A. H. Belo Corporation (NYSE: AHC) announced today that the
Company’s Board of Directors declared a quarterly cash dividend of
$0.06 per share, payable on June 3, 2011 to shareholders of record
at the close of business on May 16, 2011.
The Board authorized the dividend in conjunction with the
Company and its banks amending the Company’s revolving credit
facility effective May 2, 2011. The amendment permits dividends
without restriction as long as there is no outstanding balance on
the facility.
The Company also reported a net loss of $6.7 million, or $0.31
per share, for the first quarter of 2011 compared to a net loss of
$9.1 million, or $0.44 per share, in the first quarter of 2010.
Earnings before interest, taxes, depreciation and amortization
(“EBITDA”) was $2.8 million, an increase of $0.5 million or 22.7
percent compared to the first quarter of 2010. First quarter 2011
EBITDA includes a $0.9 million bonus accrual; a $0.7 million gain
on the sale of Ancestry.com Inc. (“Ancestry”) stock; and $0.6
million of sales tax recoveries.
When pension charges are added back to EBITDA (“Adjusted
EBITDA”) in both periods, the resulting Adjusted EBITDA in the
first quarter was $4.5 million, a decrease of $3.1 million compared
to the prior year. Higher newsprint and marketing expenses offset
decreased pension expense related to the Company’s move from
multi-employer to single-employer defined benefit accounting
effective January 1, 2011.
Robert W. Decherd, chairman, president and Chief Executive
Officer, said, “The amended credit facility enables us to execute
the next step in our financial strategy – reinstating a quarterly
dividend. The dividend rate will be $0.06 per share or $0.24 per
share on an annualized basis; our goal is to hold this rate for the
foreseeable future.
“First quarter total revenue decreased 3.1 percent compared to
2010. This decline is smaller than the decline in the fourth
quarter of 2010 and the smallest decline since the Company’s
spin-off in 2008. The Dallas Morning News’ total revenue decreased
only 0.4 percent, and its digital revenue increased 14.9 percent.
We anticipate full-year 2011 Adjusted EBITDA will be in the $45 to
$50 million range, and this range assumes no gains from real estate
dispositions. The Company’s 2010 Adjusted EBITDA was $56.5 million
and included $7.1 million of real estate gains.”
As of March 31, 2011, the Company had approximately $52 million
of cash and cash equivalents, had no borrowings outstanding under
its bank credit facility, and remained in compliance with bank
covenants. During the first quarter, the Company made required
contributions of $14.0 million to defined benefit pension and
pension transition supplement plans. This $14.0 million consists of
$8.7 million related to the Company’s defined benefit pension plans
and $5.3 million related to the Company’s pension transition
supplement plan. The Company’s former parent, Belo Corp., applied
$3.4 million that it held on behalf of the Company towards the $8.7
million, and the Company funded the remaining $10.6 million for the
defined benefit pension and pension transition supplement plans.
The Company also made the previously announced additional
contribution of $30 million to its defined benefit pension
plans.
Dividends and Amended Revolving Credit
Facility
Under the dividend policy approved by the Board of Directors on
May 2, 2011, the Company intends to pay a regular quarterly cash
dividend of $0.06 per share, or $0.24 per share on an annualized
basis.
The first quarterly dividend of $0.06 per share will be paid on
June 3, 2011 to shareholders of record at the close of business on
May 16, 2011. The Company anticipates three quarterly dividends of
$0.06 per share in calendar year 2011. As is customary at
dividend-paying companies, the two remaining anticipated dividends
for 2011 and all future dividends are each subject to Board
approval.
In conjunction with the announced dividend policy, the Company
and its banks amended the Company’s revolving credit facility
effective May 2, 2011. The amendment permits dividends and share
repurchases without restriction as long as there is no outstanding
balance on the facility. The amendment also eliminates restrictions
on capital expenditures, reduces administrative requirements, and
extends the facility’s maturity date from September 30, 2012 to
September 30, 2014. If borrowing capacity under the amended
facility is less than $7.5 million, a fixed charge coverage ratio
of 1:1 will apply. Other usual and customary covenants were carried
forward.
First Quarter Results
Total revenue was $112.2 million in the first quarter of 2011, a
decrease of 3.1 percent compared to the prior year. Advertising
revenue, including print and digital revenues, decreased 5.9
percent, with the smallest decrease at The Dallas Morning News
followed by The Press-Enterprise and The Providence Journal.
Display advertising revenue decreased 11.1 percent to $24.9
million, and preprint revenue increased 0.3 percent to $20.1
million. Classified revenue decreased 10.5 percent to $14.1
million. Digital revenue was $8.8 million, an increase of 5.4
percent. Advertising revenue from niche publications, which is
included in the display, preprint, classified and digital revenue
figures above, increased 17.6 percent to $5.3 million as Briefing,
The Morning News’ free, home-delivered condensed print news
product, increased advertising revenue 32.2 percent to $3.3
million. Circulation revenue decreased 1.5 percent to $35.1
million. Printing and distribution revenue increased 15.0 percent
to $9.2 million due primarily to increases in distribution and
printing revenues in Providence and Riverside.
Total consolidated operating expense in the first quarter was
$119.5 million. Excluding the effect of pension expense in both
periods, operating expense in the first quarter was $117.9 million,
a 0.7 percent decrease compared to the prior year.
The Company’s newsprint expense in the first quarter was $10.8
million, an increase of 27.4 percent compared to the prior year.
Newsprint consumption increased 4.9 percent to 16,935 metric tons
due to increased demand for commercial printing services and
advertising in Briefing and The Press-Enterprise. Newsprint cost
per metric ton increased 21.4 percent. The average purchase price
per metric ton for newsprint increased 19.4 percent.
Corporate and non-operating unit expenses in the first quarter,
net of costs allocated to operating units, were $8.4 million, an
increase of 1.4 percent compared to the prior year. Excluding the
effect of pension expense in both periods, corporate and
non-operating unit expenses were $8.3 million, a 5.5 percent
increase, as lower salaries and wages were offset by increases in
legal and depreciation expenses.
Other Items
In September 2010, Ancestry announced a definitive agreement to
acquire iArchives, Inc. (“iArchives”). In October 2010, Ancestry
completed the acquisition. A. H. Belo subsequently received
Ancestry stock with usual and customary sales restrictions in
exchange for the Company’s iArchives stock. The Company sold most
of its Ancestry shares in January 2011 and generated pre-tax
proceeds of $0.7 million.
In March 2011, the Company received an anticipated $3.5 million
tax refund related to A. H. Belo and Belo Corp.’s prior agreement,
pursuant to their Tax Matters Agreement, for Belo Corp. to carry
back A. H. Belo's 2009 taxable net operating loss to a previous tax
year.
As of March 31, 2011, A. H. Belo had approximately 2,350
full-time equivalents, a decrease of 5 percent compared to the
prior year.
Non-GAAP Financial
Measures
Reconciliations of net loss to EBITDA and Adjusted EBITDA are
included as exhibits to this release.
Investor Day and Discussion of
Financial Results
On April 5, A. H. Belo announced that its 2011 Investor Day will
take place on Tuesday, May 3 in New York City beginning at 9:00
a.m. EDT. A. H. Belo’s Management Committee will discuss first
quarter 2011 financial results, financial and operating strategies,
and the Company’s real estate portfolio.
Investor Day will be simultaneously webcast on the Company’s
website at www.ahbelo.com/invest. The Company will place the full
2011 Investor Day presentation on www.ahbelo.com/invest at
approximately 8:45 a.m. EDT. An archive and transcript of the
webcast will be available at www.ahbelo.com in the Investor
Relations section.
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 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.
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, real estate sales, 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 methods, patterns and demography,
and audits and related actions by the Audit Bureau of Circulations;
challenges implementing increased subscription pricing and new
pricing structures; 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
existing and new competitors and suppliers; labor relations;
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, 2010, and other public disclosures and filings with
the Securities and Exchange Commission.
A. H. Belo Corporation Condensed
Consolidated Statements of Operations Three months ended
March 31, In thousands,
except per share amounts (unaudited) 2011
2010
Net Operating Revenues
Advertising $ 67,936 $ 72,186 Circulation 35,052 35,586 Printing
and distribution 9,187 7,986 Total net
operating revenues 112,175 115,758
Operating Costs and
Expenses Salaries, wages and employee benefits 50,495 56,254
Other production, distribution and operating costs 45,652 46,030
Newsprint, ink and other supplies 14,502 11,222 Depreciation 7,583
9,164 Amortization 1,310 1,310 Total
operating costs and expenses 119,542 123,980 Loss from operations
(7,367 ) (8,222 )
Other Income (Expense), Net Interest
expense (207 ) (203 ) Other income, net 1,267
25 Total other income (expense), net 1,060 (178 )
Earnings Loss before income taxes (6,307 ) (8,400 ) Income
tax expense 420 728 Net loss $ (6,727 )
$ (9,128 )
Net loss per share: Basic and diluted $
(0.31 ) $ (0.44 )
Weighted average shares
outstanding: Basic and diluted 21,383 20,767
A. H. Belo Corporation Condensed Consolidated Balance
Sheets
March 31, December 31, In thousands (unaudited)
2011 2010
Assets Current assets Cash and cash equivalents $ 51,566 $
86,291 Accounts receivable, net 42,032 56,793 Other current assets
34,331 29,875 Total current assets 127,929 172,959
Property, plant and equipment, net 170,621 176,676
Intangible assets, net 45,461 46,771 Other assets 23,302
23,643 Total assets $ 367,313 $ 420,049
Liabilities and Shareholders' Equity Current liabilities
Accounts payable $ 17,996 $ 29,159 Pension liabilities - 54,833
Accrued expenses 29,214 27,448 Advance subscription payments
24,768 23,057 Total current liabilities 71,978 134,497
Pension liabilities 94,113 77,513 Other liabilities 7,176
8,166 Total shareholders' equity 194,046 199,873
Total liabilities and shareholders' equity $ 367,313 $
420,049
A. H. Belo Corporation
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
Three months ended
March 31, In thousands (unaudited) 2011
2010
AS REPORTED Net
Income/(Loss)
$ (6,727 ) $ (9,128 )
Addback/(Subtract):
Depreciation and amortization
8,893 10,474 Interest expense 207 203 Income tax expense 420
728 EBITDA (1) 2,793
2,277 Addback/(Subtract): Pension expense 1,685
5,350 Adjusted EBITDA (1) $ 4,478 $
7,627
(1) EBITDA is calculated by
adding depreciation and amortization, interest expense and income
tax expense recorded to net income (loss). Adjusted EBITDA is
calculated by adding pension expense and impairment expense
recorded to EBITDA.
Neither EBITDA nor Adjusted EBITDA is a
measure of financial performance under generally accepted
accounting principles ("GAAP"). Management uses EBITDA, Adjusted
EBITDA and similar measures in internal analyses as a supplemental
measure of the Company's financial performance and to assist with
determining bonus achievement, performance comparisons against its
peer group of companies, as well as capital spending and other
investing decisions. EBITDA or similar measures are also common
alternative measures of performance used by investors, financial
analysts and rating agencies to evaluate financial performance.
Neither EBITDA nor Adjusted 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 GAAP, and these non-GAAP measures may not be comparable to
similarly-titled measures of other companies.
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