May 4, 2009
Newspaper Publisher A. H. Belo Corporation Reports First Quarter 2009 Financial Results
DALLAS - Newspaper publisher A. H. Belo Corporation (NYSE: AHC) reported first quarter 2009 revenues of $128.5 million and a first quarter net loss of $103.1 million or $5.03 per share. Excluding special charges, the first quarter net loss was $18.1 million or $0.91 per share. First quarter results include $80.9 million or $3.93 per share in non-cash goodwill impairment at The Providence Journal and a charge of $4.0 million or $0.19 per share related to a reduction-in-force and related costs announced in January. The reduction-in-force is part of the Company's ongoing expense reduction initiatives. A. H. Belo's reduction-in-force impacted approximately 500 employees and will save approximately $27 million in salaries and benefits annually.
The Company had ($9.1) million in consolidated EBITDA and ($2.3) million in newspaper EBITDA for the first quarter. The aggregate newspaper EBITDA margin was (1.8) percent. Excluding the charge for the reduction-in-force and related costs, newspaper EBITDA was $1.3 million and the margin was 1.0 percent. EBITDA margins in the first quarter were highest at The Providence Journal, followed by The Dallas Morning News.
The Company's borrowings were $12.7 million as of March 31, 2009 and the Company was in compliance with its bank covenants at the end of the first quarter.
Robert W. Decherd, chairman, president and Chief Executive Officer, said, "A. H. Belo continues to face significant revenue challenges in 2009. Lower advertising revenues require us to continue to focus on expense reductions and operational realignment. These efforts resulted in significantly lower expenses in the first quarter, approximately $21.5 million below the first quarter of 2008 excluding the non-cash goodwill impairment charge of $80.9 million. We are extremely proud of the work done to adjust our cost base by A. H. Belo's operating units, corporate leadership and all of our employees."
First Quarter Highlights
Total revenue decreased 19.8 percent in the first quarter versus the prior year.
Advertising revenue, including print and Internet revenue, was down 28.2 percent, primarily due to declines in classified revenues in all AHC markets. AHC's Internet revenues accounted for 7.2 percent of total revenues in the quarter. Internet revenues were $9.3 million, 24 percent below the same period last year.
The Company continues to focus on editorial quality and value-added circulation for its advertisers. In the first quarter, circulation revenue rose 9 percent primarily due to increased prices for single copy and home delivery in Dallas and Providence.
Including the $4.0 million cost of the reduction-in-force and excluding the non-cash goodwill impairment charge of $80.9 million, total consolidated operating expenses in the first quarter were $150.5 million, a 12.5 percent decrease from the same period last year. This decrease reflects reductions in almost all expense categories. Newsprint expense decreased approximately $2.2 million in the first quarter due to lower prices and volumes.
The non-cash goodwill impairment charge at The Providence Journal was determined through an update to the annual impairment testing of goodwill and other intangible assets using the methodology prescribed by Statement of Financial Accounting Standards No. 142. The $80.9 million impairment charge is a non-cash charge to earnings and, as such, will not affect A. H. Belo's liquidity, cash flows from operating activities, debt covenants, or have any impact on future operations.
Corporate and non-operating expenses declined by $5.8 million in the first quarter versus the prior year, primarily due to lower outside services resulting from allocating more Belo Technologies costs directly to the operating units to better reflect usage of services.
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 1:30 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 1-877-777-1973 (USA) or 1-651-291-0900 (International). A replay line will be available at 1-800-475-6701 (USA) or 1-320-365-3844 (International) from 3:30 p.m. CDT on May 4 until 11:59 p.m. CDT on May 11, 2009. The access code for the replay is 996489.
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.