UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 22, 2011

 

A. H. BELO CORPORATION

 

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)		1-33741 (Commission File Number)		38-3765318 (I.R.S. Employer Identification No.)

P. O. Box 224866 Dallas, Texas (Address of principal executive offices)		75222-4866 (Zip Code)

     Registrant’s telephone number, including area code: (214) 977-8200

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition.

On February 22, 2011, A. H. Belo Corporation announced its consolidated financial results for the quarter and year ended December 31, 2010. A copy of the announcement press release is furnished with this report as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

	99.1			Financial Results Press Release dated February 22, 2011

Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EXHIBIT INDEX

	99.1			Financial Results Press Release dated February 22, 2011

Exhibit 99.1

		FOR IMMEDIATE RELEASE Tuesday, February 22, 2011 7:00 A.M. CST

A. H. Belo Corporation Reports
Fourth Quarter and Full-Year 2010 Financial Results

     DALLAS — A. H. Belo Corporation (NYSE: AHC) today reported fourth quarter and full-year 2010 total revenues of $130.8 million and $487.3 million, respectively. The Company recorded a pre-tax $132.3 million pension withdrawal charge in the fourth quarter, and posted a fourth quarter net loss of $5.65 per share. The Company’s full-year 2010 net loss was $5.92 per share.

     When pension and impairment charges are added back to EBITDA (“Adjusted EBITDA”) in both periods, the resulting Adjusted EBITDA in the fourth quarter was $15.6 million, a decrease of $4.2 million compared to the prior year. Adjusted EBITDA for the full-year 2010 was $56.5 million, an increase of $23.8 million or 72.5 percent compared to the prior year.

     Robert W. Decherd, chairman, president and Chief Executive Officer, said, “Our improved 2010 operating performance reflects the Company’s success in executing a content-first strategy of producing local news and information on a scale that other media cannot match. For 2011, the Company’s top three priorities are executing on revenue initiatives, remaining vigilant on expenses, and maximizing operating cash flow. Although the timing of real estate dispositions and potential proceeds are hard to predict, we are hopeful that results similar to 2010’s will be realized in 2011.”

     As of December 31, 2010, A. H. Belo had approximately $86 million of cash and cash equivalents, had no borrowings outstanding under its bank credit facility, and remained in compliance with bank covenants. As the Company announced on January 3, 2011, the Company will make an additional $30 million contribution into the two new defined benefit pension plans created, sponsored and managed by or on behalf of the Company (the “AHC Pension Plans”). The Company anticipates making the additional cash contribution in the first quarter, and this contribution will reduce the Company’s

-more-

P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, TX 75202

A. H. Belo Corporation Reports Fourth Quarter and
Full-Year 2010 Financial Results
February 22, 2011
Page Two

cash and cash equivalents at the end of the quarter compared to the end of 2010.

     Total revenue was $130.8 million in the fourth quarter of 2010, a decrease of 3.4 percent compared to the prior year. Advertising revenue, including print and digital revenues, decreased 6.0 percent, with the smallest decrease at The Dallas Morning News followed by The Press-Enterprise and The Providence Journal. Display advertising revenue decreased 10.7 percent to $33.6 million, and preprint revenue increased 0.3 percent to $27.5 million. Classified revenue decreased 8.8 percent to $15.3 million. Digital revenue was $9.9 million, a decrease of 0.9 percent. Advertising revenue from niche publications, which is included in the display, preprint, classified and digital revenue figures above, increased 33.4 percent to $7.1 million as Briefing, The Morning News’ free, home-delivered condensed print news product, increased advertising revenue 63.6 percent to $4.8 million. Circulation revenue decreased 3.4 percent to $35.1 million. Commercial printing, distribution and other revenue increased 28.0 percent to $9.5 million due primarily to increases in distribution and commercial printing revenues in Providence and Riverside.

     Total consolidated operating expense in the fourth quarter was $259.8 million. Excluding the effect of pension and impairment expenses in both periods, operating expense in the fourth quarter was $123.6 million, a 1.6 percent decrease compared to the prior year. This decrease was primarily driven by lower technology, bad debt and property tax expenses.

     The Company’s newsprint expense in the fourth quarter was $11.5 million, an increase of 26.7 percent compared to the prior year. Due to increased demand for

-more-

P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, TX 75202

A. H. Belo Corporation Reports Fourth Quarter and
Full-Year 2010 Financial Results
February 22, 2011
Page Three

commercial printing services and advertising in Briefing and The Press-Enterprise, newsprint consumption increased 6.2 percent to 18,684 metric tons. Newsprint cost per metric ton increased 19.3 percent. The average purchase price per metric ton for newsprint increased 21.2 percent.

     Corporate and non-operating unit expenses in the fourth quarter, net of costs allocated to operating units, were $13.1 million, an increase of 0.8 percent compared to the prior year. Excluding the effect of pension and impairment expenses in both periods, corporate and non-operating unit expenses were $7.5 million, an 18.7 percent decrease, as salaries and wages, technology, computer and communication expenses all decreased.

     In the fourth quarter of 2010, A. H. Belo and Belo Corp., pursuant to their Tax Matters Agreement, agreed that Belo Corp. would carry back A. H. Belo’s 2009 taxable net operating loss to a previous tax year, resulting in a net refund to the Company of $3.5 million. The Company expects to receive the refund in the first half of 2011.

     The Company received a $3.1 million dividend from Classified Ventures, owner of Cars.com and Apartments.com, in the fourth quarter. Proceeds of $0.5 million were also received from the sale of excess land at the Denton Record-Chronicle.

     Total revenue was $487.3 million in 2010, a decrease of 6.0 percent compared to the prior year. Advertising revenue, including print and digital revenues, decreased 11.9 percent, with the smallest decrease at The Dallas Morning News followed by The Press-Enterprise and The Providence Journal. Display advertising revenue decreased 15.4 percent to $119.7 million, and preprint revenue decreased 7.5 percent to $91.2 million. Classified revenue decreased 15.4 percent to $62.8 million. Digital revenue was $36.6

-more-

P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, TX 75202

A. H. Belo Corporation Reports Fourth Quarter and
Full-Year 2010 Financial Results
February 22, 2011
Page Four

million, a decrease of 4.1 percent. Advertising revenue from niche publications, which is included in the display, preprint, classified and digital revenue figures above, increased 36.8 percent to $23.4 million due primarily to Briefing, which increased revenue 66.1 percent to $14.2 million. Circulation revenue increased 3.3 percent to $141.1 million as circulation pricing actions implemented in Dallas and Providence in 2009 continued to cycle through. Commercial printing, distribution and other revenue increased 22.0 percent to $35.9 million as existing and new commercial printing and distribution contracts came on line in Dallas, Providence and Riverside.

     Total consolidated operating expense was $625.4 million in 2010. Excluding the effect of pension and impairment expenses in both periods, operating expense in 2010 was $476.0 million, a 10.2 percent decrease compared to the prior year. This decrease was primarily driven by lower salaries and wages, newsprint, technology and bad debt expenses.

     In 2010, the Company’s newsprint expense was $39.4 million, a decrease of 15.6 percent compared to the prior year. Newsprint consumption decreased 7.4 percent to 69,255 metric tons. Newsprint cost per metric ton decreased 8.9 percent as decreases in the first half of the year more than offset increases in the second half of the year. The average purchase price per metric ton of newsprint increased of 3.6 percent.

     Corporate and non-operating unit expenses in 2010, net of costs allocated to operating units, were $34.2 million, an increase of 0.7 percent compared to the prior year. Excluding the effect of pension and impairment expenses in both periods, corporate and non-operating unit expenses were $27.4 million, a 9.3 percent decrease, as salaries and wages, technology, and computer and communication expenses all decreased.

     For the full-year 2010, the Company’s pre-tax cash proceeds from real estate dispositions totaled nearly $10 million.

-more-

P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, TX 75202

A. H. Belo Corporation Reports Fourth Quarter and
Full-Year 2010 Financial Results
February 22, 2011
Page Five

     As of December 31, 2010, A. H. Belo had approximately 2,200 full-time and 280 part-time employees.

     On January 3, 2011, A. H. Belo and its former parent company, Belo Corp., announced they completed the split of The G. B. Dealey Retirement Pension Plan (“GBD Pension Plan”) into separately-sponsored plans as scheduled. A. H. Belo stated that as a result of the split, the Company would report a significant charge in the fourth quarter of 2010. The $132.3 million charge recorded in the fourth quarter represents A. H. Belo’s net unfunded pension liability for Company employees and retirees that the Company assumed from the GBD Pension Plan as of December 31, 2010. By June 30, 2011, A. H. Belo and Belo Corp. expect to complete a final assessment and reconciliation of the allocations made from the GBD Pension Plan to the AHC Pension Plans based upon final January 1, 2011 participant data.

     Under the new AHC Pension Plans, the Company will account for future pension obligations in accordance with accounting guidance for single-employer defined benefit plans. The Company will record the funded or unfunded position of the AHC Pension Plans as an asset or liability each period and certain actuarial gains and losses will be recorded to other comprehensive income and amortized to earnings over future periods. The Company anticipates that required cash pension contributions will total approximately $25 million in 2011. The first quarter cash contribution will be approximately $8.7 million, and $3.4 million of this amount will come from A. H. Belo funds held on deposit by Belo Corp. for pension contributions. In the second, third and fourth quarters, the Company anticipates required cash contributions of approximately

-more-

P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, TX 75202

A. H. Belo Corporation Reports Fourth Quarter and
Full-Year 2010 Financial Results
February 22, 2011
Page Six

$5.4 million each quarter. With these required payments and the additional $30 million contribution to be made in the first quarter, the Company’s cash pension contributions will total approximately $55 million in 2011.

     For tax purposes, the Company will deduct cash contributions to the AHC Pension Plans on its federal income tax returns.

     Pension expense, which is different than cash contributions, is expected to be $2 million in 2011.

     Fourth quarter results also include impairment charges totaling $2.5 million primarily related to investment write-offs.

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

     A. H. Belo will conduct a conference call today at 1:30 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 1-800-401-8436 (USA) or 612-333-4911 (International). A replay line will be available at 800-475-6701 (USA) or 320-365-3844 (International) from 3:30 p.m. CST on February 22 until 11:59 p.m. CST on March 1, 2011. The access code for the replay is 189802.

-more-

P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, TX 75202

A. H. Belo Corporation Reports Fourth Quarter and
Full-Year 2010 Financial Results
February 22, 2011
Page Seven

     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.

-more-

P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, TX 75202

A. H. Belo Corporation Reports Fourth Quarter and
Full-Year 2010 Financial Results
February 22, 2011
Page Eight

P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, TX 75202

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		2010				2009				2010				2009
		(unaudited)				(unaudited)				(unaudited)
Net operating revenues
Advertising		$	86,237			$	91,731			$	310,309			$	352,368
Circulation			35,121				36,341				141,091				136,549
Printing and distribution			9,489				7,411				35,908				29,431
Total net operating revenues			130,847				135,483				487,308				518,348
Operating Costs and Expenses
Salaries, wages and employee benefits			50,604				48,318				212,998				214,600
Other production, distribution and operating costs			46,677				53,674				183,017				209,327
Newsprint, ink and other supplies			18,478				12,641				55,472				60,987
Depreciation			7,800				9,402				32,901				38,857
Amortization			1,310				1,625				5,239				6,499
Asset impairment			2,543				3,700				3,404				106,389
Pension plan withdrawal			132,346				—				132,346				—
Total operating costs and expenses			259,758				129,360				625,377				636,659
(Loss) income from operations			(128,911	)			6,123				(138,069	)			(118,311	)
Other (expense) income
Interest expense			(203	)			(580	)			(808	)			(1,382	)
Other (expense) income, net			(729	)			(1,037	)			7,067				(677	)
Total other (expense) income			(932	)			(1,617	)			6,259				(2,059	)
Earnings
(Loss) earnings before income taxes			(129,843	)			4,506				(131,810	)			(120,370	)
Income tax benefit			(10,336	)			(1,143	)			(7,575	)			(12,475	)
Net (loss) earnings		$	(119,507	)		$	5,649			$	(124,235	)		$	(107,895	)
Net (loss) earnings per share
Basic and diluted		$	(5.65	)		$	0.27				(5.92	)		$	(5.25	)
Average shares outstanding
Basic and diluted			21,164				20,598				20,992				20,548

A. H. Belo Corporation

Condensed Consolidated Balance Sheets

		December 31,				December 31,
In thousands		2010				2009
		(unaudited)
Assets
Current assets
Cash and cash equivalents		$	86,291			$	24,503
Accounts receivable, net			56,793				62,977
Other current assets			32,593				34,464
Total current assets			175,677				121,944
Property, plant and equipment, net			176,676				203,329
Intangible assets, net			46,771				52,009
Other assets			21,516				27,145
Total assets		$	420,640			$	404,427
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable		$	29,159			$	19,191
Pension liabilities			54,833				—
Accrued expenses			27,448				29,788
Advance subscription payments			23,057				26,713
Total current liabilities			134,497				75,692
Pension liabilities			77,513				223
Deferred income taxes			591				—
Other liabilities			8,166				6,915
Total shareholders’ equity			199,873				321,597
Total liabilities and shareholders’ equity		$	420,640			$	404,427

A. H. Belo Corporation

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

		Three months ended								Twelve months ended
		December 31,								December 31,
In thousands (unaudited)		2010				2009				2010				2009
AS REPORTED
Net Income/(Loss)		$	(119,507	)		$	5,649			$	(124,235	)		$	(107,895	)
Addback/(Subtract):
Depreciation and amortization			9,110				11,027				38,140				45,356
Interest expense			203				580				808				1,382
Income tax benefit			(10,336	)			(1,143	)			(7,575	)			(12,475	)
EBITDA (1)			(120,530	)			16,113				(92,862	)			(73,632	)
Addback/(Subtract):
Pension expense			133,578				—				145,985				7
Impairments			2,543				3,700				3,404				106,389
Adjusted EBITDA (1)		$	15,591			$	19,813			$	56,527			$	32,764