DALLASNEWS CORP
10-Ks and 10-Qs
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:
March 31, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file no.
1-33741
(Exact name of registrant as specified in its charter)
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Delaware
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38-3765318
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|
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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P. O. Box 224866, Dallas, Texas 75222-4866
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(214) 977-8200
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(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
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|
Former name, former address and former fiscal year, if changed since last report.
None
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
þ
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
|
Large accelerated filer:
o
|
Accelerated filer:
þ
|
Non-accelerated filer:
o
|
Smaller reporting company:
o
|
|||
|
(Do not check if a smaller reporting company)
|
||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
o
No
þ
|
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest possible date.
|
||
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Outstanding at
|
||
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Class
|
April 24, 2015
|
|
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Common Stock, $.01 par value
|
21,749,161
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|
Total Common Stock consists of
19,361,052
shares of Series A Common Stock and
2,388,109
shares of Series B Common Stock.
A. H. BELO CORPORATION
FORM 10-Q
TABLE OF CONTENTS
A. H. Belo Corporation and Subsidiaries
|
Three Months Ended March 31,
|
|||||||
|
In thousands, except share and per share amounts (unaudited)
|
2015
|
2014
|
|||||
|
Net Operating Revenue
|
|||||||
|
Advertising and marketing services
|
$
|
36,831
|
|
$
|
37,726
|
|
|
|
Circulation
|
21,038
|
|
21,012
|
|
|||
|
Printing, distribution and other
|
7,567
|
|
5,654
|
|
|||
|
Total net operating revenue
|
65,436
|
|
64,392
|
|
|||
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Operating Costs and Expense
|
|||||||
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Employee compensation and benefits
|
27,503
|
|
28,164
|
|
|||
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Other production, distribution and operating costs
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31,460
|
|
28,444
|
|
|||
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Newsprint, ink and other supplies
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8,166
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|
7,988
|
|
|||
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Depreciation
|
3,040
|
|
3,410
|
|
|||
|
Amortization
|
373
|
|
30
|
|
|||
|
Total operating costs and expense
|
70,542
|
|
68,036
|
|
|||
|
Operating loss
|
(5,106
|
)
|
(3,644
|
)
|
|||
|
Other Income (Expense), Net
|
|||||||
|
Losses on equity method investments, net
|
(414
|
)
|
(408
|
)
|
|||
|
Other income, net
|
109
|
|
117
|
|
|||
|
Total other income (expense), net
|
(305
|
)
|
(291
|
)
|
|||
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Loss from Continuing Operations Before Income Taxes
|
(5,411
|
)
|
(3,935
|
)
|
|||
|
Income tax (benefit) provision
|
(5,730
|
)
|
891
|
|
|||
|
Income (Loss) from Continuing Operations
|
319
|
|
(4,826
|
)
|
|||
|
Income from discontinued operations
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—
|
|
977
|
|
|||
|
Loss related to the divestiture of discontinued operations, net
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(12
|
)
|
(178
|
)
|
|||
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Tax expense from discontinued operations
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—
|
|
16
|
|
|||
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Gain (Loss) from Discontinued Operations, Net
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(12
|
)
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783
|
|
|||
|
Net Income (Loss)
|
307
|
|
(4,043
|
)
|
|||
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Net loss attributable to noncontrolling interests
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(56
|
)
|
(6
|
)
|
|||
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Net Income (Loss) Attributable to A. H. Belo Corporation
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$
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363
|
|
$
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(4,037
|
)
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Per Share Basis
|
|||||||
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Basic and Diluted
|
|||||||
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Continuing operations
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$
|
0.02
|
|
$
|
(0.22
|
)
|
|
|
Discontinued operations
|
—
|
|
0.03
|
|
|||
|
Net income (loss) attributable to A. H. Belo Corporation
|
$
|
0.02
|
|
$
|
(0.19
|
)
|
|
|
Weighted average shares outstanding
|
|||||||
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Basic
|
21,770,698
|
|
21,918,000
|
|
|||
|
Diluted
|
21,845,197
|
|
21,918,000
|
|
|||
See accompanying Notes to Condensed Consolidated Financial Statements.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
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3
|
|
A. H. Belo Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
|
Three Months Ended March 31,
|
|||||||
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In thousands (unaudited)
|
2015
|
2014
|
|||||
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Net Income (Loss)
|
$
|
307
|
|
$
|
(4,043
|
)
|
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|||||||
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Amortization of net actuarial gains (losses)
|
312
|
|
(173
|
)
|
|||
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Total other comprehensive income (loss)
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312
|
|
(173
|
)
|
|||
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Comprehensive Income (Loss)
|
619
|
|
(4,216
|
)
|
|||
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Comprehensive loss attributable to noncontrolling interests
|
(56
|
)
|
(6
|
)
|
|||
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Total Comprehensive Income (Loss) Attributable to A. H. Belo Corporation
|
$
|
675
|
|
$
|
(4,210
|
)
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
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4
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
A. H. Belo Corporation and Subsidiaries
|
March 31,
|
December 31,
|
||||||
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In thousands, except share amounts (unaudited)
|
2015
|
2014
|
|||||
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Assets
|
|||||||
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Current assets:
|
|||||||
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Cash and cash equivalents
|
$
|
81,442
|
|
$
|
158,171
|
|
|
|
Accounts receivable (net of allowance of $1,380 and $1,262 at March 31, 2015
and December 31, 2014, respectively) |
30,911
|
|
34,396
|
|
|||
|
Inventories
|
4,618
|
|
4,901
|
|
|||
|
Prepaids and other current assets
|
10,763
|
|
8,422
|
|
|||
|
Deferred income taxes, net
|
12
|
|
—
|
|
|||
|
Assets of discontinued operations
|
253
|
|
565
|
|
|||
|
Total current assets
|
127,999
|
|
206,455
|
|
|||
|
Property, plant and equipment, at cost
|
469,158
|
|
472,186
|
|
|||
|
Less accumulated depreciation
|
(409,342
|
)
|
(410,597
|
)
|
|||
|
Property, plant and equipment, net
|
59,816
|
|
61,589
|
|
|||
|
Intangible assets, net
|
12,273
|
|
656
|
|
|||
|
Goodwill
|
34,085
|
|
24,582
|
|
|||
|
Investments
|
2,577
|
|
2,572
|
|
|||
|
Deferred income taxes, net
|
462
|
|
—
|
|
|||
|
Other assets
|
2,817
|
|
2,893
|
|
|||
|
Total assets
|
$
|
240,029
|
|
$
|
298,747
|
|
|
|
Liabilities and Shareholders’ Equity
|
|||||||
|
Current liabilities:
|
|||||||
|
Accounts payable
|
$
|
11,723
|
|
$
|
12,904
|
|
|
|
Accrued compensation and benefits
|
9,638
|
|
8,233
|
|
|||
|
Dividends payable
|
—
|
|
50,148
|
|
|||
|
Other accrued expense
|
4,581
|
|
13,684
|
|
|||
|
Advance subscription payments
|
16,451
|
|
15,894
|
|
|||
|
Liabilities of discontinued operations
|
150
|
|
543
|
|
|||
|
Total current liabilities
|
42,543
|
|
101,406
|
|
|||
|
Long-term pension liabilities
|
64,391
|
|
65,859
|
|
|||
|
Other post-employment benefits
|
2,530
|
|
2,656
|
|
|||
|
Deferred income taxes, net
|
1,041
|
|
530
|
|
|||
|
Other liabilities
|
1,461
|
|
2,277
|
|
|||
|
Total liabilities
|
111,966
|
|
172,728
|
|
|||
|
Noncontrolling interests - redeemable
|
1,263
|
|
—
|
|
|||
|
Shareholders’ equity:
|
|||||||
|
Preferred stock, $.01 par value; Authorized 2,000,000 shares; none issued
|
—
|
|
—
|
|
|||
|
Common stock, $.01 par value; Authorized 125,000,000 shares
|
|||||||
|
Series A: issued 20,459,900 and 20,341,501 shares at March 31, 2015
and December 31, 2014, respectively |
204
|
|
203
|
|
|||
|
Series B: issued 2,388,237 and 2,388,237 shares at March 31, 2015
and December 31, 2014, respectively |
24
|
|
24
|
|
|||
|
Treasury stock, Series A, at cost; 1,065,484 and 944,636 shares held at March 31, 2015
and December 31, 2014, respectively |
(9,202
|
)
|
(8,087
|
)
|
|||
|
Additional paid-in capital
|
500,267
|
|
499,320
|
|
|||
|
Accumulated other comprehensive loss
|
(57,055
|
)
|
(57,367
|
)
|
|||
|
Accumulated deficit
|
(309,742
|
)
|
(308,330
|
)
|
|||
|
Total shareholders’ equity attributable to A. H. Belo Corporation
|
124,496
|
|
125,763
|
|
|||
|
Noncontrolling interests
|
2,304
|
|
256
|
|
|||
|
Total shareholders’ equity
|
126,800
|
|
126,019
|
|
|||
|
Total liabilities and shareholders’ equity
|
$
|
240,029
|
|
$
|
298,747
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
5
|
|
A. H. Belo Corporation and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity
|
Common Stock
|
Treasury Stock
|
||||||||||||||||||||||||||
|
In thousands, except share amounts (unaudited)
|
Shares
Series A |
Shares
Series B |
Amount
|
Additional
Paid-in Capital |
Shares Series A
|
Amount
|
Accumulated
Other Comprehensive Loss |
Accumulated Deficit
|
Non-controlling Interests
|
Total
|
|||||||||||||||||
|
Balance at
December 31, 2013 |
19,931,599
|
|
2,397,155
|
|
$
|
223
|
|
$
|
496,682
|
|
(495,200
|
)
|
$
|
(3,113
|
)
|
$
|
(15,093
|
)
|
$
|
(310,099
|
)
|
$
|
176
|
|
$
|
168,776
|
|
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4,037
|
)
|
(6
|
)
|
(4,043
|
)
|
|||||||
|
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(173
|
)
|
—
|
|
—
|
|
(173
|
)
|
|||||||
|
Treasury stock purchases
|
—
|
|
—
|
|
—
|
|
—
|
|
(75,228
|
)
|
(675
|
)
|
—
|
|
—
|
|
—
|
|
(675
|
)
|
|||||||
|
Issuance of shares for restricted stock units
|
157,659
|
|
—
|
|
2
|
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
|
Issuance of shares for stock option exercises
|
135,412
|
|
—
|
|
1
|
|
597
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
598
|
|
|||||||
|
Income tax expense on options and RSUs
|
—
|
|
—
|
|
—
|
|
470
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
470
|
|
|||||||
|
Share-based compensation
|
—
|
|
—
|
|
—
|
|
527
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
527
|
|
|||||||
|
Conversion of Series B to Series A
|
4,725
|
|
(4,725
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
|
Dividends
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,805
|
)
|
—
|
|
(1,805
|
)
|
|||||||
|
Balance at
March 31, 2014 |
20,229,395
|
|
2,392,430
|
|
$
|
226
|
|
$
|
498,274
|
|
(570,428
|
)
|
$
|
(3,788
|
)
|
$
|
(15,266
|
)
|
$
|
(315,941
|
)
|
$
|
170
|
|
$
|
163,675
|
|
|
Balance at
December 31, 2014 |
20,341,501
|
|
2,388,237
|
|
$
|
227
|
|
$
|
499,320
|
|
(944,636
|
)
|
$
|
(8,087
|
)
|
$
|
(57,367
|
)
|
$
|
(308,330
|
)
|
$
|
256
|
|
$
|
126,019
|
|
|
Net income (loss)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
363
|
|
(56
|
)
|
307
|
|
|||||||
|
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
312
|
|
—
|
|
—
|
|
312
|
|
|||||||
|
Capital contributions by noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,104
|
|
2,104
|
|
|||||||
|
Treasury stock purchases
|
—
|
|
—
|
|
—
|
|
—
|
|
(120,848
|
)
|
(1,115
|
)
|
—
|
|
—
|
|
—
|
|
(1,115
|
)
|
|||||||
|
Issuance of shares for restricted stock units
|
100,399
|
|
—
|
|
1
|
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
|
Issuance of shares for stock option exercises
|
18,000
|
|
—
|
|
—
|
|
71
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
71
|
|
|||||||
|
Income tax benefit on options and RSUs
|
—
|
|
—
|
|
—
|
|
506
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
506
|
|
|||||||
|
Share-based compensation
|
—
|
|
—
|
|
—
|
|
371
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
371
|
|
|||||||
|
Dividends
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,775
|
)
|
—
|
|
(1,775
|
)
|
|||||||
|
Balance at
March 31, 2015 |
20,459,900
|
|
2,388,237
|
|
$
|
228
|
|
$
|
500,267
|
|
(1,065,484
|
)
|
$
|
(9,202
|
)
|
$
|
(57,055
|
)
|
$
|
(309,742
|
)
|
$
|
2,304
|
|
$
|
126,800
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
|
6
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
A. H. Belo Corporation and Subsidiaries
|
Three Months Ended March 31,
|
|||||||
|
In thousands (unaudited)
|
2015
|
2014
|
|||||
|
Operating Activities
|
|||||||
|
Net Income (Loss)
|
$
|
307
|
|
$
|
(4,043
|
)
|
|
|
Adjustments to reconcile net income (loss) to net cash (used for) provided by operations:
|
|||||||
|
Net (income) loss from discontinued operations
|
12
|
|
(783
|
)
|
|||
|
Depreciation and amortization
|
3,413
|
|
3,440
|
|
|||
|
Net periodic benefit and contributions related to employee benefit plans
|
(1,142
|
)
|
(3,009
|
)
|
|||
|
Equity method investment losses
|
495
|
|
408
|
|
|||
|
Share-based compensation
|
371
|
|
487
|
|
|||
|
Deferred income taxes
|
(3,932
|
)
|
542
|
|
|||
|
Gain on investment related activity, net
|
(81
|
)
|
—
|
|
|||
|
Gain on disposal of fixed assets
|
(39
|
)
|
—
|
|
|||
|
Changes in working capital and other operating assets and liabilities, net
|
(7,879
|
)
|
2,443
|
|
|||
|
Net cash used for continuing operations
|
(8,475
|
)
|
(515
|
)
|
|||
|
Net cash (used for) provided by discontinued operations
|
(93
|
)
|
3,481
|
|
|||
|
Net cash (used for) provided by operating activities
|
(8,568
|
)
|
2,966
|
|
|||
|
Investing Activities
|
|||||||
|
Acquisitions
|
(14,111
|
)
|
—
|
|
|||
|
Capital expenditures, net
|
(1,170
|
)
|
(1,008
|
)
|
|||
|
Purchase of investments
|
(500
|
)
|
—
|
|
|||
|
Other investment related proceeds
|
81
|
|
—
|
|
|||
|
Net cash used for continuing investing activities
|
(15,700
|
)
|
(1,008
|
)
|
|||
|
Net cash used for discontinued investing activities
|
—
|
|
(199
|
)
|
|||
|
Net cash used for investing activities
|
(15,700
|
)
|
(1,207
|
)
|
|||
|
Financing Activities
|
|||||||
|
Dividends paid
|
(51,923
|
)
|
(1,805
|
)
|
|||
|
Purchase of treasury stock
|
(1,115
|
)
|
(675
|
)
|
|||
|
Proceeds from exercise of stock options
|
71
|
|
598
|
|
|||
|
Income tax benefit on options and RSUs
|
506
|
|
470
|
|
|||
|
Net cash used for financing activities
|
(52,461
|
)
|
(1,412
|
)
|
|||
|
Net increase (decrease) in cash and cash equivalents
|
(76,729
|
)
|
347
|
|
|||
|
Cash and cash equivalents at beginning of period
|
158,171
|
|
82,193
|
|
|||
|
Cash and cash equivalents at end of period
|
$
|
81,442
|
|
$
|
82,540
|
|
|
|
Supplemental Disclosures
|
|||||||
|
Income tax paid, net of refunds
|
$
|
8,918
|
|
$
|
—
|
|
|
|
Noncash investing and financing activities:
|
|||||||
|
Noncash contributions by noncontrolling interests
|
$
|
3,367
|
|
$
|
—
|
|
|
|
Impairment of equity method investment
|
$
|
—
|
|
$
|
934
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
7
|
|
A. H. Belo Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note 1:
Summary of Significant Accounting Policies
Description of Business.
A. H. Belo Corporation and subsidiaries (“A. H. Belo” or the “Company”), headquartered in Dallas, Texas, is a leading local news and information publishing company with commercial printing, distribution and direct mail capabilities, as well as expertise in emerging media and marketing services. With a continued focus on extending the Company’s media platform, A. H. Belo is able to deliver news and information in innovative ways to a broad spectrum of audiences with diverse interests and lifestyles.
The Company publishes
The Dallas Morning News
(
www.dallasnews.com
), Texas’ leading newspaper and winner of nine Pulitzer Prizes; the
Denton Record-Chronicle
(
www.dentonrc.com
), a daily newspaper operating in Denton, Texas, and various niche publications targeting specific audiences. A. H. Belo also offers digital and other business marketing solutions as well as event marketing.
Basis of Presentation.
These consolidated financial statements include the accounts of A. H. Belo and its subsidiaries. The Company follows the guidance set by the Financial Accounting Standards Board (“FASB”) or other authoritative accounting standards-setting bodies. Under Accounting Standards Codification (“ASC”) 810 –
Consolidation,
the Company determines whether subsidiaries, joint ventures, partnerships and other arrangements should be consolidated. Transactions between the consolidated companies are eliminated and noncontrolling interests in less than wholly-owned subsidiaries are reflected in the consolidated financial statements. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management, all adjustments considered necessary for a fair presentation are included. All dollar amounts are presented in thousands, except per share amounts, unless the context requires otherwise.
Presentation of current and prior period amounts in the consolidated financial statements and notes thereto reflect continuing operations of the Company, unless otherwise noted. Amounts presented for 2014 are exclusive of results related to discontinued operations as well as prior year results of businesses subsequently acquired in 2015.
New Accounting Pronouncements.
The FASB issued Accounting Standards Update (“ASU”) 2014-08,
Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
. Under this amendment, requirements for reporting discontinued operations have changed. Discontinued operations may include disposals of a business, nonprofit activity or component of an entity upon meeting certain other criteria. Disposals representing components of an entity must reflect a strategic shift that has a major effect on the entity’s operations and financial results. Previous conditions prohibiting the entity from having significant continuing involvement in the disposal group and requiring the elimination of operations and cash flows from ongoing operations of the entity have been removed. The update is effective on a prospective basis for disposals that occur within annual periods beginning on or after December 15, 2014, and interim periods in those years. The adoption of this standard did not have a material impact on the accounting for the Company’s discontinued operations.
The FASB issued ASU 2014-09,
Revenue from Contracts with Customers (Topic 606)
. This guidance generally clarified the principles for recognizing revenue and develops a common revenue standard for GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update is effective for fiscal years and interim periods beginning after December 15, 2016, and interim periods in those years. The Company is currently evaluating the impact this update will have on its recognition and presentation of revenues within the consolidated statements of operations.
The FASB issued ASU 2014-15,
Presentation of Financial Statements - Going Concern (Subtopic 205-40)
. This standard provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related disclosures. The new standard is effective for fiscal years and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company does not anticipate the adoption of this standard to have a material impact on the presentation of the consolidated financial statements or disclosures.
|
8
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
The FASB issued ASU 2015-02,
Consolidation (Topic 810)
. This update modifies requirements for consolidating certain legal entities. The standard removes the previous presumption that a general partner controls a limited partnership, revises when fees paid to a decision maker or service provider are a variable interest, and places additional emphasis on risk of loss in determining a controlling financial interest. The standard is effective for fiscal years and interim periods beginning after December 15, 2015, with early adoption permitted. The Company is currently evaluating the impact this update will have on its consolidation of legal entities within the consolidated financial statements.
Note 2:
Acquisitions
On
January 2, 2015
, the Company acquired
an
80 percent
voting interest in
DMV Digital Holdings Company, Inc.
(“DMV”) which holds all outstanding ownership interests of three Dallas-based businesses, Distribion, Inc., Vertical Nerve, Inc. and CDFX, LLC (d/b/a MarketingFX). These businesses specialize in marketing automation, search engine marketing, direct mail and promotional products, respectively. This acquisition complements and expands the product and service offerings currently available to A. H. Belo clients, thereby strengthening the Company’s diversified product portfolio and allowing for greater penetration in a competitive advertising market.
The Company’s interest in DMV was acquired for a cash purchase price of
$14,111
, net of
$152
cash acquired. Transaction costs related to the purchase were a component of Other production, distribution and operating costs and totaled
$1,287
, of which
$725
were incurred in 2015. The estimated fair value of the acquired businesses totals
$17,478
, of which
$3,495
is attributable to noncontrolling interests. Approximately
$693
of goodwill acquired is expected to be deductible for tax purposes. As further discussed in
Note 11 – Contingencies
, the contribution agreement included provisions for two pro-rata dividends and an embedded put arrangement with certain noncontrolling shareholders of DMV. The Company is in the process of finalizing the business valuation and its allocation to underlying assets and liabilities. The preliminary allocation of the purchase price, which is subject to adjustment upon finalization, is summarized as follows:
|
Estimated
Fair Value |
|||
|
Working capital, net of acquired cash
|
$
|
(79
|
)
|
|
Property, plant and equipment
|
57
|
|
|
|
Other intangible assets
|
11,990
|
|
|
|
Goodwill
|
9,503
|
|
|
|
Deferred income tax liabilities
|
(3,993
|
)
|
|
|
$
|
17,478
|
|
|
Operating results of the businesses acquired have been included in the Condensed Consolidated Statements of Operations from the acquisition date forward. Revenue from marketing services is recognized at the time services are delivered. For arrangements that include multiple deliverables, revenue and upfront fees are allocated to each unit of accounting based on their relative selling prices. For the three months ended March 31, 2015, operating results include
$1,858
of net operating revenue and a pretax loss of
$132
before adjusting for noncontrolling interests. Pro forma results of the Company, assuming all of the acquisition had occurred at the beginning of each period presented, would not be materially different from the results reported.
Note 3:
Discontinued Operations
On
September 3, 2014
, The Providence Journal Company, a wholly-owned subsidiary of the Company, completed a transaction for the (i) sale of substantially all of the assets comprising the newspaper operations of
The Providence Journal
and related real property located in Providence, Rhode Island, and (ii) assumption of certain liabilities by
LMG Rhode Island Holdings, Inc. (“LMG”), a subsidiary of New Media Investment Group Inc. On
November 21, 2013
, the Company completed the sale of the newspaper operations of
The Press-Enterprise
, including the production facility and related land, to Freedom Communications, Inc. (“Freedom Communications”) under a definitive asset purchase agreement.
Upon completion of these divestitures, the Company no longer owns newspaper operations in Providence, Rhode Island or Riverside, California. The Company continues to hold and market for sale certain land and buildings in Providence, Rhode Island,
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
9
|
|
including the administrative headquarters of
The Providence Journal
. The Company also retains the obligation for the A. H. Belo Pension Plan II, which provides benefits to employees of The Providence Journal Company.
As a result of the above transactions, the activity and balances of
The Providence Journal
and
The Press-Enterprise
are presented as discontinued operations. During the three months ended March 31, 2014, income from discontinued operations included revenues and expenses of
$21,194
and
$20,217
, respectively related to
The Providence Journal
. The Company reduced the gain on the sale of
The Providence Journal
in the three months ended March 31, 2015, and
The Press-Enterprise
in the three months ended March 31, 2014, by
$12
and
$178
, respectively. As of March 31, 2015, the remaining assets and liabilities of discontinued operations were
$253
and
$150
, respectively.
Note 4:
Goodwill and Intangible Assets
As presented in
Note 2 – Acquisitions
, the Company acquired
$9,503
of goodwill and
$11,990
of definite-lived intangible assets in connection with its acquisition of DMV. Amortization expense of
$283
was recorded for the three months ended March 31, 2015. The identification, valuation and amortization of these assets is not complete and subject to adjustment upon finalization. The definite-lived intangible assets are presented below as Other intangible assets, gross.
The Company also records goodwill and intangible assets from its previous acquisitions. The carrying value of goodwill, exclusive of DMV, was
$24,582
at
March 31, 2015
and December 31,
2014
. Definite-lived intangible assets recorded from previous acquisitions consist of customer relationships, amortized over an estimated useful life of
3 years
. Amortization expense related to customer relationships from previous acquisitions was
$90
and
$30
for the three months ended March 31, 2015 and 2014, respectively.
The carrying value of definite-lived intangible assets is set forth in the table below.
|
March 31,
|
December 31,
|
||||||
|
2015
|
2014
|
||||||
|
Customer relationships, gross
|
$
|
975
|
|
$
|
975
|
|
|
|
Other intangible assets, gross
|
11,990
|
|
—
|
|
|||
|
Finite-lived intangible assets, gross
|
12,965
|
|
975
|
|
|||
|
Accumulated amortization
|
(692
|
)
|
(319
|
)
|
|||
|
Finite-lived intangible assets, net
|
$
|
12,273
|
|
$
|
656
|
|
|
Note 5:
Investments
The Company owns investment interests in various entities which are recorded under the equity method or cost method of accounting, or consolidated if the Company holds a controlling financial interest. Under the equity method, the Company records its share of the investee’s earnings or losses each period as a component of other income, net, in the consolidated statements of operations. Under the cost method, the Company records earnings or losses when such amounts are realized. The Company evaluates the recoverability of its investments each period and estimates the fair value of its investments if identified events or circumstances indicate a significant adverse effect on the carrying value. Net losses on equity method investments were
$414
and
$408
for the
three months ended March 31, 2015
and
2014
, respectively. The table below sets forth the Company’s investments.
|
March 31,
|
December 31,
|
||||||
|
2015
|
2014
|
||||||
|
Equity method investments
|
$
|
1,145
|
|
$
|
1,640
|
|
|
|
Cost method investments
|
1,432
|
|
932
|
|
|||
|
Total investments
|
$
|
2,577
|
|
$
|
2,572
|
|
|
|
10
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
Equity method investments.
Investments recorded under the equity method of accounting include the following:
Wanderful Media, LLC (“Wanderful”)
–
The Company owns a
13.0 percent
interest in Wanderful, which operates
FindnSave.com
, a digital shopping platform where consumers can find national and local retail goods and services for sale. This platform combines local media participation with advanced search and database technology to allow consumers to view local advertised offers and online sales circulars or search for an item and receive a list of local advertisers and the price and terms offered for the searched item. It also utilizes location-based technology and incentives to drive consumers to retailer locations.
In the first quarter of 2014, the Company determined that an other-than-temporary decline occurred in the value of its investment in Wanderful Media after evaluating the estimated fair value of the investee as determined by an independent valuation specialist, which resulted in an impairment charge of
$934
in the first quarter. The Company attributes the impairment primarily to a decline in business related to Wanderful Media’s legacy products. An additional contribution of
$1,909
was made in 2014 to provide capital for development of new product offerings as Wanderful Media establishes its market presence.
Classified Ventures, LLC (“Classified Ventures”)
–
The Company owned a
3.3 percent
interest in Classified Ventures through its sale date on
October 1, 2014
. The principal business of Classified Ventures is the operation of
cars.com
.
On
October 1, 2014
, the Company completed a transaction with Gannett Co. Inc. and other unit holders of Classified Ventures whereby Gannett acquired all membership interests from the unit holders of Classified Ventures. Proceeds of
$81
were received in the first quarter of 2015, representing an adjustment to the sale price and increasing the gain on the transaction. As of March 31, 2015, a receivable of
$3,280
was recorded for additional proceeds related to the sale of Classified Ventures which are expected to be received by the end of the third quarter of 2015.
Consolidated investments.
The Company consolidates the following investments in which it has a controlling financial interest:
|
•
|
Your Speakeasy, LLC (“Speakeasy”) -
70.0 percent
ownership - targets middle-market business customers and provides turnkey social media account management and content development services.
|
|
•
|
Untapped Festivals, LLC (“Untapped”) -
51.0 percent
ownership - hosts events providing craft beer and entertainment events across major Texas cities.
|
|
•
|
DMV Digital Holdings Company, Inc. -
80.0 percent
ownership - specializes in marketing automation, search engine marketing, direct mail and promotional products.
|
Note 6:
Long-term Incentive Plans
A. H. Belo sponsors a long-term incentive plan under which
8,000,000
common shares were authorized for equity based awards. Awards may be granted to A. H. Belo employees and outside directors in the form of non-qualified stock options, incentive stock options, restricted shares, RSUs, performance shares, performance units or stock appreciation rights. In addition, stock options may be accompanied by full and limited stock appreciation rights. Rights and limited stock appreciation rights may also be issued without accompanying stock options.
Stock Options.
The table below sets forth a summary of stock option activity under its long-term incentive plan.
|
Number of
Options |
Weighted-Average
Exercise Price |
|||||
|
Outstanding at December 31, 2014
|
432,723
|
|
$
|
13.15
|
|
|
|
Exercised
|
(18,000
|
)
|
3.95
|
|
||
|
Canceled
|
(19,400
|
)
|
23.26
|
|
||
|
Outstanding at March 31, 2015
|
395,323
|
|
$
|
13.07
|
|
|
The intrinsic value of options exercised in
three months ended March 31, 2015
and
2014
, was
$100
and
$813
, respectively, and the intrinsic value of outstanding options at
March 31, 2015
was
$729
. The vested and exercisable weighted average remaining contractual term of stock options outstanding as of
March 31, 2015
, was
2.2 years
. The expense associated with all outstanding options was fully recognized in prior years.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
11
|
|
Restricted Stock Units.
Under A. H. Belo’s long-term incentive plan, the Company’s board of directors periodically awards RSUs. The RSUs have service and/or performance conditions and vest over a period of up to
three years
. Vested RSUs are redeemed
60 percent
in A. H. Belo Series A common stock and
40 percent
in cash. As of
March 31, 2015
, the liability for the portion of the award to be redeemed in cash was
$1,074
. The table below sets forth a summary of RSU activity under its long-term incentive plan.
|
Total
RSUs |
Issuance of
Common Stock |
RSUs
Redeemed in Cash |
Cash
Payments at Closing Price of Stock |
Weighted-
Average Price on Date of Grant |
||||||||||||
|
Non-vested at December 31, 2014
|
501,158
|
|
$
|
6.81
|
|
|||||||||||
|
Granted
|
71,102
|
|
8.79
|
|
||||||||||||
|
Vested
|
(167,341
|
)
|
100,399
|
|
66,942
|
|
$
|
596
|
|
6.63
|
|
|||||
|
Canceled
|
(48,239
|
)
|
7.47
|
|
||||||||||||
|
Non-vested at March 31, 2015
|
356,680
|
|
$
|
7.20
|
|
|||||||||||
Compensation Expense.
A. H. Belo recognizes compensation expense for RSUs issued to its employees and directors under its long-term incentive plan over the vesting period of the award, as set forth in the table below.
|
RSUs Redeemable in Stock
|
RSUs Redeemable in Cash
|
Total RSU Awards Expense
|
|||||||||
|
Three months ended March 31,
|
|||||||||||
|
2015
|
$
|
371
|
|
$
|
(68
|
)
|
$
|
303
|
|
||
|
2014
|
487
|
|
1,183
|
|
1,670
|
|
|||||
Note 7:
Income Taxes
Income taxes are recorded using the asset and liability method. The provision for taxes reflects the Company’s estimate of the effective tax rate expected to be applied for the full fiscal year, adjusted for any discrete transactions which are reported in the period in which they occur. The estimated effective tax rate is re-evaluated each quarter based on the Company’s estimated tax expense for the year. If a reliable estimate cannot be made of the annual effective tax rate, which could be caused by the significant variability in rates when marginal earnings are expected for the year and significant permanent or temporary differences exist, a discrete tax rate is calculated for the period.
The Company recognized income tax (benefit) provision from continuing operations of
$(5,730)
and
$891
for the
three months ended March 31,
2015
and
2014
, respectively. Effective income tax rates from continuing operations were
105.9 percent
and
(22.6) percent
for 2015 and 2014, respectively. The effective tax rate is affected by recurring items such as tax rates and income in jurisdictions which we expect to be fairly consistent in the near term. Tax benefit for the
three months ended March 31,
2015
, reflected a reduction in the valuation allowance for deferred tax assets of
$3,993
as a result of DMV acquisition-date deferred tax liabilities assumed. Tax provision for the three months ended March 31,
2014
, was primarily attributable to state income tax expense and changes in the valuation allowance on deferred tax assets.
Note 8:
Pension and Other Retirement Plans
Defined Benefit Plans.
The Company sponsors two defined benefit pension plans, the A. H. Belo Pension Plans I and II (collectively the “A. H. Belo Pension Plans”). A. H. Belo Pension Plan I provides benefits to certain employees primarily employed with
The Dallas Morning News
or the A. H. Belo corporate offices. A. H. Belo Pension Plan II provides benefits to certain employees of The Providence Journal Company, the obligation for which was retained by the Company in the sale transaction of the newspaper operations of
The Providence Journal
. No additional benefits are accruing under the A. H. Belo Pension Plans, as future benefits were frozen prior to the plans’ effective date.
During the
three months ended March 31,
2014
, the Company made required contributions of
$1,940
to the A. H. Belo Pension Plans.
No
contributions are required to the A. H. Belo Pension Plans in 2015. Management believes the assumed rate of return on the plans’ assets of
6.5 percent
continues to be appropriate.
|
12
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
Net Periodic Pension Benefit
The Company estimates net periodic pension expense or benefit based on the expected return on plan assets, the interest on projected pension obligations and the amortization of actuarial gains and losses in accumulated other comprehensive loss, if required. The table below sets forth components of net periodic pension benefit.
|
Three Months Ended March 31,
|
|||||||
|
2015
|
2014
|
||||||
|
Interest cost
|
$
|
3,540
|
|
$
|
4,330
|
|
|
|
Expected return on plans' assets
|
(5,008
|
)
|
(5,215
|
)
|
|||
|
Amortization of actuarial loss
|
312
|
|
—
|
|
|||
|
Net periodic pension expense (benefit)
|
$
|
(1,156
|
)
|
$
|
(885
|
)
|
|
Defined Contribution Plans.
The A. H. Belo Savings Plan, a defined contribution 401(k) plan, covers substantially all employees of A. H. Belo. Participants may elect to contribute a portion of their pretax compensation, as provided by the plan and the Internal Revenue Code. Employees can contribute up to
100 percent
of their annual eligible compensation (less required withholdings and deductions) up to statutory limits. The Company provides an ongoing dollar-for-dollar match of eligible employee contributions, up to
1.5 percent
of the employees’ compensation on a per-pay-period basis. During the
three months ended March 31, 2015
and
2014
, the Company recorded expense of
$258
and
$253
, respectively, for matching contributions to this plan.
Note 9:
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss contains actuarial gains and losses associated with the A. H. Belo Pension Plans and gains and losses resulting from negative plan amendments and other actuarial experience related to other post-employment benefit plans. The Company records amortization of accumulated other comprehensive loss in employee compensation and benefits in its consolidated statements of operations. Gains and losses associated with the A. H. Belo Pension Plans are amortized over the weighted average remaining life expectancy of the participants. Gains and losses associated with the Company’s other post-employment benefit plans are amortized over the average remaining service period of active plan participants. The net deferred tax assets associated with accumulated other comprehensive loss are fully reserved.
The table below sets forth the changes in accumulated other comprehensive loss, net of taxes.
|
Three Months Ended March 31,
|
|||||||||||||||||||||||
|
2015
|
2014
|
||||||||||||||||||||||
|
Total
|
Defined benefit pension plans
|
Other post-employment benefit plans
|
Total
|
Defined benefit pension plans
|
Other post-employment benefit plans
|
||||||||||||||||||
|
Balance, beginning of period
|
$
|
(57,367
|
)
|
$
|
(57,654
|
)
|
$
|
287
|
|
$
|
(15,093
|
)
|
$
|
(16,059
|
)
|
$
|
966
|
|
|||||
|
Amortization
|
312
|
|
312
|
|
—
|
|
(173
|
)
|
—
|
|
(173
|
)
|
|||||||||||
|
Balance, end of period
|
$
|
(57,055
|
)
|
$
|
(57,342
|
)
|
$
|
287
|
|
$
|
(15,266
|
)
|
$
|
(16,059
|
)
|
$
|
793
|
|
|||||
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
13
|
|
Note 10:
Earnings Per Share
The table below sets forth the reconciliations for net income (loss) and weighted average shares used for calculating basic and diluted earnings per share (“EPS”). The Company’s Series A and B common stock equally share in the distributed and undistributed earnings.
|
Three Months Ended March 31,
|
|||||||
|
2015
|
2014
|
||||||
|
Earnings (numerator)
|
|||||||
|
Net income attributable to A. H. Belo Corporation
|
$
|
363
|
|
$
|
(4,037
|
)
|
|
|
Less: Income (loss) from discontinued operations, net
|
(12
|
)
|
783
|
|
|||
|
Less: Income to participating securities
|
36
|
|
58
|
|
|||
|
Net income available to common shareholders from continuing operations
|
$
|
339
|
|
$
|
(4,878
|
)
|
|
|
Shares (denominator)
|
|||||||
|
Weighted average common shares outstanding (basic)
|
21,770,698
|
|
21,918,000
|
|
|||
|
Effect of dilutive securities
|
74,499
|
|
—
|
|
|||
|
Adjusted weighted average shares outstanding (diluted)
|
21,845,197
|
|
21,918,000
|
|
|||
|
Earnings per share from continuing operations
|
|||||||
|
Basic and Diluted
|
$
|
0.02
|
|
$
|
(0.22
|
)
|
|
Holders of service-based RSUs participate in A. H. Belo dividends on a one-for-one share basis. Distributed and undistributed income associated with participating securities is included in the calculation of EPS under the two-class method as prescribed under ASC 260 –
Earnings Per Share
.
The Company considers outstanding stock options and RSUs in the calculation of its earnings per share. A total of
565,733
and
1,316,475
options and RSUs outstanding during the
three months ended March 31,
2015
and
2014
, respectively, were excluded from the calculation because they did not affect the earnings per share for common shareholders or the effect was anti-dilutive.
Note 11:
Contingencies
Legal proceedings.
A number of legal proceedings are pending against A. H. Belo. In the opinion of management, liabilities, if any, arising from these legal proceedings would not have a material adverse effect on A. H. Belo’s results of operations, liquidity or financial condition.
Pro-rata dividends.
In conjunction with the acquisition of DMV, the contribution agreement provides for a pro-rata dividend of
100 percent
and
50 percent
of DMV’s free-cash flow for fiscal years 2015 and 2016, respectively. Free-cash-flow is defined as earnings before interest, taxes, depreciation and amortization less capital expenditures, debt amortization and interest expense, as applicable.
Redeemable noncontrolling interest.
In connection with the acquisition, the Company entered into a shareholder agreement which provided a put option to a noncontrolling shareholder. The put option provides the shareholder with the right to require the Company to purchase up to
25 percent
of his ownership interest between the second and third anniversaries of the agreement and up to
50 percent
of his ownership interest between the fourth and fifth anniversaries of the agreement.
The exercisability of the noncontrolling interest put arrangement is outside of the control of the Company. As such, the redeemable noncontrolling interest of
$1,263
is reported in the mezzanine equity section in the condensed consolidated balance sheets as of March 31, 2015. In the event that the put options expire unexercised, the related portion of noncontrolling interest would be classified as a component of equity in the condensed consolidated balance sheets.
Redeemable noncontrolling interests are recorded at fair value on the acquisition date and the carrying value adjusted each period to the greater of the estimated redemption value or the value that would otherwise be assigned if the interests were not redeemable. Changes in redemption value are recorded to retained earnings or additional paid in capital, as applicable, and have no effect to earnings of the Company.
No
adjustments to the carrying value of redeemable noncontrolling interests have been recorded since the January 2, 2015 acquisition date of DMV.
|
14
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
15
|
|
A. H. Belo intends for the discussion of its financial condition and results of operations that follows to provide information that will assist in understanding its financial statements, the changes in certain key items in those statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect its financial statements. The following information should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and related Notes filed as part of this report. Amounts presented for 2014 are exclusive of results related to discontinued operations and businesses acquired in 2015. Unless otherwise noted, amounts in Management’s Discussion and Analysis reflect continuing operations of the Company, and all dollar amounts are presented in thousands, except per share amounts.
OVERVIEW
A. H. Belo, headquartered in Dallas, Texas, is a leading local news and information publishing company with commercial printing, distribution and direct mail capabilities, as well as expertise in emerging media and marketing services. With a continued focus on extending the Company’s media platform, A. H. Belo is able to deliver news and information in innovative ways to a broad spectrum of audiences with diverse interests and lifestyles.
The Company publishes
The Dallas Morning News
(
www.dallasnews.com
), Texas’ leading newspaper and winner of nine Pulitzer Prizes; the
Denton Record-Chronicle
(
www.dentonrc.com
), a daily newspaper operating in Denton, Texas, and various niche publications targeting specific audiences. A. H. Belo offers digital and other business marketing solutions and provides event promotion and marketing services.
On January 2, 2015, the Company acquired an
80 percent
voting interest in DMV Digital Holdings Company, Inc. (“DMV”), into which the stock of three Dallas-based companies, Distribion, Inc. (“Distribion”), Vertical Nerve, Inc. (“Vertical Nerve”) and CDFX, LLC (d/b/a “MarketingFX”), were contributed. These businesses specialize in local marketing automation, search engine marketing, direct mail and promotional products, respectively. This acquisition complements and expands the product and service offerings currently available to A. H. Belo clients, thereby strengthening the Company’s diversified product portfolio and allowing for greater penetration in a competitive advertising market.
|
16
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
RESULTS OF CONTINUING OPERATIONS
Consolidated Results of Continuing Operations
The table below sets forth the components of A. H. Belo’s net operating revenue.
|
Three Months Ended March 31,
|
||||||||||||||||
|
2015
|
Percent
of Total Revenue |
Percentage
Change |
2014
|
Percent
of Total Revenue |
||||||||||||
|
Advertising and marketing services
|
$
|
36,831
|
|
56.2
|
%
|
(2.4
|
)%
|
$
|
37,726
|
|
58.6
|
%
|
||||
|
Display advertising
|
11,140
|
|
(2.7
|
)%
|
11,452
|
|
||||||||||
|
Classified advertising
|
5,356
|
|
(11.7
|
)%
|
6,069
|
|
||||||||||
|
Preprint advertising
|
10,997
|
|
(11.8
|
)%
|
12,465
|
|
||||||||||
|
Digital advertising
|
5,555
|
|
(7.3
|
)%
|
5,995
|
|
||||||||||
|
Marketing services
|
3,783
|
|
116.8
|
%
|
1,745
|
|
||||||||||
|
Circulation
|
21,038
|
|
32.2
|
%
|
0.1
|
%
|
21,012
|
|
32.6
|
%
|
||||||
|
Printing, distribution and other
|
7,567
|
|
11.6
|
%
|
33.8
|
%
|
5,654
|
|
8.8
|
%
|
||||||
|
$
|
65,436
|
|
100.0
|
%
|
1.6
|
%
|
$
|
64,392
|
|
100.0
|
%
|
|||||
Advertising and marketing services revenue
The Company’s primary revenues are generated from advertising within its core newspapers, niche publications and related websites and from subscription and single copy sales of its printed newspapers. As a result of competitive and economic conditions, the Company and the newspaper industry have faced a significant decline in core advertising revenue over the past decade. The Company has sought to diversify its revenues through development and investment in new product offerings, increased circulation rates and leveraging of its existing assets to offer cost efficient printing and distribution services to its local markets. Through these efforts, the Company has achieved year-over-year revenue growth of
1.6 percent
as expansion of marketing services operations, resulting from the acquisition of businesses in January 2015, and additional commercial printing and distribution operations, which commenced at the end of the first quarter of 2014, offset declines in core advertising revenues.
Advertising revenue from core newspapers continues to be adversely affected by the shift of advertiser spending to other forms of media. Decreases in print display and classified categories are indicative of continuing trends by advertisers towards digital advertising, which is widely available from many sources. Companies are redistributing more of their advertising budgets towards programmatic channels to acquire digital advertising on multiple platforms which provides for targeted delivery and measurement. The Company has responded to these challenges by expanding its use of programmatic channels to meet customer demands for digital ad placement opportunities in display, mobile, video and social categories.
Expanded digital and marketing services product offerings have allowed the Company to leverage the Company’s existing resources and relationships to offer additional value to present and new advertising clients. Solutions provided by 508 Digital include development of mobile websites, search engine marketing and optimization, video, mobile advertising, email marketing, advertising analytics and online reputation management services. Through Speakeasy, the Company is able to target middle-market business customers and provide turnkey social media account management and content development services. The businesses comprising the DMV acquisition specialize in marketing automation, search engine marketing, direct mail and promotional products, respectively. This acquisition complements and expands the product and service offerings currently available to A. H. Belo clients, thereby strengthening the Company’s diversified product portfolio and allowing for greater penetration in a competitive advertising market.
The following summarizes year-over-year performance in advertising and marketing service revenue for the first quarter of 2015 by category.
Display advertising
– As advertisers continue to diversify marketing budgets to incorporate more and varied avenues of reaching consumers, traditional display advertising continues to decline. Revenue decreased due to declines in electronics, department stores and furniture, partially offset by increases in medical and other. While most categories, except medical, experienced unfavorable rate variances from the prior year period, volumes were improved overall and in most categories, except electronics and department stores. Additionally, general advertising declined in substantially all categories as a result of volume and rate declines.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
17
|
|
Classified advertising
– Classified advertising remains challenged as alternative digital outlets continue to emerge. Overall classified revenue decreased due to lower volumes in all categories except legal. This decline was partially offset by higher rates in the employment category.
Preprint advertising
– Revenue decreased due to a decline in the volume of preprint newspaper inserts, consistent with the decline in circulation volumes and due to lower volumes in home delivery mail advertising.
Digital advertising
– Digital revenue is primarily comprised of online display and classified advertising which consists of advertising placed on the Company’s websites or through programmatic advertising channels. Online classified is comprised of digital listings in auto, real estate, employment and other categories, including the Company’s resale of affiliate products such as
cars.com
. Online classified and display advertising declined by
9.9 percent
and
2.1 percent
to
$3,620
and
$1,933
, respectively. In the fourth quarter of 2014, the Company divested of its membership interest in Classified Ventures, the owner of
cars.com
, and entered into a modified affiliate agreement allowing
The Dallas Morning News
to resell
cars.com
products and services exclusively in its local market. The modified agreement increases the wholesale rate that the Company pays to Classified Ventures for selling
cars.com
products. Declines in online classified advertising are driven by a decrease of $305 related to
cars.com
.
Marketing services
– The Company began generating marketing services revenue in 2013 with 508 Digital and Speakeasy. The acquisition of DMV in January 2015 added three more marketing services companies. Marketing services revenue more than doubled as a result of growth at Speakeasy of approximately 43 percent and $1,858 of incremental revenue from the acquired entities.
Circulation revenue
Circulation revenue remained flat. Home delivery and single copy paid print circulation volumes declined
7.9 percent
and
19.1 percent
, respectively. These declines were offset by an effective rate increase of
7.5 percent
and
24.2 percent
in home delivery and single copy rates, respectively.
Printing, distribution and other revenue
The Company’s newspapers aggressively market the capacity of their printing and distribution assets to other newspapers that would benefit from cost sharing arrangements. Revenue increased primarily due to the commencement of commercial printing services in March 2014 for various regional and community newspapers. This category also incorporates expanded event marketing revenues for events sponsored by Crowdsource and Untapped as the Company continues to leverage resources and relationships to further expand its advertising influence.
|
18
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
Operating Costs and Expenses
The table below sets forth the components of the Company’s operating expenses.
|
Three Months Ended March 31,
|
||||||||||
|
2015
|
Percentage
Change |
2014
|
||||||||
|
Operating Costs and Expense
|
||||||||||
|
Employee compensation and benefits
|
$
|
27,503
|
|
(2.3
|
)%
|
$
|
28,164
|
|
||
|
Other production, distribution and operating costs
|
31,460
|
|
10.6
|
%
|
28,444
|
|
||||
|
Newsprint, ink and other supplies
|
8,166
|
|
2.2
|
%
|
7,988
|
|
||||
|
Depreciation
|
3,040
|
|
(10.9
|
)%
|
3,410
|
|
||||
|
Amortization
|
373
|
|
n/m
|
|
30
|
|
||||
|
Total operating costs and expense
|
$
|
70,542
|
|
3.7
|
%
|
$
|
68,036
|
|
||
Employee compensation and benefits
– The Company continues to implement measures to optimize its workforce and reduce risk associated with future obligations towards legacy employee benefit plans. Employee compensation and benefits decreased by $661. Savings included lower incentive compensation of $1,562 due to fewer annual equity awards and a reduced market price of the Company’s stock, partially offset by higher salaries of $782 primarily due to expanded marketing services resulting from the acquisition of DMV and its approximately 45 employees.
Other production, distribution and operating costs
– Expenses increased as a result of the Company’s continuing initiatives to develop new products and service offerings. The increases were primarily due to higher legal and consulting fees of $725 associated with the January acquisition of three marketing service companies; higher temporary labor costs and delivery expenses of $824 associated with commercial printing operations; and higher expenses of approximately $383 related to the Company’s marketing services and event marketing operations as those segments continue to grow.
Newsprint, ink and other supplies
– Expenses increased due to higher costs for purchased supplements and inserts, offset by reduced newsprint rates and lower consumption, consistent with lower circulation volumes of Company and certain third-party newspapers. Newsprint consumption approximated
7,754
and
8,120
metric tons in
three months ended March 31, 2015
and 2014, respectively, at an average cost per metric ton of
$582
and
$601
, respectively. The average purchase price for newsprint was
$570
and
$619
per metric ton in 2015 and 2014, respectively.
Depreciation
– Expenses decreased due to a lower depreciable asset base as a higher level of in-service assets are fully depreciated.
Amortization
–
Expense increased due to amortization of customer relationships and other intangible assets acquired in 2015, 2014 and 2013 which are amortized over their useful lives of three to fifteen years.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
19
|
|
Other
The table below sets forth the other components of the Company’s results of operations.
|
Three Months Ended March 31,
|
||||||||||
|
2015
|
Percentage
Change |
2014
|
||||||||
|
Other Income (Expense), Net
|
||||||||||
|
Losses on equity method investments, net
|
$
|
(414
|
)
|
1.5
|
%
|
$
|
(408
|
)
|
||
|
Other income, net
|
109
|
|
6.8
|
%
|
117
|
|
||||
|
Total other income (expense), net
|
$
|
(305
|
)
|
4.8
|
%
|
$
|
(291
|
)
|
||
|
Income tax provision (benefit)
|
$
|
(5,730
|
)
|
n/m
|
|
$
|
891
|
|
||
Other income (Expense)
– Other income (expense) is primarily comprised of losses from equity method investments. Losses in 2014 included an other-than-temporary impairment of
$934
related to the investment in Wanderful Media, The Company determined that an other-than-temporary decline occurred in the value of the investment after evaluating the estimated fair value of the investee as determined by an independent valuation specialist. The Company attributes the impairment primarily to a decline in business related to Wanderful Media’s legacy products. The 2014 impairment was offset by income on the Company’s investment in Classified Ventures. The Company sold its membership interest in Classified Ventures in the fourth quarter of 2014.
Tax provision
– Income tax decreased due to lower required valuation allowances resulting from the Company’s ability to use acquisition-date deferred tax liabilities. See the Condensed Consolidated Financial Statements,
Note 7 – Income Taxes
.
|
20
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
Earnings and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization from Continuing Operations
In addition to net income (loss) from continuing operations, the Company also evaluates earnings before interest, taxes, depreciation and amortization (“EBITDA”) which is presented for continuing operations by adjusting for discontinued operations and losses attributable to noncontrolling interests. Adjusted EBITDA is calculated, as applicable, by adding back to EBITDA acquisition costs, non-cash impairment expense and net investment-related gains and losses. Acquisition costs in 2015 related to the Company’s January purchase of three marketing services businesses. Net investment-related gains in 2015 is comprised of a post-close payment related to the Company’s sale of its membership interest in Classified Ventures of
$81
. Net investment-related losses in 2014 consist of an other-than-temporary impairment of the Company’s investment in Wanderful Media of
$934
.
|
Three Months Ended March 31,
|
|||||||
|
2015
|
2014
|
||||||
|
Net Income (Loss) Attributable to A. H. Belo Corporation
|
$
|
363
|
|
$
|
(4,037
|
)
|
|
|
Less: Income (Loss) from discontinued operations, net
|
(12
|
)
|
783
|
|
|||
|
Plus: Net loss attributable to noncontrolling interests
|
(56
|
)
|
(6
|
)
|
|||
|
Income (Loss) from continuing operations
|
319
|
|
(4,826
|
)
|
|||
|
Depreciation and amortization
|
3,413
|
|
3,440
|
|
|||
|
Income tax provision (benefit)
|
(5,730
|
)
|
891
|
|
|||
|
EBITDA from Continuing Operations
|
(1,998
|
)
|
(495
|
)
|
|||
|
Addback:
|
|||||||
|
Acquisition costs
|
725
|
|
—
|
|
|||
|
Net investment-related (gains) losses
|
(81
|
)
|
934
|
|
|||
|
Adjusted EBITDA from Continuing Operations
|
$
|
(1,354
|
)
|
$
|
439
|
|
|
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 supplemental measures of the Company’s financial performance, and for performance comparisons against its peer group of companies. Adjusted EBITDA is also used by management to evaluate the cash flows available for capital spending, investing, pension contributions (required and voluntary), dividends and other equity-related transactions. 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.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
21
|
|
Discontinued Operations
As a result of the sale of
The Providence Journal,
which was completed on
September 3, 2014
, and the sale of
The Press-Enterprise
, which was completed on
November 21, 2013
(see
Note 3 – Discontinued Operations
), the disposition and results of operations associated with these businesses are reported as discontinued operations in the Company’s financial statements. For the three months ended March 31, 2015 and 2014, gain (loss) related to the discontinued operations was
$(12)
and
$783
, respectively, which was primarily generated by
The Providence Journal
.
Upon completion of these transactions, the Company no longer owns newspaper operations in either Providence, Rhode Island or Riverside, California. The Company continues to own and market for sale certain land and buildings in Providence, Rhode Island, which served as the administrative headquarters of
The Providence Journal
. The Company also retains the obligation for the A. H Belo Pension Plan II, which provides benefits to employees of The Providence Journal Company.
|
22
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
Liquidity and Capital Resources
The Company’s cash balance as of
March 31, 2015
and December 31, 2014, was
$81,442
and
$158,171
, respectively. Working capital as of
March 31, 2015
and December 31, 2014, was
$85,456
and
$105,049
, respectively. The decrease in cash is primarily a result of distributions to shareholders of a portion of the cash proceeds generated in 2014 for the sale of the Company’s interest in Classified Ventures and the sale of
The Providence Journal
, which collectively generated cash proceeds of approximately $146,000. Other significant uses of cash include acquisition of new businesses and payment of taxes related to the gains on the 2014 divestiture transactions.
In 2015, the Company returned $53,038 to shareholders through quarterly and special dividends and through its stock repurchase program, as discussed below in Financing Cash Flows. Payment of dividends and share repurchases are dependent upon available cash after considering future operating and investing requirements and cannot be guaranteed.
In January 2015, the Company acquired three companies for
$14,111
through a newly-formed holding company in which the Company has an 80 percent voting interest as described in
Note 2 – Acquisitions
. The Company paid cash for the acquisition, and transaction costs were
$1,287
, of which
$725
were incurred in 2015. This acquisition is part of the Company’s revenue diversification strategy, and the Company continues to seek future acquisitions which will complement and leverage the Company’s existing products.
Cash used in operating activities in 2015 totaled $8,981, which included $8,918 of tax payments related to the gains on the divestiture of assets in 2014. Cash flows from operations are expected to grow throughout the year as benefits from cost cutting measures are realized and as revenues are expected to increase in subsequent quarters, consistent with historical trends. The Company is not required to make any pension contributions in 2015 and discretionary spending will be managed according to operating results.
The Company intends to deploy its cash in the long-term interests of the Company, its shareholders and employees as it seeks potential acquisition or investment opportunities complementing its advertising and marketing services products. Management works aggressively to align the current expense structure with changes in revenue and believes existing cash and cash generated from operations will be sufficient to meet foreseeable cash flow requirements for operations, capital spending and pension contributions. The following discusses the changes in cash flows by operating, investing and financing activities.
Operating Cash Flows
Net cash used for continuing operating activities for
2015
and
2014
was
$8,475
and
$515
, respectively. Cash flows from continuing operations decreased in
2015
primarily due to tax payments of
$8,918
related to gains on dispositions of assets in 2014. Cash flows provided by discontinued operations for
2015
and
2014
, were
$93
and
$3,481
, respectively, and primarily represented the results of operations from
The Providence Journal.
Investing Cash Flows
Net cash used for continuing investing activities was
$15,700
and
$1,008
in
2015
and
2014
, respectively. Cash flows used for continuing investing activities in 2015 included payments of
$14,111
and
$500
related to acquisitions and investments during the period, respectively. Cash flows used for continuing investing activities also include
$1,170
and
$1,008
of capital spending in
2015
and
2014
, respectively. Cash flows used for investing activities of discontinued operations in 2014 were
$199
and represented capital spending associated with
The Providence Journal
.
Financing Cash Flows
Net cash used for continuing financing activities was
$52,461
and
$1,412
in 2015 and 2014, respectively. Cash used for continuing financing activities includes total dividends paid of
$51,923
and
$1,805
in 2015 and 2014, respectively. Dividends paid in 2015 included a special dividend of
$2.25
per share declared and recorded in 2014, returning
$50,148
to shareholders and holders of RSUs. In 2015 and 2014, the Company purchased
120,848
and
75,228
shares of its Series A common stock at a cost of
$1,115
and
$675
, respectively, under its share repurchase program.
Financing Arrangements
None.
Contractual Obligations
No
contributions to the A. H. Belo Pension Plans are required in 2015.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
23
|
|
On
March 5, 2015
, the Company announced a
$0.08
per share dividend to shareholders of record and holders of RSUs as of the close of business on
May 15, 2015
, which will be paid on
June 5, 2015
.
Additional information related to the Company’s contractual obligations is available in Company’s Annual Report on Form 10‑K for the year ended December 31, 2014, filed on March 6, 2015, with the SEC.
Critical Accounting Policies and Estimates
No material changes were made to the Company’s critical accounting policies as set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2014.
Forward-Looking Statements
Statements in this communication concerning A. H. Belo’s business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends, capital expenditures, investments, dispositions, impairments, business initiatives, acquisitions, pension plan contributions and obligations, real estate sales, working capital, 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 the following: changes in capital market conditions and prospects, changes in advertising demand and newsprint prices; newspaper circulation trends and other circulation matters, including changes in readership methods, patterns and demography; audits and related actions by the Alliance for Audited Media; challenges implementing increased subscription pricing and new pricing structures; challenges in achieving expense reduction goals in a timely manner and the resulting potential effect on operations; challenges attracting and retaining key personnel; challenges in consummating asset acquisitions or dispositions upon acceptable terms; technological changes; development of Internet commerce; industry cycles; changes in pricing or other actions by new and existing competitors and suppliers; consumer acceptance of new products and business initiatives; 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 and co-owned ventures and investments; pension plan matters; general economic conditions and changes in interest rates; significant armed conflict; acts of terrorism; and other factors beyond the Company’s control, as well as other risks described elsewhere in this Annual Report on Form 10-K and in the Company’s other public disclosures and filings with the SEC.
There were no material changes in A. H. Belo Corporation’s exposure to market risk from the disclosure included in the Annual Report on Form 10-K for the year ended December 31, 2014.
(a) Evaluation of disclosure controls and procedures.
Based on the evaluation of the Company’s disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) required by Securities Exchange Act Rules 13a-15(b) or 15d-15(b), the Company’s Chief Executive Officer and the Company’s Chief Financial Officer have concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.
(b) Changes in internal controls.
There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.
|
24
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
A number of legal proceedings are pending against A. H. Belo. In the opinion of management, liabilities, if any, arising from these legal proceedings would not have a material adverse effect on A. H. Belo’s results of operations, liquidity or financial condition.
There were no material changes from the risk factors disclosed under the heading “Risk Factors” in Item 1A in the Annual Report on Form 10-K for the year ended December 31, 2014.
There were no unregistered sales of the Company’s equity securities during the period covered by this report.
Issuer Purchases of Equity Securities
The Company repurchases shares of its common stock from time to time pursuant to publicly announced share repurchase programs. During the first quarter of 2015, the Company repurchased
120,848
Series A shares at a cost of
$1,115
. All purchases were made through open market transactions and were recorded as treasury stock.
The following table contains information for shares repurchased during the first quarter of
2015
. None of the shares in this table were repurchased directly from any of our officers or directors.
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||||||
|
January 2015
|
39,545
|
|
$
|
10.15
|
|
984,181
|
|
515,819
|
|
||||
|
February 2015
|
37,850
|
|
9.11
|
|
1,022,031
|
|
477,969
|
|
|||||
|
March 2015
|
43,453
|
|
8.48
|
|
1,065,484
|
|
434,516
|
|
(a)
|
||||
|
(a)
|
Share repurchases are made pursuant to a share repurchase program authorized by the Company’s board of directors. A total of 1,500,000 shares have been authorized for repurchase.
|
None.
None.
None.
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
25
|
|
Exhibits marked with an asterisk (*) are incorporated by reference to documents previously filed by the Company with the SEC, as indicated.
In accordance with Regulation S-T, the XBRL-related information marked with a double asterisk (**) in Exhibit No. 101 to this Quarterly Report on Form 10-Q is deemed filed.
All other documents are filed with this report. Exhibits marked with a tilde (~) are management contracts, compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.
|
Exhibit Number
|
Description
|
||||
|
3.1
|
*
|
Amended and Restated Certificate of Incorporation of the Company (Exhibit 3.1 to Amendment No. 3 to the Company’s Form 10 dated January 18, 2008 (Securities and Exchange Commission File No. 001‑33741) (the “Third Amendment to Form 10”))
|
|||
|
3.2
|
*
|
Certificate of Designations of Series A Junior Participating Preferred Stock of the Company dated January 11, 2008 (Exhibit 3.2 to Post‑Effective Amendment No. 1 to Form 10 filed January 31, 2008 (Securities and Exchange Commission File No. 001‑33741))
|
|||
|
3.3
|
*
|
Amended and Restated Bylaws of the Company, effective December 11, 2014 (Exhibit 3.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 12, 2014 (Securities and Exchange Commission File No. 001-33741))
|
|||
|
4.1
|
*
|
Certain rights of the holders of the Company’s Common Stock set forth in Exhibits 3.1‑3.3 above
|
|||
|
4.2
|
*
|
Specimen Form of Certificate representing shares of the Company’s Series A Common Stock (Exhibit 4.2 to the Third Amendment to Form 10)
|
|||
|
4.3
|
*
|
Specimen Form of Certificate representing shares of the Company’s Series B Common Stock (Exhibit 4.3 to the Third Amendment to Form 10)
|
|||
|
4.4
|
*
|
Rights Agreement dated as of January 11, 2008 between the Company and Mellon Investor Services LLC (Exhibit 4.4 to the Third Amendment to Form 10)
|
|||
|
10.1
|
*
|
Material Contracts
|
|||
|
~(1)
|
*
|
Form of Limited Guaranty by and between A. H. Belo Corporation and Freedom Communications Holdings, Inc (Exhibit 10.2 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 11, 2013 (Securities and Exchange Commission File No. 001-33741))
|
|||
|
~(2)
|
*
|
Asset Purchase Agreement among The Providence Journal Company and LMG Rhode Island Holdings, Inc. dated as of July 22, 2014 (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 25, 2014 (Securities and Exchange Commission File No. 001-33741) (the “July 25, 2014 Form 8-K”))
|
|||
|
~(3)
|
*
|
Form of Limited Guaranty by and between A. H. Belo Corporation and LMG Rhode Island Holdings, Inc (Exhibit 10.2 to the July 25, 2014 Form 8-K)
|
|||
|
~(4)
|
*
|
Unit Purchase Agreement dated August 5, 2014 by and among Gannett Company, Inc., Classified Ventures, LLC, and Unitholders of Classified Ventures, LLC (Exhibit 2.1 to A. H. Belo Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2014 (Securities and Exchange Commission file no. 001-33741))
|
|||
|
27
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
|
Exhibit Number
|
Description
|
||||
|
10.2
|
*
|
Compensatory plans and arrangements:
|
|||
|
~(1)
|
*
|
A. H. Belo Savings Plan as Amended and Restated Effective January 1, 2015 (Exhibit 10.2 (1) to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 6, 2015 (Securities and Exchange Commission File No. 001-33741))
|
|||
|
~(2)
|
*
|
A. H. Belo Corporation 2008 Incentive Compensation Plan (Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2008 (Securities and Exchange Commission File No. 001-33741) (the “February 12, 2008 Form 8-K”))
|
|||
|
*
|
(a)
|
First Amendment to A. H. Belo 2008 Incentive Compensation Plan effective July 23, 2008 (Exhibit 10.2(2)(a) to the Company’s Quarterly Report on Form 10‑Q filed with the Securities and Exchange Commission on August 14, 2008 (Securities and Exchange Commission File No. 001‑33741))
|
|||
|
*
|
(b)
|
Form of A. H. Belo 2008 Incentive Compensation Plan Non‑Employee Director Evidence of Grant (for Non‑Employee Director Awards) (Exhibit 10.2(2)(b) to the Company’s Quarterly Report on Form 10‑Q filed with the Securities and Exchange Commission on May 13, 2010 (Securities and Exchange Commission File No. 001‑33741) (the “1st Quarter 2010 Form 10‑Q”))
|
|||
|
*
|
(c)
|
Form of A. H. Belo 2008 Incentive Compensation Plan Evidence of Grant (for Employee Awards) (Exhibit 10.2(2)(c) to the 1st Quarter 2010 Form 10‑Q)
|
|||
|
*
|
(d)
|
Form of A. H. Belo 2008 Incentive Compensation Plan Evidence of Grant (Exhibit 10.1 to A. H. Belo Corporation’s Current Report on Form 8‑K filed with the Securities and Exchange Commission on March 12, 2012 (Securities and Exchange Commission File No. 001‑33741) (the “March 12, 2012 Form 8-K”))
|
|||
|
*
|
(e)
|
Form of A. H. Belo Cash Long‑Term Incentive Evidence of Grant (Exhibit 10.2 to the March 12, 2012 Form 8-K)
|
|||
|
~(3)
|
*
|
A. H. Belo Pension Transition Supplement Restoration Plan effective January 1, 2008 (Exhibit 10.6 to the February 12, 2008 Form 8‑K)
|
|||
|
*
|
(a)
|
First Amendment to the A. H. Belo Pension Transition Supplement Restoration Plan dated March 31, 2009 (Exhibit 10.4 to the April 2, 2009 Form 8‑K)
|
|||
|
~(4)
|
*
|
A. H. Belo Corporation Change In Control Severance Plan (Exhibit 10.7 to the February 12, 2008 Form 8‑K)
|
|||
|
*
|
(a)
|
Amendment to the A. H. Belo Change in Control Severance Plan dated March 31, 2009 (Exhibit 10.3 to the April 2, 2009 Form 8‑K)
|
|||
|
~(5)
|
*
|
Robert W. Decherd Compensation Arrangements dated June 19, 2013 (Exhibit 10.1 to the June 19, 2013 Form 8-K)
|
|||
|
~(6)
|
*
|
Daniel J. Blizzard Letter Agreement dated December 11, 2014 (Exhibit 10.1 to the December 11, 2014 Form 8-K)
|
|||
|
10.3
|
Agreements relating to the separation of A. H. Belo from its former parent company:
|
||||
|
(1)
|
*
|
Separation and Distribution Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of February 8, 2008 (Exhibit 2.1 to the February 12, 2008 Form 8‑K)
|
|||
|
(2)
|
*
|
Pension Plan Transfer Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of October 6, 2010 (Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed with the Securities and Exchange Commission on October 8, 2010 (Securities and Exchange Commission File No. 001-33741))
|
|||
|
(3)
|
*
|
Agreement among the Company, Belo Corp., and The Pension Benefit Guaranty Corporation, effective March 9, 2011 (Exhibit 10.3(6) to the Company’s Annual Report on Form 10‑K filed with the Securities and Exchange Commission on March 11, 2011 (Securities and Exchange Commission File No. 001‑33741))
|
|||
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
28
|
|
|
Exhibit Number
|
Description
|
||||
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
|
||||
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
|
||||
|
32
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
|
||||
|
101.INS
|
**
|
XBRL Instance Document
|
|||
|
101.SCH
|
**
|
XBRL Taxonomy Extension Schema
|
|||
|
101.CAL
|
**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|||
|
101.DEF
|
**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|||
|
101.LAB
|
**
|
XBRL Taxonomy Extension Label Linkbase Document
|
|||
|
101.PRE
|
**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|||
|
29
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
A. H. BELO CORPORATION
|
|||
|
By:
|
/s/
|
Katy Murray
|
|
|
Katy Murray
|
|||
|
Senior Vice President/Chief Financial Officer
|
|||
|
(Principal Financial Officer)
|
|||
|
Dated:
|
April 29, 2015
|
||
|
By:
|
/s/
|
Michael N. Lavey
|
|
|
Michael N. Lavey
|
|||
|
Vice President/Controller
|
|||
|
(Principal Accounting Officer)
|
|||
|
Dated:
|
April 29, 2015
|
||
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
30
|
|
EXHIBIT INDEX
|
Exhibit Number
|
Description
|
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
|
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
|
|
|
32
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
|
|
|
101.INS
|
**
|
XBRL Instance Document
|
|
101.SCH
|
**
|
XBRL Taxonomy Extension Schema
|
|
101.CAL
|
**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
**
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
In accordance with Regulation S-T, the XBRL-related information marked with a double asterisk (**) in Exhibit No. 101 to this Quarterly Report on Form 10-Q is deemed filed.
|
31
|
A. H. Belo Corporation First Quarter 2015 on Form 10-Q
|
TABLE OF CONTENTS
Part IItem 1. Financial InformationNote 1: Summary Of Significant Accounting PoliciesNote 2: AcquisitionsNote 11 ContingenciesNote 3: Discontinued OperationsNote 4: Goodwill and Intangible AssetsNote 2 AcquisitionsNote 5: InvestmentsNote 6: Long-term Incentive PlansNote 7: Income TaxesNote 8: Pension and Other Retirement PlansNote 9: Accumulated Other Comprehensive LossNote 10: Earnings Per ShareNote 11: ContingenciesItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsNote 7 Income TaxesNote 3 Discontinued OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart IIItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits