October 30, 2009
Newspaper Publisher A. H. Belo Corporation Reports Third Quarter 2009 Financial Results
DALLAS - Newspaper publisher A. H. Belo Corporation (NYSE: AHC) reported third quarter 2009 revenues of $126.9 million and a net loss of ($5.8) million, or ($0.28) per share, for the third quarter. Included in the net loss was a $20 million, or ($0.97) per share non-cash impairment charge and a $12 million or $0.58 per share, tax benefit.
During the third quarter, A. H. Belo recorded a $20 million non-cash impairment charge related to a packaging facility operated by The Dallas Morning News. As part of the Company's ongoing efforts to realign its business and reduce expenses, The Dallas Morning News will close the packaging facility as it consolidates production operations into a single facility located in Plano, Texas. This consolidation of production facilities should be completed in the first quarter of 2010. The Company has begun the process of marketing the packaging facility for sale.
In September 2009, A. H. Belo and Belo Corp. ("Belo") amended the tax matters agreement executed between the two companies at the time of A. H. Belo's spin-off from Belo in 2008. The amendment allows for the carry back of A. H. Belo's losses since February 2008 to Belo's pre-spin-off tax returns. After the tax matters agreement was amended, Belo amended a previously filed tax return to generate a $12 million federal income tax refund. Belo will apply the refund towards A. H. Belo's future pension obligations and expects the refund to cover any 2010 pension contributions required of A. H. Belo. Correspondingly, A. H. Belo reversed the associated valuation allowance on its deferred tax assets related to the net operating losses carried back by Belo, resulting in a $12 million tax benefit for A. H. Belo.
In the third quarter, excluding the non-cash impairment charge, A. H. Belo generated $14.2 million of consolidated EBITDA and $19.4 million of newspaper EBITDA. The consolidated and newspaper EBITDA margins were 11.2 percent and 15.3 percent, respectively. EBITDA margins were highest at The Providence Journal, followed by The Dallas Morning News and The Press-Enterprise.
As of September 30, 2009, A. H. Belo had no borrowings outstanding under its bank credit facility and remained in compliance with the facility's covenants.
Robert W. Decherd, chairman, president and Chief Executive Officer, said, "The year-to-year percent decline in advertising revenue eased slightly in the third quarter when compared to the first and second quarters of 2009 due to the improved performance of The Dallas Morning News. For the third quarter, A. H. Belo successfully managed costs and increased consolidated EBITDA by $6.4 million versus the second quarter of 2009 and $22.5 million versus the third quarter of 2008. We are pleased with the recent improvements in the quantity and quality of The Morning News' journalistic products and the related opportunity to increase circulation pricing."
Third Quarter Highlights
Total revenue decreased 17.5 percent in the third quarter versus the prior year quarter.
Advertising revenue, including print and Internet revenues, decreased 27.0 percent, and classified revenue decreased 40.6 percent. In Dallas , the percent decline in advertising revenue was less than in Providence and Riverside. AHC's Internet revenue was $9.7 million and represented 7.6 percent of total revenue in the quarter. Although Internet revenue decreased 15.0 percent versus the same period last year, non-classified Internet revenue increased 15.6 percent.
The Company continues to focus on high-quality, local content and value-added circulation for its advertisers. In the third quarter, circulation revenue rose 11.6 percent due to pricing actions taken by The Dallas Morning News and The Providence Journal in late 2008 and thus far in 2009.
Total consolidated operating expenses in the third quarter were $143.8 million, a decrease of $35.4 million or 19.8 percent versus the same period last year. Excluding impairment charges in both periods, total consolidated operating expenses in the third quarter were $123.8 million, a decrease of $50.9 million or 29.1 percent versus the same period last year. Newsprint expense fell $9.5 million, a decline of 50.7 percent versus the same period last year, as both newsprint volume and prices declined.
Corporate and non-operating expenses, net of costs allocated to operating units, decreased by $3.9 million, or 36.6 percent in the third quarter versus the prior year quarter. This decrease is primarily due to lower outside services expense and the modification of a service agreement, which resulted in a one-time credit of $0.8 million.
Non-GAAP Financial Measures
Reconciliations of consolidated and newspaper EBITDA to net income 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 612-234-9960 (International). A replay line will be available at 800-475-6701 (USA) or 320-365-3844 (International) from 3:00 p.m. CDT on October 30 until 11:59 p.m. CST on November 6, 2009. The access code for the replay is 118270.
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 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, 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.