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DALLAS, Oct. 30 /PRNewswire-FirstCall/ -- 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 (http://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-publisheddaily 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 http://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.
A. H. Belo Corporation
Consolidated Statements of Operations
Three months ended Nine months ended
September 30, September 30,
-----------------------------------------------------------------------
In thousands, except
per share amounts 2009 2008 2009 2008
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Net operating revenues
Advertising $83,816 $114,811 $260,638 $364,575
Circulation 35,228 31,563 100,208 90,943
Other 7,823 7,459 22,019 21,757
----- ----- ------ ------
Total net operating
revenues 126,867 153,833 382,865 477,275
Operating Costs and Expenses
Salaries, wages and
employee benefits 51,668 77,804 166,283 220,909
Other production,
distribution and
operating costs 48,920 60,768 155,652 182,682
Newsprint, ink and
other supplies 12,302 23,523 48,345 70,230
Asset impairment 20,000 4,535 102,689 4,535
Depreciation 9,257 10,962 29,456 35,414
Amortization 1,625 1,625 4,874 4,875
----- ----- ----- -----
Total operating
costs and expenses 143,772 179,217 507,299 518,645
Loss from
operations (16,905) (25,384) (124,434) (41,370)
Other (expense) and income
Interest expense (211) (52) (802) (3,283)
Other income
(expense), net 240 (25) 362 1,237
--- --- --- -----
Total other
(expense) income 29 (77) (440) (2,046)
Earnings
Loss before income
taxes (16,876) (25,461) (124,874) (43,416)
Income tax benefit (11,110) (8,203) (8,970) (14,243)
------- ------ ------ -------
Net Loss $(5,766) $(17,258) $(115,904) $(29,173)
======= ======== ========= ========
Net loss per share
Basic and Diluted $(.28) $(.84) $(5.65) $(1.42)
Average shares outstanding
Basic and Diluted 20,538 20,479 20,521 20,477
Cash dividends
declared per share $- $0.375 $- $0.625
== ====== == ======
A. H. Belo Corporation
Condensed Consolidated Balance Sheets
-------------------------------------------------------------------
September 30, December 31,
In thousands 2009 2008
-------------------------------------------------------------------
(unaudited)
Assets
Current assets
Cash and cash
equivalents $10,825 $9,934
Accounts receivable, net 57,697 77,383
Other current assets 25,161 37,400
------ ------
Total current assets 93,683 124,717
Property, plant and
equipment, net 218,133 263,744
Intangible assets, net 53,634 139,449
Other assets 26,957 29,768
------ ------
Total assets $392,407 $557,678
======== ========
Liabilities and Shareholders' Equity
Current liabilities
Current portion of
notes payable $- $10,000
Accounts payable 14,364 32,950
Accrued expenses 32,701 42,834
Other current
liabilities 30,821 29,358
------ ------
Total current liabilities 77,886 115,142
Deferred income taxes 5,266 6,620
Other liabilities 15,322 27,264
Total shareholders' equity 293,933 408,652
------- -------
Total liabilities and
shareholders' equity $392,407 $557,678
======== ========
A. H. Belo Corporation
Consolidated EBITDA
Three months ended Nine months ended
September 30, September 30,
------------------------------------------------ -----------------
In thousands (unaudited) 2009 2008 2009 2008
------------------------------------------------ -----------------
Consolidated EBITDA (1) $14,217 $(8,287) $12,947 $4,691
Asset impairment (20,000) (4,535) (102,689) (4,535)
Depreciation and
Amortization (10,882) (12,587) (34,330) (40,289)
Interest Expense (211) (52) (802) (3,283)
Income Tax (Expense)
Benefit 11,110 8,203 8,970 14,243
------ ----- ----- ------
Net Loss $(5,766) $(17,258) $(115,904) $(29,173)
======= ======== ========= ========
A. H. Belo Corporation
Newspaper EBITDA
Three months ended Nine months ended
September 30, September 30,
------------------------------------------------ -----------------
In thousands (unaudited) 2009 2008 2009 2008
------------------------------------------------ -----------------
Newspaper EBITDA (1) $19,427 $1,468 $30,232 $35,202
Corporate & Non-Operating
Company Expenses (5,450) (9,730) (17,647) (31,748)
Other income, net 240 (25) 362 1,237
Asset impairment (20,000) (4,535) (102,689) (4,535)
Depreciation and
Amortization (10,882) (12,587) (34,330) (40,289)
Interest Expense (211) (52) (802) (3,283)
Income Tax (Expense)
Benefit 11,110 8,203 8,970 14,243
------ ----- ----- ------
Net Loss $(5,766) $(17,258) $(115,904) $(29,173)
======= ======== ========= ========
Note 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.
DATASOURCE: A. H. Belo Corporation
CONTACT: David A. Gross, vice president/Investor Relations and Strategic
Analysis of A. H. Belo Corporation, +1-214-977-4810
Web Site: http://www.ahbelo.com/