UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 27, 2015
(Exact name of registrant as specified in its charter)
Commission file number: 1-33741
Delaware | 38-3765318 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
P. O. Box 224866, Dallas, Texas 75222-4866 | (214) 977-8200 | |
(Address of principal executive offices, including zip code) | (Registrant’s telephone number, including area code) | |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On April 27, 2015, A. H. Belo Corporation announced its consolidated financial results for the quarter ended March 31, 2015. A copy of the announcement press release is furnished with this report as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release issued by A. H. Belo Corporation on April 27, 2015.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
A. H. BELO CORPORATION | |||
Date: April 27, 2015 | By: | /s/ | Katy Murray |
Katy Murray | |||
Senior Vice President/Chief Financial Officer | |||
EXHIBIT INDEX
Exhibit No. 99.1 Press Release issued by A. H. Belo Corporation on April 27, 2015.
Exhibit 99.1
A. H. Belo Corporation Announces First Quarter 2015
Financial Results from Continuing Operations
DALLAS - A. H. Belo Corporation (NYSE: AHC) today reported results for the first quarter of 2015, highlighted by an increase in total operating revenue of 1.6 percent over the prior year quarter, driven by marketing services and commercial printing and distribution. The Company's January acquisition of three marketing services businesses, Distribion, Inc., CDFX, LLC (d/b/a Marketing FX) and Vertical Nerve, Inc. (collectively, "DMV"), added incremental revenue of $1.9 million.
Jim Moroney, chairman, president and Chief Executive Officer, said, "Although core advertising revenues remain challenged, we are continuing to invest in new and diversified sources of revenue and those investments are producing returns. The improvement of 1.6 percent this quarter is primarily due to our expansion of marketing services operations, resulting from our January acquisition of DMV, the continued growth of our content marketing agency Speakeasy, the expansion of our event marketing company Crowdsource and growth in our commercial printing and distribution operations.
"Although the Company anticipates continued challenges for print advertising revenues, we continue our efforts to look for opportunities to increase the channels of marketing we can offer to our customers while assiduously working on expense management."
Net income from continuing operations was $0.02 per share in the first quarter of 2015, an increase of $0.24 per share over the first quarter of 2014. First quarter 2015 earnings include an income tax benefit of $5.7 million primarily due to a reduction in the valuation allowance for the offset of deferred tax assets by $4.0 million of DMV acquisition-date tax liabilities.
Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization ("EBITDA") from continuing operations with acquisition costs and net investment-related gains
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P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, Texas 75202
A. H. Belo Corporation Announces First Quarter 2015 Financial Results
from Continuing Operations
April 27, 2015
Page 2
and losses added back, was $(1.4) million in the first quarter of 2015, a decrease of $1.8 million from the first quarter of 2014.
As of March 31, 2015, cash and cash equivalents were $81.4 million, and the Company had no debt.
First Quarter Results from Continuing Operations
Total revenue was $65.4 million in the first quarter of 2015, an increase of 1.6 percent compared to the prior year period.
Revenue from advertising and marketing services, including print and digital revenues, decreased 2.4 percent. Marketing services revenue more than doubled from the prior year period as a result of growth of Speakeasy and the acquisition of DMV. The acquired marketing services businesses contributed $1.9 million of incremental revenue. Increases in marketing services revenue were offset by declines in display, classified, preprint and digital advertising revenues which decreased 2.7 percent, 11.7 percent, 11.8 percent and 7.3 percent, respectively. The decrease in digital advertising revenues is primarily due to declines in online classified advertising related to the resale of cars.com products and services.
Circulation revenue remained flat to the prior year period at $21.0 million as increased rates offset lower volumes.
Printing and distribution revenue increased 33.8 percent to $7.6 million in the first quarter of 2015 due primarily to the impact of commercial printing agreements with various regional and community papers.
Total consolidated operating expense in the first quarter was $70.5 million, a 3.7 percent increase compared to the prior year period, due to higher materials, production and distribution
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P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, Texas 75202
A. H. Belo Corporation Announces First Quarter 2015 Financial Results
from Continuing Operations
April 27, 2015
Page 3
expenses related to additional printing and distribution business and operating expenses related to the acquired businesses.
The Company's newsprint expense in the first quarter was $4.5 million, a decrease of 7.6 percent compared to the prior year period. Newsprint consumption dropped 4.5 percent to approximately 7,750 metric tons. Compared to the prior year period, newsprint cost per metric ton and the average purchase price per metric ton for newsprint decreased 3.2 percent and 8.0 percent, respectively.
Corporate and non-operating unit expenses in the first quarter were $4.9 million, an increase of 4.6 percent compared to the prior year period primarily due to legal and professional fees associated with recent transactions.
As of March 31, 2015, A. H. Belo had approximately 1,200 full-time equivalent employees, a decrease of 19.1 percent compared to the prior year period, primarily due to the sale of The Providence Journal during the third quarter of 2014.
Non-GAAP Financial Measures
Reconciliations of net loss to EBITDA and Adjusted EBITDA from continuing operations are included as exhibits to this release.
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P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, Texas 75202
A. H. Belo Corporation Announces First Quarter 2015 Financial Results
from Continuing Operations
April 27, 2015
Page 4
Financial Results Conference Call
A. H. Belo will conduct a conference call on Tuesday, April 28 at 1:00 p.m. CDT to discuss financial results. The conference call will be available via webcast by accessing the Company's website (www.ahbelo.com/invest) or by dialing 1-800-230-1074 (USA) or 612-288-0337 (International). A replay line will be available at 1-800-475-6701 (USA) or 320-365-3844 (International) from 3:00 p.m. CDT on April 28 until 11:59 p.m. CDT on May 5, 2015. The access code for the replay is 357654.
About A. H. Belo Corporation
A. H. Belo Corporation (NYSE: AHC) is a leading local news 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. For additional information, visit ahbelo.com or email invest@ahbelo.com.
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P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, Texas 75202
A. H. Belo Corporation Announces First Quarter 2015 Financial Results
from Continuing Operations
April 27, 2015
Page 5
Statements in this communication concerning A. H. Belo Corporation’s (the “Company’s”) business outlook or future economic performance, anticipated profitability, revenue, expense, 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, changes in capital market conditions and prospects, and other factors such as changes in advertising demand and newsprint prices; newspaper circulation trends and other circulation matters, including changes in readership methods, patterns and demography; 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 effects 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 existing and new 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, 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 our control, as well as other risks described in the Company’s Annual Report on Form 10-K, and in the Company’s other public disclosures and filings with the Securities and Exchange Commission.
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P.O. Box 224866 Dallas, Texas 75222-4866 Tel. 214.977.8200 Fax 214.977.8201
www.ahbelo.com Deliveries: 508 Young Street Dallas, Texas 75202
A. H. Belo Corporation
Condensed Consolidated Statements of Operations
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 | |||||
Operating Costs and Expense | |||||||
Employee compensation and benefits | 27,503 | 28,164 | |||||
Other production, distribution and operating costs | 31,460 | 28,444 | |||||
Newsprint, ink and other supplies | 8,166 | 7,988 | |||||
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 | ) | |||
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 | — | 977 | |||||
Loss related to the divestiture of discontinued operations, net | (12 | ) | (178 | ) | |||
Tax expense from discontinued operations | — | 16 | |||||
Gain (Loss) from Discontinued Operations, Net | (12 | ) | 783 | ||||
Net Income (Loss) | 307 | (4,043 | ) | ||||
Net loss attributable to noncontrolling interests | (56 | ) | (6 | ) | |||
Net Income (Loss) Attributable to A. H. Belo Corporation | $ | 363 | $ | (4,037 | ) | ||
Per Share Basis | |||||||
Basic and Diluted | |||||||
Continuing operations | $ | 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 | |||||||
Basic | 21,770,698 | 21,918,000 | |||||
Diluted | 21,845,197 | 21,918,000 | |||||
A. H. Belo Corporation
Condensed Consolidated Balance Sheets
March 31, | December 31, | ||||||
In thousands (unaudited) | 2015 | 2014 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 81,442 | $ | 158,171 | |||
Accounts receivable, net | 30,911 | 34,396 | |||||
Other current assets | 15,393 | 13,323 | |||||
Assets of discontinued operations | 253 | 565 | |||||
Total current assets | 127,999 | 206,455 | |||||
Property, plant and equipment, net | 59,816 | 61,589 | |||||
Intangible assets, net | 46,358 | 25,238 | |||||
Other assets | 5,856 | 5,465 | |||||
Total assets | $ | 240,029 | $ | 298,747 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 11,723 | $ | 12,904 | |||
Accrued expenses and other current liabilities | 14,219 | 72,065 | |||||
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 liabilities | 5,032 | 5,463 | |||||
Noncontrolling interests - redeemable | 1,263 | — | |||||
Total shareholders’ equity | 126,800 | 126,019 | |||||
Total liabilities and shareholders’ equity | $ | 240,029 | $ | 298,747 | |||
A. H. Belo Corporation
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA from Continuing Operations
Three Months Ended March 31, | |||||||
In thousands (unaudited) | 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 | ||
The Company 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 by adding back to EBITDA recorded expenses to acquire new businesses, net investment-related gains and losses and non-cash impairment expense, as applicable.
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. Neither EBITDA nor Adjusted EBITDA should be considered in isolation or as a substitute for net income from continuing operations, cash flows provided by operating activities or other comparable measures prepared in accordance with GAAP. Additionally, these non-GAAP measures may not be comparable to similarly-titled measures of other companies.