A. H. Belo Corporation (NYSE: AHC) today reported fourth quarter
net income of $0.12 per share compared to a net loss of $5.65 per
share in the fourth quarter of 2010. Fourth quarter 2011 net income
includes non-cash expenses of $6.5 million for the impairment of
Southern California real estate; $2.6 million for net
investment-related losses; and $1.4 million for the write-down of
spare parts inventory. For the full-year 2011, the Company’s net
loss was $0.51 per share compared to a net loss of $5.92 per share
in 2010.
Adjusted EBITDA, or earnings before interest, taxes,
depreciation and amortization (“EBITDA”) with pension expense,
impairment expense and net investment-related losses added back,
was $22.3 million in the fourth quarter of 2011 – an increase of
42.9 percent compared to the prior year period. Adjusted EBITDA for
full-year 2011 was $47.7 million, a decrease of 15.6 percent
compared to the prior year period due primarily to $0.1 million of
real estate gains in 2011 compared to $7.1 million of real estate
gains in 2010.
As of December 31, 2011, cash and cash equivalents were $57.4
million, and the Company had no borrowings under its bank credit
facility.
Robert W. Decherd, chairman, president and Chief Executive
Officer, said, “We finished the year with improved year-to-year
comparables, particularly in Dallas and Riverside. Due to better
advertising trends and ongoing expense containment, Adjusted EBITDA
in the fourth quarter and full-year 2011 exceeded our
expectations.”
Decherd continued, “For the third consecutive year, we begin the
year with a strong balance sheet and the flexibility to deploy cash
in the long-term interests of the Company, its shareholders and
employees. In 2012, we will invest approximately $3 million into a
new operating initiative at The Dallas Morning News that will
provide effective solutions for underserved small and medium-sized
businesses. We will also invest $4 million into targeted marketing
campaigns to support this launch and other programs focused on
consumer revenue. We are one of the few newspaper companies able to
re-invest in our business to this degree, and the long-term payoff
should be substantial.”
Fourth Quarter Results
Total revenue was $124.9 million in the fourth quarter of 2011,
a decrease of 4.6 percent compared to the prior year period.
Advertising revenue, including print and digital revenues,
decreased 8.2 percent compared to the prior year period.
- The smallest percentage decrease came
at The Press-Enterprise, followed by The Dallas Morning News and
The Providence Journal
- Display advertising revenue decreased
14.3 percent to $28.8 million
- Preprint revenue decreased 3.0 percent
to $26.6 million
- Classified revenue decreased 1.5
percent to $15.1 million
- Digital revenue decreased 12.4 percent
to $9.1 million
- Advertising revenue from niche
publications, which is a component of the display, preprint,
classified and digital revenues reported above, was flat at $7.1
million
Circulation revenue was $35.2 million in the fourth quarter,
flat to the prior year period. Excluding $0.9 million of increased
circulation revenue resulting from The Providence Journal’s
transition from a carrier to a distributor circulation model at the
end of 2011, total circulation revenue decreased 2.4 percent to
$34.3 million.
Printing and distribution revenue was $10.1 million in the
fourth quarter, an increase of 12.0 percent compared to the prior
year period that resulted from a new commercial printing contract
that came on line in Providence during the third quarter.
Total consolidated operating expense in the fourth quarter was
$119.2 million. Excluding the effect of pension and impairment
expenses in both periods, operating expense in the fourth quarter
was $111.4 million, a 9.9 percent decrease compared to the prior
year period as salaries, wages and employee benefits, legal,
temporary labor, consulting and other expenses all decreased.
The Company’s newsprint expense in the fourth quarter was $10.8
million, a decrease of 6.4 percent compared to the prior year
period. Newsprint consumption dropped 7.4 percent to 17,152 metric
tons. Compared to the prior year period, newsprint cost per metric
ton increased 1.0 percent, and the average purchase price per
metric ton for newsprint increased 2.0 percent.
Excluding the effect of pension and impairment expenses in both
periods, fourth quarter corporate and non-operating unit expenses
were $6.6 million in the fourth quarter, a 12.0 percent decrease,
as salaries and wages, computer and communication expenses all
decreased.
The Company’s fourth quarter severance and related expenses
totaled $1.0 million and included expense related to the departure
of a senior executive at The Dallas Morning News.
Full-Year Results
Total revenue was $461.5 million in 2011, a decrease of 5.3
percent compared to the prior year. Advertising revenue, including
print and digital revenues, decreased 8.9 percent – a 300 basis
point improvement in the rate of decline compared to the prior
year.
- The smallest percentage decrease came
at The Dallas Morning News followed by The Providence Journal and
The Press-Enterprise
- Display advertising revenue decreased
15.1 percent to $101.6 million
- Preprint revenue decreased 3.9 percent
to $87.7 million
- Classified revenue decreased 7.5
percent to $58.2 million
- Digital revenue decreased 3.7 percent
to $35.2 million
- Advertising revenue from niche
publications, which is included in the display, preprint,
classified and digital revenues reported above, increased 1.7
percent to $23.8 million
Circulation revenue was $139.9 million in 2011, a decrease of
0.8 percent compared to 2010. Excluding $1.1 million of increased
circulation revenue resulting from The Providence Journal’s
transition from a carrier to a distributor circulation model at the
end of 2011, total circulation revenue decreased 1.6 percent to
$138.8 million.
Printing and distribution revenue was $39.0 million in 2011, an
increase of 8.6 percent compared to the prior year due primarily to
several new commercial printing contracts in Providence.
Total consolidated operating expense was $466.9 million in 2011.
Excluding the effect of pension and impairment expenses, operating
expense in 2011 was $452.3 million, a 5.0 percent decrease compared
to the prior year. This decrease was primarily driven by lower
salaries and wages, consulting, temporary labor and communication
expenses.
In 2011, the Company’s newsprint expense was $42.8 million, an
increase of 8.7 percent for the full-year. Newsprint consumption
decreased 2.3 percent to 67,047 metric tons. Compared to the prior
year, newsprint cost per metric ton increased 11.3 percent, and the
average purchase price per metric ton for newsprint increased 10.3
percent.
Excluding the effect of pension and impairment expenses in both
periods, full-year corporate and non-operating unit expenses were
$26.3 million, a 4.0 percent decrease, as salaries and wages,
computer and communication expenses all decreased.
The Company’s full-year severance and related expenses totaled
$3.1 million, and included expense related to the departure of
several senior executives due to further flattening of the
Company’s operating structure.
As of December 31, 2011, A. H. Belo had approximately 2,100
full-time equivalent employees, a decrease of approximately 13
percent compared to the prior year.
Pension Plans
At year-end, A. H. Belo recorded a $65.0 million charge to the
other comprehensive income/loss account on the balance sheet due
primarily to a further decline in the aggregate discount rate of
the Company’s defined benefit pension plans. On December 31, 2011,
the aggregate discount rate for the plans was 4.19 percent, a 114
basis point decrease from December 31, 2010.
The Company anticipates that its pension plans will require cash
contributions totaling between $24 million and $27 million in 2012.
The Company made the $5.4 million first quarter contribution in
January, expects a quarterly cash contribution of approximately $5
million in the second quarter and expects to make the remaining
contributions in the second half of 2012. Next month, the Board of
Directors will consider a voluntary $10 million contribution to the
Company’s pension plans in 2012.
Investments
As announced on January 5, 2012, A. H. Belo and its former
parent company, Belo Corp., divided the assets of Belo Investment,
LLC (“Belo Investment”), a real estate investment company in which
A. H. Belo and Belo Corp. each previously held a 50 percent
interest. As a result of this transaction, the Company recorded a
loss of $5.0 million in the fourth quarter of 2011.
In December 2011, the Company sold a real estate property in
Southern California, generating a gain of $0.1 million and pre-tax
net proceeds of approximately $1.0 million.
In the fourth quarter of 2011, A. H. Belo invested $2.5 million
in a new joint venture formed by leading media companies. The joint
venture’s turnkey digital shopping platform for local media
affiliates, Find n Save, provides national advertisers with the
ability to easily engage local audiences with digital coupons,
digital daily deals, digital circulars and other products.
The Company received a $2.2 million dividend in December from
its equity interest in Classified Ventures, owner of Cars.com and
Apartments.com. This was the second dividend paid by Classified
Ventures in the past twelve months.
2012 Outlook
A. H. Belo anticipates full-year 2012 Adjusted EBITDA in the
range of $37 million to $41 million. The decrease in Adjusted
EBITDA for 2012 is due primarily to the investment of $7 million
into the Dallas-focused operating initiatives discussed earlier.
While this range assumes no gains from real estate dispositions,
the Company is focused on opportunistically monetizing non-core
real estate through outright sales, subleasing, sale-leasebacks or
development partnerships.
The Company also remains committed to returning cash to
shareholders through a quarterly dividend of $0.06 per share, or
$0.24 per share on an annualized basis. In addition to the
previously announced quarterly dividend payable on March 2, 2012 to
shareholders of record at the close of business on February 10,
2012, the Company anticipates three additional quarterly dividends
will be paid in 2012.
For the full-year 2012, total capital expenditures are expected
to be in the range of $8 million to $10 million.
A detailed update on the Company’s subscriber content strategy
will be given on the Company’s first quarter 2012 financial results
conference call in late April or early May.
Non-GAAP Financial
Measures
Reconciliations of net income (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 Tuesday, February
21 at 1:00 p.m. CST 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 1-800-230-1059 (USA)
or 612-288-0337 (International). A replay line will be available at
1-800-475-6701 (USA) or 320-365-3844 (International) from 3:00 p.m.
CST on February 21 until 11:59 p.m. CST on February 28, 2012. The
access code for the replay is 233469.
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 Twelve months ended
December 31, December 31, In
thousands, except per share amounts (unaudited) 2011
2010 2011 2010
Net operating revenues
Advertising $ 79,587 $ 86,731 $ 282,621 $ 310,309 Circulation
35,192 35,122 139,892 141,091 Printing and distribution
10,073 8,995 38,990
35,908 Total net operating revenues 124,852 130,848 461,503
487,308
Operating costs and expenses Salaries, wages
and employee benefits 44,186 50,605 187,738 212,998 Other
production, distribution and operating costs 44,066 46,673 174,942
183,017 Newsprint, ink and other supplies 15,890 18,478 60,081
55,472 Depreciation 7,202 7,801 30,427 32,902 Amortization 1,309
1,308 5,239 5,238 Asset impairments 6,500 2,547 6,500 3,404 Pension
plan withdrawal - 132,346 1,988
132,346 Total operating costs and expenses
119,153 259,758 466,915 625,377 Income (loss) from
operations 5,699 (128,910 ) (5,412 ) (138,069 )
Other
(expense) income, net Interest expense (158 ) (203 ) (669 )
(808 ) Other (expense) income, net (2,318 ) (730 )
159 7,067 Total other (expense) income
(2,476 ) (933 ) (510 ) 6,259
Earnings Income (loss)
before income taxes 3,223 (129,843 ) (5,922 ) (131,810 ) Income tax
expense (benefit) 472 (10,335 ) 5,011
(7,575 ) Net income (loss) $ 2,751 $
(119,508 ) $ (10,933 ) $ (124,235 )
Net income (loss) per
share: Basic $ 0.12 $ (5.65 ) $ (0.51 ) $ (5.92 ) Diluted $
0.12 $ (5.65 ) $ (0.51 ) $ (5.92 )
Average shares
outstanding: Basic 22,570 21,164 21,496 20,992 Diluted 22,740
21,164 21,496 20,992
A. H. Belo Corporation
Condensed Consolidated Balance Sheets
December 31, December 31, In thousands (unaudited)
2011 2010
Assets Current assets Cash
and cash equivalents $ 57,440 $ 86,291 Accounts receivable, net
50,533 56,793 Other current assets 20,225 29,875
Total current assets 128,198 172,959 Property, plant and
equipment, net 163,418 176,676 Intangible assets, net 41,532 46,771
Other assets 11,940 23,643 Total assets $
345,088
$ 420,049
Liabilities and Shareholders' Equity
Current liabilities Accounts payable $ 18,062 $ 29,159 Pension
liabilities - 54,833 Accrued expenses 30,167 27,448 Advance
subscription payments 22,491 23,057 Total current
liabilities 70,720 134,497 Pension liabilities 145,980
77,513 Other liabilities 6,908 8,166 Total shareholders' equity
121,480 199,873 Total liabilities and
shareholders' equity $ 345,088 $ 420,049
A. H. Belo
Corporation Reconciliation of Net Income (Loss) to EBITDA
and Adjusted EBITDA Three
months ended Twelve months ended December 31,
December 31, In thousands (unaudited) 2011 2010 2011
2010
AS REPORTED Net income (loss) $ 2,751 $
(119,508 ) $ (10,933 ) $ (124,235 ) Addback: Depreciation and
amortization 8,511 9,109 35,666 38,140 Interest expense 158 203 669
808 Income tax expense (benefit) 472 (10,335 )
5,011 (7,575 ) EBITDA (1) 11,892
(120,530 ) 30,413 (92,862 ) Addback: Pension
expense 1,248 133,578 8,161 145,985 Asset impairments 6,500 2,547
6,500 3,404 Net investment-related losses 2,634 -
2,634 - Adjusted EBITDA (1) $
22,274 $ 15,595 $ 47,708 $ 56,527 (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,
non-cash impairment expense and net investment-related losses
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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