Newspaper Publisher A. H. Belo Corporation Reports Third Quarter 2010 Net Income of $4.6 Million

November 3, 2010 at 8:02 AM EDT

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DALLAS, Nov 03, 2010 -- Newspaper publisher A. H. Belo Corporation (NYSE: AHC) today reported net income of $4.6 million, or $0.20 per diluted share, for the third quarter of 2010 compared to a net loss of $5.8 million, or $0.28 per diluted share, in the third quarter of 2009. Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $14.2 million, an increase of $20.0 million compared to the third quarter of 2009. Third quarter 2010 EBITDA includes pension expense of $1.6 million; a $1.1 million bonus accrual; a $1.4 million gain on two real estate transactions in Dallas; a $1.2 million reversal of an accrual for workers' compensation insurance; and $1.1 million of insurance proceeds. When pension expense is added to EBITDA ("Adjusted EBITDA") in both periods, the resulting Adjusted EBITDA in the third quarter of 2010 was $15.8 million, an increase of $21.6 million compared to the third quarter of 2009.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, "The Board and Management Committee are very pleased with the progress reflected in A. H. Belo's third quarter performance. Our corporate and operating unit teams have worked intensely for the past two years to reach this relative stability in an industry environment that continues to change at a rapid pace. Third quarter total revenue decreased 6.1 percent compared to 2009 and was only 100 basis points below the Company's 2010 Financial Plan for the third quarter. Expense containment and cost reductions remain top priorities across the entire organization.

"As of September 30, the Company had approximately $81.3 million of cash and cash equivalents, no borrowings outstanding under its bank credit facility, and remained in compliance with bank covenants. The addition of $21.3 million of cash and cash equivalents during the third quarter further strengthens the Company's ability to maintain and enhance the quality of its local content and make decisions in the long-term interests of the Company, its shareholders and its employees."

Operating Results

Total revenue was $119.1 million in the third quarter, a decrease of 6.1percent compared to the third quarter of 2009. Total advertising revenue, including print and digital revenue, decreased 11.2 percent. Circulation revenue decreased 0.9 percent. Other revenue increased 25.5 percent.

Total consolidated operating expense in the third quarter was $115.5 million, a decrease of 19.6 percent compared to 2009. Excluding the effect of pension expense in both periods, operating expense in the third quarter was $113.9 million, a 20.7 percent decrease compared to 2009. The Company's newsprint expense in the third quarter was $10.1 million, an increase of 10.5 percent compared to 2009 as newsprint consumption increased 2.5 percent and newsprint cost per metric ton increased 7.7 percent. The average purchase price per metric ton for newsprint increased 35.4 percent in the third quarter of 2010 compared to 2009.

Corporate and Non-Operating Expenses

In the third quarter, corporate and non-operating expenses, net of costs allocated to operating units, were $7.1 million, an increase of 4.6 percent compared to the third quarter of 2009. Lower salary, wage and benefit expenses were offset primarily by a $1.3 million increase in depreciation related to the intra-company transfer of a technology asset.

Non-GAAP Financial Measures

Reconciliations of net income to EBITDA and Adjusted EBITDA are included as exhibits to this release.

Financial Results Conference Call

AHC will conduct a conference call today at 2:30 p.m. CDT to discuss financial results. The conference call will be available via Webcast by accessing the Company's Web site (http://www.ahbelo.com/invest) or by dialing 1-800-288-8976 (USA) or 651-291-0618 (International). A replay line will be available at 800-475-6701 (USA) or 320-365-3844 (International) from 4:30 p.m. CDT on November 3 until 11:59 p.m. CST on November 10, 2010. The access code for the replay is 174879.

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
Condensed Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
In thousands, except per share amounts (unaudited) 2010 2009 2010 2009
Net operating revenues
Advertising $ 74,388 $ 83,816 $ 223,578 $ 260,638
Circulation 34,927 35,228 105,970 100,208
Other 9,817 7,823 26,914 22,019
Total net operating revenues 119,132 126,867 356,462 382,865
Operating Costs and Expenses
Salaries, wages and employee benefits 49,322 51,668 162,394 166,283
Other production, distribution and operating costs 43,280 48,920 136,341 155,652
Newsprint, ink and other supplies 13,280 12,302 36,994 48,345
Asset impairment 857 20,000 862 102,689
Depreciation 7,496 9,257 25,101 29,456
Amortization 1,310 1,625 3,930 4,874
Total operating costs and expenses 115,545 143,772 365,622 507,299
Loss from operations 3,587 (16,905 ) (9,160 ) (124,434 )
Other income and expense
Interest expense (199 ) (211 ) (605 ) (802 )
Other income, net 1,805 240 7,798 362
Total other income (expense) 1,606 29 7,193 (440 )
Earnings
Income (loss) before income taxes 5,193 (16,876 ) (1,967 ) (124,874 )
Income tax expense (benefit) 621 (11,110 ) 2,760 (11,331 )
Net income (loss) $ 4,572 $ (5,766 ) $ (4,727 ) $ (113,543 )
Net income (loss) per share
Basic $ 0.21 $ (0.28 ) $ (0.23 ) $ (5.53 )
Diluted $ 0.20 $ (0.28 ) $ (0.23 ) $ (5.53 )
Average shares outstanding

Basic

22,127 20,538 20,935 20,529
Diluted 22,391 20,538 20,935 20,529
A. H. Belo Corporation
Condensed Consolidated Balance Sheets
September 30, December 31,
In thousands 2010 2009
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 81,304 $ 24,503
Accounts receivable, net 46,245 62,977
Other current assets 24,899 34,464
Total current assets 152,448 121,944
Property, plant and equipment, net 180,664 203,329
Intangible assets, net 48,080 52,009
Other assets 26,376 27,145
Total assets $ 407,568 $ 404,427
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 18,734 $ 19,191
Accrued expenses 38,229 29,788
Advance subscription payments 23,814 26,713
Total current liabilities 80,777 75,692
Deferred income taxes 1,125 223
Other liabilities 6,805 6,915
Total shareholders' equity 318,861 321,597
Total liabilities and shareholders' equity $ 407,568 $ 404,427
A. H. Belo Corporation
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Three months ended Nine months ended
September 30, September 30,
In thousands (unaudited) 2010 2009 2010 2009
AS REPORTED
Net Income/(Loss) $ 4,572 $ (5,766 ) $ (4,727 ) $ (113,543 )
Addback/(Subtract):
Depreciation and amortization 8,806 10,882 29,031 34,330
Interest expense 199 211 605 802
Income tax expense (benefit) 621 (11,110 ) 2,760 (11,331 )
EBITDA (1) 14,198 (5,783 ) 27,669 (89,742 )
Addback/(Subtract):
Pension expense 1,578 7 12,407 7
Adjusted EBITDA (1) $ 15,776 $ (5,776 ) $ 40,076 $ (89,735 )
(1)

EBITDA is calculated by adding depreciation and amortization, interest expense and income tax expense recorded to net income (loss). Adjusted EBITDA is calculated by adding pension expense recorded to EBITDA.

Neither EBITDA nor Adjusted EBITDA is a measure of financial performance under generally accepted accounting principles ("GAAP"). Management uses EBITDA, Adjusted EBITDA and similar measures in internal analyses as a supplemental measure of the Company's financial performance and to assist with determining bonus achievement, performance comparisons against its peer group of companies, as well as capital spending and other investing decisions. EBITDA or similar measures are also common alternative measures of performance used by investors, financial analysts and rating agencies to evaluate financial performance. Neither EBITDA nor Adjusted 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 GAAP, and these non-GAAP measures 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)