Newspaper Publisher A. H. Belo Corporation Reports First Quarter 2010 Financial Results

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May 04, 2010, 08:00 ET

DALLAS, May 4 /PRNewswire-FirstCall/ -- Newspaper publisher A. H. Belo Corporation (NYSE: AHC) today reported a net loss of $0.44 per share in the first quarter of 2010 compared to a net loss of $4.91 per share in the first quarter of 2009. Consolidated EBITDA in the first quarter of 2010 was $2.3 million, an increase of $11.3 million compared to the first quarter of 2009. Consolidated EBITDA in the first quarter of 2010 excluding pension expenses was $7.6 million, an increase of $16.7 million compared to the first quarter of 2009.

Robert W. Decherd, chairman, president and Chief Executive Officer, said, "Total first quarter revenue decreased 9.9 percent compared to the first quarter of 2009, the lowest year-to-year percent decline in two years. Advertising revenue, including print and digital revenue, was within 100 basis points of the Company's 2010 Financial Plan for the first quarter. Circulation revenue increased 12.2 percent compared to the first quarter of 2009. These improvements reflect the Company's strategy of focusing on selected audiences, creating high-quality local content and delivering valuable audiences to advertisers."

"As of March 31, the Company had no borrowings outstanding under its bank credit facility, remained in compliance with the facility's covenants and had approximately $43 million of cash and cash equivalents. We will continue to manage expenses aggressively to maximize EBITDA and operating cash flow over the long-term," Decherd said.

Operating Results

In the first quarter of 2010, total revenue was $115.8 million, a decrease of 9.9 percent compared to the first quarter of 2009. The percent decrease in total revenue was lowest at The Providence Journal, followed by The Dallas Morning News and The Press-Enterprise. Advertising revenue, including print and digital revenue, decreased 19.2 percent. Although digital revenue decreased 8.0 percent to $8.5 million, non-classified digital revenue increased 7.1 percent to $3.6 million. Due to circulation pricing actions implemented in Dallas and Providence in 2009, total circulation revenue increased 12.2 percent. Other revenue increased 7.2 percent.

Total consolidated operating expenses in the first quarter of 2010 were $124 million, a decrease of 46.4 percent compared to the first quarter of 2009. Excluding the $80.9 million non-cash goodwill impairment charge at The Providence Journal in the first quarter of 2009, total consolidated operating expenses in the first quarter of 2010 decreased 17.6 percent. The Company's newsprint expense in the first quarter of 2010 was $8.5 million, a decrease of 46.2 percent compared to the first quarter of 2009. In the first quarter of 2010, newsprint consumption decreased 33.0 percent and newsprint cost per metric ton decreased 19.7 percent. The Company's average purchase price per metric ton for newsprint declined 23.3 percent in the first quarter of 2010 compared to the first quarter of 2009.

In the first quarter of 2010, Newspaper EBITDA was $9.4 million, an improvement of $11.8 million compared to the first quarter of 2009. Newspaper EBITDA margin was highest at The Providence Journal, followed by The Dallas Morning News and The Press-Enterprise. At The Press-Enterprise, the Newspaper EBITDA margin improved significantly compared to the first quarter of 2009 due to aggressive expense management.

The Company has maintained its long-standing commitment to delivering high-quality local content through editorial investments and targeted new products. In April 2010, the 2010 Pulitzer Prize for Editorial Writing was awarded to The Dallas Morning News' Tod Robberson, Colleen McCain Nelson and William McKenzie for their "relentless editorials deploring the stark social and economic disparity between the city's better-off northern half and distressed southern half."

Corporate

In the first quarter of 2010, corporate and non-operating expenses, net of costs allocated to operating units, were $8.3 million, a decrease of 4.0 percent compared to the first quarter of 2009.

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 1-800-398-9402 (USA) or 612-338-9017 (International). A replay line will be available at 800-475-6701 (USA) or 320-365-3844 (International) from 3:00 p.m. CDT on May 4 until 11:59 p.m. CDT on May 11, 2010. The access code for the replay is 154864.

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 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, 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 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
Consolidated Statements of Operations

				Three months ended
				March 31,
In thousands, except per share amounts (unaudited)				2010		2009

Net operating revenues
	Advertising		$	72,186	$	89,331
	Circulation			35,586		31,714
	Other			7,986		7,449
		Total net operating revenues		115,758		128,494

Operating Costs and Expenses
	Salaries, wages and employee benefits			56,254		62,894
	Other production, distribution and operating costs			46,030		55,866
	Newsprint, ink and other supplies			11,222		19,619
	Asset impairment			-		80,940
	Depreciation			9,164		10,536
	Amortization			1,310		1,624
		Total operating costs and expenses		123,980		231,479

		Loss from operations		(8,222)		(102,985)

Other (expense) and income
	Interest expense			(203)		(300)
	Other income, net			25		822
		Total other (expense) income		(178)		522

Earnings
	Loss before income taxes			(8,400)		(102,463)
	Income tax expense (benefit)			728		(1,756)

		Net loss	$	(9,128)	$	(100,707)

Net loss per share
	Basic and Diluted		$	(0.44)	$	(4.91)

Average shares outstanding
	Basic and Diluted			20,767		20,506

A. H. Belo Corporation
Condensed Consolidated Balance Sheets


				March 31,		December 31,
In thousands				2010		2009
				(unaudited)
Assets
	Current assets
		Cash and cash equivalents	$	42,863	$	24,503
		Accounts receivable, net		48,722		62,977
		Other current assets		32,295		34,464
	Total current assets			123,880		121,944

	Property, plant and equipment, net			194,578		203,329
	Intangible assets, net			50,699		52,009
	Other assets			26,811		27,145

Total assets			$	395,968	$	404,427


Liabilities and Shareholders' Equity
	Current liabilities
		Accounts payable		$ 15,360		$ 19,191
		Accrued expenses		32,510		29,788
		Advance subscription payments		26,479		26,713
	Total current liabilities			74,349		75,692

	Deferred income taxes			566		223
	Other liabilities			7,278		6,915
	Total shareholders' equity			313,775		321,597

Total liabilities and shareholders' equity			$	395,968	$	404,427


A. H. Belo Corporation
Consolidated EBITDA


		Three months ended
		March 31,
In thousands (unaudited)		2010		2009


Consolidated EBITDA (1)	$	2,277	$	(9,063)
Asset impairment		-		(80,940)
Depreciation and Amortization		(10,474)		(12,160)
Interest Expense		(203)		(300)
Income Tax Benefit (Expense)		(728)		1,756
Net Loss	$	(9,128)	$	(100,707)



A. H. Belo Corporation
Newspaper EBITDA


		Three months ended
		March 31,
In thousands (unaudited)		2010		2009


Newspaper EBITDA (1)	$	9,433	$	(2,321)
Corporate & Non-Operating Company Expenses		(7,181)		(7,564)
Other income, net		25		822
Asset impairment		-		(80,940)
Depreciation and Amortization		(10,474)		(12,160)
Interest Expense		(203)		(300)
Income Tax Benefit (Expense)		(728)		1,756
Net Loss	$	(9,128)	$	(100,707)




(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.