What changed in this filing

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Item 1A. Risk Factors

2023-12-08 compared with 2023-02-27 · 40 added, 61 removed, 119 unchanged (46% of the section changed)

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Risks Related to our Business and Operations

Our advertising revenues may decline due to weakness in the brick-and-mortar retail sector.

A significant portion of our revenue is derived from advertising.

The demand for advertising is sensitive to the overall level of economic strength, both in the markets in which we operate and nationally.

Also, the decline in the financial or economic conditions of our advertisers could alter discretionary spending by advertisers.

Certain segments of the economy have been challenged in recent years, particularly in the brick-and-mortar retail sector, and total advertising revenues have declined as a result.

Advertising revenues may worsen if advertisers reduce their budgets, shift their spending priorities, are forced to consolidate, or cease operations.

Our advertising revenues may decline due to weakness in the retail sector.

A significant portion of our revenue is derived from advertising and a decline in the financial or economic conditions of our advertisers could alter discretionary spending by those advertisers.

Our publications' and websites' advertisers are primarily retail businesses, which have been challenged in recent years by increased competition from online retailers.

This trend has reduced and may continue to reduce advertising revenue from the brick-and-mortar retail sector.

Specifically, advertising revenues may worsen if advertisers reduce their budgets, shift their spending priorities, are forced to consolidate, or cease operations.

Our ability to generate revenue is highly sensitive to the strength of the economies in which we operate and the demographics of the local communities that we serve.

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Uncertainty and adverse changes in the general economic conditions of markets in which we participate and increases in costs of raw materials, energy, labor and other factors may negatively affect our business.

markets have weakened recently and are experiencing uncertainty and volatility due to higher inflation, increased interest rates, the war in Ukraine, the ongoing recovery from the COVID-19 pandemic, and other geopolitical events.

In the past, these and other similar conditions have resulted in, and could lead to a tightening of credit and capital markets, lower levels of liquidity, lower consumer and business spending due to wavering of consumer confidence, unemployment, declines in real estate values, and other adverse economic conditions.

Our business and the companies with which we do business are subject risks and uncertainties caused by factors beyond our control.

Such factors include economic pressures related to high inflation, rising interest rates, economic weakness or recession, as well as geopolitical and public health events such as the wars in Ukraine and Israel, pandemics, and workforce expectations.

In the past, these and other similar conditions and events have resulted in, and could lead to a tightening of credit and capital markets, lower levels of liquidity, lower consumer and business spending, unemployment, declines in real estate values, increases in employee-related costs, and other adverse economic conditions.

These changes may negatively affect the sales of our products, increase exposure to losses from bad debts, increase the cost and decrease the availability of financing, or increase costs associated with publishing and distributing our publications.

In addition, printing and distribution costs, including the costs of paper and ink, are a significant expense for the Company.

We expect increases in these costs in the near-term from various factors, including increases in the cost of raw materials, energy, labor, transportation, and distribution, which can be attributed to inflation and other adverse factors on the economy.

We expect increases in these costs in the near-term from various factors, including increases in the cost of raw materials, energy, labor, transportation, and distribution, due to inflation and other adverse factors on the economy.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial results.

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As a public company, we are required to maintain effective internal controls for financial reporting and disclosure controls and procedures.

In particular, Section 404 of the Sarbanes-Oxley Act requires us to perform system and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting.

Compliance with Section 404 may

require us to incur substantial accounting expenses and expend significant management efforts.

In particular, Section 404 of the Sarbanes-Oxley Act requires us to perform system

and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting.

Compliance with Section 404 may require us to incur substantial accounting expenses and expend significant management efforts.

Our testing has revealed and in the future may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses.

In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner, the market price of our stock could decline if investors and others lose confidence in the reliability of our financial statements and we could be subject to sanctions or investigations by the SEC, NASDAQ, or other applicable regulatory authorities.

We have identified three material weaknesses in our internal control over financial reporting, which could result in loss of investor confidence in the Company and a negative impact on the value of our common stock.

We have identified a material weakness in our internal control over financial reporting, which could result in loss of investor confidence in the Company and a negative impact on the value of our common stock.

Management assessed the effectiveness of our internal control over financial reporting as of September 24, 2023, and concluded we did not maintain effective internal control over financial reporting.

Specifically, management identified three material weaknesses, including controls related to user access of our systems, information used by us in performing internal controls, and deferred taxes related to business combinations.

Management did not design and implement controls to assess the reliability of certain internally generated information, or evaluate information received from certain third-party service providers, that are relevant to certain revenue recognized in the Company’s consolidated financial statements.

For additional information, see Item 9A, "Controls and Procedures," below.

Until remediated, the material weaknesses could adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, which could negatively affect investor confidence in the Company and, in turn, the value of our common stock.

While certain actions have been taken and planned to remediate and address the material weaknesses and enhance our internal control over financial reporting, we cannot be certain such remedial measures will be successful or otherwise sufficient to address the material weaknesses.

In addition, if we are unable to remediate the material weaknesses, are otherwise unable to maintain effective internal control over financial reporting, or additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which, in addition to loss of investor confidence and a negative affect on the value of our common stock, could subject the Company to sanctions or investigations by the SEC, Nasdaq, or other regulatory authorities requiring additional financial and management resources to address.

Until remediated, the material weakness could adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, which could negatively affect investor confidence in the Company and, in turn, the value of our common stock.

In addition, if we are unable to remediate the material weakness, are otherwise unable to maintain effective internal control over financial reporting, or additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which, in addition to loss of investor confidence and a negative affect on the value of our common stock, could subject the Company to sanctions or investigations by the SEC, NASDAQ, or other regulatory authorities requiring additional financial and management resources to address.

The collectability of accounts receivable under adverse economic conditions could deteriorate to a greater extent than provided for in our financial statements and in our projections of future results.

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We compete with a large number of companies in the local media industry, including digital media businesses and, if we are unable to compete effectively, our advertising and subscription revenues may decline.

We compete for audiences and advertising revenue with newspapers and other media such as the internet, magazines, broadcast, cable and satellite television, radio, direct mail, outdoor billboards and yellow pages.

As the use of the internet and mobile devices has increased, we have lost some classified advertising and subscribers to online advertising businesses and our free Internet sites that contain abbreviated versions of our publications.

We compete for audiences and advertising revenue with newspapers and other media such as web-based digital platforms (e.g., Alphabet, Amazon, Meta, TikTok etc.), magazines, broadcast, cable and satellite television, radio, direct mail, and billboards.

As the use of the internet and mobile devices has increased, we have lost some classified advertising and subscribers to online advertising businesses and free Internet sites that contain abbreviated versions of our publications.

Some of our current and potential competitors have greater financial and other resources than we do.

If we fail to compete effectively with competing newspapers and other media, our results of operations may be materially adversely affected.

Risks Related to Takeover Attempts

Alden ’ s unsolicited proposal to acquire us diverted management ’ s attention and resources, caused us to incur substantial costs, and such actions have an adverse effect on our business.

On November 22, 2021, we received an unsolicited proposal from Alden Global Capital, LLC (with its affiliates, “Alden”) to acquire the Company for $24.00 per share in cash (the “Unsolicited Proposal”).

On December 9, 2021, we announced that our Board of Directors, in consultation with its independent financial and legal advisors, unanimously determined to reject the Unsolicited Proposal, as it significantly undervalued the Company and was not in the best interests of the Company and its stockholders.

The events surrounding the Unsolicited Proposal and related circumstances and our response have required, and may continue to require, significant time and attention by management and our Board of Directors and have required us, and may continue to require us, to incur significant legal and advisory fees and expenses.

Further, actions taken by Alden or other third parties as a result of the Unsolicited Proposal, including a proxy contest, and litigation by adverse parties, could disrupt our business, distract us from efforts to improve our business, cause us to incur substantial additional expense, create perceived uncertainties among current and potential employees, customers, clients, suppliers, and other constituencies as to our future direction as a consequence thereof that may result in lost sales or other business arrangements and the loss of potential business opportunities, and make it more difficult to attract and retain qualified personnel and business partners.

Actions that our Board of Directors have taken, and may take in the future, in response to any offer or other related actions by Alden or other third parties, including the Unsolicited Proposal and Alden’s purported notice of nominations in connection with our 2022 annual meeting of stockholders (which our Board of Directors determined was invalid for failing to comply with requirements of our by-laws), or any other offer or proposal may result in litigation against us.

In the event Alden or other third parties initiate litigation against us, these actions could harm our business and have a material adverse effect on our results of operations.

We also believe the future trading price of our Common Stock could be subject to wide price fluctuations based on uncertainty associated with the Unsolicited Proposal and any future offer.

Risks Related to our Acquisitions of BH Media and Buffalo News

On March 16, 2020, the Company completed the purchase of certain assets and the assumption of certain liabilities of the newspaper and related community publications business of BH Media and the purchase of all of the issued and outstanding capital stock of Buffalo News (collectively, the “Transactions”).

Under the terms of the Asset and Stock Purchase Agreement, dated January 29, 2020, with Berkshire Hathaway, Inc.

(“Berkshire”), and BH Media (the “Purchase Agreement”), the aggregate purchase price for the Transactions was $140 million, which excluded $12 million in cash at closing of the Transactions.

BH Finance, LLC (“BH Finance”), an affiliate

of Berkshire, financed the Purchase Agreement through a Credit Agreement, dated January 29, 2020 (the “Credit Agreement”).

The Company borrowed $576 million from BH Finance under the Credit Agreement in order to finance the Transactions and refinance its outstanding indebtedness.

We may not achieve the intended benefits of the BH Media and Buffalo News acquisition.

We completed the BH Media and Buffalo News acquisition in March 2020, and there can be no assurance that we will be able to realize the expected benefits of the transaction.

There are many challenges associated with integrating a material acquisition, such as our acquisition of BH Media and Buffalo News, including the integration of executive and other employee teams with historically different cultures and priorities;

the coordination of personnel located across multiple geographic locations;

retaining key management and other employees;

consolidating corporate and administrative infrastructures and eliminating duplicative operations;

the diversion of management’s attention from ongoing business concerns;

retaining existing business and operational relationships, including customers, suppliers and other counterparties, and attracting new business and operational relationships;

unanticipated issues in integrating information technology, communications and other systems;

as well as unforeseen expenses associated with the acquisition.

These and other challenges could result in unanticipated operational challenges and the failure to realize anticipated synergies in the expected timeframe or at all.

If we fail to realize anticipated synergies in the amount and within the timeframe expected, our actual financial condition and results of operations may differ materially from the illustrative unaudited financial information disclosed in connection with the acquisition, which was based on various assumptions and estimates that may prove to be incorrect.

Such illustrative unaudited financial information did not constitute management’s projections of future financial performance or results of operations;

however, any material variance from such illustrative unaudited financial information could result in negative investor reactions that materially and adversely affect the market price of our Common Stock.

Our actual financial condition and results of operations may differ materially even if synergies are realized, due to macroeconomic factors or a variety of other risks to our business that are independent of the acquisition.

Our future results will suffer if we do not effectively manage our expanded operations.

With the completion of the BH Media acquisition, the size of our business increased significantly.

Our continued success depends, in part, upon our ability to manage this expanded business, which poses substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.

We cannot assure that we will be successful or that we will realize the expected operating efficiencies, cost savings, and other benefits from the combination that we currently anticipate.

Risks Related to Liquidity and Capital

We may not be able to generate sufficient cash to service all our debt and may be forced to take other actions to satisfy our obligations under our debt, which may not be successful.

Risks Related to Our Indebtedness

Our Indebtedness could materially and adversely affect our business or financial condition.

Our current indebtedness, and any future debt incurred, could have significant consequences on our future operations, including making it more difficult to satisfy our debt obligations and meet our operational goals.

Our entire outstanding indebtedness is encompassed in a 25-year term loan ("Term Loan") with BH Finance LLC, a Nebraska limited liability company affiliated with Berkshire Hathaway, Inc.

("BH Finance"), which was part of a broader comprehensive refinancing of all of our then-outstanding debt, including a Credit Agreement, dated January 29, 2020 (collectively, the "2020 Refinancing").

At its inception, the aggregate principal amount and applicable interest rate of the Term Loan was $576.0 million and 9% annual rate, respectively, the proceeds of which were used to refinance our then-outstanding debt and fund the acquisition of BH Media and Buffalo News.

The Term Loan is collateralized by all Company assets.

Currently, the Term Note has an aggregate principal outstanding amount of $455.7 million.

Our ability to make scheduled payments depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, competitive, legislative, regulatory, and other factors beyond our control.

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We cannot assure investors we would be able to take any of these alternative actions, such actions would be permitted under the terms of the Credit Agreement, and, even if successful,, that such actions would permit us to meet our scheduled debt service obligations

If we cannot make scheduled payments on our debt, the subsequent default proceedings under the Credit Agreement could lead to all principal and interest becoming due and payable.

In addition, the 2020 Refinancing terms impose operating and financial restrictions, including restrictions on incurring additional indebtedness, creating certain liens, making certain investments or acquisitions, issuing dividends, repurchasing shares of Company stock, and engaging in other capital transactions.

A failure to satisfy out debt service obligations on the Term Loan could give rise to default.

Moreover, these restrictions limit our flexibility in planning for or reacting to changes in our business, the economy, in general, and the economies in which we operate, which, in turn increases our vulnerability to adverse financial consequences related to such changes.

A failure to satisfy our debt service obligations on the Term Loan could give rise to default and, in turn, the right of our lender to accelerate our indebtedness, making all principal and interest becoming due and payable.

Certain actions, including our ability to incur additional indebtedness, require the consent of our lenders and note holders which, if not provided, would limit our ability to take advantage of future opportunities.

The terms of the 2020 Refinancing, limit our ability to take certain actions without requisite lender approval and modification of the loan agreements.

These limitations include restrictions on incurring additional indebtedness, creating certain liens, making certain investments or acquisitions, issuing dividends, repurchasing shares of Company stock, and engaging in other capital transactions.

While we have an established relationship with BH Finance, whose priorities and interests are familiar to us, there is no assurance BH Finance will approve or consent to our activities, even if the activities are in the best interests of our stockholders.

If we are unable to secure the required consent of BH Finance, our ability to take advantage of future opportunities, including acquisition or financing opportunities, could be restricted.

Risks Related to Cybersecurity

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Additionally, 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 confidential information, including payment card (credit or debit) information, of our customers.

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 confidential 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.

A 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.

As 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, financial condition and results of operations.

As 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, financial condition and results of operations.

The coverage and limits of our insurance policies may not be adequate to reimburse us for losses caused by security breaches.

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Sustained increases in funding requirements of our pension and postretirement obligations may reduce the cash available for our business.

Pension plans were in a net underfunded position of $0.4 million at September 25, 2022, compared to an over funded position of $13.4 million at September 26, 2021.

Pension plans were in a net overfunded position of $10.3 million at September 24, 2023 compared to an underfunded position of $0.4 million at September 25, 2022.

Our pension and postretirement plans invest in a variety of equity and debt securities.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors