Newspaper Publisher A. H. Belo Corporation Reports Second Quarter 2010 Financial Results

July 26, 2010 at 8:02 AM EDT

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DALLAS, July 26, 2010 /PRNewswire via COMTEX/ -- Newspaper publisher A. H. Belo Corporation (NYSE: AHC) today reported a net loss of $0.01 per share for the second quarter of 2010 compared to a net loss of $0.34 per share in the second quarter of 2009. Consolidated EBITDA was $11.2 million, an increase of $3.4 million compared to the second quarter of 2009, and includes the following items: a $5.4 million gain on the sale of a parking garage in Providence, Rhode Island; a $1.2 million gain related to the reversal of an accrual for the modification of a service agreement; and a $2.5 million charge related to a legal settlement. Similar to the first quarter of 2010, consolidated EBITDA in the second quarter of 2010 includes an incremental pension charge. The second quarter charge was $5.5 million, and the Company anticipates $2.9 million of pension expense during the remainder of the year. When these four items are excluded, consolidated EBITDA in the second quarter of 2010 was $12.6 million, an increase of $4.8 million compared to the comparable and unadjusted consolidated EBITDA figure in the second quarter of 2009. Second quarter results include $4.6 million of bonus accrual, and the Company anticipates a total bonus expense of $5.0 to $6.0 million in 2010. The Company cancelled most non-sales bonuses in 2009.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, "Second quarter total revenue decreased 4.7 percent compared to 2009. This rate of decline is less than in the first quarter of 2010 and is the lowest year-to-year percent decline in more than two years. Unadjusted consolidated EBITDA increased 43.7 percent compared to the second quarter of 2009. Improvement in the Company's EBITDA was primarily driven by The Dallas Morning News."

"As of June 30, the Company had approximately $60 million of cash and cash equivalents, no borrowings outstanding under its bank credit facility, and remained in compliance with the bank covenants. We continue to manage the business to maximize operating cash flow over the long-term and monetize real estate in transactions that create value for shareholders at appropriate prices," Decherd said.

Operating Results

Total revenue was $121.6 million in the second quarter, a decrease of 4.7percent compared to the second quarter of 2009. The percent decline in total revenue was lowest at The Dallas Morning News, followed by The Providence Journal and The Press-Enterprise. Advertising revenue, including print and digital revenue, decreased 12.0 percent. Although digital revenue decreased 4.3 percent to $9.3 million, non-classified digital revenue increased 2.5 percent to $4.2 million. Due primarily to circulation pricing actions implemented in Dallas last year, circulation revenue increased 6.6 percent. Other revenue increased 35.0 percent.

Total consolidated operating expenses in the second quarter of 2010 were $126.1 million, a decrease of 4.5 percent compared to 2009. Excluding the impact of pension expense, legal settlement expense and the gain related to the reversal of an accrual, operating expenses in the second quarter of 2010 were $119.3 million, a decrease of 9.6 percent compared to 2009. The Company's newsprint expense in the second quarter of 2010 was $9.2 million, a decrease of 27.1 percent compared to 2009. In the second quarter of 2010, newsprint consumption decreased 3.8 percent and newsprint cost per metric ton decreased 24.3 percent compared to 2009. The average purchase price per metric ton for newsprint increased 1.3 percent in the second quarter of 2010 compared to 2009.

Newspaper EBITDA was $10.1 million in the second quarter, a decrease of $3.0 million compared to the second quarter of 2009. This decrease was primarily attributable to incremental pension, bonus and legal settlement expenses. Excluding pension and legal settlement expenses, newspaper EBITDA was $18.1 million, an increase of 38.2 percent; the newspaper EBITDA margin was 14.9 percent; and the newspaper EBITDA margin was highest at The Providence Journal, followed by The Dallas Morning News and The Press-Enterprise.

Corporate

In the second quarter of 2010, corporate and non-operating expenses, net of costs allocated to operating units, were $5.8 million, an increase of 2.6 percent compared to the second quarter of 2009.

Non-GAAP Financial Measures

Reconciliations of consolidated and newspaper EBITDA to net loss are included as exhibits to this release.

Financial Results Conference Call

AHC will conduct a conference call today at 1:00 p.m. CDT to discuss financial results. The conference call will be available via Webcast by accessing the Company's Web site (www.ahbelo.com/invest) or by dialing 1-800-230-1096 (USA) or 612-332-0418 (International). A replay line will be available at 800-475-6701 (USA) or 320-365-3844 (International) from 3:00 p.m. CDT on July 26 until 11:59 p.m. CDT on August 2, 2010. The access code for the replay is 163974.

About A. H. Belo Corporation

A. H. Belo Corporation (NYSE: AHC), headquartered in Dallas, Texas, is a distinguished newspaper publishing and local news and information company that owns and operates four daily newspapers and a diverse group of Web sites. A. H. Belo publishes The Dallas Morning News, Texas' leading newspaper and winner of nine Pulitzer Prizes since 1986; The Providence Journal, the oldest continuously-published daily newspaper in the U.S. and winner of four Pulitzer Prizes; The Press-Enterprise (Riverside, CA), serving southern California's Inland Empire region and winner of one Pulitzer Prize; and the Denton Record-Chronicle. The Company publishes various specialty publications targeting niche audiences, and its partnerships and/or investments include the Yahoo! Newspaper Consortium and Classified Ventures, owner of cars.com. A. H. Belo also owns direct mail and commercial printing businesses. Additional information is available at http://www.ahbelo.com/ or by contacting David A. Gross, vice president/Investor Relations and Strategic Analysis, at 214-977-4810.

Statements in this communication concerning A. H. Belo Corporation's (the "Company's") business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends, capital expenditures, investments, impairments, pension plan contributions, real estate sales, future financings, 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. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements.

Such risks, uncertainties and factors include, but are not limited to, changes in capital market conditions and prospects, and other factors such as changes in advertising demand and newsprint prices; newspaper circulation trends and other circulation matters, including changes in readership methods, patterns and demography, and audits and related actions by the Audit Bureau of Circulations; challenges in achieving expense reduction goals, and on schedule, and the resulting potential effects on operations; technological changes; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; regulatory, tax and legal changes; adoption of new accounting standards or changes in existing accounting standards by the Financial Accounting Standards Board or other accounting standard-setting bodies or authorities; the effects of Company acquisitions, dispositions, co-owned ventures, and investments; pension plan matters; general economic conditions and changes in interest rates; significant armed conflict; and other factors beyond our control, as well as other risks described in the Company's Annual Report on Form 10-K for the year ended December 31, 2009, and other public disclosures and filings with the Securities and Exchange Commission.

    A. H. Belo Corporation
    Consolidated Statements of Operations

                                           Three months ended
                                                June 30,
                                                --------
    In thousands, except per share
     amounts (unaudited)             2010                  2009
    ------------------------------   ----                  ----

    Net operating revenues
      Advertising                         $77,004               $87,492
      Circulation                          35,456                33,266
      Other                                 9,110                 6,746
        Total net operating revenues      121,570               127,504

    Operating Costs and Expenses
      Salaries, wages and employee
       benefits                            56,817                51,720
      Other production, distribution
       and operating costs                 47,034                50,867
      Newsprint, ink and other
       supplies                            12,492                16,425
      Asset impairment                          -                 1,749
      Depreciation                          8,441                 9,662
      Amortization                          1,310                 1,625
                                            -----                 -----
        Total operating costs and
         expenses                         126,094               132,048

        Loss from operations               (4,524)               (4,544)

    Other income and expense
      Interest expense                       (203)                 (291)
      Other income, net                     5,967                  (702)
                                            -----                  ----
        Total other (expense) income        5,764                  (993)

    Earnings
      Income (loss) before income
       taxes                                1,240                (5,537)
      Income tax expense (benefit)          1,411                 1,534
                                            -----                 -----

        Net loss                            $(171)              $(7,071)
                                            =====               =======

    Net loss per share
      Basic and diluted                    $(0.01)               $(0.34)

    Average shares outstanding
      Basic and diluted                    20,950                20,537


                                            Six months ended
                                                June 30,
                                                --------
    In thousands, except per share
     amounts (unaudited)                        2010              2009
    ------------------------------              ----              ----

    Net operating revenues
      Advertising                           $149,190          $176,823
      Circulation                             71,042            64,980
      Other                                   17,097            14,195
        Total net operating revenues         237,329           255,998

    Operating Costs and Expenses
      Salaries, wages and employee benefits  113,071           114,614
      Other production, distribution and
       operating costs                        93,066           106,734
      Newsprint, ink and other supplies       23,713            36,043
      Asset impairment                             -            82,689
      Depreciation                            17,605            20,198
      Amortization                             2,620             3,249
                                               -----             -----
        Total operating costs and expenses   250,075           363,527

        Loss from operations                 (12,746)         (107,529)

    Other income and expense
      Interest expense                          (406)             (591)
      Other income, net                        5,992               120
                                               -----               ---
        Total other (expense) income           5,586              (471)

    Earnings
      Income (loss) before income taxes       (7,160)         (108,000)
      Income tax expense (benefit)             2,139              (222)
                                               -----              ----

        Net loss                             $(9,299)        $(107,778)
                                             =======         =========

    Net loss per share
      Basic and diluted                       $(0.45)           $(5.25)

    Average shares outstanding
      Basic and diluted                       20,860            20,521


    A. H. Belo Corporation
    Condensed Consolidated Balance Sheets



                                       June 30,    December 31,
    In thousands                              2010         2009
    ------------                              ----         ----
                                      (unaudited)
    Assets
      Current assets
        Cash and cash equivalents          $60,009      $24,503
        Accounts receivable, net            47,025       62,977
        Other current assets                32,304       34,464
      Total current assets                 139,338      121,944

      Property, plant and equipment,
       net                                 185,551      203,329
      Intangible assets, net                49,390       52,009
      Other assets                          26,465       27,145
                                            ------       ------

    Total assets                          $400,744     $404,427
                                          ========     ========


    Liabilities and Shareholders'
     Equity
      Current liabilities
        Accounts payable                   $16,395      $19,191
        Accrued expenses                    37,768       29,788
        Advance subscription payments       24,211       26,713
                                            ------       ------
      Total current liabilities             78,374       75,692

      Deferred income taxes                  1,366          223
      Other liabilities                      6,915        6,915
      Total shareholders' equity           314,089      321,597
                                           -------      -------

    Total liabilities and
     shareholders' equity                 $400,744     $404,427
                                          ========     ========


    A. H. Belo Corporation
    Consolidated EBITDA

                        Three months ended               Six months ended
                             June 30,                        June 30,
                             --------                        --------
    In
     thousands
     (unaudited)         2010               2009      2010                2009
    ------------         ----               ----      ----                ----


       Consolidated
       EBITDA
       (1)          $11,194             $7,790   $13,471             $(1,273)
       Asset
       impairment         -             (1,749)        -             (82,689)
       Depreciation
       and
       Amortization  (9,751)           (11,287)  (20,225)            (23,447)
       Interest
       Expense         (203)              (291)     (406)               (591)
      Income
       Tax
       Benefit
       (Expense)     (1,411)            (1,534)   (2,139)                222
                     ------             ------    ------                 ---
      Net
       Loss           $(171)           $(7,071)  $(9,299)          $(107,778)
                      =====            =======   =======           =========




    A. H. Belo Corporation
    Newspaper EBITDA



                                         Three months ended
                                              June 30,
                                              --------
    In thousands (unaudited)            2010               2009
    ------------------------            ----               ----


      Newspaper EBITDA (1)           $10,094            $13,126
      Corporate & Non-
       Operating                      (4,867)            (4,633)
         Company Expenses
      Other income, net                5,967               (702)
      Asset impairment                     -             (1,749)
      Depreciation and
       Amortization                   (9,751)           (11,287)
      Interest Expense                  (203)              (291)
      Income Tax Benefit
       (Expense)                      (1,411)            (1,534)
                                      ------             ------
      Net Loss                         $(171)           $(7,071)
                                       =====            =======


                                          Six months ended
                                              June 30,
                                              --------
    In thousands (unaudited)           2010                2009
    ------------------------           ----                ----


      Newspaper EBITDA (1)          $19,527             $10,807
      Corporate & Non-
       Operating                    (12,048)            (12,200)
         Company Expenses
      Other income, net               5,992                 120
      Asset impairment                    -             (82,689)
      Depreciation and
       Amortization                 (20,225)            (23,447)
      Interest Expense                 (406)               (591)
      Income Tax Benefit
       (Expense)                     (2,139)                222
                                     ------                 ---
      Net Loss                      $(9,299)          $(107,778)
                                    =======           =========


    (1)  The Company defines Consolidated EBITDA as net earnings before
    interest expense, income taxes, goodwill impairment, depreciation
    and amortization and Newspaper EBITDA as net earnings before
    corporate and non-operating company expenses, other income net,
    interest expense, income taxes, goodwill impairment, depreciation
    and amortization.  Neither Consolidated EBITDA nor Newspaper EBITDA
    is a measure of financial performance under accounting principles
    generally accepted in the United States.  Management uses both
    measures in internal analyses as a supplemental measure of the
    financial performance of the Company to assist it with determining
    bonus achievement, performance comparisons against its peer group of
    companies, as well as capital spending and other investing
    decisions.  They are also common alternative measures of performance
    used by investors, financial analysts, and rating agencies to
    evaluate financial performance.   Neither Consolidated EBITDA nor
    Newspaper EBITDA should be considered in isolation or as a
    substitute for cash flows provided by operating activities or other
    income or cash flow data prepared in accordance with U.S. GAAP and
    this non-GAAP measure may not be comparable to similarly titled
    measures of other companies.


Investor Relations
Katy Murray
President 
DallasNews Corporation
214-977-8869

invest@dallasnews.com

DallasNews Corporation Headquarters
Mailing Address:
P.O. Box 224866
Dallas, Texas 75222-4866
Street Address:
1954 Commerce Street
Dallas, Texas 75201
214-977-8222
214-977-8285 (fax)