DALLAS, Oct. 31 /PRNewswire-FirstCall/ -- A. H. Belo Corporation
(NYSE: AHC) reported third quarter revenues of $153.8 million and a net loss
of $17.3 million or $0.84 per share for the third quarter. The results
include charges totaling $11.1 million related to a voluntary severance
program and $4.5 million related to the impairment of a printing press. The
aggregate newspaper EBITDA margin before these special items was 8.1 percent
in the third quarter. EBITDA margins were highest at The Providence Journal,
followed by The Dallas Morning News.
A. H. Belo drew $10 million from its revolving credit facility in
September to fund the voluntary severance program costs and negotiated an
amendment to its credit facility in October that will enable the Company to
have greater financial flexibility.
Robert W. Decherd, chairman, president and Chief Executive Officer, said,
"These are challenging times for A. H. Belo, the industry and the country. In
light of a weak ad environment and ad trends that may not stabilize in the
short term, we remain steadfast in delivering highly-valued audiences and
marketing solutions to advertisers while maximizing our existing
infrastructure and reducing expenses Company-wide."
AHC continues its transformation in streamlining operations and targeting
sustainable incremental revenue streams. Some of the Company's initiatives in
the third quarter included:
-- On August 27, The Dallas Morning News launched Briefing, a free,
home-delivered condensed print news product that leverages existing resources.
Briefing targets families who are non-subscribers but are interested in local
news and information. Advertisers and consumers have responded positively to
Briefing, resulting in approximately $0.5 million in incremental third quarter
revenue and lower than expected opt-out rates
-- Circulation was tripled for Al Dia, a free Spanish-language newspaper
published by The Dallas Morning News, to increase effectiveness for pre-print
advertisers
-- The Dallas Morning News and the Fort Worth Star-Telegram entered into
a joint distribution agreement to maximize operating efficiencies and improve
delivery time in certain parts of each newspaper's distribution area
-- The Press-Enterprise re-evaluated its circulation footprint and
eliminated its distribution to Palm Springs, which will improve EBITDA
performance by approximately $600,000 for 2009
-- The Dallas Morning News reduced the number of zoned editions it
publishes from five to three, thereby reducing press runs and simplifying
daily composition requirements
AHC completed a voluntary severance offer (VSO) in September, which will
result in annualized savings of approximately $24 million. As of September
30, 2008, after the majority of employees who accepted the VSO had left the
Company, A. H. Belo had approximately 2,980 full-time and 480 part-time
employees. The Company completed a reduction-in-force on October 24 in order
to achieve additional savings. The reduction-in-force affected approximately
90 employees and cost $2.4 million, which will be recorded in the fourth
quarter. The combined workforce reductions will result in savings of
approximately $29 million on an annualized basis.
Third Quarter Highlights
Total revenue decreased 15 percent in the third quarter versus the prior
year.
Advertising revenue, including print and Internet revenue, was down 22
percent, driven primarily by declines in classified revenue at The Dallas
Morning News and The Press-Enterprise.
For the third consecutive quarter, the year-over-year percent decline in
The Press-Enterprise's advertising revenues, including print and Internet,
improved. The percent decline in The Press-Enterprise's advertising revenues
improved 300 basis points from the second quarter to the third quarter. The
Press-Enterprise experienced a 29 percent increase in part-run revenue and an
8 percent increase in national revenue over the prior year.
AHC's Internet revenues accounted for 7.4 percent of total revenues in the
quarter. Internet revenues were $11.4 million, 19 percent below the same
period last year. Circulation revenue increased 12 percent.
In the third quarter, despite having incurred over $11 million in expenses
for the voluntary severance offer, AHC reduced total consolidated operating
expenses by $2.0 million or 1.2 percent over the same period last year. This
decrease included a $4.8 million decline in outside services expense, a $1.8
million decline in advertising and promotion expense and a $0.8 million
decline in newsprint expense. Excluding voluntary severance costs, total
operating expense at all three major newspapers declined in the third quarter.
Corporate & Non-Operating Company Results
Corporate and non-operating company expenses declined more than $3 million
versus the same period last year. The decline was due primarily to a drop in
outside services. The 2007 corporate and non-operating company expenses are
based on an estimate of allocated amounts since AHC did not become a separate
public company until February 8, 2008 when AHC was spun off from Belo Corp.
AHC's 2007 historical financial information reflects allocations for services
historically provided by Belo Corp., and these allocated costs may be
different from the actual costs AHC will incur for these services in the
future as a separate public company, including with respect to actual services
provided to AHC by Belo Corp. under a services agreement and other agreements.
In some instances, the costs incurred for these services as a separate public
company may be higher than the share of total Belo Corp. expenses allocated to
AHC historically.
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 10:00 a.m. CDT to discuss
financial and strategic results. The conference call will be available via
Webcast by accessing the Company's Web site (http://www.ahbelo.com/invest) or
by dialing 1-800-230-1092 (USA) or 612-288-0340 (International). A replay
line will be available at 800-475-6701 (USA) or 320-365-3844 (International)
from 12:00 p.m. CDT on October 31 until 11:59 p.m. CST on November 7, 2008.
The access code for the replay is 963236.
About A. H. Belo Corporation
A. H. Belo Corporation (NYSE: AHC) headquartered in Dallas, Texas, is a
distinguished 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, young adults and the
fast-growing Hispanic market. The Company's 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 http://www.ahbelo.com or by
contacting Maribel Correa, director/Investor Relations, at 214-977-2702.
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 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 on Form 10-K and other public
disclosures and filings with the Securities and Exchange Commission.
A. H. Belo Corporation
Consolidated Statements of Operations
Three months ended Nine months ended
In thousands, except per share September 30, September 30,
amounts (unaudited) 2008 2007 2008 2007
Net operating revenues
Advertising $114,811 $147,511 $364,575 $447,160
Circulation 31,563 28,210 90,943 83,721
Other 7,459 6,219 21,757 19,048
Total net operating revenues 153,833 181,940 477,275 549,929
Operating Costs and Expenses
Salaries, wages and employee
benefits 77,804 72,840 220,909 220,631
Other production, distribution and
operating costs 60,768 66,243 182,682 192,312
Newsprint, ink and other supplies 23,523 25,037 70,230 77,712
Impairment on printing press 4,535 - 4,535 -
Depreciation 10,962 11,142 35,414 33,854
Amortization 1,625 1,624 4,875 4,874
Total operating costs and
expenses 179,217 176,886 518,645 529,383
Earnings (loss) from operations (25,384) 5,054 (41,370) 20,546
Other income and expense
Interest expense (52) (8,768) (3,283) (26,547)
Other income (expense), net (25) 530 1,237 3,312
Total other income and expense (77) (8,238) (2,046) (23,235)
Earnings
Loss before income taxes (25,461) (3,184) (43,416) (2,689)
Income tax (benefit) expense (8,203) 3,097 (14,243) 688
Net loss $(17,258) $(6,281) $(29,173) $(3,377)
Net loss per share
Basic and Diluted $(.84) $(.31) $(1.42) $(.17)
Average shares outstanding
Basic and Diluted 20,479 20,452 20,477 20,452
Cash dividends declared per share $0.375 $ - $0.625 $ -
A. H. Belo Corporation
Condensed Consolidated Balance Sheets
September 30, December 31,
In thousands 2008 2007
(unaudited)
Assets
Current assets
Cash and temporary cash investments $17,712 $6,874
Accounts receivable, net 66,289 90,792
Other current assets 38,408 24,353
Total current assets 122,409 122,019
Property, plant and equipment, net 264,290 307,788
Intangible assets, net 155,219 160,093
Other assets 46,497 29,810
Total assets $588,416 $619,710
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long term debt $10,000 $ -
Accounts payable 28,907 25,384
Accrued expenses 42,194 32,550
Other current liabilities 32,323 62,468
Total current liabilities 113,424 120,402
Long-term debt - 378,916
Deferred income taxes 19,888 19,189
Other liabilities 13,511 14,263
Total shareholders' equity 441,593 86,940
Total liabilities and shareholders' equity $588,416 $619,710
A. H. Belo Corporation
Consolidated EBITDA
Three months ended Nine months ended
September 30, September 30,
In thousands (unaudited) 2008 2007 2008 2007
Consolidated EBITDA (1) $(12,822) $18,350 $156 $62,586
Depreciation and Amortization (12,587) (12,766) (40,289) (38,728)
Interest Expense (52) (8,768) (3,283) (26,547)
Income Tax Benefit (Expense) 8,203 (3,097) 14,243 (688)
Net Loss $(17,258) $(6,281) $(29,173) $(3,377)
A. H. Belo Corporation
Newspaper EBITDA
Three months ended Nine months ended
September 30, September 30,
In thousands (unaudited) 2008 2007 2008 2007
Newspaper EBITDA (1) $(3,067) $30,667 $30,667 $97,875
Corporate & Non-Operating
Company Expenses (9,730) (12,847) (31,748) (38,601)
Other Income (Expense), net (25) 530 1,237 3,312
Depreciation and Amortization (12,587) (12,766) (40,289) (38,728)
Interest Expense (52) (8,768) (3,283) (26,547)
Income Tax Benefit (Expense) 8,203 (3,097) 14,243 (688)
Net Loss $(17,258) $(6,281) $(29,173) $(3,377)
Note 1: The Company defines Consolidated EBITDA as net earnings before
interest expense, income taxes, depreciation and amortization and Newspaper
EBITDA as net earnings before corporate and non-operating company expenses,
other income net, interest expense, income taxes, 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.
