Newspaper Publisher A. H. Belo Corporation Reports Second Quarter 2009 Financial Results

July 27, 2009 at 8:05 AM EDT

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DALLAS, July 27 -- Newspaper publisher A. H. Belo Corporation (NYSE: AHC) reported second quarter 2009 revenues of $127.5 million and a second quarter net loss of $7.1 million or $0.34 per share. Second quarter results include $1.7 million or $0.10 per share for impairment of the customer value management system at The Dallas Morning News, which was offset by $1.1 million or $0.08 per share for insurance claim proceeds the Company received in the second quarter. The Company decommissioned the customer value management system as part of its ongoing cost reductions. Excluding these items, the second quarter net loss was $6.5 million or $0.32 per share.

A. H. Belo had $7.8 million in consolidated EBITDA and $13.1 million in newspaper EBITDA for the second quarter. The aggregate newspaper EBITDA margin was 10.3 percent. Excluding the insurance claim proceeds, consolidated EBITDA was $6.7 million. EBITDA margins in the second quarter were highest at The Providence Journal, followed by The Dallas Morning News.

The Company's borrowings were $3.5 million as of June 30, 2009, down from $12.7 million at the end of the first quarter. A. H. Belo was in compliance with its bank covenants at the end of the second quarter.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, "We successfully managed costs in the second quarter to remain EBITDA positive and significantly pay down the Company's credit facility. A. H. Belo continues to experience success with our strategy of providing high quality newspaper subscribers to our advertisers, resulting in increased circulation revenue in 2009. In July, The Dallas Morning News went live with a new integrated advertising system. This new system provides tools that allow The Morning News sales force to spend more time with advertisers developing solutions that meet their advertising and marketing needs. With advertising revenues under pressure, it is critical that A. H. Belo's sales force has the tools it needs to be successful."

Second Quarter Highlights

Total revenue decreased 21.9 percent in the second quarter versus the prior year quarter.

Advertising revenue, including print and Internet revenue, was down 30.2 percent, due to declines in retail, general and classified revenues in all AHC markets. AHC's Internet revenues accounted for 7.6 percent of total revenues in the quarter. Internet revenues were $9.8 million, 20.8 percent below the same period last year.

The Company continues to focus on editorial quality and value-added circulation for its advertisers. In the second quarter, circulation revenue rose 9.9 percent primarily due to increased prices for single copy and home delivery in Dallas and Providence.

Total consolidated operating expenses in the second quarter were $132 million, a 21.1 percent decrease from the same period last year. Excluding the effects of the insurance claim proceeds (which is a reduction to expense) and the non-cash impairment charge of $1.7 million, total consolidated operating expenses in the second quarter were $131.4 million, a 21.5 percent decrease from the same period last year. The decrease reflects reductions in almost all expense categories. Newsprint expense decreased approximately $5.9 million in the second quarter due to lower prices and volumes.

Corporate and non-operating expenses, net of costs allocated to operating units, declined by $5.8 million in the second quarter versus the prior year quarter, primarily due to reduced salaries and employee benefits.

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 1-800-230-1059 (USA) or 1-612-234-9960 (International). A replay line will be available at 1-800-475-6701 (USA) or 1-320-365-3844 (International) from 3:00 p.m. CDT on July 27 until 11:59 p.m. CDT on August 3, 2009. The access code for the replay is 107351.

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 eight 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 www.ahbelo.com or by contacting Alison K. Engel, senior vice president/Chief Financial Officer, at 214-977-2248.

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, 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, interest rates, and newsprint prices; newspaper circulation trends and other circulation matters, including changes in readership 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; general economic conditions; 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, 2008.


    A. H. Belo Corporation
    Consolidated Statements of Operations

                                    Three months ended    Six months ended
                                          June 30,            June 30,
    -----------------------------------------------------------------------
    In thousands, except
     per share amounts                2009      2008       2009      2008
    -----------------------------------------------------------------------
                                 (unaudited)(unaudited)(unaudited)(unaudited)
    Net operating revenues
      Advertising                    $87,492  $125,341   $176,823  $249,764
      Circulation                     33,266    30,275     64,980    59,380
      Other                            6,746     7,639     14,195    14,298
                                     -------   -------    -------   -------
        Total net operating revenues 127,504   163,255    255,998   323,442

    Operating Costs and Expenses
      Salaries, wages and employee
       benefits                       51,720    68,840    114,614   143,105
      Other production, distribution
       and operating costs            50,867    60,948    106,734   121,914
      Newsprint, ink and other
       supplies                       16,425    23,738     36,043    46,707
      Goodwill impairment                  -         -     80,940         -
      Asset impairment                 1,749         -      1,749         -
      Depreciation                     9,662    12,211     20,198    24,452
      Amortization                     1,625     1,625      3,249     3,250
                                     -------   -------    -------   -------
        Total operating costs
         and expenses                132,048   167,362    363,527   339,428

    Loss from operations              (4,544)   (4,107)  (107,529)  (15,986)

    Other (expense) and income
      Interest expense                  (291)     (165)      (591)   (3,231)
      Other (expense) income, net       (702)      305        120     1,262
                                        ----       ---        ---     -----
        Total other (expense) income    (993)      140       (471)   (1,969)

    Earnings
      Loss before income taxes        (5,537)   (3,967)  (108,000)  (17,955)
      Income tax expense (benefit)     1,534      (770)     2,139    (6,040)
                                       -----       ---      -----     -----
        Net Loss                     $(7,071)  $(3,197) $(110,139) $(11,915)
                                      ======    ======    =======   ========
    Net loss per share
      Basic and Diluted                $(.34)    $(.16)    $(5.37)    $(.58)

    Average shares outstanding
      Basic and Diluted               20,537    20,478     20,521    20,476

    Cash dividends declared per share     $-        $-         $-    $0.250
                                         ===       ===        ===     =====



    A. H. Belo Corporation
    Condensed Consolidated Balance Sheets

    ---------------------------------------------------------------------
                                               June 30,        December 31,
    In thousands                                 2009              2008
    ---------------------------------------------------------------------
                                             (unaudited)
    Assets
      Current assets
        Cash and temporary cash investments     $12,205            $9,934
        Accounts receivable, net                 52,236            77,383
        Other current assets                     30,165            37,400
                                                 ------            ------
      Total current assets                       94,606           124,717

      Property, plant and equipment, net        244,563           263,744
      Intangible assets, net                     55,259           139,449
      Other assets                               40,170            29,768
                                                 ------            ------

        Total assets                           $434,598          $557,678
                                                =======           =======


    Liabilities and Shareholders' Equity
      Current liabilities
        Current portion of notes payable         $3,540           $10,000
        Accounts payable                         20,526            32,950
        Accrued expenses                         39,062            42,834
        Other current liabilities                30,142            29,358
                                                 ------            ------
      Total current liabilities                  93,270           115,142

      Deferred income taxes                      19,093             6,620
      Other liabilities                          23,003            27,264
      Total shareholders' equity                299,232           408,652
                                                -------           -------

    Total liabilities and shareholders'
     equity                                    $434,598          $557,678
                                                =======           =======



    A. H. Belo Corporation
    Consolidated EBITDA

                                     Three months ended      Six months ended
                                          June 30,              June 30,
    --------------------------------------------------      ----------------
    In thousands (unaudited)            2009      2008      2009      2008
    --------------------------------------------------      ----------------


      Consolidated EBITDA (1)         $7,790   $10,034    $(1,273)   $12,978
      Goodwill impairment                  -         -    (80,940)         -
      Asset impairment                (1,749)        -     (1,749)         -
      Depreciation and Amortization  (11,287)  (13,836)   (23,447)   (27,702)
      Interest Expense                  (291)     (165)      (591)    (3,231)
      Income Tax (Expense) Benefit    (1,534)      770     (2,139)     6,040
                                       -----     -----    -------     ------
      Net Loss                       $(7,071)  $(3,197) $(110,139)  $(11,915)
                                       =====     =====    =======     ======


    A. H. Belo Corporation
    Newspaper EBITDA

                                     Three months ended     Six months ended
                                          June 30,              June 30,
    --------------------------------------------------      ----------------
    In thousands (unaudited)           2009      2008      2009      2008
    --------------------------------------------------      ----------------


      Newspaper EBITDA (1)           $13,127   $19,305    $10,806   $33,734
      Corporate & Non-Operating
      Company Expenses                (4,635)   (9,576)   (12,199)  (22,018)
      Other income, net                 (702)      305        120     1,262
      Goodwill impairment                  -         -    (80,940)        -
      Asset impairment                (1,749)        -     (1,749)        -
      Depreciation and Amortization  (11,287)  (13,836)   (23,447)  (27,702)
      Interest Expense                  (291)     (165)      (591)   (3,231)
      Income Tax (Expense) Benefit    (1,534)      770     (2,139)    6,040
                                       -----     -----    -------    ------
      Net Loss                       $(7,071)  $(3,197) $(110,139) $(11,915)
                                       =====     =====    =======    ======

    Note 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 / Chief Financial Officer
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)