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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2020

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file no. 1-33741

Picture 1

A. H. Belo Corporation

(Exact name of registrant as specified in its charter)

Texas

 

38-3765318

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

P. O. Box 224866, Dallas, Texas 75222-4866

 

(214977-7342

(Address of principal executive offices, including zip code)

 

(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report.

None

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Series A Common Stock, $0.01 par value

AHC

New York Stock Exchange

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:  þ

Non-Accelerated Filer:  ¨

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 July 22, 2020: 21,410,423 shares (consisting of 18,941,340 shares of Series A Common Stock and 2,469,083 shares of Series B Common Stock).


A. H. BELO 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 18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

PAGE 26

Item 4.

Controls and Procedures

 

PAGE 26

 

 

 

 

PART II 

 

 

Item 1.

Legal Proceedings

 

PAGE 28

Item 1A.

Risk Factors

 

PAGE 28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

PAGE 28

Item 3.

Defaults Upon Senior Securities

 

PAGE 28

Item 4.

Mine Safety Disclosures

 

PAGE 28

Item 5.

Other Information

 

PAGE 28

Item 6.

Exhibits

 

PAGE 29

Signatures

 

PAGE 32

Exhibit Index

 

PAGE 33

A. H. Belo Corporation Second Quarter 2020 on Form 10-Q


PART I

Item 1. Financial Information

A. H. Belo Corporation and Subsidiaries

Consolidated Statements of Operations

Three Months Ended June 30,

Six Months Ended June 30,

In thousands, except share and per share amounts (unaudited)

2020

2019

2020

2019

Net Operating Revenue:

Advertising and marketing services

$

15,591

$

25,300

$

34,918

$

49,341

Circulation

15,723

17,013

32,137

34,286

Printing, distribution and other

4,101

4,802

8,703

10,077

Total net operating revenue

35,415

47,115

75,758

93,704

Operating Costs and Expense:

Employee compensation and benefits

16,997

19,828

36,013

40,952

Other production, distribution and operating costs

18,659

23,845

39,651

46,029

Newsprint, ink and other supplies

2,271

4,022

5,542

8,769

Depreciation

1,802

2,333

3,567

4,719

Amortization

64

140

128

216

Gain on sale/disposal of assets, net

(25,908)

(5)

(25,908)

Total operating costs and expense

39,793

24,260

84,896

74,777

Operating income (loss)

(4,378)

22,855

(9,138)

18,927

Other income, net

1,331

1,133

2,683

1,962

Income (Loss) Before Income Taxes

(3,047)

23,988

(6,455)

20,889

Income tax provision (benefit)

367

7,460

(1,420)

6,496

Net Income (Loss)

$

(3,414)

$

16,528

$

(5,035)

$

14,393

Per Share Basis

Net income (loss)

Basic and diluted

$

(0.16)

$

0.77

$

(0.24)

$

0.67

Number of common shares used in the per share calculation:

Basic and diluted

21,410,423

21,525,971

21,410,423

21,578,014

See the accompanying Notes to the Consolidated Financial Statements.

 

A. H. Belo Corporation Second Quarter 2020 on Form 10-Q 3


A. H. Belo Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended June 30,

Six Months Ended June 30,

In thousands (unaudited)

2020

2019

2020

2019

Net Income (Loss)

$

(3,414)

$

16,528

$

(5,035)

$

14,393

Other Comprehensive Income (Loss), Net of Tax:

Amortization of actuarial losses

219

62

438

125

Total other comprehensive income, net of tax

219

62

438

125

Total Comprehensive Income (Loss)

$

(3,195)

$

16,590

$

(4,597)

$

14,518

See the accompanying Notes to the Consolidated Financial Statements.

 

A. H. Belo Corporation Second Quarter 2020 on Form 10-Q 4


A. H. Belo Corporation and Subsidiaries

Consolidated Balance Sheets

  

June 30,

December 31,

In thousands, except share amounts (unaudited)

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

42,310

$

48,626

Accounts receivable (net of allowance of $1,116 and $671 at June 30, 2020
and December 31, 2019, respectively)

13,019

18,441

Notes receivable

22,775

Inventories

3,060

2,573

Prepaids and other current assets

8,550

5,164

Total current assets

89,714

74,804

Property, plant and equipment, at cost

314,418

343,893

Less accumulated depreciation

(299,237)

(325,440)

Property, plant and equipment, net

15,181

18,453

Operating lease right-of-use assets

21,871

21,371

Intangible assets, net

191

319

Deferred income taxes, net

22

50

Long-term note receivable

22,400

Other assets

3,627

3,648

Total assets

$

130,606

$

141,045

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

4,903

$

6,103

Accrued compensation and benefits

5,733

7,407

Other accrued expense

6,359

5,930

Contract liabilities

14,012

12,098

Total current liabilities

31,007

31,538

Long-term pension liabilities

20,275

23,039

Long-term operating lease liabilities

23,051

23,120

Other post-employment benefits

1,330

1,347

Other liabilities

4,372

4,264

Total liabilities

80,035

83,308

Shareholders’ equity:

Preferred stock, $0.01 par value; Authorized 2,000,000 shares; none issued

Common stock, $0.01 par value; Authorized 125,000,000 shares

Series A: issued 20,855,200 and 20,854,975 shares at June 30, 2020
and December 31, 2019, respectively

209

209

Series B: issued 2,469,083 and 2,469,308 shares at June 30, 2020
and December 31, 2019, respectively

24

24

Treasury stock, Series A, at cost; 1,913,860 shares held at June 30, 2020 and December 31, 2019

(13,443)

(13,443)

Additional paid-in capital

494,389

494,389

Accumulated other comprehensive loss

(31,856)

(32,294)

Accumulated deficit

(398,752)

(391,148)

Total shareholders’ equity

50,571

57,737

Total liabilities and shareholders’ equity

$

130,606

$

141,045

See the accompanying Notes to the Consolidated Financial Statements.


A. H. Belo Corporation Second Quarter 2020 on Form 10-Q 5


A. H. Belo Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Six Months Ended June 30, 2020 and 2019

Common Stock

Treasury Stock

In thousands, except share amounts (unaudited)

Shares
Series A

Shares
Series B

Amount

Additional
Paid-in
Capital

Shares
Series A

Amount

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Total

Balance at December 31, 2018

20,854,728 

2,469,555 

$

233 

$

494,389 

(1,697,370)

$

(12,601)

$

(37,641)

$

(393,582)

$

50,798 

Net income

14,393

14,393

Other comprehensive income

125

125

Shares repurchased

(131,613)

(527)

(527)

Conversion of Series B to Series A

43

(43)

Dividends declared ($0.16 per share)

(3,436)

(3,436)

Balance at June 30, 2019

20,854,771

2,469,512

$

233 

$

494,389 

(1,828,983)

$

(13,128)

$

(37,516)

$

(382,625)

$

61,353

Balance at December 31, 2019

20,854,975 

2,469,308 

$

233 

$

494,389 

(1,913,860)

$

(13,443)

$

(32,294)

$

(391,148)

$

57,737 

Net loss

(5,035)

(5,035)

Other comprehensive income

438

438

Conversion of Series B to Series A

225 

(225)

Dividends declared ($0.12 per share)

(2,569)

(2,569)

Balance at June 30, 2020

20,855,200 

2,469,083 

$

233 

$

494,389 

(1,913,860)

$

(13,443)

$

(31,856)

$

(398,752)

$

50,571

Three Months Ended June 30, 2020 and 2019

Common Stock

Treasury Stock

In thousands, except share amounts (unaudited)

Shares
Series A

Shares
Series B

Amount

Additional
Paid-in
Capital

Shares
Series A

Amount

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Total

Balance at March 31, 2019

20,854,739 

2,469,544 

$

233 

$

494,389 

(1,780,899)

$

(12,941)

$

(37,578)

$

(397,437)

$

46,666 

Net income

16,528 

16,528 

Other comprehensive income

62 

62 

Shares repurchased

(48,084)

(187)

(187)

Conversion of Series B to Series A

32 

(32)

Dividends declared ($0.08 per share)

(1,716)

(1,716)

Balance at June 30, 2019