A. H. Belo Corporation (NYSE: AHC) today announced a net loss of
$6.8 million, or $0.32 per share, for the second quarter of 2011
compared to a net loss of $0.2 million, or $0.01 per share, in the
second quarter of 2010. The second quarter 2011 net loss includes a
tax charge of $3.0 million, or $0.14 per share, and non-cash
expenses totaling $3.0 million, or $0.14 per share. The non-cash
expenses include a $2.0 million, or $0.09 per share, expense
related to the Company’s withdrawal from The G. B. Dealey
Retirement Pension Plan, and a $1.0 million, or $0.05 per share,
expense related to increased depreciation on certain fixed assets.
The second quarter 2010 net loss included a gain of $5.4 million,
or $0.26 per share, related to the Company’s disposition of a real
estate asset.
Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) was $6.5 million in the second quarter of 2011, a
decrease of $4.7 million compared to the second quarter of 2010.
When pension expense is added back to EBITDA (“Adjusted EBITDA”) in
both periods, Adjusted EBITDA in the second quarter was $10.2
million, a decrease of $6.5 million compared to the prior year. The
second quarter 2011 decreases in EBITDA and Adjusted EBITDA are due
primarily to the $5.4 million real estate gain in the second
quarter of 2010.
Robert W. Decherd, chairman, president and Chief Executive
Officer, said, “Second quarter Adjusted EBITDA met our
expectations. Total revenue decreased 5.8 percent compared to 2010,
and business leaders across the Company responded to inconsistent
advertising patterns with targeted expense reductions. We continue
to anticipate full-year 2011 Adjusted EBITDA in the range of $45
million to $50 million, which assumes no gains from real estate
dispositions.”
As of June 30, 2011, the Company had approximately $50 million
of cash and cash equivalents, had no borrowings outstanding under
its bank credit facility, and remained in compliance with bank
covenants.
Dividends
The Company also announced today that the Company’s Board of
Directors declared a quarterly cash dividend of $0.06 per share,
payable on September 2, 2011 to shareholders of record at the close
of business on August 12, 2011.
As announced on May 2, 2011, the Company intends to pay a
regular quarterly cash dividend of $0.06 per share, or $0.24 per
share on an annualized basis. The first of three anticipated
dividends for calendar year 2011 was paid on June 3, 2011 to
shareholders of record at the close of business on May 16, 2011. As
is customary at dividend-paying companies, the remaining dividend
for 2011 and all future dividends are each subject to Board
approval.
Second Quarter Results
Total revenue was $114.5 million in the second quarter of 2011,
a decrease of 5.8 percent compared to the prior year.
Advertising revenue, including print and digital revenues,
decreased 9.3 percent, with the smallest percentage decrease at The
Providence Journal followed by The Dallas Morning News and The
Press-Enterprise. Display advertising revenue decreased 11.0
percent to $26.4 million, and preprint revenue decreased 6.0
percent to $20.5 million. Classified revenue decreased 12.8 percent
to $14.3 million. Digital revenue was $8.7 million, a decrease of
5.2 percent. Advertising revenue from niche publications, which is
spread among the display, preprint, classified and digital revenue
figures above, increased 3.0 percent compared to second quarter of
2010. Briefing, The Dallas Morning News’ free, home-delivered
condensed print news product, increased advertising revenue 14.0
percent to $3.5 million.
Circulation revenue decreased 1.6 percent to $34.9 million as a
0.4 percent increase at The Dallas Morning News was offset by
decreases at The Providence Journal and The Press-Enterprise.
Printing and distribution revenue increased 6.7 percent to $9.7
million due primarily to increases in printing and distribution
revenue in Providence.
Total consolidated operating expense in the second quarter was
$118.0 million. Excluding the effect of pension expense in both
periods, operating expense in the second quarter was $114.4
million, a 5.2 percent decrease compared to the prior year.
The Company’s newsprint expense in the second quarter was $10.9
million, an increase of 18.7 percent compared to the prior year.
Newsprint consumption increased 1.4 percent to 16,928 metric tons.
Newsprint cost per metric ton increased 17.1 percent. The average
purchase price per metric ton for newsprint increased 11.3
percent.
Corporate and non-operating unit expenses in the second quarter,
net of costs allocated to operating units, were $6.3 million, an
increase of 8.4 percent compared to the prior year due to increased
pension expense. Excluding the effect of pension expense in both
periods, corporate and non-operating unit expenses in the second
quarter of 2011 were $5.9 million, an increase of 0.7 percent
compared to the prior year.
Capital expenditures totaled $1.6 million in the second quarter.
The Company anticipates full-year 2011 capital expenditures in the
$9 to $11 million range.
As of June 30, 2011, A. H. Belo had approximately 2,300
full-time equivalent employees, a decrease of 6.4 percent compared
to the prior year.
Pension and Tax Items
In June 2011, A. H. Belo and its former parent company, Belo
Corp., completed the planned final reconciliation of allocations
made from The G. B. Dealey Retirement Pension Plan to the new
defined benefit plans created, sponsored and managed by or on
behalf of the Company (“AHC Pension Plans”). The Company recorded
an additional $2.0 million pension plan withdrawal expense as a
result.
During the second quarter, the Company made required cash
contributions totaling $5.9 million to the AHC Pensions Plans. In
mid-July, the Company funded its required contributions for the
third and fourth quarters with a $10.4 million contribution. The
Company anticipates no further defined benefit plan contributions
in 2011.
Pursuant to the Tax Matters Agreement with its former parent
company, Belo Corp., the Company recorded $3.0 million of tax
expense in the second quarter of 2011 resulting from the resolution
of an Internal Revenue Service audit of Belo Corp.’s 2006 to 2008
federal income tax returns. The Company will make the $3.0 million
cash reimbursement to Belo Corp. in the second half of 2011.
Non-GAAP Financial
Measures
Reconciliations of net loss to EBITDA and Adjusted EBITDA are
included as exhibits to this release.
Financial Results Conference
Call
A. H. Belo will conduct a conference call on
Thursday, July 28 at 1:00 p.m. CDT to discuss financial results.
The conference call will be available via webcast by accessing the
Company’s website (www.ahbelo.com/invest) or by dialing
1-877-260-8900 (USA) or 612-332-1025 (International). A replay line
will be available at 1-800-475-6701 (USA) or 320-365-3844
(International) from 3:00 p.m. CDT on July 28 until 11:59 p.m. CDT
on August 4, 2011. The access code for the replay is 207931.
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 websites. A. H. Belo publishes The Dallas
Morning News, Texas’ leading newspaper and winner of nine Pulitzer
Prizes; 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 the Inland Southern
California region and winner of one Pulitzer Prize; and the Denton
Record-Chronicle. The Company publishes various niche publications
targeting specific audiences, and its partnerships and/or
investments include the Yahoo! Newspaper Consortium and Classified
Ventures, owner of cars.com. A. H. Belo also owns and operates
commercial printing, distribution and direct mail service
businesses. Additional information is available at 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 implementing increased subscription pricing and new
pricing structures; 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
existing and new competitors and suppliers; labor relations;
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, 2010, and other public disclosures and filings with
the Securities and Exchange Commission.
A. H. Belo Corporation
Condensed Consolidated Statements of Operations Three
Months Ended Six Months Ended June 30,
June 30,
In thousands, except per share amounts
(unaudited)
2011
2010 2011
2010
Net Operating Revenues Advertising $
69,869 $ 77,004 $ 137,805 $ 149,190 Circulation 34,899 35,456
69,950 71,042 Printing and distribution 9,718
9,110 18,906 17,097 Total net
operating revenues 114,486 121,570 226,661 237,329
Operating
Costs and Expenses Salaries, wages and employee benefits 48,099
56,817 98,594 113,071
Other production, distribution and
operating costs
43,228
47,034 88,879 93,066 Newsprint, ink and other supplies 15,071
12,492 29,573 23,713 Depreciation 8,256 8,441 15,839 17,605
Amortization 1,310 1,310 2,620 2,620 Pension plan withdrawal
1,988 - 1,988 -
Total operating costs and expenses 117,952 126,094 237,493 250,075
Loss from operations (3,466 ) (4,524 ) (10,832 ) (12,746 )
Other
Income (Expense), Net Interest expense (172 ) (203 ) (378 )
(406 ) Other income, net 446 5,967
1,711 5,992
Total other income (expense), net
274 5,764 1,333 5,586
Earnings Income/(loss) before income
taxes (3,192 ) 1,240 (9,499 ) (7,160 ) Income tax expense
3,630 1,411 4,049 2,139
Net loss $ (6,822 ) $ (171 ) $ (13,548 ) $ (9,299 )
Net loss per share: Basic and diluted $ (0.32 ) $ (0.01 ) $
(0.63 ) $ (0.45 )
Weighted average shares
outstanding: Basic and diluted 21,512 20,950 21,448 20,860
A. H. Belo Corporation Condensed
Consolidated Balance Sheets
June 30, December 31, In thousands (unaudited)
2011 2010
Assets Current
assets Cash and cash equivalents $ 50,057 $ 86,291 Accounts
receivable, net 40,796 56,793 Other current assets 30,576
29,875 Total current assets 121,429 172,959 Property,
plant and equipment, net 163,460 176,676 Intangible assets, net
44,151 46,771 Other assets 23,810 23,643 Total
assets $ 352,850
$ 420,049
Liabilities and Shareholders' Equity
Current liabilities Accounts payable $ 13,815 $ 29,159 Pension
liabilities - 54,833 Accrued expenses 31,925 27,448 Advance
subscription payments 22,805 23,057 Total current
liabilities 68,545 134,497 Pension liabilities 90,704 77,513
Other liabilities 7,385 8,166 Total shareholders' equity
186,216 199,873 Total liabilities and shareholders'
equity $ 352,850 $ 420,049
A.
H. Belo Corporation Reconciliation of Net Loss to EBITDA and
Adjusted EBITDA
Three Months Ended Six Months Ended June 30,
June 30, In thousands (unaudited) 2011
2010 2011 2010
AS REPORTED Net Loss $ (6,822 ) $ (171 ) $ (13,548 )
$ (9,299 ) Addback: Depreciation and amortization 9,566 9,751
18,459 20,225 Interest expense 172 203 378 406 Income tax expense
3,630 1,411 4,049
2,139 EBITDA (1) 6,546 11,194
9,338 13,471 Addback: Pension expense
3,630 5,478 5,315
10,829 Adjusted EBITDA (1) $ 10,176 $ 16,672 $
14,653 $ 24,300
(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 and
impairment 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.
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