates, judgments and assumptions that management believed were appropriate in the circumstances and were consistent with the terms of the Plan. 7he estimates and judgments used in the assessment included multiples for revenue and EBI7D$, the weighted average cost of capital and the terminal growth rate. *iven the bankruptcy Plan, the Company determined that discounted cash Àows provided the best estimate of the fair value of its reporting units. 7he estimated fair value of the Large Daily reporting unit exceeded its carrying value and Step of the analysis was not necessary. 7he Small Community reporting unit failed the Step 1 goodwill impairment analysis. 7he Company performed Step of the analysis using consistent assumptions, as discussed above, and determined an impairment was not present for this reporting unit. 7he estimated fair value of each reporting unit’s mastheads exceeded their carrying values, using consistent assumptions as discussed above. 7he masthead fair value was estimated using the relief from royalty valuation method. 7he Company considered the impairment analysis for goodwill and mastheads to be an indicator of impairment under $SC 0, and performed an analysis of its undiscounted cash Àows for amortizable intangibles. For any groups where the carrying value exceeded the undiscounted cash Àows a discounted cash Àow analysis was performed to determine the amount of the impairment. .ey assumptions within this analysis included earnings projections, discount rates, attrition rates, long-term growth rates, and effective tax rate that the Company considers appropriate. Earnings projections reÀected continued declines in print advertising revenue of .0% to .0% per year, which is expected to moderate in later years, growth in circulation revenue of up to .0% per year, and expense declines of up to .0% per year. Discount rates ranged from 1.% to 1.0%, attrition rates ranged from .0% to .%, the long-term growth rate was 0% and the effective tax rate was .1%. 7he resulting cash Àows were reconciled to the projections supporting the Plan. Due to reductions in the Company’s operating projections during the third quarter in conjunction with the bankruptcy process, an impairment charge of $, was recognized for advertiser relationships within the Company’s Metro and Small Community reporting units, an impairment charge of $1 ,1 was recognized for subscriber relationships within the Company’s Metro and Small Community reporting units, an impairment charge of $,0 was recognized for customer relationships within the Company’s Metro reporting unit and an impairment charge of $1,00 was recognized for trade names and publication rights within the Directories business unit. 5efer to Note 1 ³Fair 9alue Measurement´ for additional information on the impairment charge. 11 $s part of the annual impairment assessments as of -une , 01, the fair values of the Company’s reporting units for goodwill impairment testing, which include Large Daily Newspapers, Metro Newspapers, Small Community Newspapers, Local Media Newspapers, and 9entures, and newspaper mastheads were estimated. $s a result of the annual assessment’s Step 1 analysis that was performed, no impairment of goodwill was identi¿ed. $s part of the annual impairment assessments as of -une , 01, the fair values of the Company’s reporting units for goodwill impairment testing, which include Large Daily Newspapers, Metro Newspapers, Small Community Newspapers, Local Media Newspapers, and 9entures, and newspaper mastheads were estimated using the expected present value of future cash Àows, recent industry multiples and using estimates, judgments and assumptions that management believes were appropriate in the circumstances. 7he estimates and judgments used in the assessment included multiples for revenue and EBI7D$, the weighted average cost of capital and the terminal growth rate. 7he Company determined that the future cash Àow and industry multiple analyses provided the best estimate of the fair value of its reporting units. $s a result of the annual assessment’s Step 1 analysis that was performed, no impairment of goodwill was identi¿ed. 7he Company uses a ³relief from royalty´ approach which utilizes a discounted cash Àow model to determine the fair value of each masthead. $dditionally, the estimated fair value exceeded carrying value for all mastheads. 7he Company performed a qualitative assessment for the 5ecent $cquisitions reporting unit and concluded that it is not more likely than not that the goodwill and inde¿nite-lived intangibles are impaired. $s a result, no quantitative analysis was performed for the 5ecent $cquisitions. 7he total Company’s estimate of reporting unit fair value was reconciled to its then market capitalization based upon the stock market price and fair value of debt plus an estimated control premium. During the fourth quarter of 01, the Company reorganized its management structure to align with the geography of the market served. $s a result, the composition of our reporting units has changed and the fair value of goodwill was allocated to each of the new reporting units based on a relative fair value allocation approach: Western US Publishing, Central US Publishing and Eastern US Publishing. Due to the change in the composition of the reporting units, the Company performed a goodwill impairment test before and after the reorganization. 7he Company also assessed its mastheads for impairment as a result of the reorganization. In the analysis performed before the reorganization and because of the recent revaluation of assets related to fresh start accounting, there is a relatively small amount of fair value excess for certain reporting units. Speci¿cally, the fair value of the Large Daily Newspapers, Small Community Newspapers and 9entures reporting units exceeded carrying value by less than 10%. Considering a relatively low headroom for the historical reporting units and declining same store revenue and pro¿tability in the newspaper industry over the past several years, there is a risk for future impairment in the event of decline in general economic, market or business conditions or any signi¿cant unfavorable changes in the forecasted cash Àows, weighted-average cost of capital and/or market transaction multiples. $s a result of reduced royalty rates and a decline in revenues, an impairment charge of $,00 was recognized for mastheads within the Company’s Large Daily, Small Community and Metro reporting units. .ey assumptions within the masthead analysis included revenue projections, discount rates, royalty rates, long-term growth rates, and the effective tax rate that the Company considers appropriate. 5evenue projections reÀected slight declines in early years, and revenues are expected to moderate to a terminal growth rate of 1%. Discount rates ranged from 1.0% to 1.0%, royalty rates ranged from 1.% to 1.%, and the effective tax rate was 0.0%. 7he fair values of the Company’s reporting units for goodwill impairment testing and newspaper mastheads were estimated using the expected present value of future cash Àows, recent industry multiples and using estimates, judgments and assumptions that management believes were appropriate in the circumstances. 7he estimates and judgments used in the assessment included multiples for revenue and EBI7D$, the weighted average cost of capital and the terminal growth rate. 7he Company determined that the future cash Àow and industry multiple analyses provided the best estimate of the fair value of its reporting units. Similar methodology and assumptions were utilized for the post-reorganization impairment assessment. In the resulting Step 1 analysis that was performed post-reorganization, fair values of the reporting units were determined to be greater than the carrying values of the reporting units. $dditionally, the estimated fair value exceeded carrying value for all mastheads. 7he total Company’s estimate of reporting unit fair value was reconciled to its then market capitalization based upon the stock market price and fair value of debt plus an estimated control premium. 11 (8) AccrXed E[penses $ccrued expenses consisted of the following: December 27, 2015 December 28, 2014 $ccrued payroll and related liabilities ...... $ 1,0 $ ,1 $ccrued bonus ...... 10, ,1 $ccrued insurance ...... , ,1 $ccrued legal and professional fees ...... , , $ccrued interest expense...... , 1,0 $ccrued taxes...... ,0 ,0 $ccrued restructuring...... ,1 1, $ccrued management and incentive fees...... , 1, $ccrued other...... , 1 1,0 $ , $ ,01 (9) Lease Commitments 7he future minimum lease payments related to the Company’s non-cancelable operating lease commitments as of December , 01 are as follows: For the years ending the Sunday closest to December 1: 01 ...... $ 1,01 01 ...... 1,0 01 ...... 1,0 01 ...... 10, 0 00 ...... 10,0 7hereafter...... ,1 7otal minimum lease payments ...... $ 1,10 5ental expense under operating leases for the Successor Company for the years ended December , 01 and December , 01, two months ended December , 01, and the Predecessor Company for the ten months ended November , 01 was $,, $,, $1,11 and $,, respectively. In addition to minimum lease payments, certain leases require payment of the excess of various percentages of gross revenue or net operating income over the minimum rental payments. 7he leases generally require the payment of taxes assessed against the leased property and the cost of insurance and maintenance. 7he majority of lease terms range from 1 to 10 years, and typically, the leases contain renewal options. Certain leases include minimum scheduled increases in rental payments at various times during the term of the lease. 7hese scheduled rent increases are recognized on a straight-line basis over the term of the lease, resulting in an accrual, which is included in accrued expenses and other long-term liabilities, for the amount by which the cumulative straight-line rent exceeds the contractual cash rent. (10) Indebtedness SXccessor Company *ateHouse Credit Facilities ± terminated -une , 7he 5evolving Credit, 7erm Loan and Security $greement the ³First Lien Credit Facility´ dated November , 01 by and among *ate+ouse, *ate+ouse Media Intermediate +oldco, LLC formerly known as *ate+ouse Media Intermediate +oldco, Inc. ³*MI+´ , certain wholly-owned subsidiaries of *MI+, all of which are wholly owned subsidiaries of New Media collectively with *MI+ and *ate+ouse, the ³Loan Parties´ , PNC Bank, National $ssociation, as the administrative agent, Crystal Financial LLC, as term loan B agent, and each of the lenders party thereto provided for i a term loan $ in the aggregate principal amount of $,000, ii a term loan B in the aggregate principal amount of $0,000, iii and a revolving credit facility in an aggregate principal amount of up to $0,000. 11 7he 7erm Loan and Security $greement the ³Second Lien Credit Facility´ and together with the First Lien Credit Facility, the ³*ate+ouse Credit Facilities´ dated November , 01 by and among the Loan Parties, Mutual Quest Fund and each of the lenders party thereto provided for a term loan in an aggregate principal amount of $0,000. 7he *ate+ouse Credit Facilities were secured by a ¿rst and second priority security interest in substantially all the assets of the Loan Parties. 7he *ate+ouse Credit Facilities imposed upon *ate+ouse certain ¿nancial and operating covenants, including, among others, requirements that *ate+ouse satisfy certain ¿nancial tests, including a minimum ¿xed charge coverage ratio of not less than 1.0 to 1.0, a maximum leverage ratio of not greater than . to 1.0, a minimum EBI7D$ and a limitation on capital expenditures, and restrictions on *ate+ouse’s ability to incur additional debt, incur liens and encumbrances, consolidate, amalgamate or merge with any other person, pay dividends, dispose of assets, make certain restricted payments, engage in transactions with af¿liates, materially alter the business it conducts and taking certain other corporate actions. 7he *ate+ouse Credit Facilities were paid in full on -une , 01. Local Media Credit Facility ± terminated -une , Certain of Local Media Parent’s subsidiaries together, the ³Borrowers´ and Local Media Parent entered into a Credit $greement, dated as of September , 01, with a syndicate of ¿nancial institutions with Credit Suisse $*, Cayman Islands Branch, as administrative agent the ³Local Media Credit Facility´ . 7he Local Media Credit Facility provided for: a a $,000 term loan facility; and b a $10,000 revolving credit facility, with a $,000 sub-facility for letters of credit and a $,000 sub-facility for swing loans. 7he Borrowers used the proceeds of the Local Media Credit Facility to a fund a portion of the acquisition of Dow -ones Local Media *roup, Inc., a Delaware corporation the ³Local Media $cquisition´ , b provide for working capital and other general corporate purposes of the Borrowers and c fund certain fees, costs and expenses associated with the transactions contemplated by the Local Media Credit Facility and consummation of the Local Media $cquisition. 7he Local Media Credit Facility was secured by a ¿rst priority security interest in substantially all assets of the Borrowers and Local Media Parent. In addition, the loans and other obligations of the Borrowers under the Local Media Credit Facility were guaranteed by Local Media *roup +oldings LLC. 7he Local Media Credit Facility contained ¿nancial covenants that required Local Media Parent and the Borrowers to maintain a a Leverage 5atio of not more than . to 1.0 and a Fixed Charge Coverage 5atio as de¿ned in the Local Media Credit Facility of at least .0 to 1.0, each measured at the end of each ¿scal quarter for the four-quarter period then ended. 7he Local Media Credit Facility contained af¿rmative and negative covenants applicable to Local Media and the Borrowers customarily found in loan agreements for similar transactions, including, but not limited to, restrictions on their ability to incur indebtedness, create liens on assets, engage in certain lines of business, engage in mergers or consolidations, dispose of assets, make investments or acquisitions, engage in transactions with af¿liates, pay dividends or make other restricted payments. 7he Local Media Credit Facility contained customary events of default, including, but not limited to, defaults based on a failure to pay principal, interest, fees or other obligations, subject to speci¿ed grace periods other than with respect to principal ; any material inaccuracy of representation or warranty; breach of covenants; default in other material indebtedness; a Change of Control as de¿ned in the Local Media Credit Facility ; bankruptcy and insolvency events; material judgments; certain E5IS$ events; and impairment of collateral. 7he Local Media Credit Facility was amended on 2ctober 1, 01 and on February , 01. 7he 2ctober 1, 01 amendment corrected a typographical mistake. 7he February , 01 amendment provided that among other things, sales of real property collateral and reinvestment of the proceeds from such sales could only be made with the consent of the $dministrative $gent, modi¿ed the properties included in the real property collateral, and set forth in detail the documentary post-closing requirements with respect to the real property collateral. 7he Local Media Credit Facility was paid in full on -une , 01. New Media Credit Agreement 2n -une , 01, New Media +oldings II LLC the ³New Media Borrower´ , a wholly owned subsidiary of New Media, entered into a credit agreement the ³New Media Credit $greement´ among the New Media Borrower, New Media +oldings I LLC ³+oldings I´ , the lenders party thereto, 5BS Citizens, N.$. and Credit Suisse Securities US$ LLC as joint lead arrangers and joint bookrunners, Credit Suisse $*, Cayman Islands Branch as syndication agent and Citizens Bank of Pennsylvania as administration agent which provides for i a $00,000 senior secured term facility the ³7erm Loan Facility´ and any loan thereunder, including as part of the Incremental Facility, ³7erm Loans´ and ii a $,000 senior secured revolving credit facility, with a $,000 sub-facility for letters of credit and a $,000 sub-facility for swing loans, the ³5evolving Credit Facility´ and together with the 7erm Loan Facility, the ³Senior Secured Credit Facilities´ . In addition, the New Media Borrower may request 11 one or more new commitments for term loans or revolving loans from time to time up to an aggregate total of $,000 the ³Incremental Facility´ subject to certain conditions. 2n -une , 01, the New Media Borrower borrowed $00,000 under the 7erm Loan Facility the ³Initial 7erm Loans´ . 7he 7erm Loans mature on -une , 00 and the maturity date for the 5evolving Credit Facility is -une , 01 . 7he New Media Credit $greement was amended on -uly 1, 01 to cure an omission. 2n September , 01, the New Media Credit $greement was amended to provide for the 01 Incremental 7erm Loan as de¿ned below . 2n November 0, 01, the New Media Credit $greement was amended to increase the amount of the Incremental Facility that may be requested after the date of the amendment from $,000 to $,000. 2n -anuary , 01, the New Media Credit $greement was amended to provide for the 01 Incremental 7erm Loan and the 01 Incremental 5evolver as de¿ned below . 2n February 1, 01, the New Media Credit $greement was amended the ³Fourth $mendment´ to provide for the replacement of the existing term loans under the 7erm Loan Facility including the 01 Incremental 7erm Loan and the 01 Incremental 7erm Loan with a new class of replacement term loans the ³5eplacement 7erm Loans´ on the same terms as the existing term loans except that the 5eplacement 7erm Loans are subject to a 1.00% prepayment premium for any prepayments made in connection with certain repricing transactions effected within six months of the date of the amendment. 7his amendment was considered a modi¿cation, and the related $10 of fees were expensed during the ¿rst quarter. 2n March , 01, the New Media Credit $greement was amended to provide for $1,000 in additional revolving commitments under the Incremental Facility. In connection with this transaction, the Company incurred approximately $ of fees and expenses which were capitalized as deferred ¿nancing costs. 2n May , 01, the New Media Credit $greement was amended to provide for the May 01 Incremental 7erm Loan as de¿ned below . $s of December , 01, $0 was drawn under the 5evolving Credit Facility. 7he proceeds of the Initial 7erm Loans, which included a $, original issue discount, were used to repay in full all amounts outstanding under the *ate+ouse Credit Facilities and the Local Media Credit Facility and to pay fees associated with the ¿nancing, with the balance going to the Company for general corporate purposes. Borrowings under the 7erm Loan Facility bear interest, at the New Media Borrower’s option, at a rate equal to either i the Eurodollar 5ate as de¿ned in the New Media Credit $greement , plus an applicable margin equal to .% per annum subject to a Eurodollar 5ate Àoor of 1.00% or ii the Base 5ate as de¿ned in the New Media Credit $greement , plus an applicable margin equal to .% per annum subject to a Base 5ate Àoor of .00% . 7he New Media Borrower currently uses the Eurodollar 5ate option. Borrowings under the 5evolving Credit Facility bear interest, at the New Media Borrower’s option, at a rate equal to either i the Eurodollar 5ate, plus an applicable margin equal to .% per annum or ii the Base 5ate, plus an applicable margin equal to .% per annum, with a step down based on achievement of a certain total leverage ratio. 7he New Media Borrower currently uses the Eurodollar 5ate option. If any borrowings under the Incremental Facility have an all-in yield more than 0 basis points greater than the 7erm Loans the ³Incremental Yield´ , the all-in yield for the 7erm Loans shall be adjusted to be 0 basis points less than the Incremental Yield. $s of December , 01 the New Media Credit $greement had a weighted average interest rate of .0%. 7he Senior Secured Credit Facilities are unconditionally guaranteed by +oldings I and certain subsidiaries of the New Media Borrower collectively, the ³*uarantors´ and is required to be guaranteed by all future material wholly-owned domestic subsidiaries, subject to certain exceptions. $ll obligations under the New Media Credit $greement are secured, subject to certain exceptions, by substantially all of the New Media Borrower’s assets and the assets of the *uarantors, including a a pledge of 100% of the equity interests of the New Media Borrower and the *uarantors other than +oldings I , b a mortgage lien on the New Media Borrower’s material real property and that of the *uarantors and c all proceeds of the foregoing. 5epayments made under the 7erm Loans are equal to 1.0% annually of the original principal amount in equal quarterly installments for the life of the 7erm Loans, with the remainder due at maturity. 7he New Media Borrower is permitted to make voluntary prepayments at any time without premium or penalty, except in the case of prepayments made in connection with certain repricing transactions with respect to the 7erm Loans effected within six months of the Fourth $mendment, to which a 1.00% prepayment premium applies. 7he New Media Borrower is required to repay borrowings under the Senior Secured Credit Facilities without payment of a premium with i net cash proceeds of certain debt obligations except as otherwise permitted under the New Media Credit $greement , ii net cash proceeds from non-ordinary course asset sales subject to reinvestment rights and other exceptions , and iii commencing with the Company’s ¿scal year started December 0, 01, 100% of Excess Cash Flow as de¿ned in the New Media Credit $greement , subject to step-downs to 0%, % and 0% of Excess Cash Flow based on achievement of a total leverage ratio of less than or equal to .00 to 1.00 but greater than . to 1.00; less than or equal to . to 1.00 but greater than .0 to 1.00; and less than or equal to .0 to 1.00, respectively. 11 7he New Media Credit $greement contains customary representations and warranties and customary af¿rmative and negative covenants applicable to +oldings I, the New Media Borrower and the New Media Borrower’s subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. 7he New Media Credit $greement contains a ¿nancial covenant that requires +oldings I, the New Media Borrower and the New Media Borrower’s subsidiaries to maintain a maximum total leverage ratio of . to 1.00. 7he New Media Credit $greement contains customary events of default. 7he foregoing descriptions of the Senior Secured Credit Facilities are quali¿ed in their entirety by reference to the Senior Secured Credit Facilities. In connection with the -une , 01 transaction, one lender under the New Media Credit $greement was also a lender under the *ate+ouse Credit Facilities. 7his portion of the transaction was accounted for as a modi¿cation under $SC Subtopic 0-0, ³'HEW0RGL¿FDWLRQVDQG([WLQJXLVKPHQWV´ ³$SC Subtopic 0-0´ , as the difference between the present value of the cash Àows under the New Media Credit $greement and the present value of the cash Àows under the *ate+ouse Credit Facilities was less than 10%. 7he unamortized deferred ¿nancing costs and original issuance discount balances as of the re¿nance date pertaining to this lender’s portion of the *ate+ouse Credit Facilities will be amortized over the terms of the new facility. 7he remaining portion of the *ate+ouse Credit Facilities and the Local Media Credit Facility debt re¿nancing constituted an extinguishment of debt under $SC Subtopic 0-0, and was accounted for accordingly. In connection with this 01 transaction, the Company incurred approximately $10,0 of fees and expenses, of which $, was recognized as original issue discount and $1,00 were capitalized as deferred ¿nancing costs. 7hese amounts will be amortized over the term of the new Senior Secured Credit Facilities. $dditionally, the Company recorded a loss on early extinguishment of debt of $ ,0 associated with this transaction, which consisted of the write-off of unamortized deferred ¿nancing costs and other expenses not eligible for capitalization under $SC Subtopic 0-0. 2n September , 01, the New Media Credit $greement was amended to provide for additional term loans under the Incremental Facility in an aggregate principal amount of $,000 such term loans, the ³01 Incremental 7erm Loan,´ and such amendment, the ³01 Incremental $mendment´ in connection with the acquisition of the assets of 7he Providence -ournal. 7he 01 Incremental 7erm Loan is on terms identical to the term loans that were extended pursuant to the New Media Credit $greement and will mature on -une , 00. In addition, the New Media Borrower was required to pay an upfront fee of .00% and an underwriter fee of 1.0% of the aggregate amount of the 01 Incremental 7erm Loan as of the effective date of the 01 Incremental $mendment. 7his amendment was considered a modi¿cation and the related $ of fees were expensed. 2n -anuary , 01, the New Media Credit $greement was amended such amendment, the ³01 Incremental $mendment´ to provide for $10,000 in additional term loans the ³01 Incremental 7erm Loan´ and $0,000 in additional revolving commitments the ³01 Incremental 5evolver´ under the Incremental Facility and to make certain amendments to the 5evolving Credit Facility in connection with the +alifax Media acquisition. 7he 01 Incremental 7erm Loan is on terms identical to the term loans that were extended pursuant to the New Media Credit $greement and will mature on -une , 00. In addition, the New Media Borrower was required to pay an upfront fee of 1.00% and an underwriter fee of .% of the aggregate amount of the 01 Incremental 7erm Loan and the 01 Incremental 5evolver as of the effective date of the 01 Incremental $mendment. 2n -anuary 0, 01, the outstanding loans under the 01 Incremental 5evolver were repaid with the proceeds of a common stock offering by New Media and the 01 Incremental 5evolver commitments were terminated. 7his amendment was treated as new debt for new lenders and as a modi¿cation for existing lenders. In connection with this transaction, the Company incurred approximately $, of fees and expenses. 7he lender fees for the 01 Incremental 7erm Loan increased the original issue discount by $,1. 7hird party expenses of $110 were allocated to new lenders, capitalized as deferred ¿nancing costs, and will be amortized over the remaining term of the loan. 7hird party expenses of $1 were allocated to existing lenders and were expensed during the ¿rst quarter. Lender fees and third party expenses of $1, were allocated to the 01 Incremental 5evolver, capitalized, and written off to amortization of deferred ¿nancing costs after the balance of the 01 Incremental 5evolver was repaid. 2n May , 01, the New Media Credit $greement was amended such amendment, the ³May 01 Incremental $mendment´ to provide for $,000 in additional term loans the ³May 01 Incremental 7erm Loan´ under the Incremental Facility. 7he 01 Incremental 7erm Loan is on terms identical to the 5eplacement 7erm Loans and will mature on -une , 00. In addition, the New Media Borrower was required to pay an upfront fee of 1.00% and an underwriter fee of .% of the aggregate amount of the May 01 Incremental 7erm Loan as of the effective date of the May 01 Incremental $mendment. In connection with this transaction, the Company incurred approximately $ of fees and expenses. 7his amendment was considered a modi¿cation and the related $ of third-party fees were expensed during the second quarter. 7he lender fees for the May 01 Incremental 7erm Loan increased the original issue discount by $1. $s of December , 01, the Company is in compliance with all of the covenants and obligations under the New Media Credit $greement. 11 Advantage Credit Agreements In connection with the purchase of the assets of +alifax Media, which closed on -anuary , 01, C$ Daytona +oldings, Inc. the ³Florida $dvantage Borrower´ and C$ $labama +oldings, Inc. the ³$labama $dvantage Borrower´, and, collectively with the Florida $dvantage Borrower, the ³$dvantage Borrowers´ , each subsidiaries of the Company, agreed to assume all of the obligations of +alifax Media and its af¿liates required to be performed after the closing date in respect of each of i that certain Consolidated $mended and 5estated Credit $greement dated -anuary , 01 among +alifax Media $cquisition LLC, $dvantage Capital Community Development Fund ;;9III, L.L.C., and Florida Community Development Fund II, L.L.C., as amended pursuant to that certain First $mendment to Consolidated $mended and 5estated Credit $greement dated -une , 01 and that certain Second $mendment to Consolidated $mended and 5estated Credit $greement, dated -une 1, 01, and all rights and obligations thereunder and related thereto the ³+alifax Florida Credit $greement´ , and ii that certain Credit $greement dated -une 1, 01 between +alifax $labama, LLC and Southeast Community Development Fund 9, L.L.C. the ³+alifax $labama Credit $greement´ and, together with the +alifax Florida Credit $greement, the ³$dvantage Credit $greements´ , respectively. In consideration therefore, the amount of cash payable by the Company to +alifax Media on the closing date was reduced by approximately $1,000, representing the aggregate principal amount outstanding plus the aggregate amount of accrued interest through the closing date under the $dvantage Credit $greements the debt under the +alifax Florida Credit $greement, the ³$dvantage Florida Debt´; the debt under the +alifax $labama Credit $greement, the ³$dvantage $labama Debt´; and the $dvantage Florida Debt and the $dvantage $labama Debt, collectively, the ³$dvantage Debt´ . 2n May , 01, the +alifax $labama Credit $greement was amended to cure an omission. 7he $dvantage Florida Debt is in the principal amount of $10,000 and bears interest at the rate of .% per annum, payable quarterly in arrears, maturing on December 1, 01. 7he $dvantage $labama Debt is in the principal amount of $,000 and bears interest at the rate of LIB25 plus .% per annum with a minimum of 1% LIB25 payable quarterly in arrears, maturing on March 1, 01 . 7he $dvantage Debt is secured by a perfected second priority security interest in all the assets of the Borrowers and certain other subsidiaries of the Company, subject to the limitation that the maximum amount of secured obligations is $1,000. 7he $dvantage Credit Facilities are unconditionally guaranteed by +oldings I and certain subsidiaries of the New Media Borrowers and are required to be guaranteed by all future material wholly-owned domestic subsidiaries, subject to certain exceptions. 7he $dvantage Debt is subordinated to the New Media Credit Facilities pursuant to an intercreditor agreement. 7he $dvantage Credit $greements contain covenants substantially consistent with those contained in the New Media Credit Facilities in addition to those required for compliance with the New Markets 7ax Credit program. 7he $dvantage Borrowers are permitted to make voluntary prepayments at any time without premium or penalty. 7he $dvantage Borrowers are required to repay borrowings under the $dvantage Credit $greements without payment of a premium with i net cash proceeds of certain debt obligations except as otherwise permitted under the $dvantage Credit $greements and ii net cash proceeds from non-ordinary course asset sales subject to reinvestment rights and other exceptions . 7he $dvantage Credit $greements contain customary representations and warranties and customary af¿rmative and negative covenants applicable to the $dvantage Borrowers and certain of the Company subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. 7he $dvantage Credit $greements contain a ¿nancial covenant that requires +oldings I, the New Media Borrower and the New Media Borrower’s subsidiaries to maintain a maximum total leverage ratio of . to 1.00. 7he $dvantage Credit $greements contain customary events of default. $s of December , 01, the Company is in compliance with all of the covenants and obligations under the $dvantage Credit $greements. Fair 9alue 7he fair value of long-term debt under the Senior Secured Credit Facilities and the $dvantage Credit $greements was estimated at $,0 as of December , 01, based on discounted future contractual cash Àows and a market interest rate adjusted for necessary risks, including the Company’s own credit risk as there are no rates currently observable in publically traded debt markets of risk with similar terms and average maturities. $ccordingly, the Company’s long-term debt under the Senior Secured Credit Facilities is classi¿ed within Level of the fair value hierarchy. 11 Payment Schedule $s of December , 01, scheduled principal payments of outstanding debt are as follows: 01 ...... ,0 01 ...... 1,0 01 ...... ,0 01 ...... 11,0 00 ...... , $,0 Less: Short-term debt...... ,0 Less: 5emaining original issue discount ...... , Long-term debt...... $ ,0 Predecessor Company $s part of the 5estructuring, the Predecessor’s previous long term debt was extinguished pursuant to the Support $greement on the Effective Date of the Plan. 2007 Credit Facility 7he Borrowers entered into an $mended and 5estated Credit $greement, dated as of February , 00, with a syndicate of ¿nancial institutions with Wells Fargo Bank, N.$., successor-by-merger to Wachovia Bank, National $ssociation ³Wells Fargo Bank´ , as administrative agent the ³00 Credit Facility´ . 7he 00 Credit Facility, prior to execution of the Second $mendment de¿ned below , provided for: a a $0,000 term loan facility which would have matured on $ugust , 01; b a delayed draw term loan facility of up to $0,000 which would have matured on $ugust , 01, and c a revolving credit facility with a $0,000 aggregate loan commitment amount available, including a $1,000 sub-facility for letters of credit and a $10,000 swingline facility, which would have matured on February , 01. 7he Borrowers used the proceeds of the 00 Credit Facility to re¿nance existing indebtedness and for working capital and other general corporate purposes, including, without limitation, ¿nancing acquisitions permitted under the 00 Credit Facility. 7he 00 Credit Facility was secured by a ¿rst priority security interest in substantially all of the tangible and intangible assets of +oldco, 2perating and their present and future direct and indirect domestic restricted subsidiaries. In addition, the loans and other obligations of the Borrowers under the 00 Credit Facility were guaranteed, subject to speci¿ed limitations, by +oldco, 2perating and their present and future direct and indirect domestic restricted subsidiaries. 7he 00 Credit Facility also contained a ¿nancial covenant that required +oldco to maintain a 7otal Leverage 5atio of less than or equal to . to 1.0 at any time an extension of credit was outstanding under the revolving credit facility and other af¿rmative and negative covenants applicable to +oldco, 2perating and their restricted subsidiaries customarily found in loan agreements for similar transactions. 7he 00 Credit Facility contained customary events of default, including defaults based on a failure to pay principal, reimbursement obligations, interest, fees or other obligations, subject to speci¿ed grace periods; any material inaccuracy of a representation or warranty; breach of covenant; failure to pay other indebtedness and cross-accelerations; a Change of Control as de¿ned in the 00 Credit Facility ; events of bankruptcy and insolvency; material judgments; failure to meet certain requirements with respect to E5IS$; and impairment of collateral. First Amendment to 2007 Credit Facility 2n May , 00, the Borrowers entered into the First $mendment to the 00 Credit Facility the ³First $mendment´ . 7he First $mendment provided, among other things, an incremental term loan facility under the 00 Credit Facility in the amount of $,000. $s amended by the First $mendment, the 00 Credit Facility included $1,1 ,000 of term loan facilities and $0,000 of a revolving credit facility. Second Amendment to 2007 Credit Facility 2n February , 00 , the Company entered into the Second $mendment to the 00 Credit Facility the ³Second $mendment´ . 11 $mong other things, the Second $mendment reduced the aggregate principal amounts available under the 00 Credit Facility, as follows: a for revolving loans, from $0,000 to $0,000; b for the letter of credit subfacility, from $1,000 to $,000; and c for the swingline loan subfacility, from $10,000 to $,000. In addition, the Second $mendment provided that +oldco may not incur additional term debt under the 00 Credit Facility unless the Senior Secured Incurrence 7est as de¿ned in the Second $mendment was less than .00 to 1.00 and the current Incurrence 7est as de¿ned in the Second $mendment was satis¿ed. Agency Amendment to 2007 Credit Facility 2n $pril 1, 011, the Borrowers entered into an $gency Succession and $mendment $greement, dated as of March 0, 011, to the 00 Credit Facility the ³$gency $mendment´ . Pursuant to the $gency $mendment, among other things, a Wells Fargo Bank resigned as administrative agent and b *leacher Products Corp. was appointed as administrative agent. In addition, the $gency $mendment effected certain amendments to the 00 Credit Facility that provided that x the administrative agent need not be a lender under the 00 Credit Facility and y the lenders holding a majority of the outstanding term loans and loan commitments under the 00 Credit Facility have i the right, in their discretion, to remove the administrative agent and ii the right to make certain decisions and exercise certain powers under the 00 Credit Facility that had previously been within the discretion of the administrative agent. Fourth Amendment to 2007 Credit Facility 2n September , 01, the Company entered into the Fourth $mendment to the Credit Facility the ³Credit Facility Fourth $mendment´ . Pursuant to the terms of the Credit Facility Fourth $mendment, the Company obtained the following improvement in terms: a clari¿ed and expanded de¿nition of ³Eligible $ssignee´; an increase in the base amount in the formula used to calculate the ³Permitted Investments´ basket from $,000 to a base of $0,000; the removal of the requirement that the Company’s annual ¿nancial statements not have a ³going concern´ or like quali¿cation to the audit; the removal of a cross default from any Secured +edging $greement to the 00 Credit Facility; the removal of a Bankruptcy Default, as de¿ned therein, arising from actions in furtherance of or indicating consent to the speci¿ed actions; and a waiver of any prior Default or Event of Default, as de¿ned therein. In consideration of the changes described above, the Company agreed to pay each of the lenders party to the Credit Facility Fourth $mendment that timely executed and delivered its signature to the Credit Facility Fourth $mendment and the 5S$, an amendment fee equal to .% multiplied by the aggregate outstanding amount of the Loans held including through trades pending settlement by such lender, unless waived in writing. Newcastle and certain other lenders elected to waive their amendment fee pursuant to the Credit Facility Fourth $mendment. Newcastle indemni¿ed other Lenders with respect to their entry into the Credit Facility Fourth $mendment, subject to the limitations set forth in the Credit Facility Fourth $mendment for a total amendment fee paid of approximately $, 0. 2007 Credit Facility Excess Cash Flow Payment and Outstanding Balance $s required by the 00 Credit Facility, as amended, on March , 01 and March 1, 01, the Company made principal payments of $, and $,00, respectively, which represented 0% of the Excess Cash Flow related to the ¿scal years ended December 0, 01 and -anuary 1, 01, respectively. $s of December , 01, a total of $0 was outstanding under the 00 Credit Facility. (11) Derivative InstrXments 7he Company is exposed to certain risks relating to its ongoing business operations. 7he Company has used derivative instruments to manage its interest rate risk in the past. 2n February , 01, the Company entered into an interest rate swap with a notional amount of $,0, which was scheduled to mature in November 01 to economically hedge the risk of Àuctuations in interest payments with respect to the First Lien Credit Facility under the *ate+ouse Credit Facilities. 7he interest rate swap agreement was terminated on -une , 01 when the *ate+ouse Credit Facilities were paid in full. Under the swap agreement, the Company received interest equivalent to one-month LIB25 and paid a ¿xed rate of 1.%, with settlements occurring monthly. 7he Company did not designate this swap as a cash Àow hedge for accounting purposes. 7he gains losses on the swap were recorded in gain loss on derivative instruments on the consolidated statements of operations. 7he counterparty on the interest rate swap was PNC Bank, N.$. 10 In 01, the Company’s derivative instruments were carried at fair value and were generally valued using models with observable market inputs that could be veri¿ed and which do not involve signi¿cant judgment. 7he signi¿cant observable inputs used in determining the fair value of its Level derivative contracts were contractual cash Àows and market based parameters such as interest rates. 7he Predecessor used certain derivative ¿nancial instruments to hedge the aggregate risk of interest rate Àuctuations with respect to its borrowings under the 00 Credit Facility, which required payments based on a variable interest rate index. 7hese risks included: increases in debt rates above the earnings of the encumbered assets, increases in debt rates resulting in the failure of certain debt ratio covenants, increases in debt rates such that assets can no longer be re¿nanced, and earnings volatility. 7he bankruptcy ¿ling on September , 01 was a termination event under the Predecessor’s interest rate swap agreements. In order to reduce such risks, the Predecessor primarily used interest rate swap agreements to change Àoating-rate long-term debt to ¿xed-rate long-term debt. 7his type of hedge was intended to qualify as a ³cash-Àow hedge´ under $SC 1. For these instruments, the effective portion of the change in the fair value of the derivative was recorded in accumulated other comprehensive loss in the consolidated statement of stockholders’ equity de¿cit and recognized in the consolidated statement of operations and comprehensive income loss in the same period in which the hedged transaction impacts earnings. 7he ineffective portion of the change in the fair value of the derivative was immediately recognized in earnings. 7he restructuring process resulted in the dedesignation of the hedging relationship as it was not probable that the forecasted transaction would occur according to the original strategy; any related amounts previously recorded in accumulated other comprehensive income loss , net were recognized into earnings of the Predecessor as of the Petition Date. 7he derivative liability balances were classi¿ed as liabilities subject to compromise at the allowed claim amount. 7he remaining amount of other comprehensive income totaling $,1 was recognized through earnings for the Predecessor for the ten months ended November , 01. 7here are no derivative assets or liabilities outstanding as of December , 01 and December , 01. The Effect of Derivative InstrXments on the Statement of Operations and Comprehensive Income (Loss) for the SXccessor Company for the Year Ended December 28, 2014 and for the Predecessor Company for the Ten Months Ended November 6, 2013(1) AmoXnt of Gain or (Loss) Recognized in Income on Derivative Derivatives in ASC 815 Fair ValXe Hedging Location of Gain or (Loss) Recognized in Relationships Income on Derivative SXccessor Company 2014 Predecessor Company 2013 Interest rate swaps ...... Loss gain on derivative instruments $ 1 $ 1 AmoXnt of Gain or Location of AmoXnt of Gain or (Loss) Location of (Loss) Reclassi¿ed Gain or (Loss) AmoXnt of Gain or (Loss) Recognized in OCI on Gain or (Loss) from AccXmXlated OCI Recognized inIncome Recognized in Income on Derivative (Effective Reclassi¿ed from into Income (Effective on Derivative Derivative (Ineffective Portion) AccXmXlated Portion) (Ineffective Portion Portion)(2) Derivatives in ASC 815 SXccessor Predecessor OCI into Income SXccessor Predecessor and AmoXnt SXccessor Predecessor Fair ValXe Hedging Company Company (Effective Company Company E[clXded from Company Company Relationships 2014 2013 Portion) 2014 2013 Effectiveness Testing) 2014 2013 Interest rate swaps . $— $1 , Interest $— $,0 *ain loss $ 1 $ 1 income / on derivative expense instruments 5eorganization $—$ ,01 items, net 1 For the Successor Company for the year ended December , 01 and the two months ended December , 01, there were no derivative assets or liabilities outstanding. During the quarter ended September , 01, the Predecessor recognized $,01 in reorganization items, net to adjust the fair value of derivatives to the allowed claim. In connection with the 00 Credit Facility, the Predecessor Company entered into and designated an interest rate swap based on a notional amount of $100,000 maturing September 01, as a cash Àow hedge. Under the swap agreement, the Predecessor Company received interest equivalent to one month LIB25 and pays a ¿xed rate of .1%, with settlements occurring monthly. 11 In connection with the 00 Credit Facility, the Predecessor Company entered into and designated an interest rate swap based on a notional amount of $0,000 maturing September 01, as a cash Àow hedge. Under the swap agreement, the Predecessor Company received interest equivalent to one month LIB25 and pays a ¿xed rate of . 1%, with settlements occurring monthly. In connection with the First $mendment to the 00 Credit Facility, the Predecessor Company entered into and designated an interest rate swap based on a notional amount of $00,000 maturing September 01, as a cash Àow hedge. Under the swap agreement, the Predecessor Company received interest equivalent to one month LIB25 and pays a ¿xed rate of .0 % with settlements occurring monthly. In connection with the First $mendment to the 00 Credit Facility, the Predecessor Company entered into and designated an interest rate swap based on a notional amount of $,000 maturing September 01, as a cash Àow hedge. Under the swap agreement, the Predecessor Company received interest equivalent to one month LIB25 and pays a ¿xed rate of . 1% with settlements occurring monthly. 7he aggregate amount of unrealized loss related to derivative instruments recognized in other comprehensive loss as of December , 01 and December , 01 was $0 and $0, respectively. (12) Income Taxes Income tax expense bene¿t on income loss from continuing operations for the periods shown below consisted of: CXrrent Deferred Total Year ended December , 01, Successor Company: U.S. Federal ...... $ $ $1, 0 State and local...... 1,0 1,1 $ , $ 1,1 $,0 Year ended December , 01, Successor Company: U.S. Federal ...... $ — $ , $, State and local...... 10 $ 10 ,1 $ ,1 7wo months ended December , 01, Successor Company: U.S. Federal ...... $ — $ — $ — State and local...... 1 — 1 $ 1 — $ 1 7en months ended November , 01, Predecessor Company: U.S. Federal ...... $ — $ 1 $ 1 State and local...... — $— 1 $ 1 1 Income tax expense bene¿t differed from the amounts computed by applying the U.S. federal income tax rate of % to income loss from continuing operations before income taxes as a result of the following: Predecessor SXccessor Company Company Year Ended Year Ended Two Months Ended Ten Months Ended December 27, 2015 December 28, 2014 December 29, 2013 November 6, 2013 Computed ³expected´ tax expense bene¿t ...... $ ,0 $ 1 $ ,1 $ , Increase decrease in income tax bene¿t resulting from: State and local income taxes, net of federal bene¿t ...... 0 1 1 Net nondeductible meals, entertainment, and other expenses...... 0 0 1 5eturn to provision adjustment...... — — — 7ax attribute reduction ...... — , — — Change in valuation allowance...... , ,1 1,0 , 1 Increase decrease to provision for unrecognized tax bene¿ts ...... — — Cancellation of indebtedness and original issue discount ...... — — 1,1 $lternative minimum tax ...... 0 — — — 2ther ...... — — $ ,0 $ ,1 $ 1 $ 1 7he effect of retroactive adoption of $SU No. 01-1 to 01 results in combining net current deferred tax assets of $, , after valuation allowance of $1,0 , with net non-current deferred tax assets of $,1, after valuation allowance of $11, , and non-current deferred tax liabilities of $, 1 resulting in net deferred tax liabilities reported of $,1. 7he tax effects of temporary differences that give rise to signi¿cant portions of the deferred tax assets as of December , 01 and December , 01 are presented below: December 27, 2015 December 28, 2014 Non-current deferred tax assets/ liabilities : $ccounts receivable ...... $ 1, $1, $ccrued expenses...... , 1 1 , Inventory capitalization ...... 1,1 1 $lternative minimum tax credit ...... 0 — Pension and other postretirement bene¿t obligation ...... , ,00 De¿nite and inde¿nite lived intangible assets ...... 1, ,01 Net operating losses ...... 0, ,0 Fixed assets...... ,0 , 1 *ross non-current deferred tax assets/liabilities ...... 10, 1,11 Less valuation allowance...... 11, 1 , Net deferred tax liabilities ...... $ , $ ,1 In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. 7he ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. During the ten months ended November , 01, the valuation allowance decreased by $, , of which $ , was a bene¿t to earnings, $0 was charged to discontinued operations, and $0,1 was recorded as a bene¿t through accumulated other comprehensive income, and a reduction of $1 , was attributable to the reduction of tax attributes related to the cancellation of indebtedness and other fresh start adjustments. During the two months ended December , 01, the valuation allowance decreased by $,1, all of which was a bene¿t to earnings. $s a result of the 5estructuring in 01, we recognized 1 cancellation of indebtedness income, which is not subject to tax provided we reduce certain tax attributes. 7he ¿nal determination of the reduction in tax attributes was made in 01. $t that time, ¿nal calculations were made as to the manner in which we would reduce our tax attributes. For the year ended December , 01, the valuation allowance decrease was primarily attributable to ¿nalization of tax attribute reduction adjustments from the cancellation of indebtedness. During the year ended December , 01, the valuation allowance decreased by $, of which $, was a bene¿t to earnings and $1, was recorded as an increase to accumulated other comprehensive income. During the year ended December , 01, the valuation allowance decreased by $,1 of which $,0 was a bene¿t to earnings and $1 was recorded as an increase to accumulated other comprehensive income. $t December , 01, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $10,1 after tax attribute reductions, which are available to offset future taxable income, if any. State net operating loss carryforwards may differ signi¿cantly from Federal net operating loss carryforwards due to state tax attribute reduction requirements that differ from Federal tax law. 7hese federal and state net operating loss carryforwards begin to expire on various dates from 01 through 0. 7he majority of the operating losses are subject to the limitations of Internal 5evenue Code the ³Code´ Section . 7his section provides limitations on the availability of net operating losses to offset current taxable income if signi¿cant ownership changes have occurred for Federal tax purposes. $ reconciliation of the beginning and ending amount of uncertain tax positions for the years ended December , 01, December , 01 and December , 01 are as follows: Balance as of December 0, 01, Predecessor Company ...... $ , Decreases based on tax positions prior to 01 and tax attribute reductions ...... , Uncertain tax positions as of December , 01, Successor Company...... $ 1,10 Decreases based on tax positions prior to 01 and tax attribute reductions ...... Uncertain tax positions as of December , 01, Successor Company...... $ 1,00 Increases based on tax positions in 01 and tax attribute reductions ...... Uncertain tax positions as of December , 01, Successor Company...... $ 1, $t December , 01, the Company had uncertain tax positions of $1, which, if recognized, would impact the effective tax rate. 7he Company did not record signi¿cant amounts of interest and penalties related to uncertain tax positions for the year ended December , 01. 7he Company does not anticipate signi¿cant increases or decreases in our uncertain tax positions within the next twelve months. 7he Company recognizes penalties and interest relating to uncertain tax positions in the provision for income taxes. During the period, the Company did not recognize any accrued interest or penalties. $t December , 01 and December , 01, the accrual for uncertain tax positions, included $ and $ of interest and penalties, respectively. 7he Company ¿les a U.S. federal consolidated income tax return for which the statute of limitations remains open for the 01 tax year and beyond. U.S. state jurisdictions have statute of limitations generally ranging from to years. 7he Company’s six month federal tax return ended December , 01 is under examination by the Internal 5evenue Service. We do not anticipate any material adjustments related to this examination. 1 (13) Earnings (Loss) Per Share 7he following table sets forth the computation of basic and diluted earnings loss per share: Predecessor SXccessor Company Company Year Ended Year Ended Two Months Ended Ten Months Ended December 27, 2015 December 28, 2014 December 29, 2013 November 6, 2013 Numerator for earnings per share calculation: Income loss from continuing operations attributable to New Media ...... $ ,1 $ ,0 $ ,0 $ , Loss from discontinued operations, attributable to New Media, net of income taxes ...... — — — 1,0 Net income loss attributable to New Media ...... $ ,1 $ ,0 $ ,0 $ ,1 Denominator for earnings per share calculation: Basic weighted average shares outstanding...... ,, 1, , 0,000,000 ,0 , Effect of dilutive securities: Stock 2ptions...... 1,1 — — — Diluted weighted average shares outstanding ...... ,, 1, , 0,000,000 ,0 , Income loss per share—basic: Income loss from continuing operations attributable to New Media ...... $ 1. $ 0.10 $0. $1. Loss from discontinued operations, attributable to New Media, net of taxes...... — — — 0.0 Net income loss attributable to New Media ...... $ 1. $ 0.10 $0. $1. Income loss per share—diluted: Income loss from continuing operations attributable to New Media ...... $ 1. $ 0.10 $0. $1. Loss from discontinued operations, attributable to New Media, net of taxes...... — — — 0.0 Net income loss attributable to New Media ...... $ 1. $ 0.10 $0. $1. For the Successor Company for the years ended December , 01 and December , 01, two months ended December , 01, and for the Predecessor Company for the ten months ended November , 01, 1,, , 1,, , 1,, , and 0 common stock warrants, 0, 1,0, 0, and 0 5S*s, and 00,000, ,0, 0 and 0 stock options, respectively, were excluded from the computation of diluted income loss per share because their effect would have been antidilutive. Equity In September 01, the Company issued ,0, shares of its common stock in a public offering at a price to the public of $1. per share for net proceeds of approximately $11,0. Certain principals of Fortress and certain of the Company’s of¿cers and directors participated in this offering and purchased an aggregate of ,0 shares at a price of $1. per share. For the purpose of compensating the Manager as de¿ned below for its successful efforts in raising capital for the Company, in connection with this offering, the Company granted options to the Manager to purchase ,0 shares of the Company’s common stock at a price of $1., which had an aggregate fair value of approximately $, as of the grant date. 7he assumptions used in valuing the options were: a .% risk-free rate, a .% dividend yield, 1.% volatility and a 10 year term. 7he options granted to the Manager, were fully vested on the date of grant and one thirtieth of the options become exercisable on the ¿rst day of each of the following thirty calendar months, or earlier upon the occurrence of certain events, such as a change in control of the Company or the termination of the Management $greement as de¿ned below . 7he options expire ten years from the date of issuance. 7he fair value of the options issued as compensation to the Manager was recorded as an increase in equity with an offsetting reduction of capital proceeds received. $s a result of the 01 return of capital, the strike price decreased to $1.1. 1 In -anuary 01, the Company issued ,000,000 shares of its common stock in a public offering at a price to the public of $1.0 per share for net proceeds of approximately $10,1 . Certain principals of Fortress and certain of the Company’s of¿cers and directors participated in this offering and purchased an aggregate of 10,00 shares at a price of $1.0 per share. For the purpose of compensating the Manager for its successful efforts in raising capital for the Company, in connection with this offering, the Company granted options to the Manager to purchase 00,000 shares of the Company’s common stock at a price of $1.0, which had an aggregate fair value of approximately $,1 as of the grant date. 7he assumptions used in valuing the options were: a .0% risk-free rate, a .% dividend yield, .% volatility and a 10 year term. 2n February , 01, a grant of restricted shares totaling 00,0 shares was made to the Company’s Employees as de¿ned below . See Note ³Share-Based Compensation´. In March 01, the Company issued , shares of its common stock to its Non-2f¿cer Directors as de¿ned below to settle a liability of $ for 01 services. During the three months ended September , 01, a grant of restricted shares totaling ,1 shares were made to the Company’s Employees. See Note ³Share-Based Compensation´. 2n -uly 1, 01, the Company announced a second quarter 01 cash dividend of $0. per share of Common Stock, par value $0.01 per share. 7he dividend was paid on $ugust 1, 01 to shareholders of record as of the close of business on $ugust 1, 01. 2n 2ctober 0, 01, the Company announced a third quarter 01 cash dividend of $0. per share of Common Stock, par value $0.01 per share. 7he dividend was paid on November 0, 01, to shareholders of record as of the close of business on November 1, 01. 2n February , 01, the Company announced a fourth quarter 01 cash dividend of $0.0 per share of Common Stock, par value $0.01 per share. 7he dividend was paid on March 1 , 01, to shareholders of record as of the close of business on March 11, 01. 2n $pril 0, 01, the Company announced a ¿rst quarter 01 cash dividend of $0. per share of Common Stock, par value $0.01 per share, of New Media. 7he dividend was paid on May 1, 01, to shareholders of record as of the close of business on May 1, 01. 2n -uly 0, 01, the Company announced a second quarter 01 cash dividend of $0. per share of Common Stock, par value $0.01 per share, of New Media. 7he dividend was paid on $ugust 0, 01, to shareholders of record as of the close of business on $ugust 1, 01. 2n 2ctober , 01, the Company announced a third quarter 01 cash dividend of $0. per share of Common Stock, par value $0.01 per share, of New Media. 7he dividend was paid on November 1 , 01, to shareholders of record as of the close of business on November 1, 01. (14) Employee Bene¿t Plans For the years ended December , 01 and December , 01, the Company maintained the New Media Investment *roup, Inc. 5etirement Savings Plan, which was previously known as the *ate+ouse Media, Inc. 5etirement Savings Plan, the ³New Media 01 k Plan´ , which is intended to be a quali¿ed de¿ned contribution plan with a cash or deferred arrangement under Section 01 k of the Code. 7he Company became the plan sponsor of the New Media 01 k Plan effective -anuary 1, 01. In general, eligible employees of the Company and participating af¿liates who satisfy minimum age and service requirements are eligible to participate. Eligible employees can contribute amounts up to 100% of their eligible compensation to the New Media 01 k Plan, subject to I5S limitations. 7he New Media 01 k Plan also provides for discretionary matching and nonelective contributions that can be made in separate amounts among different allocation groups. For the Successor Company for the years ended December , 01 and December , 01, the two months ended December , 01, and the Predecessor Company for the ten months ended November , 01, the Company’s matching contributions to the New Media 01 k Plan were $,, $1,1, $1 and $, respectively. 7he Company did not make nonelective contributions for the reported years. For the year ended December , 01, Local Media sponsored the Local Media *roup, Inc. 01 k Savings Plan the ³Local Media 01 k Plan´ , which also was intended to be a quali¿ed de¿ned contribution plan with a cash or deferred arrangement under Section 01 k of the Code. 7he Company became the plan sponsor of the Local Media 01 k Plan effective -anuary 1, 01. 7he Local Media 01 k Plan was frozen with respect to all new eligibility and contributions effective after 1 December 1, 01. $ccordingly, after that date, no contributions were made to the Local Media 01 k Plan for the year ended December , 01. 2n March 1, 01, the Local Media 01 k Plan was merged into the New Media 01 k Plan and ceased to exist as a separate plan. 7he Company maintains three nonquali¿ed deferred compensation plans, as described below, for certain of its employees. 7he Company maintains the *ate+ouse Media, Inc. Publishers’ Deferred Compensation Plan ³Publishers Plan´ , a nonquali¿ed deferred compensation plan for the bene¿t of certain designated publishers of the Company’s newspapers. Under the Publishers Plan, the Company credits an amount to a bookkeeping account established for each participating publisher pursuant to a pre-determined formula, which is based upon the gross operating pro¿ts of each such publisher’s newspaper. 7he bookkeeping account is credited with earnings and losses based upon the investment choices selected by the participant. 7he amounts credited to the bookkeeping account on behalf of each participating publisher vest on an installment basis over a period of 1 years. $ participating publisher forfeits all amounts under the Publishers Plan in the event that the publisher’s employment with the Company is terminated for ³cause´, as de¿ned in the Publishers Plan. $mounts credited to a participating publisher’s bookkeeping account are distributable upon termination of the publisher’s employment with the Company and will be made in a lump sum or installments as elected by the publisher. 7he Publisher’s Plan was frozen effective as of December 1, 00, and all accrued bene¿ts of participants under the terms of the Publisher’s Plan became 100% vested. 7he Company recorded $0, $0, $0 and $0 of compensation expense related to the Publishers Plan for the Successor Company for the years ended December , 01 and December , 01, the two months ended December , 01, and the Predecessor Company for the ten months ended November , 01, respectively. 7he Company maintains the *ate+ouse Media, Inc. Executive Bene¿t Plan ³Executive Bene¿t Plan´ , a nonquali¿ed deferred compensation plan for the bene¿t of certain key employees of the Company. Under the Executive Bene¿t Plan, the Company credits an amount, determined at the Company’s sole discretion, to a bookkeeping account established for each participating key employee. 7he bookkeeping account is credited with earnings and losses based upon the investment choices selected by the participant. 7he amounts credited to the bookkeeping account on behalf of each participating key employee vest on an installment basis over a period of years. $ participating key employee forfeits all amounts under the Executive Bene¿t Plan in the event that the key employee’s employment with the Company is terminated for ³cause´, as de¿ned in the Executive Bene¿t Plan. $mounts credited to a participating key employee’s bookkeeping account are distributable upon termination of the key employee’s employment with the Company, and will be made in a lump sum or installments as elected by the key employee. 7he Executive Bene¿t Plan was frozen effective as of December 1, 00, and all accrued bene¿ts of participants under the terms of the Executive Bene¿t Plan became 100% vested. 7he Company recorded $0, $0, $0 and $0 of compensation expense related to the Publishers Plan for the Successor Company for the years ended December , 01 and December , 01, the two months ended December , 01, and the Predecessor Company for the ten months ended November , 01, respectively. 7he Company maintains the *ate+ouse Media, Inc. Executive Deferral Plan ³Executive Deferral Plan´ , a nonquali¿ed deferred compensation plan for the bene¿t of certain key employees of the Company. Under the Executive Deferral Plan, eligible key employees may elect to defer a portion of their compensation for payment at a later date. Currently, the Executive Deferral Plan allows a participating key employee to defer up to 100% of his or her annual compensation until termination of employment or such earlier period as elected by the participating key employee. $mounts deferred are credited to a bookkeeping account established by the Company for this purpose. 7he bookkeeping account is credited with earnings and losses based upon the investment choices selected by the participant. $mounts deferred under the Executive Deferral Plan are fully vested and non- forfeitable. 7he amounts in the bookkeeping account are payable to the key employee at the time and in the manner elected by the key employee. (15) Pension and Postretirement Bene¿ts $s a result of the Enterprise News Media, LLC and Copley Press, Inc. acquisitions, the Company maintains a pension plan and postretirement medical and life insurance plans which cover certain employees. 7he Company uses the accrued bene¿t actuarial method and best estimate assumptions to determine pension costs, liabilities and other pension information for de¿ned bene¿t plans. 7he Enterprise News Media, LLC pension plan was amended to freeze all future bene¿t accruals as of December 1, 00, except for a select group of union employees whose bene¿ts were frozen during 00 . $lso, during 00, the medical and life insurance bene¿ts were frozen, and the plan was amended to limit future bene¿ts to a select group of active employees under the Enterprise News Media, LLC postretirement medical and life insurance plan. 1 7he following table provides a reconciliation of bene¿t obligations, plan assets and funded status, along with the related amounts in the consolidated balance sheets of the Company’s pension and postretirement medical and life insurance plans as of December , 01 and December , 01: Pension Postretirement Year Ended Year Ended Year Ended Year Ended December 27, 2015 December 28, 2014 December 27, 2015 December 28, 2014 Change in proMected bene¿t obligation Bene¿t obligation at beginning of period...... $ , $ ,1 $ , $ ,0 Service cost...... 00 00 1 1 Interest cost...... 1,1 1,1 1 $ctuarial gain loss ...... 1, ,1 Bene¿ts and expenses paid...... 1, 1, Participant contributions...... — — Employer implicit subsidy ful¿lled ...... — — 1 Projected bene¿t obligation at end of period $ ,11 $ , $ ,0 $ , Change in plan assets Fair value of plan assets at beginning of period $ 1,0 $ 0, 0 $— $— $ctual return on plan assets ...... 1, — — Employer contributions ...... 00 1, — — Employer implicit subsidy contribution ...... — — — — Participant contributions...... — — — — Employer implicit subsidy ful¿lled ...... — — — — Bene¿ts paid...... 1,1 1, — — Expenses paid...... 1 — — Fair value of plan assets at end of period . . $ 0,0 $ 1,0 $— $— Reconciliation of fXnded statXs Bene¿t obligation at end of period...... $ ,11 $ , $ ,0 $ , Fair value of assets at end of period...... 0,0 1,0 — — Funded status ...... ,01 , ,0 , Unrecognized actuarial gain loss...... , , 1 Net accrued bene¿t cost...... $ ,0 $ ,0 $ , $ , Balance sheet presentation $ccrued liabilities...... $ — $ — $ 1 $ 0 Pension and other postretirement bene¿t obligations...... ,01 , ,1 ,1 $ccumulated other comprehensive income loss ...... , , 1 Net accrued bene¿t cost...... $ ,0 $ ,0 $ , $ , Comparison of obligations to plan assets Projected bene¿t obligation ...... $ ,11 $ , $ ,0 $ , $ccumulated bene¿t obligation ...... ,11 , ,0 , Fair value of plan assets...... 0,0 1,0 — — 1 7he following table provides the components of net periodic bene¿t cost and other changes in plan assets recognized in other comprehensive loss of the Company’s pension and postretirement medical and life insurance plans for the Successor Company for the years ended December , 01 and December , 01, two months ended December , 01, and for the Predecessor Company for the ten months ended November , 01: Pension Postretirement Predecessor Predecessor SXccessor Company Company SXccessor Company Company Two Months Ten Months Two Months Ten Months Year Ended Year Ended Ended Ended Year Ended Year Ended Ended Ended December 27, December 28, December 29, November 6, December 27, December 28, December 29, November 6, 2015 2014 2013 2013 2015 2014 2013 2013 Components of net periodic bene¿t cost Service cost...... $ 00 $ 00 $ $ $1 $ 1 $ $ Interest cost...... 1,1 1,1 1 1 1 1 1 Expected return on plan assets ...... 1, 1, 1,10 — — — — $mortization of prior service cost ..... — — — — — — — $mortization of unrecognized loss — — — — — — Net periodic bene¿t cost . . $ 10 $ 1 $ 11 $ $ $ $ $ 1 Other changes in plan assets and bene¿t obligations recognized in other comprehensive income Net actuarial gain loss...... $ 0 $ , $ $ , $ $ $1 $ $mortization of net actuarial loss .... — — — — — — $mortization of prior service credit .... — — — — — — — 2ther adjustment..... — — — — — — — — 7otal recognized in other comprehensive income. . $ $ , $ $ , $ $ $1 $1,0 7he following assumptions were used in connection with the Company’s actuarial valuation of its de¿ned bene¿t pension and postretirement plans: Pension Postretirement Year Ended Year Ended Year Ended Year Ended December 27, 2015 December 28, 2014 December 27, 2015 December 28, 2014 Weighted average discount rate ...... .% .% .% .% 5ate of increase in future compensation levels ..... ———— Expected return on assets...... .% .0% — — Current year trend ...... — — .% .% Ultimate year trend ...... — — .% .% Year of ultimate trend...... — — 0 0 1 7he following assumptions were used to calculate the net periodic bene¿t cost for the Company’s de¿ned bene¿t pension and postretirement plans: Pension Postretirement Predecessor Predecessor SXccessor Company Company SXccessor Company Company Two Months Ten Months Two Months Ten Months Year Ended Year Ended Ended Ended Year Ended Year Ended Ended Ended December 27, December 28, December 29, November 6, December 27, December 28, December 29, November 6, 2015 2014 2013 2013 2015 2014 2013 2013 Weighted average discount rate ...... .% .0% .0% .% .% .% .% .% 5ate of increase in future compensation levels ...... — — — ———— — Expected return on assets...... .% .0% .0% .0% — — — — Current year trend ...... — — — — .% .% .% .% Ultimate year trend ...... — — — — .% .% .% .% Year of ultimate trend...... — — — — 0 0 0 0 7o determine the expected long-term rate of return on pension plan assets, the Company considers the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets, input from the actuaries and investment consultants, and long-term inÀation assumptions. 7he expected allocation of pension plan assets is based on a diversi¿ed portfolio consisting of domestic and international equity securities and ¿xed income securities. 7his expected return is then applied to the fair value of plan assets. 7he Company amortizes experience gains and losses, including the effects of changes in actuarial assumptions and plan provisions over a period equal to the average future service of plan participants. $mortization of prior service costs was calculated using the straight-line method over the average remaining service periods of the employees expected to receive bene¿ts under the plan. Postretirement 2015 2014 Effect of 1% increase in health care cost trend rates $PB2 ...... $ ,0 $ ,1 Dollar change ...... $ $ Percent change ...... .1% . % Effect of 1% decrease in health care cost trend rates $PB2 ...... $ , $ ,01 Dollar change ...... $ 1 $ Percent change ...... . % . % Fair 9alue of plan assets are measured on a recurring basis using quoted market prices in active markets for identical assets, Level 1 input. 7he pension plan’s assets by asset category are as follows: Year Ended December 27, 2015 Year Ended December 28, 2014 Dollar Percent Dollar Percent Equity mutual funds...... $ 1,1 %$1, % Fixed income mutual funds ...... ,1% , % Cash and cash equivalents ...... % 1,0 % 2ther ...... 1% % 7otal ...... $ 0,0 100% $ 1,0 100% Plan ¿duciaries of the *eorge W. Prescott Publishing Company LLC Pension Plan set investment policies and strategies for the pension trust. 2bjectives include preserving the funded status of the plan and balancing risk against return. 7he general target allocation is 0% in equity funds and 0% in ¿xed income funds for the plan’s investments. 7o accomplish this goal, each plan’s assets are actively managed by outside investment managers with the objective of optimizing long-term return while maintaining a high standard of portfolio quality and proper diversi¿cation. 7he Company monitors the maturities of ¿xed income securities so that there is suf¿cient liquidity to meet current bene¿t payment obligations. 10 7he following bene¿t payments, which reÀect expected future services, as appropriate, are expected to be paid as follows: Pension Postretirement 01 ...... $ 1, $ 01 ...... 1, 01 ...... 1, 0 01 ...... 1, 00 ...... 1,0 01-0 ...... , 1, Employer contribution expected to be paid during the year ending December , 01 ...... $ — $ 7he postretirement plans are not funded. 7he aggregate amount of net actuarial loss related to the Company’s pension and postretirement plans recognized in other comprehensive loss income as of December , 01 was $,1 of which $ is expected to be amortized in 01. Multiemployer Plans 7he Company is a participant in three multi-employer pension plans covering certain employees with Collective Bargaining $greements ³CB$s´ in 2hio, Massachusetts and Illinois. 7he risks of participating in these multi-employer plans are different from single-employer plans in the following aspects: • 7he Company plays no part in the management of plan investments or any other aspect of plan administration. • $ssets contributed to the multi-employer plan by one employer may be used to provide bene¿ts to employees of other participating employers. • If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. • If the Company chooses to stop participating in some of its multi-employer plans, the Company may be required to pay those plans an amount based on the unfunded status of the plan, referred to as withdrawal liability. 7he Company’s participation in these plans for the year ended December , 01, is outlined in the table below. 7he ³EIN/Pension Plan Number´ column provides the Employee Identi¿cation Number EIN and the three-digit plan number. Unless otherwise noted, the two most recent Pension Protection $ct PP$ zone statuses available are for the plans for the years ended December , 01 and December , 01, respectively. 7he zone status is based on information that the company received from the plan and is certi¿ed by the plan’s actuary. $mong other factors, plans in the red zone are generally less than % funded; plans in the orange zone are both a less than 0% funded and b have an accumulated/expected funding de¿ciency in any of the next six plan years, net of any amortization extensions; plans in the yellow zone meet either one of the criteria mentioned in the orange zone; and plans in the green zone are at least 0% funded. 7he ³FIP/5P Status Pending/Implemented´ column indicates plans for which a ¿nancial improvement plan FIP or a rehabilitation plan 5P is either pending or has been implemented. 7he last column lists the expiration date s of the collective-bargaining agreement s to which the plans are subject. 7he Company makes all required contributions to these plans as determined under the respective CB$s. For each of the plans listed below, the Company’s contribution represented less than % of total contributions to the plan. FIPRP StatXs EIN NXmber Plan ZoneStatXs Pending ContribXtions (in thoXsands) SXrcharge Pension Plan Name NXmber 2015 2014Implemented 2015 2014 2013 Imposed Expiration Dates of CBAs CW$/I7U Negotiated Pension Plan...... 1-1 /001 5ed 5ed Implemented $ 1 $1 $1 No Under negotiation *CIU—Employer 5etirement Bene¿t Plan 1 ...... 1-0 0/001 5ed 5ed Implemented 10 1 No 11/1/01 7he Newspaper *uild International Pension Plan 1 .. -10/001 5ed 5ed Implemented No Under negotiation Total...... $ 1 $1 $1 1 7his plan has elected to utilize special amortization provisions provided under the Preservation of $ccess to Care for Medicare Bene¿ciaries and Pension 5elief $ct of 010. 11 (16) Fair ValXe MeasXrement 7he Company measures and records in the accompanying consolidated ¿nancial statements certain assets and liabilities at fair value on a recurring basis. $SC 0 establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data observable inputs and the Company’s own assumptions unobservable inputs . 7hese inputs are prioritized as follows: • Level 1: 2bservable inputs such as quoted prices in active markets for identical assets or liabilities; • Level : Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs; and • Level : Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants price the asset or liability. 7he valuation techniques that may be used to measure fair value are as follows: • Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; • Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectation about those future amounts; • Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset replacement cost . 7he following table provides information for the Company’s major categories of ¿nancial assets and liabilities measured or disclosed at fair value on a recurring basis: Fair ValXe MeasXrements at Reporting Date Using QXoted Prices in Active Markets Signi¿cant Other Signi¿cant for Identical Observable Unobservable Total Fair ValXe Assets (Level 1) InpXts (Level 2) InpXts (Level 3) MeasXrements As of December 28, 2014 $ssets Cash and cash equivalents ...... $ 1,0 $— $— $1,0 5estricted cash ...... , — — , As of December 27, 2015 $ssets Cash and cash equivalents ...... $ 1, $— $— $1, 5estricted cash ...... , — — , 7he following tables reÀect the activity of our derivative liabilities measured at fair value using models with observable market inputs Level for year ended December , 01: Derivative Liabilities Balance as of December , 01 ...... $ — 7otal gains losses, net: Included in earnings ...... 7ermination of derivative instrument...... Balance as of December , 01 ...... $ — Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances for example, when there is evidence of impairment . 1 During the quarter ended September , 01, certain intangible assets were written down to their implied fair value using Level inputs. 7he valuation techniques and signi¿cant inputs and assumptions utilized to measure fair value are discussed in Note ³*oodwill and Intangible $ssets´. 7he fair value of select advertiser relationships was $1 ,10, subscriber relationships $,10, customer relationships $0, trade names was $0, and publication rights was $0 at September , 01. During the quarter ended December , 01, the Company applied fresh start accounting which resulted in its assets and liabilities being recorded at their fair values utilizing Level inputs as of November , 01. For the acquisitions during the quarters ended September , 01, December , 01, March 0, 01, September , 01, December , 01, March , 01, -une , 01, and September , 01, the Company consolidated the assets and liabilities under the acquisition method of accounting. $ccordingly, the assets acquired and liabilities assumed were recorded at their fair value. Property, plant and equipment was valued using Level inputs and intangible assets were valued using Level inputs. 5efer to Note ³$cquisitions and Dispositions´ for discussion of the valuation techniques, signi¿cant inputs, assumptions utilized, and the fair value recognized. During the quarter ended December , 01, certain meastheads were written down to their implied fair value using Level inputs. 7he valuation techniques and signi¿cant inputs and assumptions utilized to measure fair value are discussed in Note ³*oodwill and Intangible $ssets´. 7he fair value of select mastheads was $,0 at December , 01. 5efer to Note 10 ³Indebtedness´ for the discussion on the fair value of the Company’s total long-term debt. 5efer to Note 1 ³Pension and Postretirement Bene¿ts´ for the discussion on the fair value of the Company’s pension plan. (17) Commitments and Contingencies 7he Company is and may become involved from time to time in legal proceedings in the ordinary course of its business, including but not limited to with respect to such matters as libel, invasion of privacy, intellectual property infringement, wrongful termination actions and complaints alleging employment discrimination, and regulatory investigations and inquiries. In addition, the Company is involved from time to time in governmental and administrative proceedings concerning employment, labor, environmental and other claims. Insurance coverage mitigates potential loss for certain of these matters. +istorically, such claims and proceedings have not had a material adverse effect on the Company’s consolidated results of operations or ¿nancial position. $lthough the Company is unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, the Company does not expect its current and any threatened legal proceedings to have a material adverse effect on the Company’s business, ¿nancial position or consolidated results of operations. *iven the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on the Company’s ¿nancial results. 5estricted cash at December , 01 and December , 01, in the aggregate amount of $, and $,, respectively, is used to collateralize standby letters of credit in the name of the Company’s insurers in accordance with certain insurance policies and as cash collateral for certain business operations. (18) Related-Party Transactions $s of December , 01, Newcastle an af¿liate of FI* LLC ³Fortress´ bene¿cially owned approximately .% of the our outstanding common stock. 2n February 1, 01, Newcastle completed the spin-off of the Company. 2n February 1, 01 New Media became a separate, publicly traded company trading on the NYSE under the ticker symbol ³NEWM´. $s a result of the spin-off, the fees included in the Management $greement with our Manager became effective. $s of December , 01, Fortress and its af¿liates owned approximately 1.% of the Company’s outstanding stock and approximately .% of the Company’s outstanding warrants. 7he Company’s Manager holds 1,,0 stock options of the Company’s stock as of December , 01. During the years ended December , 01 and December , 01, Fortress and its af¿liates were paid $ and $ in dividends, respectively. In addition, the Company’s Chairman, Wesley Edens, is also the Co-Chairman of the board of directors of FI* LLC. 7he Company does not pay Mr. Edens a salary or any other form of compensation. 2ur Chief 2perating 2f¿cer owns an interest in a company from which we recognized revenue of $1, $ and $11 during the years ended December , 01, December , 01 and December , 01, respectively, for commercial printing services and managed information technology services which is included in commercial printing and other on the consolidated statement of operations and comprehensive income loss . 1 2ur Chief Executive 2f¿cer and Chief Financial 2f¿cer are employees of Fortress and their salaries are paid by Fortress. Management Agreement 2n the Effective Date, we entered into a Management $greement with our Manager. 2ur Management $greement requires our Manager to manage our business affairs subject to the supervision of our Board of Directors. 2n March , 01, the Company’s independent directors on the Board approved an amendment to the Management $greement. 7he initial term of our Management $greement will expire on March , 01 and will be automatically renewed for one-year terms thereafter unless terminated either by the us or the Manager. From the commencement date of the Listing, the Manager is a entitled to receive from us a management fee, b eligible to receive incentive compensation that is based on the our performance and c eligible to receive options to purchase New Media Common Stock upon the successful completion of an offering of shares of the our Common Stock or any shares of preferred stock with an exercise price equal to the price per share paid by the public or other ultimate purchaser in the offering, see Note 1 ³Earnings Loss Per Share´. In addition, we are obligated to reimburse certain expenses incurred by the Manager. 7he Manager is also entitled to receive a termination fee from us under certain circumstances. 7he Company recognized $ , and $,1 for management fees and $0,0 and $11 for incentive compensation within selling, general and administrative expense and $ , 0 and $, in management fees and $, and $0 in incentive compensation was paid to Fortress during the years ended December , 01 and December , 01, respectively. In addition, the Company reimbursed Fortress for expenses of approximately $1,01 and $0 for the years ended December , 01 and December , 01 respectively. No management fees or incentive compensation was incurred during the year ended December , 01. *ateHouse Management and Advisory Agreement 2n November , 01, New Media entered into the *ate+ouse Management and $dvisory $greement the ³*ate+ouse Management $greement´ with *ate+ouse, pursuant to which New Media managed the assets and the day-to-day operations of *ate+ouse. New Media was responsible for, among other things i the purchase and sale of *ate+ouse’s investments ii the ¿nancing of *ate+ouse’s investments and iii investment advisory services. Such services may have been performed by the Manager. 7he *ate+ouse Management $greement had an initial three-year term and was to be automatically renewed for one- year terms thereafter unless terminated by New Media or *ate +ouse. 7he *ate+ouse Management $greement would have automatically terminated if the Management $greement between New Media and the Manager was terminated. Commencing from the Listing, New Media was a entitled to receive a management fee equal to 1.0% per annum of *ate+ouse’s 7otal Equity as de¿ned in the *ate+ouse Management $greement and b eligible to receive incentive compensation that is based on *ate+ouse’s performance. In addition, *ate+ouse was obligated to reimburse certain expenses incurred by New Media in connection with the performance of its duties under the agreement. 7hese fees eliminate in consolidation. 7he *ate+ouse Management $greement was terminated effective -une , 01. Local Media Management and Advisory Agreement 2n $ugust , 01, *ate+ouse entered into the Local Media Management $greement with Local Media Parent, which was substantially assigned to Local Media, to manage the operations of Local Media. Local Media Parent was a subsidiary of Newcastle an af¿liate of Fortress prior to the Effective Date. While the agreement was in effect, *ate+ouse received an annual management fee of $1,100, subject to adjustments up to a maximum annual management fee of $1,00 , and an annual incentive compensation fee based on exceeding EBI7D$ targets of Local Media. 7hese fees eliminate in consolidation. 7he Local Media Management $greement was terminated effective -une , 01. 1 Holdings I Management Agreement 2n -une , 01, we entered into a management agreement with +oldings I as amended and restated, the ³+oldings I Management $greement´ . 7he +oldings I Management $greement requires we manage the business affairs of +oldings I subject to the supervision of the Board of Directors of +oldings I. 7he +oldings I Management $greement has an initial three-year term and will be automatically renewed for one-year terms thereafter unless terminated by the +oldings I. We are a entitled to receive from the +oldings I a management fee and b eligible to receive incentive compensation that is based on the performance of +oldings I. In addition, +oldings I is obligated to reimburse certain expenses incurred by us. We are also entitled to receive a termination fee from +oldings I under certain circumstances. 7hese fees eliminate in consolidation. Registration Rights Agreement with Omega 7he Company entered into a registration rights agreement with 2mega $dvisors, Inc. and its af¿liates collectively, ³2mega´ . Under the terms of the registration rights agreement, subject to customary exceptions and limitations, the Company is required to use commercially reasonable efforts to ¿le a registration statement the ³5egistration Statement´ providing for the registration and sale by 2mega of its New Media Common Stock acquired pursuant to the Plan the ³5egistrable Securities´ the ³Shelf 5egistration´ , subject to customary exceptions and limitations. 2mega is entitled to initiate up to three offerings or sales with respect to some or all the 5egistrable Securities pursuant to the Shelf 5egistration. 2mega may only exercise its right to request Shelf 5egistrations if the 5egistrable Securities to be sold pursuant to such Shelf 5egistration are at least % of the then-outstanding New Media Common Stock. (19) DiscontinXed Operations For the Successor Company for the year ended December , 01 and under the guidance adopted as a result of $SU No. 01-0, there was no disposal that is required to be reported in discontinued operations. For the Successor Company for the year ended December , 01, no material publications were discontinued. In May 01, the Predecessor Company disposed of a non wholly owned subsidiary in Chicago, Illinois. $s a result, the asset, liability and noncontrolling interest carrying amounts of this subsidiary were derecognized. $ loss of $1,1 was recognized in discontinued operations. 7he net revenue for the Successor Company for the years ended December , 01 and December , 01, the two months ended December , 01, and for the Predecessor Company for the ten months ended November , 01 for the aforementioned discontinued operations were $0, $0, $0, and $ , respectively. Loss, net of income taxes of $0, for the Successor Company for the years ended December , 01 and December , 01, the two months ended December , 01, and for the Predecessor Company for the ten months ended November , 01 for the aforementioned discontinued operations was $0, $0, $0, and $1,0, respectively. 1 (20) QXarterly ResXlts (XnaXdited) QXarter Ended QXarter Ended QXarter Ended QXarter Ended March 29 -Xne 28 September 27 December 27 Year Ended December 27, 2015 5evenues ...... $ 0,1 $ , $ 1,0 $ , *ain on sale of assets...... — — — ,0 Mastheads impairment...... — — — ,00 2perating income loss ...... ,01 1 , 1, , Income loss before income taxes ...... , 11, ,1 , Net income loss ...... ,0 11,1 ,10 , Basic income loss per share ...... $ 0.1 $0. $ 0.1 $1. Diluted income loss per share...... $ 0.1 $0. $ 0.1 $1. QXarter Ended QXarter Ended QXarter Ended QXarter Ended March 30 -Xne 29 September 28 December 28 Year Ended December 28, 2014 5evenues ...... $ 1,0 $1, $1,01 $ 1, 2perating income loss ...... ,0 , , 1, Income loss before income taxes ...... , ,0 1, Net income loss ...... , 1 , ,0 11, Basic income loss per share ...... $ 0. $ 0.11 $ 0.1 $0.1 Diluted income loss per share...... $ 0. $ 0.11 $ 0.1 $0.0 (21) SXbseTXent Events Acquisitions Dolan, LLC 2n December 1, 01, the Company completed its acquisition of the Business Information Division of Dolan LLC ³Dolan´ for $,000 in cash, plus working capital. 7he Company funded the acquisition with cash on the balance sheet. Dolan is a leading provider of industry-speci¿c news with print and online publications and an audience of over paid subscribers. Times Publishing Company 2n -anuary 1, 01, the Company completed its acquisition of substantially all of the publishing operations of the 7imes Publishing Company, including the Erie Times-News daily newspaper, for $11,00 in cash, plus the assumption of liabilities. 7he Company funded the acquisition with cash on the balance sheet. Erie Times-News is a dominant source of local news and advertising in Erie, P$ with an average weekday circulation of over and on Sunday. Dividends 2n February , 01, the Company announced a fourth quarter 01 cash dividend of $0. per share of New Media Common Stock. 7he dividend will be paid on March 1, 01, to shareholders of record as of the close of business on March , 01. Item 9. Changes in and Disagreements with AccoXntants on AccoXnting and Financial DisclosXre Not applicable. 1 Item 9A. Controls and ProcedXres ConclXsion Regarding the Effectiveness of DisclosXre Controls and ProcedXres 2ur management, with the participation of our Chief Executive 2f¿cer principal executive of¿cer and Chief Financial 2f¿cer principal ¿nancial of¿cer , has evaluated the effectiveness of our disclosure controls and procedures as such term is de¿ned in 5ules 1a-1 e and 1d-1 e under the Securities and Exchange $ct of 1 the ³Exchange $ct´ , as of the end of the period covered by this report. Based on such evaluation, our Chief Executive 2f¿cer and Chief Financial 2f¿cer concluded that, as of December , 01, our disclosure controls and procedures were effective. Changes in Internal Controls Over Financial Reporting Except for the changes noted below, there have not been any changes in our internal control over ¿nancial reporting as such term is de¿ned in 5ule 1a-1 f under the Exchange $ct during the fourth quarter of the ¿scal year covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over ¿nancial reporting. 7he Company is currently engaged in re¿ning the internal controls and processes relating to the acquisitions of +alifax Media *roup, Stephens Media, 7he Columbus Dispatch, and the Monroe News with the Company’s internal controls and processes. 7he operating results of +alifax Media *roup, Stephens Media, 7he Columbus Dispatch, and the Monroe News since the acquisition dates are included in the Company’s consolidated ¿nancial statements as of and for the year ended December , 01 and constituted approximately $10.0 million of combined total assets as of December , 01, and approximately $0.1 million of combined total revenue for the year then ended. Internal control over ¿nancial reporting of the +alifax Media *roup, Stephens Media, 7he Columbus Dispatch, and the Monroe News have been excluded from the Company’s annual assessment of the effectiveness of the Company’s internal control over ¿nancial reporting in accordance with the general guidance issued by the SEC that an assessment of a recent business combination may be omitted from management’s report on internal control over ¿nancial reporting in the year of acquisition. Management’s AnnXal Report on Internal Control Over Financial Reporting 2ur management is responsible for establishing and maintaining effective internal control over ¿nancial reporting, as such term is de¿ned in Exchange $ct 5ule 1a-1 f . 2ur internal control system was designed under the supervision of our Chief Executive 2f¿cer and our Chief Financial 2f¿cer and with the participation of management in order to provide reasonable assurance regarding the reliability of our ¿nancial reporting and our preparation of ¿nancial statements for external purposes in accordance with *$$P. $ll internal control systems, no matter how well designed and tested, have inherent limitations, including, among other things, the possibility of human error, circumvention or disregard. 7herefore, even those systems of internal control that have been determined to be effective can provide only reasonable assurance that the objectives of the control system are met and may not prevent or detect misstatements. $lso, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision of our Chief Executive 2f¿cer and our Chief Financial 2f¿cer and with the participation of management, we conducted an assessment of the effectiveness of our internal control over ¿nancial reporting based on the criteria set forth in ³Internal Control—Integrated Framework´ the ³C2S2´ criteria issued by the Committee of Sponsoring 2rganizations of the 7readway Commission in 01. $s noted above, the Company has excluded from its assessment the internal control over ¿nancial reporting of recently acquired businesses in accordance with the general guidance issued by the Securities and Exchange Commission that an assessment of a recent business combination may be omitted from management’s report on internal control over ¿nancial reporting in the year of acquisition. Based on an assessment of such criteria, management concluded that, as of December , 01, we maintained effective internal control over ¿nancial reporting based on the C2S2 criteria. 7he effectiveness of our internal control over ¿nancial reporting as of December , 01, has been audited by Ernst Young LLP, an independent registered public accounting ¿rm. Ernst Young LLP’s attestation report is included below. 1 Report of Independent Registered PXblic AccoXnting Firm 7he Board of Directors and Stockholders of New Media Investment *roup Inc. We have audited New Media Investment *roup Inc. and subsidiaries’ internal control over ¿nancial reporting as of December , 01, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring 2rganizations of the 7readway Commission 01 framework the C2S2 criteria . New Media Investment *roup Inc. and subsidiaries’ management is responsible for maintaining effective internal control over ¿nancial reporting, and for its assessment of the effectiveness of internal control over ¿nancial reporting included in the accompanying Management’s $nnual 5eport on Internal Control 2ver Financial 5eporting. 2ur responsibility is to express an opinion on the company’s internal control over ¿nancial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company $ccounting 2versight Board United States . 7hose standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over ¿nancial reporting was maintained in all material respects. 2ur audit included obtaining an understanding of internal control over ¿nancial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. $ company’s internal control over ¿nancial reporting is a process designed to provide reasonable assurance regarding the reliability of ¿nancial reporting and the preparation of ¿nancial statements for external purposes in accordance with generally accepted accounting principles. $ company’s internal control over ¿nancial reporting includes those policies and procedures that 1 pertain to the maintenance of records that, in reasonable detail, accurately and fairly reÀect the transactions and dispositions of the assets of the company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of ¿nancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the ¿nancial statements. Because of its inherent limitations, internal control over ¿nancial reporting may not prevent or detect misstatements. $lso, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. $s indicated in the accompanying Management’s $nnual 5eport on Internal Control 2ver Financial 5eporting, management’s assessment of and conclusion on the effectiveness of internal control over ¿nancial reporting did not include the internal controls of +alifax Media *roup, Stephens Media, 7he Columbus Dispatch, and the Monroe News, that are included in the 01 consolidated ¿nancial statements of New Media Investment *roup Inc. and subsidiaries and constituted $10.0 million of total assets as of December , 01 and $0.1 million of revenues for the year then ended. 2ur audit of internal control over ¿nancial reporting of New Media Investment *roup Inc. and subsidiaries also did not include an evaluation of the internal control over ¿nancial reporting of the +alifax Media *roup, Stephens Media, 7he Columbus Dispatch, and the Monroe News. In our opinion, New Media Investment *roup Inc. and subsidiaries maintained, in all material respects, effective internal control over ¿nancial reporting as of December , 01, based on the C2S2 criteria. We also have audited, in accordance with the standards of the Public Company $ccounting 2versight Board United States , the consolidated balance sheets of New Media Investment *roup Inc. and subsidiaries as of December , 01 and December , 01, and the related consolidated statements of operations and comprehensive income loss , shareholders’ equity de¿cit and cash Àows for the year ended December , 01, the year ended December , 01, the period from November , 01 to December , 01, and the period from December 1, 01 through November , 01 Predecessor of New Media Investment *roup Inc. and subsidiaries and our report dated February , 01 expressed an unquali¿ed opinion thereon. /s/ Ernst Young LLP New York, New York February , 01 Item 9B. Other Information Not applicable. 1 PART III Item 10. Directors, ExecXtive Of¿cers and Corporate Governance Except as set forth below, the information required by this Item 10 is incorporated into this report by reference to our proxy statement to be issued in connection with our 01 $nnual Meeting of Stockholders under the headings ³Election of Directors,´ ³Executive 2f¿cers,´ ³Corporate *overnance Principles and Board Matters´ and ³Section 1 a Bene¿cial 2wnership 5eporting Compliance,´ which proxy statement will be ¿led within 10 days after the year ended December , 01. We have adopted a Code of Business Conduct and Ethics that applies to our principal executive of¿cer, principal ¿nancial of¿cer, principal accounting of¿cer or controller or persons performing similar functions. 2ur Code of Business Conduct and Ethics also applies to all of our other employees and, as set forth therein, to our directors. 2ur Code of Business Conduct and Ethics is posted on our website at www.ir.newmediainv.com under Investor 5elations/Corporate *overnance. We intend to satisfy any disclosure requirements pursuant to Item .0 of Form -. regarding any amendment to, or a waiver from, certain provisions of our Code of Business Conduct and Ethics by posting such information on our website under Investor 5elations/Corporate *overnance. Item 11. ExecXtive Compensation 7he information required by this Item 11 is incorporated into this report by reference to our proxy statement to be issued in connection with our 01 $nnual Meeting of Stockholders, under the headings ³Compensation Discussion and $nalysis,´ ³Compensation Committee 5eport´ and ³Compensation of Executive 2f¿cers,´ which proxy statement will be ¿led within 10 days after the year ended December , 01. Item 12. SecXrity Ownership of Certain Bene¿cial Owners and Management and Related Stockholder Matters Except as set forth below, the information required by this Item 1 is incorporated into this report by reference to our proxy statement to be issued in connection with our 01 $nnual Meeting of Stockholders, under the heading ³Common Stock 2wnership of Certain Bene¿cial 2wners and Management,´ which proxy statement will be ¿led within 10 days after the year ended December , 01. SecXrities AXthorized for IssXance Under ETXity Compensation Plans as of December 27, 2015 ETXity Compensation Plan Information NXmber of SecXrities Remaining Available for Weighted-Average FXtXre IssXance Under NXmber of SecXrities to Exercise Price ETXity Compensation be IssXed Upon Exercise of OXtstanding Plans (ExclXding of OXtstanding Options, Options, Warrants SecXrities ReÀected in Plan Category Warrants and Rights and Rights ColXmn (a)) (a) (b) (c) Equity compensation plans approved by security holders. . . — — 1,11,1 Equity compensation plans not approved by security holders . . — — — 7otals...... — 1,11,1 Item 13. Certain Relationships and Related Transactions, and Director Independence 7he information required by this Item 1 is incorporated into this report by reference to our proxy statement to be issued in connection with our 01 $nnual Meeting of Stockholders, under the headings ³5elated Person 7ransactions´ and ³Corporate *overnance Principles´ and ³Board Matters,´ which proxy statement will be ¿led within 10 days after the year ended December , 01. Item 14. Principal AccoXnting Fees and Services 7he information required by this Item 1 is incorporated into this report by reference to our proxy statement to be issued in connection with our 01 $nnual Meeting of Stockholders, under the heading ³Matters 5elating to the Independent 5egistered Public $ccounting Firm,´ which proxy statement will be ¿led within 10 days after the year ended December , 01. 1 PART IV Item 15. Exhibits and Financial Statement SchedXles a Documents ¿led as part of this report: 1 Financial Statements 7he ¿nancial statements required by this Item 1 are set forth in Part II, Item of this report. Financial Statement Schedules Schedule II—9aluation and Qualifying $ccounts. New Media Investment GroXp Inc. ValXation and QXalifying AccoXnts (In ThoXsands) Balance at Beginning of Charges to Charges to Balance at Description Period Earnings Other AccoXnts DedXctions End of Period Allowance for doXbtfXl accoXnts Year ended December , 01 ...... $ , $1, 0 $— $ 1 $ , Year ended December , 01 ...... $ $ , $— $ 11 1 $ , 7wo months ended December , 01 ...... $ — $ $— $— $ 7en months ended November , 01 ...... $ , $1, $— $ 1 1 $ , 0 Deferred tax valXation allowance Year ended December , 01 ...... $ 1 , $ ,0 $ 1 $— $11, Year ended December , 01 ...... $ 1,0 $ , $1, $— $1 , 7wo months ended December , 01 ...... $ 1, 1 $ ,1 $— $— $1,0 7en months ended November , 01 ...... $ , 1 $ , $ 0,1 $ 1 , $1, 1 1 $mounts are primarily related to the write off of fully reserved accounts receivable. $mount is primarily attributable to ¿nalization of tax attribute reduction adjustments from the cancellation of indebtedness. $mount is primarily related to the tax effects of the change in derivative value and is recorded in accumulated other comprehensive income loss . $mount primarily relates to the reduction of tax attributes related to the cancellation of indebtedness and other fresh start adjustments. $mount relates to a valuation allowance for a pension actuarial loss recorded in accumulated other comprehensive income loss . $ll other schedules are omitted because the conditions requiring their ¿ling do not exist, or because the required information is provided in the consolidated ¿nancial statements, including the notes thereto. 10 b Exhibits. 7he following Exhibits are ¿led as a part of this report: Exhibit No. Description .1 Share Purchase $greement, dated as of -anuary , 00, by and among SureWest Communications, as Seller, SureWest Directories and *ate+ouse Media, Inc., as Purchaser incorporated herein by reference to Exhibit .1 to *ate+ouse Media, Inc.’s Current 5eport on Form -., ¿led March 1, 00 . .$mended and 5estated $sset Purchase $greement, dated $pril 1, 00, by and among *annett Satellite Information Network, Inc., *annett 5iver States Publishing Corporation, Paci¿c and Southern Company, Inc., Federated Publications, Inc., Media West—*SI, Inc., Media West—*5S, Inc., as Sellers, and *ate+ouse Media Illinois +oldings, Inc., as Buyer, and *ate+ouse Media, Inc., as Buyer guarantor incorporated herein by reference to Exhibit .1 to *ate+ouse Media, Inc’s Current 5eport on Form -., ¿led May , 00 . .$sset Purchase $greement, dated $pril 1, 00, by and among *annett Satellite Information Network, Inc., Media West—*SI, Inc., as Sellers, *ate+ouse Media Illinois +oldings, Inc., as Buyer, and *ate+ouse Media, Inc., as Buyer guarantor incorporated herein by reference to Exhibit . to *ate+ouse Media, Inc’s Current 5eport on Form -., ¿led May , 00 . . Stock Purchase $greement dated as of -une , 01 by and among Dow -ones 9entures 9II, Inc., Dow -ones Local Media *roup, Inc., Newcastle Investment Corp. and Dow -ones Company, Inc. incorporated herein by reference to Exhibit . to New Media Investment *roup Inc.’s 5egistration Statement on Form 10/$ File No. 001-0 , ¿led November , 01 . . Debtors’ -oint Prepackaged Chapter 11 Plan incorporated herein by reference to Exhibit . to New Media Investment *roup Inc.’s 5egistration Statement on Form 10/$ File No. 001-0 , ¿led November , 01 . . Debtors’ Findings of Fact and Conclusions of Law and 2rder $pproving Debtors’ Disclosure Statement For, and Con¿rming, Debtors’ -oint Prepackaged Chapter 11 Plan incorporated herein by reference to Exhibit . to New Media Investment *roup Inc.’s 5egistration Statement on Form 10/$ File No. 001-0 , ¿led November , 01 . .$sset Purchase $greement, dated as of -uly , 01, among 7he Providence -ournal Company, as Seller, and LM* 5hode Island +oldings, Inc., as Buyer incorporated herein by reference to Exhibit .1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led September , 01 . .$sset Purchase $greement dated as of November 0, 01, by and among Cummings $cquisition, Inc. and the sellers party thereto incorporated by reference to Exhibit .1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led November , 01 . . $mendment to the $sset Purchase $greement, dated as of -anuary , 01, by and among Cummings $cquisition, Inc. and the sellers party thereto incorporated herein by reference to Exhibit . to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led -anuary 1, 01 . .10 $sset Purchase $greement dated as of February 1 , 01, by and among DB $cquisition, Inc. and the sellers party thereto incorporated by reference to Exhibit .1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led February , 01 . .11 $sset Purchase $greement dated as of -une , 01, by and among 7he Dispatch Printing Company, Consumer News Services, Inc., Dispatch Consumer Services, Inc. , *ate+ouse Media 2hio +oldings II, Inc. and *ate+ouse Media 2perating, LLC incorporated by reference to Exhibit .1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led -une 1, 01 . .1 Á$mended and 5estated Share Purchase $greement dated as of February , 01, by and among DB $cquisition, Inc., Las 9egas 5eview--ournal, Inc. fka DB Nevada +oldings, Inc and News Media Capital *roup LLC included herewith . .1 $mended and 5estated Certi¿cate of Incorporation of New Media Investment *roup Inc. incorporated herein by reference to Exhibit .1 to New Media Investment *roup Inc.’s 5egistration Statement on Form S-1/$ 5egistration No. -1 , ¿led -anuary 1, 01 . 11 Exhibit No. Description .$mended and 5estated Bylaws of New Media Investment *roup Inc. incorporated herein by reference to Exhibit . to New Media Investment *roup Inc.’s 5egistration Statement on Form S-1/$ 5egistration No. - 1 , ¿led -anuary 1, 01 . .1 Form of 5egistration 5ights $greement between New Media Investment *roup Inc. and 2mega $dvisors, Inc. incorporated herein by reference to Exhibit . to New Media Investment *roup Inc.’s 5egistration Statement on Form 10/$ File No. 001-0 , ¿led November , 01 . .*lobal Warrant Certi¿cate of New Media Investment *roup Inc. included in Exhibit 10.1 . .*lobal Warrant Certi¿cate of New Media Investment *roup Inc. amended included in Exhibit 10. . *10.1 Liberty *roup Publishing, Inc. Publisher’s Deferred Compensation Plan incorporated herein by reference to Exhibit 10. to *ate+ouse Media, Inc’s 5egistration Statement on Form S-1 5egistration No. -1 , ¿led -uly 1, 00 . *10. Liberty *roup Publishing, Inc. Executive Bene¿t Plan incorporated herein by reference to Exhibit 10. to *ate+ouse Media, Inc’s 5egistration Statement on Form S-1 5egistration No. -1 , ¿led -uly 1, 00 . *10. Liberty *roup Publishing, Inc. Executive Deferral Plan incorporated herein by reference to Exhibit 10. to *ate+ouse Media, Inc’s 5egistration Statement on Form S-1 5egistration No. -1 , ¿led -uly 1, 00 . 10. Form of Indemni¿cation $greement to be entered into by New Media Investment *roup Inc. with each of its executive of¿cers and directors incorporated herein by reference to Exhibit 10.11 to New Media Investment *roup Inc.’s 5egistration Statement on Form 10/$ File No. 001-0 , ¿led November , 01 . 10. License $greement, dated as of February , 00, by and between SureWest Communications and *ate+ouse Media, Inc. incorporated herein by reference to Exhibit 10.1 to *ate+ouse Media, Inc.’s Current 5eport on Form -. Items 1.01, .01, and .01 , ¿led March 1, 00 . 10.$mended and 5estated Credit $greement, dated as of February , 00, among *ate+ouse Media +oldco, Inc., as +oldco, *ate+ouse Media 2perating, Inc., as the Company, *ate+ouse Media Massachusetts I, Inc., *ate+ouse Media Massachusetts II, Inc., and EN+E $cquisition, LLC, as Subsidiary Borrowers, the Domestic Subsidiaries of +oldco from time to time Parties thereto, as *uarantors, the Lenders Parties thereto, *oldman Sachs Credit Partners L.P., as Syndication $gent, Morgan Stanley Senior Funding, Inc., and BM2 Capital Markets Financing, Inc., as co-documentation $gents and Cortland Products Corp., as successor to Wells Fargo Bank, as $dministrative $gent, Wachovia Capital Markets, LLC, as *oldman Sachs Credit Partners, L.P., *eneral Electric Capital Corporation and Morgan Stanley Senior Funding, Inc., as -oint Lead $rrangers and -oint Book 5unners incorporated herein by reference to Exhibit 10.1 to *ate+ouse Media, Inc.’s Current 5eport on Form -. Items 1.01, .0, and .01 , ¿led March 1, 00 . 10.$mended and 5estated Security $greement, dated as of February , 00, among *ate+ouse Media +oldco, Inc., as +oldco, *ate+ouse Media 2perating, Inc., as the Company, *ate+ouse Media Massachusetts I, Inc., *ate+ouse Media Massachusetts II, Inc., and EN+E $cquisition, LLC, as Subsidiary Borrowers, the Domestic Subsidiaries of +oldco from time to time Parties thereto, as *uarantors, and Wells Fargo Bank, as $dministrative $gent, Wachovia Capital Markets, LLC, as *oldman Sachs Credit Partners, L.P., *eneral Electric Capital Corporation and Morgan Stanley Senior Funding, Inc., as -oint Lead $rrangers and -oint Book 5unners incorporated herein by reference to Exhibit 10. to *ate+ouse Media, Inc.’s Current 5eport on Form -. Items 1.01, .0, and .01 , ¿led March 1, 00 . 10.$mended and 5estated Pledge $greement, dated as of February , 00, among *ate+ouse Media +oldco, Inc., as +oldco, *ate+ouse Media 2perating, Inc., as the Company, *ate+ouse Media Massachusetts I, Inc., *ate+ouse Media Massachusetts II, Inc., and EN+E $cquisition, LLC, as Subsidiary Borrowers, the Domestic Subsidiaries of +oldco from time to time Parties thereto, as *uarantors, and Wells Fargo Bank, as $dministrative $gent, for the several banks and other ¿nancial institutions as may from time to time becomes parties to such Credit $greement incorporated herein by reference to Exhibit 10. to *ate+ouse Media, Inc.’s Current 5eport on Form -. Items 1.01, .0, and .01 , ¿led March 1, 00 . 1 Exhibit No. Description 10. First $mendment to $mended and 5estated Credit $greement, dated as of May , 00, by and among *ate+ouse Media +oldco, Inc., as +oldco, *ate+ouse Media 2perating, Inc., as the Company, *ate+ouse Media Massachusetts I, Inc., *ate+ouse Media Massachusetts II, Inc. and EN+E $cquisition, LLC, as Subsidiary Borrowers, the Domestic Subsidiaries of +oldco from time to time Parties thereto, as *uarantors, the Lenders Parties thereto, and Wells Fargo Bank, as $dministrative $gent incorporated herein by reference to Exhibit .1 to *ate+ouse Media, Inc.’s Current 5eport on Form -., ¿led May 11, 00 . 10.10 Second $mendment to $mended and 5estated Credit $greement, dated as of February , 00 , by and among *ate+ouse Media +oldco, Inc., as +oldco, *ate+ouse Media 2perating, Inc., as the Company, *ate+ouse Media Massachusetts I, Inc., *ate+ouse Media Massachusetts II, Inc. and EN+E $cquisition, LLC, as Subsidiary Borrowers, the Domestic Subsidiaries of +oldco from time to time Parties thereto, as *uarantors, the Lenders Parties thereto, and Wells Fargo Bank, as $dministrative $gent incorporated herein by reference to Exhibit .1 to *ate+ouse Media, Inc.’s Current 5eport on Form -., ¿led February , 00 . *10.11 Employment $greement dated as of -anuary , 00 , by and among *ate+ouse Media, Inc., *ate+ouse Media 2perating Inc., and .irk Davis incorporated herein by reference to Exhibit 10.1 to *ate+ouse Media, Inc.’s Current 5eport on Form -., ¿led -anuary , 00 . *10.1 Form of amendment to Employment $greement for .irk Davis incorporated herein by reference to Exhibit 10. to *ate+ouse Media, Inc.’s $nnual 5eport on Form 10-., ¿led March , 01 . 10.1$gency Succession and $mendment $greement, dated as of March 0, 011 by and among *ate+ouse Media +oldco, Inc., *ate+ouse Media 2perating, Inc., *ate+ouse Media Massachusetts I, Inc., *ate+ouse Media Massachusetts II, Inc., EN+E $cquisition, LLC, each of those domestic subsidiaries of +oldco identi¿ed as a ³*uarantor´ on the signature pages of the Credit $greement, Wells Fargo Bank, N.$., successor-by-merger to Wachovia Bank, National $ssociation, as the resigning $dministrative $gent, and the Successor $gent incorporated herein by reference to Exhibit .1 to *ate+ouse Media, Inc.’s Current 5eport on Form -., ¿led $pril , 011 . 10.1 Credit $mendment, dated as of September , 01, by and among *ate+ouse Media +oldco, Inc. ³+oldco´ , *ate+ouse Media 2perating, Inc., *ate+ouse Media Massachusetts I, Inc., *ate+ouse Media Massachusetts II, Inc. and EN+E $cquisition, LLC, those subsidiaries of +oldco party hereto as *uarantors and the 5equired Lenders party hereto incorporated herein by reference to Exhibit . to *ate+ouse Media, Inc’s Current 5eport on Form -., ¿led September 11, 01 . 10.1 Warrant $greement dated as of November , 01 between New Media Investment *roup Inc. and $merican Stock 7ransfer 7rust Company, LLC incorporated herein by reference to Exhibit 10. to New Media Investment *roup Inc.’s 5egistration Statement on Form S-1 5egistration No. -1 , filed December 10, 01 . 10.1 Form of Management $greement between New Media Investment *roup Inc. and FI* LLC incorporated herein by reference to Exhibit 10. to New Media Investment *roup Inc.’s 5egistration Statement on Form 10 File No. 001-0 , ¿led September , 01 . 10.1 Contribution $greement dated November , 01 between Newcastle Investment Corp. and New Media Investment *roup Inc. incorporated herein by reference to Exhibit 10. to New Media Investment *roup Inc.’s 5egistration Statement on Form S-1 5egistration No. -1 , ¿led December 10, 01 . 10.1 Form of Cooperation $greement between Newcastle Investment Corp. and New Media Investment *roup Inc. incorporated herein by reference to Exhibit 10.0 to New Media Investment *roup Inc.’s 5egistration Statement on Form 10/$ File No. 001-0 , ¿led November , 01 . 10.1 Form of $ssignment $greement between Newcastle Investment Corp. and New Media Investment *roup Inc. incorporated herein by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s 5egistration Statement on Form 10/$ File No. 001-0 , ¿led November , 01 . 1 Exhibit No. Description 10.0 5evolving Credit, 7erm Loan and Security $greement, dated as of November , 01 by and among *ate+ouse Media, Inc., *ate+ouse Media Intermediate +oldco, Inc., certain wholly-owned subsidiaries of *ate+ouse Media Intermediate +oldco, Inc., PNC Bank, National $ssociation, as the administrative agent, Crystal Financial LLC, as term loan B agent, and each of the lenders party thereto incorporated herein by reference to Exhibit 10. to New Media Investment *roup Inc.’s 5egistration Statement on Form S-1 5egistration No. - 1 , ¿led December 10, 01 . 10.1 7erm Loan and Security $greement dated November , 01 by and among *ate+ouse Media, Inc., *ate+ouse Media Intermediate +oldco Inc., certain wholly-owned subsidiaries of *ate+ouse Media Intermediate +oldco, Inc., Mutual Quest Fund and each of the lenders party thereto incorporated herein by reference to Exhibit 10. to New Media Investment *roup Inc.’s 5egistration Statement on Form S-1 5egistration No. -1 , ¿led December 10, 01 . *10. New Media Investment *roup Inc. Nonquali¿ed Stock 2ption and Incentive $ward Plan incorporated herein by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led February , 01 . 10. $mended and 5estated Warrant $greement dated -anuary 1, 01 between New Media Investment *roup Inc. and $merican Stock 7ransfer Company, LLC incorporated herein by reference to Exhibit 10. to New Media Investment *roup Inc.’s 5egistration Statement on Form S-1/$ 5egistration No. -1 , ¿led -anuary , 01 . *10. Form of New Media Investment *roup Inc. Non-2f¿cer Director 5estricted Stock *rant $greement incorporated herein by reference to Exhibit 10. to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led February , 01 . 10. $mended and 5estated Management $greement, dated as of February 1, 01, between New Media Investment *roup Inc. and FI* LLC incorporated by reference to Exhibit 10. of New Media Investment *roup Inc.’s $nnual 5eport on Form 10-., ¿led March 1 , 01 . *10. Form of Nonquali¿ed Stock 2ption $greement between New Media Investment *roup Inc. and Fortress 2perating Entity I LP incorporated by reference to Exhibit 10. of New Media Investment *roup Inc.’s $nnual 5eport on Form 10-., ¿led March 1 , 01 *10. Form of 7andem $ward $greement between New Media Investment *roup Inc. and FI* LLC incorporated by reference to Exhibit 10. of New Media Investment *roup Inc.’s $nnual 5eport on Form 10-., ¿led March 1 , 01 10. Credit $greement, dated as of -une , 01 among New Media +oldings I LLC, New Media +oldings II LLC, the several banks and other ¿nancial institutions or entities from time to time parties to this $greement, as the Lenders, 5BS Citizens, N.$. and Credit Suisse Securities US$ LLC, as -oint Lead $rrangers and -oint Bookrunners, Credit Suisse $*, Cayman Islands Branch, as Syndication $gent, and Citizens Bank of Pennsylvania, together with any successor appointed in accordance with Section . of the Credit $greement, as $dministrative $gent incorporated by reference to Exhibit 10.0 to New Media Investment *roup Inc.’s Quarterly 5eport on Form 10-Q for the period ended -une , 01, ¿led -uly 1, 01 . 10. Pledge $greement, dated as of -une , 01 among New Media +oldings II LLC, New Media +oldings I LLC, each of the subsidiary guarantors from time to time party thereto and Citizens Bank of Pennsylvania, in its capacity as $dministrative $gent incorporated by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Quarterly 5eport on Form 10-Q for the period ended -une , 01, ¿led -uly 1, 01 . 10.0 *uarantee $greement, dated as of -une , 01 made by New Media +oldings I LLC, each of the other guarantors party thereto in favor of Citizens Bank of Pennsylvania, as $dministrative $gent incorporated by reference to Exhibit 10. to New Media Investment *roup Inc.’s Quarterly 5eport on Form 10-Q for the period ended -une , 01, ¿led -uly 1, 01 . 1 Exhibit No. Description 10.1 Security $greement, dated as of -une , 01 among New Media +oldings I LLC, New Media +oldings II LLC, each of the subsidiary guarantors from time to time party thereto and Citizens Bank of Pennsylvania, in its capacity as $dministrative $gent incorporated by reference to Exhibit 10. to New Media Investment *roup Inc.’s Quarterly 5eport on Form 10-Q for the period ended -une , 01, ¿led -uly 1, 01 . 10. $mendment to Credit $greement, dated as of -uly 1, 01 between Citizens Bank of Pennsylvania, New Media +oldings II LLC and New Media +oldings I LLC incorporated by reference to Exhibit 10. to New Media Investment *roup Inc.’s Quarterly 5eport on Form 10-Q for the period ended -une , 01, ¿led -uly 1, 01 . 10. First $mendment to Credit $greement, dated as of September , 01, among New Media +oldings I LLC, New Media +oldings II LLC, the loan parties party thereto, the several banks and other ¿nancial institutions or entities party thereto as incremental term lenders, and Citizens Bank of Pennsylvania, as administrative agent incorporated by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led September , 01 . 10. Second $mendment to Credit $greement, dated as of November 0, 01, among New Media +oldings I LLC, New Media +oldings II LLC, the loan parties party thereto, the lenders party thereto, and Citizens Bank of Pennsylvania, as administrative agent incorporated by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led November , 01 . 10. Parent *uaranty, dated as of November 0, 01, among New Media Investment *roup Inc., New Media +oldings I LLC and the sellers party thereto incorporated by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led November , 01 . 10. 7hird $mendment to Credit $greement, dated as of -anuary , 01, among New Media +oldings I LLC, New Media +oldings II LLC, the loan parties party thereto, the several banks and other ¿nancial institutions or entities party thereto as incremental term lenders, the revolving credit lenders and Citizens Bank of Pennsylvania, as administrative agent incorporated herein by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led -anuary 1, 01 . 10. Fourth $mendment to Credit $greement, dated as of February 1, 01, among New Media +oldings I LLC, New Media +oldings II LLC, the loan parties party thereto, the term loan lenders, the other lenders party thereto and Citizens Bank of Pennsylvania, as administrative agent incorporated by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led February 0, 01 . 10. Parent *uaranty, dated as of February 1 , 01, among New Media Investment *roup Inc., New Media +oldings I LLC and the sellers party thereto incorporated by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led February , 01 . 10. $mended and 5estated Management and $dvisory $greement, dated March , 01, between New Media Investment *roup Inc. and FI* LLC. incorporated by reference to Exhibit 10. to New Media Investment *roup Inc.’s $nnual 5eport on Form 10-., ¿led March , 01 . 10.0 Fifth $mendment to Credit $greement, dated as of March , 01, among New Media +oldings I LLC, New Media +oldings II LLC, the loan parties party thereto, +SBC Bank US$, National $ssociation and Deutsche Bank $* New York Branch as additional lenders and Citizens Bank of Pennsylvania, as administrative agent incorporated by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led March 1, 01 . 10.1 Sixth $mendment to Credit $greement, dated as of May , 01, among New Media +oldings I LLC, New Media +oldings II LLC, the loan parties party thereto, the several banks and other ¿nancial institutions party thereto as the incremental term lenders and Citizens Bank of Pennsylvania, as administrative agent incorporated by reference to Exhibit 10.1 to New Media Investment *roup Inc.’s Current 5eport on Form -., ¿led -une , 01 . **1 Subsidiaries of New Media Investment *roup Inc. included herewith . 1 Exhibit No. Description ** Consent of Ernst Young LLP included herewith . **1.1 5ule 1a-1 a /1d-1 d Certi¿cation of Principal Executive 2f¿cer under the Securities Exchange $ct of 1 included herewith . **1.5ule 1a-1 a /1d-1 d Certi¿cation of Principal Financial 2f¿cer under the Securities Exchange $ct of 1 included herewith . **.1 Section 10 Certi¿cation included herewith . **. Section 10 Certi¿cation included herewith . ** 101.INS ;B5L Instance Document ** 101.SC+;B5L 7axonomy Extension Schema ** 101.C$L ;B5L 7axonomy Extension Calculation Linkbase ** 101.DEF ;B5L 7axonomy Extension De¿nition Linkbase ** 101.L$B ;B5L 7axonomy Extension Label Linkbase ** 101.P5E ;B5L 7axonomy Extension Presentation Linkbase * $sterisks identify management contracts and compensatory plans or arrangements. ** Furnished electronically herewith. Á Schedules have been omitted pursuant to Item 01 b of 5egulation S-.. New Media hereby undertakes to supplementally furnish copies of any of the omitted schedules upon request by the SEC. 1 SIGNATURES Pursuant to the requirements of Section 1 or 1 d of the Securities Exchange $ct of 1 , the 5egistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NEW MEDIA INVESTMENT GROUP INC. By: /s/ MICHAEL E. REED Michael E. Reed Chief ExecXtive Of¿cer February , 01 Pursuant to the requirements of the Securities Exchange Act of 1 , this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. SignatXre Title Date /s/ WESLEY R. EDENS February , 01 Chairman of the Board Wesley R. Edens /s/ MICHAEL E. REED Chief Executive 2f¿cer and Director February , 01 Michael E. Reed Principal Executive 2f¿cer /s/ GREGORY W. F REIBERG Chief Financial Of¿cer and Chief Accounting Of¿cer February , 01 Gregory W. Freiberg Principal Financial and Accounting Of¿cer /s/ KEVIN M. SHEEHAN Director February , 01 Kevin M. Sheehan /s/ THEODORE P. JANULIS Director February , 01 Theodore P. -anXlis /s/ LAURENCE TARICA Director February , 01 LaXrence Tarica Exhibit 21 List of SXbsidiaries of New Media Investment GroXp Inc. As of -anXary 1, 2016 Name of Entity State of Organization AdUs, Inc. Nevada Arizona News, LLC Delaware CA Alabama Holdings, Inc. Delaware CA Daytona Holdings, Inc. Delaware CA Florida Holdings, Inc. Delaware CA Louisiana Holdings, Inc. Delaware CA Massachusetts Holdings, Inc. Delaware CA North Carolina Holdings, Inc. Delaware CA South Carolina Holdings, Inc. Delaware Chapel Hill Publishing Co, Inc. North Carolina Copley Ohio Newspapers, Inc. Illinois Cummings Acquisition, Inc. Delaware Daily Journal of Commerce, Inc. Delaware Daily Reporter Publishing Company Delaware DB Acquisition, Inc. Delaware DB Arkansas Holdings, Inc. Delaware DB Iowa Holdings, Inc. Delaware DB North Carolina Holdings, Inc. Delaware DB Oklahoma Holdings, Inc. Delaware DB Tennessee Holdings, Inc. Delaware DB Texas Holdings, Inc. Delaware DB Washington Holdings, Inc. Delaware Dolan DLN, LLC Delaware Dolan Media Holding Company Delaware Dolco Acquisition, Inc. Delaware ENHE Acquisition, LLC Delaware Enterprise NewsMedia, LLC Delaware Enterprise NewsMedia Holding, LLC Delaware Enterprise Publishing Company, LLC Delaware Finance and Commerce, Inc. Minnesota GateHouse Media Intermediate Holdco, LLC. Delaware GateHouse Media Holdco, LLC. Delaware GateHouse Media Operating, LLC. Delaware GateHouse Media, LLC. Delaware GateHouse Media Massachusetts I, Inc. Delaware GateHouse Media Massachusetts II, Inc. Delaware GateHouse Media Arkansas Holdings, Inc. Delaware GateHouse Media California Holdings, Inc. Delaware GateHouse Media Colorado Holdings, Inc. Delaware GateHouse Media Connecticut Holdings, Inc. Delaware GateHouse Media Corning Holdings, Inc. Nevada GateHouse Media Delaware Holdings, Inc. Delaware GateHouse Media Directories Holdings, Inc. Delaware GateHouse Media Florida Holdings, Inc. Delaware GateHouse Media Freeport Holdings, Inc. Delaware GateHouse Media Illinois Holdings, Inc. Delaware GateHouse Media Illinois Holdings II, Inc. Delaware GateHouse Media Iowa Holdings, Inc. Delaware GateHouse Media Kansas Holdings, Inc. Delaware GateHouse Media Kansas Holdings II, Inc. Delaware GateHouse Media Lansing Printing, Inc. Delaware GateHouse Media Louisiana Holdings, Inc. Delaware GateHouse Media Macomb Holdings, Inc. Delaware GateHouse Media Management Services, Inc. Delaware Name of Entity State of Organization GateHouse Media Michigan Holdings, Inc. Delaware GateHouse Media Michigan Holdings II, Inc. Delaware GateHouse Media Minnesota Holdings, Inc. Delaware GateHouse Media Missouri Holdings, Inc. Delaware GateHouse Media Missouri Holdings II, Inc. Delaware GateHouse Media Nebraska Holdings, Inc. Delaware GateHouse Media New York Holdings, Inc. Delaware GateHouse Media North Dakota Holdings, Inc. Delaware GateHouse Media Ohio Holdings, Inc. Delaware GateHouse Media Ohio Holdings II, Inc. Delaware GateHouse Media Oklahoma Holdings, Inc. Delaware GateHouse Media Pennsylvania Holdings, Inc. Delaware GateHouse Media Suburban Newspapers, Inc. Delaware GateHouse Media Tennessee Holdings, Inc. Delaware GateHouse Media Texas Holdings, Inc. Delaware GateHouse Media Texas Holdings II, Inc. Delaware GateHouse Media Virginia Holdings, Inc. Delaware George W. Prescott Publishing Company, LLC Delaware Idaho Business Review, LLC Idaho Lawyers Weekly, LLC Delaware Liberty SMC, L.L.C. Delaware LMG Maine Holdings, Inc. Delaware LMG Massachusetts, Inc. Massachusetts LMG National Publishing, Inc. Delaware LMG Rhode Island Holdings, Inc. Delaware LMG Stockton, Inc Delaware Local Media Group Holdings, LLC. Delaware Local Media Group, Inc. Delaware Long Island Business News, LLC Delaware Low Realty, LLC Delaware LRT Four Hundred, LLC Delaware Mineral Daily News Tribune, Inc. West Virginia New Media Holdings I, LLC Delaware New Media Holdings II, LLC Delaware New Orleans Publishing Group, L.L.C. Louisiana News Leader, Inc. Louisiana NOPG, L.L.C. Louisiana NWS Holdings Company, LLC Delaware Paci¿c Trading Company LLC. Delaware Pro Football Weekly LLC Delaware Propel Business Services, Inc. Delaware Seacoast Newspapers, Inc. New Hampshire SureWest Directories California Terry Newspapers, Inc. Iowa The Daily Record Company, LLC Delaware The Inquirer and Mirror, Inc. Massachusetts The Journal Record Publishing Co., LLC Delaware The Mail Tribune, Inc. Delaware The Nickel of Medford, Inc Oregon The NWS Company, LLC Delaware The Peoria Journal Star, Inc. Illinois Exhibit 23 Consent of Independent Registered PXblic AccoXnting Firm We consent to the incorporation by reference in the Registration Statement Form S- No. -00 of New Media Investment Group Inc. and in the related Prospectus of our reports dated February , 01, with respect to the consolidated ¿nancial statements and schedule of New Media Investment Group Inc., and the effectiveness of internal control over ¿nancial reporting of New Media Investment Group Inc. included in this Annual Report Form 10-K for the year ended December , 01. /s/ Ernst Young LLP New York, New York February , 01 Exhibit 31.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Michael E. Reed, certify that: 1. I have reviewed this Annual Report on Form 10-K of New Media Investment Group Inc.; . Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; . Based on my knowledge, the ¿nancial statements, and other ¿nancial information included in this report, fairly present in all material respects the ¿nancial condition, results of operations and cash Àows of the registrant as of, and for, the periods presented in this report; . The registrant’s other certifying of¿cer s and I are responsible for establishing and maintaining disclosure controls and procedures as de¿ned in Exchange Act Rules 1a-1 e and 1d-1 e and internal control over ¿nancial reporting as de¿ned in Exchange Act Rules 1a-1 f and 1d -1 f for the registrant and have: a Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b Designed such internal control over ¿nancial reporting, or caused such internal control over ¿nancial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of ¿nancial reporting and the preparation of ¿nancial statements for external purposes in accordance with generally accepted accounting principles; c Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d Disclosed in this report any change in the registrant’s internal control over ¿nancial reporting that occurred during the registrant’s most recent ¿scal quarter the registrant’s fourth ¿scal quarter in the case of an annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over ¿nancial reporting; and . The registrant’s other certifying of¿cer s and I have disclosed, based on our most recent evaluation of internal control over ¿nancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors or persons performing the equivalent functions : a All signi¿cant de¿ciencies and material weaknesses in the design or operation of internal control over ¿nancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report ¿nancial information; and b Any fraud, whether or not material, that involves management or other employees who have a signi¿cant role in the registrant’s internal control over ¿nancial reporting. Date: February , 01 /s/ MICHAEL E. REED Michael E. Reed Chief ExecXtive Of¿cer (Principal ExecXtive Of¿cer) Exhibit 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Gregory W. Freiberg, certify that: 1. I have reviewed this Annual Report on Form 10-K of New Media Investment Group Inc.; . Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; . Based on my knowledge, the ¿nancial statements, and other ¿nancial information included in this report, fairly present in all material respects the ¿nancial condition, results of operations and cash Àows of the registrant as of, and for, the periods presented in this report; . The registrant’s other certifying of¿cer s and I are responsible for establishing and maintaining disclosure controls and procedures as de¿ned in Exchange Act Rules 1a-1 e and 1d-1 e and internal control over ¿nancial reporting as de¿ned in Exchange Act Rules 1a-1 f and 1d -1 f for the registrant and have: a Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b Designed such internal control over ¿nancial reporting, or caused such internal control over ¿nancial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of ¿nancial reporting and the preparation of ¿nancial statements for external purposes in accordance with generally accepted accounting principles; c Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d Disclosed in this report any change in the registrant’s internal control over ¿nancial reporting that occurred during the registrant’s most recent ¿scal quarter the registrant’s fourth ¿scal quarter in the case of an annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over ¿nancial reporting; and . The registrant’s other certifying of¿cer s and I have disclosed, based on our most recent evaluation of internal control over ¿nancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors or persons performing the equivalent functions : a All signi¿cant de¿ciencies and material weaknesses in the design or operation of internal control over ¿nancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report ¿nancial information; and b Any fraud, whether or not material, that involves management or other employees who have a signi¿cant role in the registrant’s internal control over ¿nancial reporting. Date: February , 01 /s/ GREGORY W. F REIBERG Gregory W. Freiberg Chief Financial Of¿cer (Principal Financial Of¿cer) Exhibit 32.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) In connection with the Annual Report of New Media Investment Group Inc. the ³Company´ on Form 10-K for the ¿scal year ended December , 01 as ¿led with the Securities and Exchange Commission on the date hereof the ³Report´ , the undersigned certi¿es, pursuant to 1 U.S.C. Section 10, as adopted pursuant to Section 0 of the Sarbanes-Oxley Act of 00, that: 1 The Report fully complies with the requirements of Section 1 a or 1 d of the Securities Exchange Act of 1 ; and The information contained in the Report fairly presents, in all material respects, the ¿nancial condition and results of operations of the Company. /s/ MICHAEL E. REED Michael E. Reed Chief ExecXtive Of¿cer (Principal ExecXtive Of¿cer) FebrXary 25, 2016 Exhibit 32.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) In connection with the Annual Report of New Media Investment Group Inc. the ³Company´ on Form 10-K for the ¿scal year ended December , 01 as ¿led with the Securities and Exchange Commission on the date hereof the ³Report´ , the undersigned certi¿es, pursuant to 1 U.S.C. Section 10, as adopted pursuant to Section 0 of the Sarbanes-Oxley Act of 00, that: 1 The Report fully complies with the requirements of Section 1 a or 1 d of the Securities Exchange Act of 1 ; and The information contained in the Report fairly presents, in all material respects, the ¿nancial condition and results of operations of the Company. /s/ GREGORY W. F REIBERG Gregory W. Freiberg Chief Financial Of¿cer (Principal Financial Of¿cer) FebrXary 25, 2016 Performance Graph The following graph compares the cumulative total return for our common stock (stock price plus reinvested dividends) with the comparable return of three indices: S&P 500, Russell 2000, and a peer group index we selected. The graph assumes an investment of $100 in New Media’s common stock and in each of the indices on February 14, 2014, and that all dividends were reinvested. The past performance of New Media’s common stock is not an indication of future performance. NewNew Media Investment Group Inc. Total Return Performance 200 New Media Investment Group Inc. 180 S&P 500 Russell 2000 NEWM Old Peer Group Index* 160 NEWM New Peer Group Index** 140 Index Value 120 100 80 02/14/14 03/31/14 06/30/14 09/30/14 12/31/14 03/31/15 06/30/15 09/30/15 12/31/15 Period Ending Index 02/14/14 03/31/14 06/30/14 09/30/14 12/31/14 03/31/15 06/30/15 09/30/15 12/31/15 New Media Investment Group Inc. 100.00 117.34 110.23 132.31 190.72 195.51 148.65 130.88 167.91 S&P 500 100.00 102.07 107.42 108.63 113.99 115.07 115.39 107.96 115.56 Russell 2000 100.00 102.29 104.38 96.70 106.11 110.69 111.15 97.91 101.42 NEWM Old Peer Group Index* 100.00 110.91 109.75 93.79 110.51 113.02 108.35 92.19 95.05 NEWM New Peer Group Index** 100.00 111.73 110.54 93.92 109.83 109.64 105.05 89.51 93.31 *NEWM Old Peer Group Index includes Gannett Co. (GCI), Lee Enterprises Inc. (LEE), McClatchy Co. (MNI), New York Times Co. (NYT), E. W. Scripps Co. (SSP), Tribune Publishing Co. (TPUB), A. H. Belo Corporation (AHC), Meredith Corp. (MDP), Time Inc. (TIME) and Journal Communications Inc. (JRN) (Now historical). **NEWM New Peer Group Index includes Gannett Co. (GCI), Lee Enterprises Inc. (LEE), McClatchy Co. (MNI), New York Times Co. (NYT), E. W. Scripps Co. (SSP), Tribune Publishing Co. (TPUB), A. H. Belo Corporation (AHC), Meredith Corp. (MDP) Time Inc. (TIME) and Journal Media Group Inc (JMG). CORPORATE INFORMATION NEW MEDIA BUSINESS OVERVIEW* BOARD OF DIRECTORS PORTFOLIO OVERVIEW NEW MEDIA REACH Wesley R. Edens Chairman of the Board OF OUR DAILY OPERATE IN OVER 485 MARKETS NEWSPAPERS HAVE ACROSS 31 STATES Theodore P. Janulis BEEN PUBLISHED FOR (1) 100% Board Member MORE THAN 50 YEARS Kevin Sheehan Board Member (1) 560+ Laurence Tarica COMMUNITY (1) Board Member PUBLICATIONS Michael E. Reed REACH OVER 19 MILLION Board Member PEOPLE ON A WEEKLY BASIS (1) Member of Audit Committee, Nominating and 124 Corporate Governance Committee and Compensation Committee DAILY NEWSPAPERS CORPORATE OFFICERS Michael E. Reed 1,450+ Chief Executive Officer & President IN MARKET 485+ SERVE OVER RELATED Gregory W. Freiberg WEBSITES SALES 190K Chief Financial Officer & Chief Accounting Officer REPRESENTATIVES SMALL & MEDIUM BUSINESSES Kirk Davis DIGITAL MARKETING Chief Operating Officer SERVICES BUSINESS Cameron MacDougall Secretary CORPORATE HEADQUARTERS CUMULATIVE COMMON DIVIDENDS SINCE SPIN-OFF* New Media Investment Group Inc. 1345 Avenue of the Americas, 45th Floor New York, NY 10105 www.newmediainv.com $2.16 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM $1.83 Ernst & Young LLP Five Times Square New York, NY 10036-6530 $1.50 SHAREHOLDER SERVICES, TRANSFER AGENT AND REGISTRAR American Stock Transfer & Trust Company $1.17 6201 15th Avenue Brooklyn, NY 11219 $0.84 (800) 937-5449 STOCK EXCHANGE LISTING $0.54 New Media Investment Group Inc. is listed on the New York Stock Exchange (NYSE:NEWM) $0.27 INVESTOR INFORMATION SERVICES New Media Investment Group Inc. 1345 Avenue of the Americas, 45th Floor New York, NY 10105 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Tel: (212) 479-3160 Email: [email protected] *As of December 27, 2015. ANNUAL REPORT 1345 Avenue of the Americas, 45th Floor New York, NY 10105 (212) 479-3160 www.newmediainv.com