A.H. Belo Corp

A.H. Belo Corp details

A. H. Belo Corporation is the leading local news and information publishing company in Texas. The Company has a growing presence in emerging media and digital marketing, and maintains capabilities related to commercial printing, distribution and direct mail. A. H. Belo delivers news and information in innovative ways to a broad range of audiences with diverse interests and lifestyles.

Ticker:AHC
Employees: 2200

Filing

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form  10-Q þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended:
September
 30, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file no.   1-33741 DallasNews CORPORATION (Exact name of registrant as specified in its charter) Texas   38-3765318 (State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)     P. O. Box 224866 , Dallas , Texas 75222-4866   ( 214 )  977-7342 (Address of principal executive offices, including zip code)   (Registrant’s telephone number, including area code) Former name, former address and former fiscal year, if changed since last report. None Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Series A Common Stock, $0.01 par value DALN The Nasdaq Stock Market LLC Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes   þ      No  ¨   Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes   þ      No  ¨   Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.: Large Accelerated Filer:   ¨ Accelerated Filer:   ¨ Non-Accelerated Filer :   þ Smaller Reporting Company:   þ Emerging Growth Company   ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      Yes  ¨      No  þ Shares of Common Stock outstanding at
October
2
1
, 2022: 5,352,490 shares (consisting of 4,737,
772
shares of Series A Common Stock and 614,
718
shares of Series B Common Stock). Table of Contents DALLASNEWS CORPORATION FORM 10-Q TABLE OF CONTENTS     Page PART I Item 1. Financial Information   PAGE 3 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   PAGE 17 Item 4. Controls and Procedures   PAGE 23         PART II       Item 1. Legal Proceedings   PAGE 24 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   PAGE 24 Item 3. Defaults Upon Senior Securities   PAGE 24 Item 4. Mine Safety Disclosures   PAGE 24 Item 5. Other Information   PAGE 24 Item 6. Exhibits   PAGE 25 Signatures   PAGE 28 Exhibit Index   PAGE 29 DallasNews Corporation
Thir
d Quarter 2022 on Form 10-Q Table of Contents PA RT I Ite m 1. Financial Information DallasNews Corporation and Subsidiaries Consolidated Statements of Operations Three Months Ended
September
 30,
Nine
Months Ended
September
 30, In thousands, except share and per share amounts (unaudited) 2022
2021
2022 2021 Net Operating Revenue:
Advertising and marketing services $
17,525
$ 18,
1
01 $
51,246
$
53,471
Circulation
16,230
16,
157
48,57
6
48,272
Printing, distribution and other
3,933
4,053
11,726
12,051
Total net operating revenue
37,688
38,
311
111,548
113,794
Operating Costs and Expense:
Employee compensation and benefits
16,428
1
7
,1
3
1
49,642
53,194
Other production, distribution and operating costs
19,691
20,
04
1
5
8,
665
5
9,2
82
Newsprint, ink and other supplies
3,161
2,
439
8,059
7,158
Depreciation
699
1,0
18
2,127
3
,1
27
Amortization
—
— — 64
Loss
on sale/disposal of assets, net
—
30
—
29
Asset impairments
—
232
102
232
Total operating costs and expense
39,979
4
0,891
118,595
123,086
Operating loss
( 2,291 )
(
2,580
) (
7,047
) (
9,29
2 ) Other income
(loss)
, net
( 94 )
1,
827
(
4
8 )
4,694
Loss Before Income Taxes
( 2,385 )
(
753
)
( 7,095
) (
4,598
) Income tax provision
(benefit)
201
( 2,384 )
550
( 1,982 ) Net Income (
Loss
)
$
( 2,
586 )
$ 1,
631
$ (
7,645
) $ (
2,616
) Per Share Basis
Net income (
loss
)
Basic $
( 0.4
8
)
$ 0.
30
$ (
1.43
) $ ( 0.
4
9 ) Number of common shares used in the per share calculation:
Basic
5,352,490
5,352,490 5,352,490 5,352,490 See the accompanying Notes to the Consolidated Financial Statements.   ‎ DallasNews Corporation
Thir
d Quarter 2022 on Form 10-Q 3 Table of Contents DallasNews Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) Three Months Ended
September
 30,
Nine
Months Ended
September
 30, In thousands (unaudited) 2022
2021
2022 2021 Net
Income (Loss)
$
( 2,586 )
$ 1,
631
$ (
7,645
) $ (
2,616
) Other Comprehensive Income (Loss), Net of Tax:
Amortization of actuarial losses
130
360
39
1
1,080
Total other comprehensive income, net of tax
130
360
39
1
1,08
0 Total Comprehensive
Income (Loss)
$
( 2,456 )
$ 1,
991
$ (
7,254
) $ (
1
,5
36
) See the accompanying Notes to the Consolidated Financial Statements.   ‎ DallasNews Corporation
Thir
d Quarter 2022 on Form 10-Q 4 Table of Contents DallasNews Corporation and Subsidiaries Consolidated Balance Sheets   
September
 30, December 31, In thousands, except share amounts (unaudited)
2022
2021 Assets
Current assets:
Cash and cash equivalents
$
33,031
$ 32,439 Accounts receivable (net of allowance of $ 4
3
5 and $ 551 at
September
 30, 2022
and December 31, 2021, respectively)
13,256
16,012 Notes receivable
—
22,400 Inventories
1,844
2,192 Prepaids and other current assets
3,714
3,485 Total current assets
51,845
76,528 Property, plant and equipment, at cost
313,
583
312,979 Less accumulated depreciation
( 305,
773
) ( 304,157 ) Property, plant and equipment, net
7,810
8,822 Operating lease right-of-use assets
15,449
17,648 Deferred income taxes, net
186
257 Other assets
2,096
2,197 Total assets
$
77,386
$ 105,452 Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
$
4,62
3 $ 7,821 Accrued compensation and benefits
6,001
4,932 Other accrued expense
4,818
4,573 Contract liabilities
9,389
10,592 Total current liabilities
24,831
27,918 Long-term pension liabilities
9,546
14,275 Long-term operating lease liabilities
16,8
15
19,181 Other post-employment benefits
1,3
11
1,349 Other liabilities
15
8
152 Total liabilities
52,661
62,875 Shareholders’ equity:
Preferred stock, $ 0.01 par value; Authorized 2,000,000 shares; none issued
— — Common stock, $ 0.01 par value; Authorized 31,250,000 shares
Series A: issued 5,216,
208
and 5,216,045 shares at
September
 30, 2022 and December 31, 2021, respectively
52 52 Series B: issued 614,
747
and 614,910 shares at
September
 30, 2022 and December 31, 2021, respectively
6 6 Treasury stock, Series A, at cost; 478,465 shares held at
September
30, 2022 and December 31, 2021
( 13,443 ) ( 13,443 ) Additional paid-in capital
494,563 494,563 Accumulated other comprehensive loss
( 32,
0
15 ) ( 32,406 ) Accumulated deficit
( 424,438
) ( 406,195 ) Total shareholders’ equity
24,725
42,577 Total liabilities and shareholders’ equity
$
77,386
$ 105,452 See the accompanying Notes to the Consolidated Financial Statements. ‎ DallasNews Corporation
Thir
d Quarter 2022 on Form 10-Q 5 Table of Contents DallasNews Corporation and Subsidiaries Consolidated Statements of Shareholders’ Equity
Nine
Months Ended
September
30, 2022 and 2021 Common Stock
Treasury Stock Accumulated Shares
Shares Additional ‎ Other ‎ Paid-in Shares ‎ Comprehensive Accumulated In thousands, except share and per share amounts (unaudited) Series A
Series B Amount ‎ Capital ‎ Series A Amount ‎ Loss ‎ Deficit Total Balance at December 31, 2020 5,213,710  
617,245   $ 233   $ 494,389   ( 478,465 ) $ ( 13,443 ) $ ( 32,468 ) $ ( 402,303 ) $ 46,408  
Net loss —
— — — — — — (
2,616
) (
2,616
)
Other comprehensive income —
— — — — —
1,080
—
1,08
0 Conversion of Series B to Series A 2,03
5
( 2,03
5
) — — — — — — —
Dividends declared ($ 0.
48
per share) —
— — — — — — (
2,568
) (
2,568
)
Fractional shares paid out related to the reverse stock split —
— — ( 1 ) — — — — ( 1 )
Reduction of shares at par value related to the reverse stock split —
— ( 175 ) 175   — — — — —
Balance at
September
 30, 2021 5,215,74
5
615,21
0
$ 58   $ 494,563   ( 478,465 ) $ ( 13,443 ) $ ( 31,
38
8 ) $ ( 40
7,487
) $ 4
2,303
Balance at December 31, 2021 5,216,045  
614,910   $ 58   $ 494,563   ( 478,465 ) $ ( 13,443 ) $ ( 32,406 ) $ ( 406,195 ) $ 42,577  
Net loss —
— — — — — — (
7,645
) (
7,645
)
Other comprehensive income —
— — — — —
39
1
—
391
Conversion of Series B to Series A
163
(
163
) — — — — — — —
Dividends declared ($
1.98
per share) —
— — — — — — ( 1
0,598
) ( 1
0,598
) Balance at
September
 30, 2022 5,216,
208
614,
747
$ 58   $ 494,563   ( 478,465 ) $ ( 13,443 ) $ ( 32,
0
15 ) $ ( 4
24,438
) $
24,725
Three Months Ended
September
30, 2022 and 2021 Common Stock
Treasury Stock Accumulated Additional ‎ Other Shares
Shares ‎ Paid-in Shares ‎ Comprehensive Accumulated In thousands, except share and per share amounts (unaudited) ‎ Series A
‎ Series B Amount ‎ Capital ‎ Series A Amount ‎ Loss ‎ Deficit Total Balance at
June
3
0
, 2021 5,21
5
,7
4
0  
61
5
,2
1
5   $
58
 
$ 494,
563
  ( 478,465 ) $ ( 13,443 ) $ ( 3
1,74
8 ) $ ( 40
8,262
) $ 4
1
,1
68
  Net
income
—
— — — — — — 1,
631  
1,
631  
Other comprehensive income
—
— — — — — 360   — 360   Conversion of Series B to Series A
5  
(
5
)
— — — — — — — Dividends declared ($ 0.16 per share)
—
— — — — — — ( 856 ) ( 856 )
Balance at September
 30, 2021 5,215,74
5
 
615,21
0
  $ 58   $ 494,563   ( 478,465 ) $ ( 13,443 ) $ ( 31,
38
8 ) $ ( 40
7,487
) $ 4
2,303
  Balance at
June
3
0
, 2022 5,216,
103  
614,
852
  $ 58   $ 494,563   ( 478,465 ) $ ( 13,443 ) $ ( 32,
145
) $ ( 4
12,967
) $ 3
6,066
  Net loss
—
— — — — — — ( 2,
586
) ( 2,
586
) Other comprehensive income
—
— — — — — 13
0
  — 13
0
  Conversion of Series B to Series A
105  
(
10
5 ) — — — — — — — Dividends declared ($
1.6
6 per share)
—
— — — — — — ( 8
,88
5 ) (
8,8
85 ) Balance at
September
 30, 2022
5,216,208  
614,
747
  $ 58   $ 494,563   ( 478,465 ) $ ( 13,443 ) $ ( 32,
0
15 ) $ ( 4
24,438
) $
24,725
  See the accompanying Notes to the Consolidated Financial Statements.   ‎ DallasNews Corporation
Thir
d Quarter 2022 on Form 10-Q 6 Table of Contents DallasNews Corporation and Subsidiaries Consolidated Statements of Cash Flows
Nine
Months Ended
September
 30, In thousands (unaudited) 2022
2021 Operating Activities
Net loss $
( 7,645
)
$ (
2,616
) Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization
2,127
3
,1
91
Net periodic
costs and contributions related to employe
e benefit
plans
( 4,318 )
(
3,105
) Bad debt expense
165
10
6
Deferred income taxes
72
(
26
)
Loss
on sale/disposal of assets, net
—
29
Asset impairments
102
232
Changes in working capital and other operating assets and liabilities:
Accounts receivable
2,591
2,207
Inventories, prepaids and other current assets
119
( 663
) Other assets
101
401
Accounts payable
(
3,19
8 )
( 1,
562
) Compensation and benefit obligations
1,069
1,114
Other accrued expenses
225
( 3,137 )
Contract liabilities
( 1,203 )
( 757 )
Other post-employment benefits
(
5
8 )
(
5
4 ) Net cash used for operating activities
( 9,851
)
(
4
,64
0
) Investing Activities
Purchases of assets
( 1,359
) (
5
23 ) Sales of assets
—
1 Note payment received for asset sales
22,400
375 Net cash provided by (used for) investing activities
21,041
( 147 )
Financing Activities
Dividends paid
( 10,598
) (
2,568
) Fractional share payments related to the reverse stock split
—
( 1 ) Net cash used for financing activities
( 10,598
) (
2,569
) Net
increase (
decrease
)
in cash and cash equivalents
592
(
7,356
) Cash and cash equivalents, beginning of period
32,439
42,015 Cash and cash equivalents, end of period $
33,031
$ 3
4,659
Supplemental Disclosures
Income tax paid, net $
652
$ 693 Noncash investing and financing activities:
Dividends payable
856
856 See the accompanying Notes to the Consolidated Financial Statements.   DallasNews Corporation
Thir
d Quarter 2022 on Form 10-Q 7 Table of Contents DallasNews Corporation and Subsidiaries Notes to the Consolidated Financial Statements   Note 1: Basis of Presentation and Recently Issued Accounting Standards Description of Business.      DallasNews Corporation, formerly A. H. Belo Corporation, and its subsidiaries are referred to collectively herein as “DallasNews” or the “Company.” DallasNews was formed in February 2008 through a spin-off from its former parent company and is registered on The Nasdaq Stock Market LLC (Nasdaq trading symbol: DALN). DallasNews is the Dallas-based holding company of The Dallas Morning News and Medium Giant.  The Company operates The Dallas Morning News  ( dallasnews.com ), Texas’ leading newspaper and winner of nine Pulitzer Prizes, and various niche publications targeting specific audiences. These operations generate revenue from sales of advertising within the Company’s newspaper and digital platforms, subscriptions and retail sales of its newspapers, commercial printing and distribution services primarily related to national newspapers, and preprint advertising. In addition, the Company has a full-service agency, Medium Giant, with capabilities including strategy, creative and media management with a focus on strategic and digital marketing, and data intelligence that provide a measurable return on investment to its clients. Name Change and Stock Exchange Listing. The Company transferred its stock exchange listing from the New York Stock Exchange (“NYSE”) to The Nasdaq Stock Market LLC (“Nasdaq”) and changed its corporate name to DallasNews Corporation. The listing and trading of the Company’s Series A common stock on the NYSE ceased trading at market close on June 28, 2021, and began trading on Nasdaq at market open on June 29, 2021, under the ticker symbol “DALN.” Reverse Stock Split.     
In May 2021, at the Company’s 2021 annual meeting of shareholders, its shareholders approved a reverse stock split at a ratio of not less than one-for-three and not more than one-for-five , with the exact ratio to be determined by the Company’s board of directors. Following the annual meeting, the Company’s board of directors approved a one-for-four reverse stock split of its issued, outstanding and treasury shares of common stock, par value $ 0.01 per share, which became effective June 8, 2021. As a result, every four shares of the Company’s issued and outstanding Series A common stock and Series B common stock (and any such shares held in treasury) were converted into one share of Series A common stock and Series B common stock, respectively. All fractional shares were settled in cash in connection with the reverse stock split on June 9, 2021. The par value of the Series A and Series B common stock was not adjusted as a result of the reverse stock split and the Company reclassified an amount equal to the reduction in the number of Company shares at par value to additional paid-in capital. COVID-19 Pandemic.      Beginning in early 2020, the COVID-19 pandemic impacted, and may continue to impact, the Company’s customers, distribution partners, advertisers, production facilities, and third parties, and could result in additional loss of advertising revenue or supply chain disruption. If the pandemic were to affect a significant number of the workforce employed in printing operations, the Company may experience delays or be unable to produce, print and deliver its publications and other third-party print publications on a timely basis. The Company continues to evaluate for any future material impacts on its consolidated financial statements. Basis of Presentation.     The interim consolidated financial statements included herein are unaudited; however, they include adjustments of a normal recurring nature which, in the Company’s opinion, are necessary to present fairly the consolidated financial information as of and for the periods indicated in conformity with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim periods. All intercompany balances and transactions have been eliminated in consolidation. The Company consolidates its majority owned subsidiaries over which the Company exercises control. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. All dollar amounts presented herein, except share and per share amounts, are in thousands, unless the context indicates otherwise. Use of Estimates.     The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net operating revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. Areas where estimates are used include valuation allowances for doubtful accounts, fair value measurements, pension plan assets, pension and other post-employment benefit obligation assumptions, income taxes, leases, self-insured liabilities, and assumptions related to long-lived assets impairment review. DallasNews Corporation Third Quarter 2022 on Form 10-Q 8 Table of Contents Segment Presentation.         Based on the Company’s structure and organizational chart, the Company’s chief operating decision-maker (the “CODM”) is its Chief Executive Officer, Grant S. Moise. B ased on how the Company’s CODM makes decisions about allocating resources and assessing performance, the Company determined it has one reportable segment. New Accounting Pronouncements. The Financial Accounting Standards Board (“FASB”) issued the following accounting pronouncements and guidance, which may be applicable to the Company but have not yet become effective. In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance will be effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted. The Company currently anticipates adopting this ASU on January 1, 2023, using the modified retrospective approach and does not expect a material impact on its consolidated financial statements. Note 2: Revenue Revenue Recognition Revenue is recognized when obligations under the terms of a contract with our customer are satisfied. This occurs when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services, typically at contract price or determined by stand-alone selling price. The Company has an estimated allowance for credits, refunds and similar obligations. Sales tax collected concurrent with revenue-producing activities are excluded from revenue. Accounts receivable are reported net of a valuation reserve that represents an estimate of amounts considered uncollectible. The Company estimates the allowance for doubtful accounts based on historical write-off experience and the Company’s knowledge of the customers’ ability to pay amounts due. Accounts are written-off after all collection efforts fail; generally, after one year has expired. Expense for such uncollectible amounts is included in other production, distribution and operating costs. Credit terms are customary. The table below sets forth revenue disaggregated by revenue source. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Advertising and Marketing Services Print advertising $ 11,069 $ 11,236 $ 33,082 $ 34,727 Digital advertising and marketing services 6,456 6,865 18,164 18,744 Total $ 17,525 $ 18,101 $ 51,246 $ 53,471 Circulation Print circulation $ 12,746 $ 13,661 $ 38,863 $ 41,455 Digital circulation 3,484 2,496 9,713 6,817 Total $ 16,230 $ 16,157 $ 48,576 $ 48,272 Printing, Distribution and Other $ 3,933 $ 4,053 $ 11,726 $ 12,051 Total Revenue $ 37,688 $ 38,311 $ 111,548 $ 113,794 Advertising and Marketing Services Print advertising is comprised of display, classified and preprint advertising revenue. Display revenue results from sales of advertising space within the Company’s core newspapers and niche publications to local, regional or national businesses with local operations, affiliates or resellers. Classified revenue, which includes automotive, real estate, employment, obituaries and other, results from sales of advertising space in the classified and other sections of the Company’s newspapers. DallasNews Corporation Third Quarter 2022 on Form 10-Q 9 Table of Contents
Preprint revenue results from sales of preprinted advertisements or circulars inserted into the Company’s core newspapers, niche publications, and distributed to publications in other markets, or distributed by mail or third-party distributors to households in targeted areas in order to provide total market coverage for advertisers. The Company’s capabilities allow its advertisers to target preprint distribution selectively at the sub-zip code level in order to optimize coverage for the advertisers’ locations. Preprint advertising also includes other services revenue related to the Company’s niche publications. Digital advertising and marketing services revenue consists of strategic marketing management, consulting, creative services, targeted and multi-channel (programmatic) advertising placed on third-party websites, digital sales of banner, classified and native advertisements on the Company’s news and entertainment-related websites and mobile apps, social media management, search optimization, direct mail and the sale of promotional materials. Advertising and marketing services revenue is primarily recognized at a point in time when the ad or service is complete and delivered, based on the customers’ contract price. Barter advertising transactions are recognized at estimated fair value based on the negotiated contract price and the range of prices for similar advertising from customers unrelated to the barter transaction. The Company expenses barter costs as incurred, which is independent from the timing of revenue recognition. In addition, certain digital advertising revenue related to website access is recognized over time, based on the customers’ monthly rate. The Company typically extends credit to advertising and marketing services customers, although for certain advertising campaigns the customer may pay in advance. For ads placed on certain third-party websites, the Company must evaluate and use judgment to determine whether it is acting as the principal, where revenue is reported on a gross basis, or acting as the agent, where revenue is reported on a net basis. Generally, the Company reports advertising revenue for ads placed on third-party websites on a net basis, meaning the amount recorded to revenue is the amount billed to the customer net of amounts paid to the publisher of the third-party website. The Company is acting as the agent because the publisher controls the advertising inventory. The Company will record certain arrangements gross when it has latitude in establishing price or it determines the placement of the ads as a value added service to the customer. Circulation Print circulation revenue is generated primarily by selling home delivery subscriptions, including premium publications, and from single copy sales to non-subscribers.
Home delivery revenue is recognized over the subscription period based on the days of actual delivery over the total subscription days
and single copy revenue is recognized at a point in time when the paper is purchased. Revenue is directly reduced for any non-payment for the grace period of home delivery subscriptions where the Company recorded revenue for newspapers delivered after a subscription expired. Digital circulation revenue is generated by digital-only subscriptions and is recognized over the subscription period based on daily or monthly access to the content in the subscription period. Payment of circulation fees is typically received in advance and deferred over the subscription period. There is little judgment required for valuation or timing of circulation revenue recognition. Printing, Distribution and Other Printing, distribution and other revenue is primarily generated from printing and distribution of other newspapers, as well as production of preprinted advertisements for other newspapers. Printing, distribution and other revenue is recognized at a point in time when the product or service is delivered, which requires little judgment to determine. The Company typically extends credit to printing and distribution customers.
‎ DallasNews Corporation Third Quarter 2022 on Form 10-Q 10 Table of Contents
Deferred Revenue Deferred revenue is recorded when cash payments are received in advance of the Company’s performance, including amounts which are refundable. The Company’s primary sources of deferred revenue are from circulation subscriptions and advertising paid in advance of the service provided.  These up-front payments are recorded upon receipt as contract liabilities in the Consolidated Balance Sheets and the revenue is recognized when the Company’s obligations under the terms of the contract are satisfied . In the three and
nine months ended September 30, 2022, the Company recognized $ 271 and $ 9,650
, resp ectively, of revenue that was included in the contract liabilities balance as of December 31, 2021. The Company typically recognizes deferred revenue within 1 to 12 months. Practical Expedients and Exemptions The Company generally expenses sales commissions and circulation acquisition costs when incurred because the amortization period would have been one year or less. These costs are recorded within employee compensation and benefits expense and other production, distribution and operating costs expense, respectively. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less and contracts for which revenue is recognized at the amount invoiced for services performed. Note 3: Leases Lease Accounting The Company has various operating leases primarily for office space and other distribution centers, some of which include escalating lease payments and options to extend or terminate the lease. The Company’s leases have remaining terms of less than 1 year to 12 years. The Company determines if a contract is a lease at the inception of the arrangement. Operating lease right-of-use assets and liabilities are recognized at commencement date of lease agreements greater than one year based on the present value of lease payments over the lease term. I n determining the present value of lease payments, the implicit rate was not readily determinable in the Company’s lease agreements. Therefore, the Company used an estimated secured incremental borrowing rate, based on the Company’s credit rating, adjusted for the weighted average term of each lease. Lease expense is recognized on a straight-line basis over the lease term and variable lease costs are expensed as incurred. For leases with terms of 12 months or less, no asset or liability is recorded and lease expense is recognized on a straight-line basis over the lease term. The exercise of lease renewal options are at the Company’s sole discretion and options are recognized when it is reasonably certain the Company will exercise the option. The recognized right-of-use assets and lease liabilities as calculated do not assume renewal options. The Company does not have lease agreements with residual value guarantees, sale leaseback terms or material restrictive covenants. Additionally, the Company does not separately identify lease and nonlease components, such as maintenance costs. The Company subleases office space in Dallas, Texas, with a remaining lease term of approximately one year . Additionally, the Company has various subleases with distributors, for distribution center space, with varying remaining lease terms of less than one year to two years and are cancellable with notice by either party.
The Company terminated the lease and sublease agreements for the office space of the Denton Publishing Company, resulting in a right-of-use asset impairment of $ 102 recorded in the second quarter of 2022. In the third quarter of 2021, the Company subleased office space in Dallas, Texas at a lower rate than the head lease, resulting in a right-of-use asset impairment of $ 232 . Sublease income is included in printing, distribution and other revenue in the Consolidated Statements of Operations. As of September 30, 2022, sublease income is expected to approximate $ 230 for the remainder of 2022, $ 640 in 2023, and $ 5 in 2024. As of September 30, 2022, the Company renewed three operating leases with lease terms of three years , which will result in a right-of-use asset and lease liability of approximately $ 810 in aggregate upon commencement in the first quarter of 2023. ‎ DallasNews Corporation Third Quarter 2022 on Form 10-Q 11 Table of Contents The table below sets forth supplemental Consolidated Balance Sheet information for the Company’s leases. Classification September 30, 2022 December 31, 2021 Assets Operating Operating lease right-of-use assets $ 15,449 $ 17,648 Liabilities Operating Current Other accrued expense $ 1,945 $ 2,430 Noncurrent Long-term operating lease liabilities 16,815 19,181 Total lease liabilities $ 18,760 $ 21,611 Lease Term and Discount Rate Operating leases Weighted average remaining lease term (years) 10.1 10.2 Weighted average discount rate (%) 7.7 7.5 The table below sets forth components of lease cost and supplemental cash flow information for the Company’s leases. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Lease Cost Operating lease cost $ 991 $ 1,075 $ 3,096 $ 3,226 Short-term lease cost 29 — 48 — Variable lease cost 156 194 496 518 Sublease income ( 257 ) ( 256 ) ( 898 ) ( 741 ) Total lease cost $ 919 $ 1,013 $ 2,742 $ 3,003 Supplemental Cash Flow Information Cash paid for operating leases included in operating activities $ 3,180 $ 3,249 Right-of-use assets obtained in exchange for operating lease liabilities 424 — The table below sets forth the remaining maturities of the Company’s lease liabilities as of September 30, 2022. Years Ending December 31, Operating Leases 2022 $ 697 2023 3,202 2024 2,348 2025 2,315 2026 2,366 Thereafter 16,719 Total lease payments 27,647 Less: imputed interest 8,887 Total lease liabilities $ 18,760 ‎ DallasNews Corporation Third Quarter 2022 on Form 10-Q 12 Table of Contents Note 4: Income Taxes The Company calculated the income tax provision (benefit) for the 2022 and 2021 interim periods using an estimated annual effective tax rate based on its expected annual loss before income taxes, adjusted for permanent differences, which it applied to the year-to-date loss before income taxes and specific events that are discretely recognized as they occur. The Company recognized an income tax provision (benefit) of $ 201 and $( 2,384 ) for the three months ended September 30, 2022 and 2021, respectively, and $ 550 and $( 1,982 ) for the nine months ended September 30, 2022 and 2021, respectively. Effective income tax rates were ( 7.8 ) percent and 43.1  percent for the nine months ended September 30, 2022 and 2021, respectively. The income tax provision for the three and nine months ended September 30, 2022, was due to the effect of the Texas franchise tax. The income tax benefit for the three and nine months ended September 30, 2021, was due to the release of $ 2,575 , included in other liabilities, for a federal uncertain tax reserve resulting from the statute of limitations lapsing in August 2021, partially offset by the effect of the Texas franchise tax. In connection with the release of a federal uncertain tax reserve, the Company released a reserve for interest included in other liabilities and recognized $ 548 in other income (loss), net in the three months ended September 30, 2021. The American Rescue Plan Act of 2021 (the “ARP Act”), was passed and signed into law on March 11, 2021, and was designed to speed up the United States’ economic recovery. The ARP Act contains many provisions, including direct cash payments to eligible taxpayers below specified income limits, extended unemployment insurance benefits, additional relief designed to prevent layoffs and business closures at small businesses, and pension relief provisions. The pension relief provisions include extending the interest rate relief passed in previous years, permanently adding a floor to funding interest rates, and permanently changing the amortization period for pension underfunding from 7 to 15 years. All provisions are required to be effective for plan years beginning in 2022, but plan sponsors can elect certain provisions to apply to plan years beginning as early as 2019. The Company benefited from the shortfall amortization relief provisions and the segment interest rate relief provisions contained in the ARP Act effective for the 2020 plan year. On August 9, 2022, the CHIPS and Science Act of 2022 (“the CHIPS Act”) was enacted and signed into law. The CHIPS Act is legislation that is designed to boost domestic semiconductor manufacturing and encourage US research activities through federal funding and tax credits that will not have a material impact on the Company’s consolidated financial statements. On August 16, 2022, the Inflation Reduction Act (the “Act”) was enacted and signed into law. The Act is a budget reconciliation package that includes significant law changes relating to tax, climate change, energy, and health care. The tax provisions include, among other items, a corporate alternative minimum tax of 15  percent, an excise tax of 1  percent on corporate stock buy-backs, energy-related tax credits, and additional IRS funding. The Company does not expect the tax provisions to have a material impact on its consolidated financial statements. Note 5: Pension and Other Retirement Plans Defined Benefit Plans. The Company sponsors the DallasNews Corporation Pension Plans (the “Pension Plans”), formerly the A. H. Belo Pension Plans, which provide benefits to approximately 1,350 current and former employees of the Company. DallasNews Pension Plan I provides benefits to certain current and former employees primarily employed with The Dallas Morning News or the DallasNews corporate offices. DallasNews Pension Plan II provides benefits to certain former employees of The Providence Journal Company. This obligation was retained by the Company upon the sale of the newspaper operations of The Providence Journal . No additional benefits are accruing under the DallasNews Pension Plans, as future benefits were frozen. No contributions are required to the DallasNews Pension Plans in 2022 under the applicable tax and labor laws governing pension plan funding. On August 31, 2022, the Company made a board approved voluntary contribution of $ 5,000 to the Pension Plans, reflected in long-term pension liabilities in the Consolidated Balance Sheet. Net Periodic Pension Expense (Benefit) The Company’s estimates of net periodic pension expense or benefit are based on the expected return on plan assets, interest on the projected benefit obligations and the amortization of actuarial gains and losses that are deferred in accumulated other comprehensive loss. Participation in and accrual of new benefits to participants has been frozen since 2007 and, accordingly, on-going service costs are not a component of net periodic pension expense (benefit). For 2022, b ased on the re-allocation of the Pension Plans’ assets, the Company assumed a lower rate of return on the assets resulting in net periodic pension expense. ‎ DallasNews Corporation Third Quarter 2022 on Form 10-Q 13 Table of Contents The table below sets forth components of net periodic pension expense (benefit), which are included in other income (loss), net in the Consolidated Statements of Operations. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Interest cost $ 1,328 $ 1,174 $ 3,983 $ 3,522 Expected return on plans' assets ( 1,237 ) ( 2,574 ) ( 3,711 ) ( 7,723 ) Amortization of actuarial loss 131 361 394 1,083 Net periodic pension expense (benefit) $ 222 $ ( 1,039 ) $ 666 $ ( 3,118 ) Defined Contribution Plans. The DallasNews Savings Plan (the “Savings Plan”), a defined contribution 401(k) plan, covers substantially all employees of DallasNews. Participants may elect to contribute a portion of their pretax compensation as provided by the Savings Plan and the Internal Revenue Code. Employees can contribute up to 100 percent of their annual eligible compensation less required withholdings and deductions up to statutory limits. The Company provides an ongoing dollar-for-dollar match of eligible employee contributions, up to 1.5 percent of the employees’ compensation. Aggregate expense for matching contributions to the Savings Plan was $ 178 and $ 175 for the three months ended September 30, 2022 and 2021, respectively, and $ 567 and $ 568 for the nine months ended September 30, 2022 and 2021, respectively. Note 6: Shareholders’ Equity Reverse Stock Split.     T he Company’s board of directors approved a one-for-four reverse stock split of its issued, outstanding and treasury shares of common stock, par value $ 0.01 per share, which became effective June 8, 2021. See Note 1 – Basis of Presentation and Recently Issued Accounting Standards for additional information. Dividends. On August 22, 2022 , the Company’s board of directors declared a special, one-time $ 1.50 per share dividend to shareholders of record as of the close of business on September 9, 2022 , which was paid on September 30, 2022 , returning $ 8,029 to shareholders. On September 22, 2022 , the Company’s board of directors declared a $ 0.16 per share dividend to shareholders of record as of the close of business on November 10, 2022 , which is payable on December 2, 2022 . Outstanding Shares. The Company had Series A and Series B common stock outstanding of 4,737,743 and 614,747 , respectively, net of treasury shares at September 30, 2022. At December 31, 2021, the Company had Series A and Series B common stock outstanding of 4,737,580 and 614,910 , respectively, net of treasury shares. Accumulated Other Comprehensive Loss. Accumulated other comprehensive loss consists of actuarial gains and losses attributable to the DallasNews Pension Plans, gains and losses resulting from Pension Plans’ amendments and other actuarial experience attributable to other post-employment benefit (“OPEB”) plans. The Company records amortization of the components of accumulated other comprehensive loss in other income (loss), net in its Consolidated Statements of Operations. Gains and losses are amortized over the weighted average remaining life expectancy of the OPEB plans and Pension Plans’ participants. ‎ DallasNews Corporation Third Quarter 2022 on Form 10-Q 14 Table of Contents The tables below set forth the changes in accumulated other comprehensive loss, net of tax, as presented in the Company’s consolidated financial statements. Three Months Ended September 30, 2022 2021 Defined Other post- Defined Other post- ‎ benefit pension ‎ employment ‎ benefit pension ‎ employment Total ‎ plans ‎ benefit plans Total ‎ plans ‎ benefit plans Balance, beginning of period $ ( 32,145 ) $ ( 32,222 ) $ 77 $ ( 31,748 ) $ ( 31,849 ) $ 101 Amortization 130 131 ( 1 ) 360 361 ( 1 ) Balance, end of period $ ( 32,015 ) $ ( 32,091 ) $ 76 $ ( 31,388 ) $ ( 31,488 ) $ 100 Nine Months Ended September 30, 2022 2021 Defined Other post- Defined Other post- ‎ benefit pension ‎ employment ‎ benefit pension ‎ employment Total ‎ plans ‎ benefit plans Total ‎ plans ‎ benefit plans Balance, beginning of period $ ( 32,406 ) $ ( 32,485 ) $ 79 $ ( 32,468 ) $ ( 32,571 ) $ 103 Amortization 391 394 ( 3 ) 1,080 1,083 ( 3 ) Balance, end of period $ ( 32,015 ) $ ( 32,091 ) $ 76 $ ( 31,388 ) $ ( 31,488 ) $ 100 Note 7: Earnings Per Share The table below sets forth the net income (loss) available to common shareholders and weighted average shares used for calculating basic earnings per share (“EPS”). The Company’s Series A and Series B common stock equally share in the distributed and undistributed earnings. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Earnings (Numerator) Net income (loss) available to common shareholders $ ( 2,586 ) $ 1,631 $ ( 7,645 ) $ ( 2,616 ) Shares (Denominator) Weighted average common shares outstanding (basic) 5,352,490 5,352,490 5,352,490 5,352,490 Income (Loss) Per Share Basic $ ( 0.48 ) $ 0.30 $ ( 1.43 ) $ ( 0.49 ) There were no options or RSUs outstanding as of September 30, 2022 and 2021, that would result in dilution of shares or the calculation of EPS under the two-class method as prescribed under ASC 260 – Earnings Per Share . Note 8: Contingencies Legal proceedings. From time to time, the Company is involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. Management routinely assesses the likelihood of adverse judgments or outcomes in these matters, as well as the ranges of probable losses to the extent losses are reasonably estimable. Accruals for contingencies are recorded when, in the judgment of management, adverse judgments or outcomes are probable and the financial impact, should an adverse outcome occur, is reasonably estimable. The determination of likely outcomes of litigation matters relates to factors that include, but are not limited to, past experience and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. Predicting the outcome of claims and litigation and estimating related costs and financial exposure involves substantial uncertainties that could cause actual results to vary materially from estimates and accruals. In the opinion of management, liabilities, if any, arising from other currently existing claims against the Company would not have a material adverse effect on DallasNews’ results of operations, liquidity or financial condition. DallasNews Corporation Third Quarter 2022 on Form 10-Q 15 Table of Contents Note 9: Disposal of Assets In May 2019, the Company finalized a Purchase and Sale Agreement with Charter DMN Holdings, LP (the “Purchaser”) for the sale of the real estate assets in downtown Dallas, Texas, previously used as the Company’s headquarters for a sale price of $ 28,000 and a pretax gain of $ 25,908 . The sale price consisted of $ 4,597 cash received, after selling costs of approximately $ 1,000 , and a two year seller-financed promissory note of $ 22,400 (the “Promissory Note”), included in current notes receivable in the December 31, 2021 Consolidated Balance Sheet . Effective June 30, 2022, the Company and the Purchaser entered into an agreement extending the maturity date of the Promissory Note to July 29, 2022 (the “Third Modification Agreement”). The unpaid, original principal balance of the Promissory Note accrued interest at the rate of 6.5  percent. On July 29, 2022, the Company was paid in full, receiving cash proceeds of $ 22,516 , including interest, due from the Purchaser under the Third Modification Agreement In the three months ended September 30, 2022 and 2021, the Company recorded $ 116 and $ 254 , respectively, and $ 616 and $ 774 in the nine months ended September 30, 2022 and 2021, respectively, of interest income related to the Promissory Note, included in other income (loss), net in the Consolidated Statements of Operations. Notes receivable are recorded net of an allowance for doubtful accounts. Interest income is accrued on the unpaid principal balance, included in accounts receivable in the Consolidated Balance Sheets. The Company puts notes receivable on non-accrual status and provides an allowance against accrued interest if it is determined the likelihood of collecting substantially all of the note and accrued interest is not probable. Notes are written-off against the allowance when all possible means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2021, there was no allowance recorded for the notes receivable or accrued interest receivable. ‎ DallasNews Corporation Third Quarter 2022 on Form 10-Q 16 Table of Contents It em 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations DallasNews Corporation (“DallasNews” or the “Company”) intends for the discussion of its financial condition and results of operations that follows to provide information that will assist in understanding its financial statements, the changes in certain key items in those statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect its financial statements. The following information should be read in conjunction with the Company’s consolidated financial statements and related notes filed as part of this report. All dollar amounts presented herein, except share and per share amounts, are in thousands, unless the context indicates otherwise.  This section and other parts of this Quarterly Report on Form 10-Q contain certain forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. See Forward-Looking Statements of this Quarterly Report for further discussion. OVERVIEW DallasNews Corporation, formerly A. H. Belo Corporation, and its subsidiaries are referred to collectively herein as “DallasNews” or the “Company.” DallasNews was formed in February 2008 through a spin-off from its former parent company and is registered on The Nasdaq Stock Market LLC (Nasdaq trading symbol: DALN). DallasNews is the Dallas-based holding company of The Dallas Morning News and Medium Giant.  The Company operates The Dallas Morning News  ( dallasnews.com ), Texas’ leading newspaper and winner of nine Pulitzer Prizes, and various niche publications targeting specific audiences. These operations generate revenue from sales of advertising within the Company’s newspaper and digital platforms, subscriptions and retail sales of its newspapers, commercial printing and distribution services primarily related to national newspapers, and preprint advertising. In addition, the Company has a full-service agency, Medium Giant, with capabilities including strategy, creative and media management with a focus on strategic and digital marketing, and data intelligence that provide a measurable return on investment to its clients. The Company transferred its stock exchange listing from the New York Stock Exchange (“NYSE”) to The Nasdaq Stock Market LLC (“Nasdaq”) and changed its corporate name to DallasNews Corporation. The listing and trading of the Company’s Series A common stock on the NYSE ceased trading at market close on June 28, 2021, and began trading on Nasdaq at market open on June 29, 2021, under the ticker symbol “DALN.” In May 2021, at the Company’s 2021 annual meeting of shareholders, its shareholders approved a reverse stock split at a ratio of not less than one-for-three and not more than one-for-five, with the exact ratio to be determined by the Company’s board of directors. Following the annual meeting, the Company’s board of directors approved a one-for-four reverse stock split of its issued, outstanding and treasury shares of common stock, par value $0.01 per share, which became effective June 8, 2021. As a result, every four shares of the Company’s issued and outstanding Series A common stock and Series B common stock (and any such shares held in treasury) were converted into one share of Series A common stock and Series B common stock, respectively. All fractional shares were settled in cash in connection with the reverse stock split on June 9, 2021. The par value of the Series A and Series B common stock was not adjusted as a result of the reverse stock split and the Company reclassified an amount equal to the reduction in the number of Company shares at par value to additional paid-in capital. Beginning in early 2020, the COVID-19 pandemic impacted, and may continue to impact, the Company’s customers, distribution partners, advertisers, production facilities, and third parties, and could result in additional loss of advertising revenue or supply chain disruption. If the pandemic were to affect a significant number of the workforce employed in printing operations, the Company may experience delays or be unable to produce, print and deliver its publications and other third-party print publications on a timely basis. The Company continues to evaluate for any future material impacts on its consolidated financial statements. Effective June 30, 2022, the Company and Charter DMN Holdings, LP (the “Purchaser”) entered into an agreement (the “Third Modification Agreement”) extending the maturity date of the promissory note of $22,400 (the “Promissory Note”), for the sale of the real estate assets previously used as the Company’s headquarters, to July 29, 2022. The unpaid, original principal balance of the Promissory Note accrued interest at the rate of 6.5 percent. On July 29, 2022, the Company was paid in full, receiving cash proceeds of $22,516, including interest, due from the Purchaser under the Third Modification Agreement. In the third quarter, the Company made a board approved voluntary contribution of $5,000 to the DallasNews Corporation Pension Plans (the “Pension Plans”) and its board declared a special, one-time $1.50 per share dividend, paid on September 30, 2022, returning $8,029 to shareholders. DallasNews Corporation Third Quarter 2022 on Form 10-Q 17 Table of Contents RESULTS OF OPERATIONS Consolidated Results of Operations (unaudited) This section contains discussion and analysis of net operating revenue, operating costs and expense and other information relevant to an understanding of results of operations for the three and nine months ended September
 30, 2022 and 2021. B ased on how the Company’s chief operating decision-maker makes decisions about allocating resources and assessing performance, the Company determined it has one reportable segment. The table below sets forth the components of the Company’s operating loss.
Three Months Ended
September 30, Nine Months Ended September 30, Percentage Percentage 2022 ‎ Change 2021 2022 ‎ Change 2021 Advertising and marketing services $ 17,525 (3.2) % $ 18,101 $ 51,246 (4.2) % $ 53,471 Circulation 16,230 0.5 % 16,157 48,576 0.6 % 48,272 Printing, distribution and other 3,933 (3.0) % 4,053 11,726 (2.7) % 12,051 Total Net Operating Revenue 37,688 (1.6) % 38,311 111,548 (2.0) % 113,794 Total Operating Costs and Expense 39,979 (2.2) % 40,891 118,595 (3.6) % 123,086 Operating Loss $ (2,291) 11.2 % $ (2,580) $ (7,047) 24.2 % $ (9,292) Traditionally, the Company’s primary revenues are generated from advertising within its core newspapers, niche publications and related websites and from subscription and single copy sales of its printed newspapers. As a result of competitive and economic conditions, the newspaper industry has faced a significant revenue decline over the past decade. Therefore, the Company has sought to diversify its revenues through development and investment in new product offerings, increased circulation rates and leveraging of its existing assets to offer cost efficient commercial printing and distribution services. The Company continually evaluates the overall performance of its core products to ensure existing assets are deployed adequately to maximize return. The Company’s advertising revenue from its core newspapers continues to be adversely affected by the shift of advertiser spending to other forms of media and the increased accessibility of free online news content, as well as news content from other sources, which resulted in declines in advertising and paid print circulation volumes and revenue. Decreases in print display and classified categories are indicative of continuing trends by advertisers towards digital platforms, which are widely available from many sources. In the current environment, companies are allocating more of their advertising spending towards programmatic channels that provide digital advertising on multiple platforms with enhanced technology for targeted delivery and measurement. In addition, the Company has experienced declines resulting from the COVID-19 pandemic
. In response to the decline in print revenue, the Company has developed agency capabilities, including strategy, creative and media management with a focus on strategic and digital marketing, and data intelligence that provide a measurable return on investment to its clients. The Company leverages its news content to improve engagement on the Company’s digital platforms that results in increased digital subscriptions and associated revenue. The Company also continues to diversify its revenue base by leveraging the available capacity of its existing assets to provide print and distribution services for newspapers and other customers requiring these services, by introducing new advertising and marketing services products, and by increasing circulation prices. Because of declining print circulation, the Company has developed broad digital strategies designed to provide readers with multiple platforms for obtaining online access to local news. The Company continues to obtain additional key demographic data from readers, which allows the Company to provide content desired by readers and to modify marketing and distribution strategies to target and reach audiences valued by advertisers. The Company has access to programmatic digital advertising platforms that provide digital ad placement and targeting efficiencies and increases utilization of digital inventory within the Company’s websites. Additionally, in order to optimize owned and operated digital advertising revenue, the Company has adopted a holistic yield management approach powered by real-time bidding technologies and data analysis to ensure the optimal mix of direct sales and programmatic ad sales is achieved. ‎ DallasNews Corporation
Thir
d Quarter 2022 on Form 10-Q 18 Table of Contents Advertising and marketing services revenue Advertising and marketing services revenue was 46.5 percent and 45.
9 percent of total revenue for the three and nine months ended September 30, 2022, respectively, and 47.2 percent and 47.0 percent of total revenue for the three and nine months ended September 30, 2021, respectively. Three Months Ended September 30, Nine Months Ended September 30, Percentage Percentage 2022 ‎ Change 2021 2022 ‎ Change 2021 Print advertising $ 11,069 (1.5) % $ 11,236 $ 33,082 (4.7) % $ 34,727 Digital advertising and marketing services 6,456 (6.0) % 6,865 18,164 (3.1) % 18,744 Advertising and Marketing Services $ 17,525 (3.2) % $ 18,101 $ 51,246 (4.2) % $ 53,471 Print advertising Print advertising is comprised of display, classified and preprint advertising revenue. Display and classified print revenue primarily represents sales of advertising space within the Company’s core and niche newspapers. Display and classified print revenue increased $176 and $553 in the three and nine months ended September 30, 2022, respectively, primarily due to volume increases in display and employment classified advertisements. Preprint revenue primarily reflects preprinted advertisements inserted into the Company’s core newspapers, niche publications, and distributed to publications in other markets, or distributed to non-subscribers through the mail. Preprint advertising also includes other services revenue related to the Company’s niche publications. Revenue decreased $343 and $2,198 in the three and nine months ended September 30, 2022, respectively, primarily due to a volume decline in preprinted advertisements and reduced advertiser spending. Digital advertising and marketing services Digital advertising and marketing services revenue consists of strategic marketing management, consulting, creative services, targeted and multi-channel (programmatic) advertising placed on third-party websites, digital sales of banner, classified and native advertisements on the Company’s news and entertainment-related websites and mobile apps, social media management, search optimization, direct mail and the sale of promotional materials. Revenue decreased $409 and $580 in the three and nine months ended September 30, 2022, respectively, primarily due to a decline in direct mail and the sale of promotional materials, partially offset by an increase in marketing services resulting from the start of new contracts. Circulation revenue Circulation revenue was 43.1 percent and 43.6 percent of total revenue for the three and nine months ended September 30, 2022, respectively, and 42.2 percent and 42.4 percent of total revenue for the three and nine months ended September 30, 2021, respectively. Three Months Ended September 30, Nine Months Ended September 30, Percentage Percentage 2022 ‎ Change 2021 2022 ‎ Change 2021 Print circulation $ 12,746 (6.7) % $ 13,661 $ 38,863 (6.3) % $ 41,455 Digital circulation 3,484 39.6 % 2,496 9,713 42.5 % 6,817 Circulation $ 16,230 0.5 % $ 16,157 $ 48,576 0.6 % $ 48,272 Print circulation Revenue decreased primarily driven by volume declines, partially offset by rate increases. Home delivery revenue decreased $722 or 5.8 percent in the three months ended September 30, 2022, and $2,089 or 5.5 percent in the nine months ended September 30, 2022. Single copy revenue decreased $193 or 16.8 percent in the three months ended September 30, 2022, and $503 or 14.0 percent in the nine months ended September 30, 2022. ‎ DallasNews Corporation Third Quarter 2022 on Form 10-Q 19 Table of Contents Digital circulation Revenue increased in the three and nine months ended September 30, 2022, due to an increase in digital-only subscriptions of approximately 7,088 or 12.4 percent when compared to September 30, 2021, reflecting the Company’s continued focus on growing its paid digital memberships and improving the member experience. Printing, distribution and other revenue Printing, distribution and other revenue was 10.4 percent and 10.5 percent of total revenue for the three and nine months ended September 30, 2022, respectively, and 10.6 percent and 10.6 percent of total revenue for the three and nine months ended September 30, 2021, respectively. Three Months Ended September 30, Nine Months Ended September 30, Percentage Percentage 2022 ‎ Change 2021 2022 ‎ Change 2021 Printing, Distribution and Other $ 3,933 (3.0) % $ 4,053 $ 11,726 (2.7) % $ 12,051 Revenue decreased in the three and nine months ended September 30, 2022, primarily due to a decline in revenue from mailed advertisements for business customers. Operating Costs and Expense The table below sets forth the components of the Company’s operating costs and expense. Three Months Ended September 30, Nine Months Ended September 30, Percentage Percentage 2022 ‎ Change 2021 2022 ‎ Change 2021 Employee compensation and benefits $ 16,428 (4.1) % $ 17,131 $ 49,642 (6.7) % $ 53,194 Other production, distribution and operating costs 19,691 (1.7) % 20,041 58,665 (1.0) % 59,282 Newsprint, ink and other supplies 3,161 29.6 % 2,439 8,059 12.6 % 7,158 Depreciation 699 (31.3) % 1,018 2,127 (32.0) % 3,127 Amortization — N/A — — (100.0) % 64 Loss on sale/disposal of assets, net — (100.0) % 30 — (100.0) % 29 Asset impairments — (100.0) % 232 102 (56.0) % 232 Total Operating Costs and Expense $ 39,979 (2.2) % $ 40,891 $ 118,595 (3.6) % $ 123,086 Employee compensation and benefits – T he Company continues to implement measures to optimize its workforce and evaluate strategies to reduce risk associated with future obligations for employee benefit plans. Employee compensation and benefits decreased $703 and $3,552 in the three and nine months ended September 30, 2022, respectively, primarily due to a reduction in medical expense. Other production, distribution and operating costs – Expense decreased $350 and $617 in the three and nine months ended September 30, 2022, respectively, primarily due to a decrease in distribution expense. Newsprint, ink and other supplies – Expense increased $722 and $901 in the three and nine months ended September 30, 2022, respectively. Competitive pricing is available under the Company’s p aper supply agreement ; however, the price of newsprint increased, partially offset by s avings from reduced newsprint costs associated with lower circulation volumes. Newsprint consumption for the three months ended September 30, 2022 and 2021, approximated 1,915 and 2,035 metric tons, respectively, and 5,705 and 6,298 metric tons for the nine months ended September 30, 2022 and 2021, respectively. Depreciation – Expense decreased $319 and $1,000 in the three and nine months ended September 30, 2022, respectively, due to a lower depreciable asset base as a higher level of in-service assets are now fully depreciated.
Amortization – Expense decreased due to all intangible assets being fully amortized in the first quarter of 2021. DallasNews Corporation
Third Quarter 2022 on Form 10-Q 20 Table of Contents Loss on sale/disposal of assets, net – T he Company disposed assets that were no longer in use and from time to time, the Company will sell disposed assets. Asset impairments – In the second quarter of 2022, the Company terminated the lease and sublease agreements for the office space of the Denton Publishing Company, resulting in a right-of-use asset impairment of $102. In the third quarter of 2021, the Company subleased office space in Dallas, Texas at a lower rate than the head lease, resulting in a right-of-use asset impairment of $232. Other The table below sets forth the other components of the Company’s results of operations. Three Months Ended September 30, Nine Months Ended September 30, Percentage Percentage 2022 ‎ Change 2021 2022 ‎ Change 2021 Other income (loss), net $ (94) (105.1) % $ 1,827 $ (48) (101.0) % $ 4,694 Income tax provision (benefit) $ 201 108.4 % $ (2,384) $ 550 127.7 % $ (1,982) Other income (loss), net – Other income (loss), net includes net periodic pension and other post-employment expense (benefit) of $227 and $(1,035) for the three months ended September 30, 2022 and 2021, respectively, and $682 and $(3,105) for the nine months ended September 30, 2022 and 2021, respectively. Interest income (expense) and gain (loss) from investments and are also included in other income (loss), net. In the three months ended September 30, 2022 and 2021, the Company recorded $116 and $254, respectively, and $616 and $774 in the nine months ended September 30, 2022 and 2021, respectively, of interest income related to the Promissory Note from the sale of the Company’s former headquarters. Income tax provision (benefit) – The Company recognized an income tax provision (benefit) of $201 and $(2,384) for the three months ended September 30, 2022 and 2021, respectively, and $550 and $(1,982) for the nine months ended September 30, 2022 and 2021, respectively. Effective income tax rates were (7.8) percent and 43.1 percent for the nine months ended September 30, 2022 and 2021, respectively. The income tax provision for the three and nine months ended September 30, 2022, was due to the effect of the Texas franchise tax. The income tax benefit for the three and nine months ended September 30, 2021, was due to the release of $2,575, included in other liabilities, for a federal uncertain tax reserve resulting from the statute of limitations lapsing in August 2021, partially offset by the effect of the Texas franchise tax. In connection with the release of a federal uncertain tax reserve, the Company released a reserve for interest included in other liabilities and recognized $548 in other income (loss), net in the three months ended September 30, 2021. Legal proceedings – From time to time, the Company is involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. Management routinely assesses the likelihood of adverse judgments or outcomes in these matters, as well as the ranges of probable losses to the extent losses are reasonably estimable. Accruals for contingencies are recorded when, in the judgment of management, adverse judgments or outcomes are probable and the financial impact, should an adverse outcome occur, is reasonably estimable. The determination of likely outcomes of litigation matters relates to factors that include, but are not limited to, past experience and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. Predicting the outcome of claims and litigation and estimating related costs and financial exposure involves substantial uncertainties that could cause actual results to vary materially from estimates and accruals. In the opinion of management, liabilities, if any, arising from other currently existing claims against the Company would not have a material adverse effect on DallasNews’ results of operations, liquidity or financial condition. ‎ DallasNews Corporation Third Quarter 2022 on Form 10-Q 21 Table of Contents Liquidity and Capital Resources The Company’s cash balances as of September 30, 2022 and December 31, 2021, were $33,031 and $32,439, respectively. The Company intends to hold the majority of existing cash for purposes of future investment opportunities, potential return of capital to shareholders and for contingency purposes. Although revenue is expected to continue to decline in future periods, cash flows and other expense reduction measures are expected to be sufficient to fund operating activities and capital spending. The future approval of dividends is dependent upon available cash after considering future operating and investing requirements and cannot be guaranteed. The Company continues to have a board-authorized repurchase authority. However, the agreement to repurchase the Company’s stock expired and was not renewed. The American Rescue Plan Act of 2021 (the “ARP Act”) was passed and signed into law on March 11, 2021, and was designed to speed up the United States’ economic recovery. The ARP Act contains many provisions, including direct cash payments to eligible taxpayers below specified income limits, extended unemployment insurance benefits, additional relief designed to prevent layoffs and business closures at small businesses, and pension relief provisions. The pension relief provisions include extending the interest rate relief passed in previous years, permanently adding a floor to funding interest rates, and permanently changing the amortization period for pension underfunding from 7 to 15 years. All provisions are required to be effective for plan years beginning in 2022, but plan sponsors can elect certain provisions to apply to plan years beginning as early as 2019. The Company benefited from the shortfall amortization relief provisions and the segment interest rate relief provisions contained in the ARP Act effective for the 2020 plan year. Effective June 30, 2022, the Company and Charter DMN Holdings, LP (the “Purchaser”) entered into an agreement (the “Third Modification Agreement”) extending the maturity date of the promissory note of $22,400 (the “Promissory Note”), for the sale of the real estate assets previously used as the Company’s headquarters, to July 29, 2022. The unpaid, original principal balance of the Promissory Note accrued interest at the rate of 6.5 percent. On July 29, 2022, the Company was paid in full, receiving cash proceeds of $22,516, including interest, due from the Purchaser under the Third Modification Agreement. The following discusses the changes in cash flows by operating, investing and financing activities. Operating Cash Flows Net cash used for operating activities for the nine months ended September 30, 2022 and 2021, was $9,851 and $4,640, respectively. Cash flows used for operating activities increased by $5,211 during the nine months ended September 30, 2022, when compared to the prior year period, primarily due to the board approved voluntary contribution of $5,000 to the Pension Plans made in the third quarter of 2022. Investing Cash Flows Net cash provided by (used for) investing activities was $21,041 and $(147) for the nine months ended September 30, 2022 and 2021, respectively. Cash flows from investing activities increased due to cash proceeds of $22,400, received in the third quarter of 2022, due under the Third Modification Agreement as discussed above. Cash flows from investing activities also included $1,359 and $523 of capital spending in 2022 and 2021, respectively. Financing Cash Flows Net cash used for financing activities was $10,598 and $2,569 for the nine months ended September 30, 2022 and 2021, respectively, primarily attributable to dividend payments. On August 22, 2022, the Company’s board of directors declared a special, one-time $1.50 per share dividend to shareholders of record as of the close of business on September 9, 2022, which was paid on September 30, 2022, returning $8,029 to shareholders. Financing Arrangements None. DallasNews Corporation Third Quarter 2022 on Form 10-Q 22 Table of Contents Contractual Obligations The Company has contractual obligations for operating leases, primarily for office space and other distribution centers, some of which include escalating lease payments. See Note 3 – Leases for future lease payments by year. Under the applicable tax and labor laws governing pension plan funding, no contributions to the DallasNews Pension Plans are required in 2022. On September 22, 2022, the Company’s board of directors declared a $0.16 per share dividend to shareholders of record as of the close of business on November 10, 2022, which is payable on December 2, 2022. Additional information related to the Company’s contractual obligations is available in Company’s Annual Report on Form 10 - K for the year ended December 31, 2021, filed on March 7, 2022, with the Securities and Exchange Commission (“SEC”). Critical Accounting Policies and Estimates No material changes were made to the Company’s critical accounting policies as set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2021. Forward-Looking Statements Statements in this communication concerning DallasNews Corporation’s business outlook or future economic performance, revenues, expenses, cash balance and other financial and non-financial items that are not historical facts are “forward-looking statements” as the term is defined under applicable federal securities laws. Words such as “anticipate,” “believe,” “could,” “estimate,” “intend,” “expect,” “may,” “project,” “plan,” “will,” “would” and their opposites and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. Such risks, trends and uncertainties are, in most instances, beyond the Company’s control, and include changes in advertising demand and other economic conditions; consumers’ tastes; newsprint prices; program costs; labor relations; cybersecurity incidents; technological obsolescence; and the current and future impacts of the COVID-19 pandemic. Among other risks, there can be no guarantee that the board of directors will approve a quarterly dividend in future quarters or that our financial projections are accurate, as well as other risks described in the Company’s Annual Report on Form 10-K and in the Company’s other public disclosures and filings with the Securities and Exchange Commission.
Forward-looking statements, which are as of the date of this filing, are not updated to reflect events or circumstances after the date of the statement. Ite m 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are controls that are designed to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, management is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. The Company’s management, with the participation of its Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, as of
September
 30, 2022, management concluded that the Company’s disclosure controls and procedures were effective. Changes in Internal Control Over Financial Reporting There have been no changes in the Company’s internal control over financial reporting that occurred during the
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d fiscal quarter ended
September
 30, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ‎ DallasNews Corporation
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d Quarter 2022 on Form 10-Q 23 Table of Contents PA RT II Ite m 1. Legal Proceedings A number of legal proceedings are pending against DallasNews. In the opinion of management, liabilities, if any, arising from these legal proceedings would not have a material adverse effect on DallasNews’ results of operations, liquidity or financial condition. I tem 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of the Company’s equity securities during the period covered by this report. Issuer Purchases of Equity Securities The Company continues to have a board-authorized repurchase authority. However, the agreement to repurchase the Company’s stock expired and was not renewed. Ite m 3. Defaults Upon Senior Securities None. Ite m 4. Mine Safety Disclosures None. Ite m 5. Other Information None. ‎ DallasNews Corporation
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d Quarter 2022 on Form 10-Q 24 Table of Contents Ite m 6. Exhibits Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by the Company with the SEC, as indicated. In accordance with Regulation S-T, the XBRL-related information marked with a double asterisk (**) in Exhibit No. 101 to this Quarterly Report on Form 10-Q is deemed filed. All other documents are filed with this report. Exhibits marked with a tilde (~) are management contracts, compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. Exhibit Number Description 3.1 * Certificate of Formation of A. H. Belo Corporation (successor to A. H. Belo Texas, Inc.)(Exhibit 3.1 to the April 23, 2018 Form 8-K) 3.2 * Certificate of Merger (Delaware) of A. H. Belo Corporation with and into A. H. Belo Texas, Inc. (Exhibit 3.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 2, 2018 (Securities and Exchange Commission File No. 001-33741) (the “July 2, 2018 Form 8-K”)) 3.3 * Certificate of Merger (Texas) of A. H. Belo Corporation with and into A. H. Belo Texas, Inc. (Exhibit 3.4 to the July 2, 2018 Form 8-K) 3.4 * Certificate of Amendment to Certificate of Formation effective June 8, 2021 (Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 8, 2021 (Securities and Exchange Commission File No. 001-33741)) 3.5 * Certificate of Amendment to Certificate of Formation (changing Company name to DallasNews Corporation) effective June 29, 2021 (Exhibit 3.1 to the Company’s Current Report of Form 8-K filed with the Securities and Exchange Commission on June 30, 2021 (Securities and Exchange Commission File No. 001-33741) (the “June 30, 2021 Form 8-K”)) 3.6 * Certificate of Correction to Certificate of Amendment (Exhibit 3.2 to the June 30, 2021 Form 8-K) 3.7 * Amended and Restated Bylaws of DallasNews Corporation (Exhibit 3.3 to the June 30, 2021 Form 8-K) 4.1 * Description of Capital Stock (Exhibit 4.1 to the July 2, 2018 Form 8-K) 4.2 * Specimen Form of Certificate representing shares of the Company’s Series A Common Stock (Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 26, 2021 (Securities and Exchange Commission File No. 001-33741) (the “2 nd Quarter 2021 Form 10-Q”)) 4.3 * Specimen Form of Certificate representing shares of the Company’s Series B Common Stock (Exhibit 4.3 to the 2 nd Quarter 2021 Form 10-Q) 10.1 * Material Contracts     (1) * Sublease Agreement for Old Dallas Library Building dated December 30, 2016 (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 3, 2017 (Securities and Exchange Commission File No. 001 - 33741) (the “January 3, 2017 Form 8-K”))     (2) * Guaranty of Lease dated December 30, 2016 (Exhibit 10.2 to the January 3, 2017 Form 8-K) (3) * Paper Supply Agreement effective as of August 5, 2019, by and between The Dallas Morning News, Inc. and Gannett Supply Corporation (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 6, 2019 (Securities and Exchange Commission File No. 001-33741)) (4) * Purchase and Sale Agreement effective as of May 17, 2019, by and between The Dallas Morning News, Inc. and Charter DMN Holdings, LP, together with related Promissory Note dated May 17, 2019, in the original principal amount of $22.4 million made by Charter DMN Holdings, LP, payable to The Dallas Morning News, Inc. (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2019 (Securities and Exchange Commission File No. 001-33741)) * (a) Modification Agreement effective April 1, 2020 to Promissory Note dated May 17, 2020 (Exhibit 10.1 to the April 6, 2020 Form 8-K) * (b) Promissory Note (Interest and Property Tax Reconciliation) effective April 1, 2020 (Exhibit 10.2 to the April 6, 2020 Form 8-K) * (c) Second Modification Agreement effective June 30, 2021 (Exhibit 10.1 to the June 30, 2021 Form 8-K) ‎ DallasNews Corporation
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d Quarter 2022 on Form 10-Q 25 Table of Contents Exhibit Number Description * (d) Third Modification Agreement effective June 30, 2022 (Exhibit 10.1 to DallasNews Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2022 (Securities and Exchange Commission File No. 001-33741)) 10.2 * Compensatory plans and arrangements:     ~(1)
* DallasNews Savings Plan as Amended and Restated Effective January 1, 2022 (Exhibit 10.2(1) to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 29, 2022 (Securities and Exchange Commission File No. 001-33741))
~(2) * A. H. Belo 2017 Incentive Compensation Plan (Exhibit I to A. H. Belo Corporation’s Schedule 14A Proxy Statement filed with the Securities and Exchange Commission on March 28, 2017) * (a) Form of A. H. Belo 2017 Incentive Compensation Plan Evidence of Grant (for Non-Employee Directors) (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2017 (Securities and Exchange Commission File No. 001-33741) (the “May 12, 2017 Form 8-K”)) * (b) Form of A. H. Belo 2017 Incentive Compensation Plan Evidence of Grant (for Employee Awards) (Exhibit 10.2 to the May 12, 2017 Form 8-K) * (c) First Amendment to the A. H. Belo 2017 Incentive Compensation Plan (Exhibit 10.1 to the July 2, 2018 Form 8-K) * (d) Second Amendment to the A. H. Belo 2017 Incentive Compensation Plan (Exhibit 10.3 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 11, 2018 (Securities and Exchange Commission File No. 001-33741)) * (e) Third Amendment to the A. H. Belo 2017 Incentive Compensation Plan (changing name of plan to the DallasNews 2017 Incentive Compensation Plan) (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2021 (Securities and Exchange Commission File No. 001-33741)) ~(3) * Form of A. H. Belo Cash Long-Term Incentive Compensation Evidence of Grant (for Employee Awards) (Exhibit 10.1 to the Company’s Annual Report on Form 10 - K filed with the Securities and Exchange Commission on March 14, 2019 (Securities and Exchange Commission File No. 001-33741)) ~(4) * Robert W. Decherd Compensation Agreement dated May 12, 2022 (Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2022 (Securities and Exchange Commission File No. 001-33741) (the “May 12, 2022 Form 8-K”)) ~(5) * Grant S. Moise Compensation Agreement dated May 12, 2022 (Exhibit 10.2 to the May 12, 2022 Form 8-K) ~(6) * Katy Murray Compensation Agreement dated May 12, 2022 (Exhibit 10.3 to the May 12, 2022 Form 8-K) 10.3 * Agreements relating to the separation of A. H. Belo from its former parent company: (1) * Pension Plan Transfer Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of October 6, 2010 (Exhibit 10.1 to the Company’s current Report on Form 8 - K filed with the Securities and Exchange Commission on October 8, 2010 (Securities and Exchange Commission File No. 001-33741)) (2) * Agreement among the Company, Belo Corp., and The Pension Benefit Guaranty Corporation, effective March 9, 2011 (Exhibit 10.3(6) to the Company’s Annual Report on Form 10 - K filed with the Securities and Exchange Commission on March 11, 2011 (Securities and Exchange Commission File No. 001 - 33741)) 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 32 Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 ‎ DallasNews Corporation
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d Quarter 2022 on Form 10-Q 26 Table of Contents Exhibit Number Description 101.INS ** Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH ** Inline XBRL Taxonomy Extension Schema Document 101.CAL ** Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF ** Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB ** Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE ** Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 ** Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) ‎ DallasNews Corporation
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d Quarter 2022 on Form 10-Q 27 Table of Contents SIG NATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.   DALLASNEWS CORPORATION      
  By: /s/ Katy Murray       Katy Murray       President and Chief Financial Officer       (Principal Financial Officer)       Dated: October 25, 2022         ‎ DallasNews Corporation Thir
d Quarter 2022 on Form 10-Q 28 Table of Contents EX HIBIT INDEX Exhibit Number Description 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 32 Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 101.INS ** Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH ** Inline XBRL Taxonomy Extension Schema Document 101.CAL ** Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF ** Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB ** Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE ** Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 ** Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) In accordance with Regulation S-T, the XBRL-related information marked with a double asterisk (**) in Exhibit No. 101 to this Quarterly Report on Form 10-Q is deemed filed.   DallasNews Corporation
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d Quarter 2022 on Form 10-Q 29