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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: September 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 October 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 Third 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 September 30,

Nine Months Ended September 30,

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

2020

2019

2020

2019

Net Operating Revenue:

Advertising and marketing services

$

17,474

$

21,616

$

52,392

$

70,957

Circulation

16,111

16,809

48,248

51,095

Printing, distribution and other

4,157

4,632

12,860

14,709

Total net operating revenue

37,742

43,057

113,500

136,761

Operating Costs and Expense:

Employee compensation and benefits

16,499

19,504

52,512

60,456

Other production, distribution and operating costs

19,307

21,171

58,958

67,200

Newsprint, ink and other supplies

2,476

3,972

8,018

12,741

Depreciation

1,753

2,289

5,320

7,008

Amortization

63

140

191

356

(Gain) loss on sale/disposal of assets, net

61

1,362

56

(24,546)

Asset impairments

1,593

1,593

Total operating costs and expense

40,159

50,031

125,055

124,808

Operating income (loss)

(2,417)

(6,974)

(11,555)

11,953

Other income, net

2,095

1,161

4,778

3,123

Income (Loss) Before Income Taxes

(322)

(5,813)

(6,777)

15,076

Income tax provision (benefit)

(224)

(1,808)

(1,644)

4,688

Net Income (Loss)

$

(98)

$

(4,005)

$

(5,133)

$

10,388

Per Share Basis

Net income (loss)

Basic and diluted

$

(0.00)

$

(0.19)

$

(0.24)

$

0.48

Number of common shares used in the per share calculation:

Basic and diluted

21,410,423

21,476,029

21,410,423

21,553,625

See the accompanying Notes to the Consolidated Financial Statements.

 

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


A. H. Belo Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended September 30,

Nine Months Ended September 30,

In thousands (unaudited)

2020

2019

2020

2019

Net Income (Loss)

$

(98)

$

(4,005)

$

(5,133)

$

10,388

Other Comprehensive Income (Loss), Net of Tax:

Amortization of actuarial losses

219

63

657

188

Total other comprehensive income, net of tax

219

63

657

188

Total Comprehensive Income (Loss)

$

121

$

(3,942)

$

(4,476)

$

10,576

See the accompanying Notes to the Consolidated Financial Statements.

 

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


A. H. Belo Corporation and Subsidiaries

Consolidated Balance Sheets

  

September 30,

December 31,

In thousands, except share amounts (unaudited)

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

43,174

$

48,626

Accounts receivable (net of allowance of $829 and $671 at September 30, 2020

and December 31, 2019, respectively)

15,174

18,441

Notes receivable

22,775

Inventories

2,062

2,573

Prepaids and other current assets

8,344

5,164

Total current assets

91,529

74,804

Property, plant and equipment, at cost

313,667

343,893

Less accumulated depreciation

(300,188)

(325,440)

Property, plant and equipment, net

13,479

18,453

Operating lease right-of-use assets

21,496

21,371

Intangible assets, net

128

319

Deferred income taxes, net

27

50

Long-term note receivable

22,400

Other assets

2,608

3,648

Total assets

$

129,267

$

141,045

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

5,792

$

6,103

Accrued compensation and benefits

6,835

7,407

Other accrued expense

5,778

5,930

Contract liabilities

14,860

12,098

Total current liabilities

33,265

31,538

Long-term pension liabilities

18,893

23,039

Long-term operating lease liabilities

22,555

23,120

Other post-employment benefits

1,322

1,347

Other liabilities

3,396

4,264

Total liabilities

79,431

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 September 30, 2020

and December 31, 2019, respectively

209

209

Series B: issued 2,469,083 and 2,469,308 shares at September 30, 2020

and December 31, 2019, respectively

24

24

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

(13,443)

(13,443)

Additional paid-in capital

494,389

494,389

Accumulated other comprehensive loss

(31,637)

(32,294)

Accumulated deficit

(399,706)

(391,148)

Total shareholders’ equity

49,836

57,737

Total liabilities and shareholders’ equity

$

129,267

$

141,045

See the accompanying Notes to the Consolidated Financial Statements.


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


A. H. Belo Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Nine Months Ended September 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

10,388

10,388

Other comprehensive income

188

188

Shares repurchased

(183,458)

(719)

(719)

Conversion of Series B to Series A

207

(207)

Dividends declared ($0.24 per share)

(5,148)

(5,148)

Balance at September 30, 2019

20,854,935

2,469,348

$

233 

$

494,389 

(1,880,828)

$

(13,320)

$

(37,453)

$

(388,342)

$

55,507

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

(5,133)

(5,133)

Other comprehensive income

657

657

Conversion of Series B to Series A

225 

(225)

Dividends declared ($0.16 per share)

(3,425)

(3,425)

Balance at September 30, 2020

20,855,200 

2,469,083 

$

233 

$

494,389 

(1,913,860)

$

(13,443)

$

(31,637)

$

(399,706)

$

49,836

Three Months Ended September 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 June 30, 2019

20,854,771 

2,469,512 

$

233 

$

494,389 

(1,828,983)

$

(13,128)

$

(37,516)

$

(382,625)

$

61,353 

Net loss

(4,005)

(4,005)

Other comprehensive income

63 

63 

Shares repurchased

(51,845)

(192)

(192)

Conversion of Series B to Series A

164 

(164)

Dividends declared ($0.08 per share)