UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-Q
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☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2016 
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file no. 1-33741
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A. H. Belo Corporation
(Exact name of registrant as specified in its charter)
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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) 977-8222	
(Address of principal executive offices, including zip code)	 	(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 ☑     No ☐ 
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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 ☑     No ☐ 
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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):
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Large accelerated filer:  ☐	 	Accelerated filer:  ☑	 	Non-accelerated filer:  ☐	 	Smaller reporting company:  ☐	
 	 	 	 	(Do not check if a smaller reporting company)	
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).      Yes ☐     No ☑
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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	
Class	 	October 28, 2016	
Common Stock, $.01 par value	 	21,676,260	
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Total Common Stock consists of 19,203,564 shares of Series A Common Stock and 2,472,696 shares of Series B Common Stock.

 

A. H. BELO CORPORATION
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FORM 10-Q
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TABLE OF CONTENTS
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﻿	 	 	 	
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﻿	 	 	 	
 	 	Page	
﻿PART I	
Item 1.	Financial Information	 	PAGE   3	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	PAGE 16	
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	 	PAGE 23	
Item 4.	Controls and Procedures	 	PAGE 23	
 	 	 	 	
﻿PART II 	 	 	
Item 1.	Legal Proceedings	 	PAGE 23	
Item 1A.	Risk Factors	 	PAGE 23	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	 	PAGE 23	
Item 3.	Defaults Upon Senior Securities	 	PAGE 23	
Item 4.	Mine Safety Disclosures	 	PAGE 24	
Item 5.	Other Information	 	PAGE 24	
Item 6.	Exhibits	 	PAGE 25	
﻿Signatures	 	PAGE 27	
﻿Exhibit Index	 	PAGE 28	
﻿
 
﻿

 
Table of Contents
 
PART I
Item 1.  Financial Information
﻿
A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Operations
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﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
In thousands, except share and per share amounts (unaudited)	 	2016	 	2015	 	2016	 	2015	
Net Operating Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	
Advertising and marketing services	 	$	38,304 	 	$	39,184 	 	$	111,581 	 	$	114,281 	
Circulation	 	 	19,633 	 	 	20,279 	 	 	59,806 	 	 	62,133 	
Printing, distribution and other	 	 	6,843 	 	 	7,445 	 	 	22,502 	 	 	22,606 	
Total net operating revenue	 	 	64,780 	 	 	66,908 	 	 	193,889 	 	 	199,020 	
Operating Costs and Expense:	 	 	 	 	 	 	 	 	 	 	 	 	
Employee compensation and benefits	 	 	25,626 	 	 	29,041 	 	 	77,417 	 	 	81,649 	
Other production, distribution and operating costs	 	 	30,615 	 	 	30,562 	 	 	88,844 	 	 	93,037 	
Newsprint, ink and other supplies	 	 	6,315 	 	 	7,266 	 	 	18,834 	 	 	23,275 	
Depreciation	 	 	2,488 	 	 	2,780 	 	 	7,725 	 	 	8,695 	
Amortization	 	 	225 	 	 	361 	 	 	680 	 	 	1,107 	
Total operating costs and expense	 	 	65,269 	 	 	70,010 	 	 	193,500 	 	 	207,763 	
Operating income (loss)	 	 	(489)	 	 	(3,102)	 	 	389 	 	 	(8,743)	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from equity method investments, net	 	 	 —	 	 	(564)	 	 	 —	 	 	(288)	
Other income (expense), net	 	 	114 	 	 	(489)	 	 	601 	 	 	(912)	
Total other income (expense), net	 	 	114 	 	 	(1,053)	 	 	601 	 	 	(1,200)	
Income (Loss) from Continuing Operations Before Income Taxes	 	 	(375)	 	 	(4,155)	 	 	990 	 	 	(9,943)	
Income tax provision (benefit)	 	 	77 	 	 	(188)	 	 	1,361 	 	 	(5,601)	
Loss from Continuing Operations	 	 	(452)	 	 	(3,967)	 	 	(371)	 	 	(4,342)	
Loss from divestiture of discontinued operations	 	 	 —	 	 	(52)	 	 	 —	 	 	(62)	
Loss from Discontinued Operations	 	 	 —	 	 	(52)	 	 	 —	 	 	(62)	
Net Loss	 	 	(452)	 	 	(4,019)	 	 	(371)	 	 	(4,404)	
Net income (loss) attributable to noncontrolling interests	 	 	45 	 	 	(63)	 	 	65 	 	 	(219)	
Net Loss Attributable to A. H. Belo Corporation	 	$	(497)	 	$	(3,956)	 	$	(436)	 	$	(4,185)	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Per Share Basis	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss attributable to A. H. Belo Corporation	 	 	 	 	 	 	 	 	 	 	 	 	
Basic and diluted	 	$	(0.02)	 	$	(0.18)	 	$	(0.02)	 	$	(0.19)	
Number of common shares used in the per share calculation:	 	 	 	 	 	 	 	 	 	 	 	 	
Basic and diluted	 	 	21,676,260 	 	 	21,651,670 	 	 	21,601,828 	 	 	21,721,875 	
﻿
See the accompanying Notes to the Consolidated Financial Statements.
 
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     3

 
Table of Contents
 
A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
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﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
In thousands (unaudited)	 	2016	 	2015	 	2016	 	2015	
Net Loss	 	$	(452)	 	$	(4,019)	 	$	(371)	 	$	(4,404)	
Other Comprehensive Income (Loss):	 	 	 	 	 	 	 	 	 	 	 	 	
Amortization of net actuarial (gains) losses, net of tax	 	 	(17)	 	 	313 	 	 	(49)	 	 	938 	
Total other comprehensive income (loss)	 	 	(17)	 	 	313 	 	 	(49)	 	 	938 	
Comprehensive Loss	 	 	(469)	 	 	(3,706)	 	 	(420)	 	 	(3,466)	
Comprehensive income (loss) attributable to noncontrolling interests	 	 	45 	 	 	(63)	 	 	65 	 	 	(219)	
Total Comprehensive Loss Attributable to A. H. Belo Corporation	 	$	(514)	 	$	(3,643)	 	$	(485)	 	$	(3,247)	
﻿
See the accompanying Notes to the Consolidated Financial Statements.
 
4     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
Table of Contents
 
A. H. Belo Corporation and Subsidiaries
Consolidated Balance Sheets
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﻿
﻿	 	 	 	 	 	 	
  	 	 	 	 	 	 	
﻿	 	September 30,	 	December 31,	
In thousands, except share amounts (unaudited)	 	2016	 	2015	
Assets	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	
Cash and cash equivalents	 	$	78,341 	 	$	78,380 	
Accounts receivable (net of allowance of $940 and $1,441 at September 30, 2016
and December 31, 2015, respectively)	 	 	26,750 	 	 	31,502 	
Inventories	 	 	4,257 	 	 	4,052 	
Prepaids and other current assets	 	 	9,134 	 	 	9,415 	
Assets held for sale	 	 	2,600 	 	 	 —	
Total current assets	 	 	121,082 	 	 	123,349 	
Property, plant and equipment, at cost	 	 	445,069 	 	 	448,223 	
Less accumulated depreciation	 	 	(399,265)	 	 	(396,865)	
Property, plant and equipment, net	 	 	45,804 	 	 	51,358 	
Intangible assets, net	 	 	5,098 	 	 	5,778 	
Goodwill	 	 	36,883 	 	 	36,883 	
Investments	 	 	1,432 	 	 	1,632 	
Other assets	 	 	3,083 	 	 	2,501 	
Total assets	 	$	213,382 	 	$	221,501 	
Liabilities and Shareholders’ Equity	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	
Accounts payable	 	$	10,838 	 	$	12,736 	
Accrued compensation and benefits	 	 	7,456 	 	 	7,100 	
Other accrued expense	 	 	5,152 	 	 	4,712 	
Advance subscription payments	 	 	13,211 	 	 	14,424 	
Total current liabilities	 	 	36,657 	 	 	38,972 	
Long-term pension liabilities	 	 	54,831 	 	 	57,446 	
Other post-employment benefits	 	 	2,430 	 	 	2,489 	
Deferred income taxes, net	 	 	1,059 	 	 	1,046 	
Other liabilities	 	 	5,227 	 	 	1,277 	
Total liabilities	 	 	100,204 	 	 	101,230 	
Noncontrolling interest - redeemable	 	 	1,335 	 	 	1,421 	
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 20,620,445 and 20,522,503 shares at September 30, 2016
and December 31, 2015, respectively	 	 	207 	 	 	205 	
Series B: issued 2,472,696 and 2,387,509 shares at September 30, 2016
and December 31, 2015, respectively	 	 	24 	 	 	24 	
Treasury stock, Series A, at cost; 1,416,881 shares held at September 30, 2016
and December 31, 2015	 	 	(11,233)	 	 	(11,233)	
Additional paid-in capital	 	 	500,741 	 	 	500,449 	
Accumulated other comprehensive loss	 	 	(38,491)	 	 	(38,442)	
Accumulated deficit	 	 	(340,686)	 	 	(333,222)	
Total shareholders’ equity attributable to A. H. Belo Corporation	 	 	110,562 	 	 	117,781 	
Noncontrolling interests	 	 	1,281 	 	 	1,069 	
Total shareholders’ equity	 	 	111,843 	 	 	118,850 	
Total liabilities and shareholders’ equity	 	$	213,382 	 	$	221,501 	
﻿
See the accompanying Notes to the Consolidated Financial Statements.
 
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     5

 
Table of Contents
 
A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Shareholders’ Equity
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﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	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	Noncontrolling
Interests	Total	
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 loss	 —	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	(4,185)	 	(219)	 	(4,404)	
Other comprehensive income	 —	 —	 	 —	 	 —	 	 —	 	 —	 	938 	 	 —	 	 —	 	938 	
Capital contributions from noncontrolling interests	 —	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	2,105 	 	2,105 	
Treasury stock purchases	 —	 —	 	 —	 	 —	 	(369,952)	 	(2,589)	 	 —	 	 —	 	 —	 	(2,589)	
Issuance of shares for restricted stock units	155,097 	 —	 	2 	 	(2)	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	
Issuance of shares for stock option exercises	18,000 	 —	 	 —	 	71 	 	 —	 	 —	 	 —	 	 —	 	 —	 	71 	
Excess tax benefit on share-based compensation	 —	 —	 	 —	 	546 	 	 —	 	 —	 	 —	 	 —	 	 —	 	546 	
Share-based compensation	 —	 —	 	 —	 	537 	 	 —	 	 —	 	 —	 	 —	 	 —	 	537 	
Conversion of Series B to Series A	728 	(728)	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	
Dividends	 —	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	(5,302)	 	 —	 	(5,302)	
Balance at
September 30, 2015	20,515,326 	2,387,509 	$	229 	$	500,472 	 	(1,314,588)	$	(10,676)	$	(56,429)	$	(317,817)	$	2,142 	$	117,921 	
Balance at
December 31, 2015	20,522,503 	2,387,509 	$	229 	$	500,449 	 	(1,416,881)	$	(11,233)	$	(38,442)	$	(333,222)	$	1,069 	$	118,850 	
Net income (loss)	 —	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	(436)	 	52 	 	(384)	
Other comprehensive loss	 —	 —	 	 —	 	 —	 	 —	 	 —	 	(49)	 	 —	 	 —	 	(49)	
Distributions to noncontrolling interests	 —	 —	 	 —	 	 —	 	 —	 	 —	 	 	 	 —	 	(236)	 	(236)	
Capital contributions from noncontrolling interests	 —	 —	 	 —	 	(396)	 	 —	 	 —	 	 —	 	 —	 	396 	 	 —	
Issuance of shares for restricted stock units	97,203 	 —	 	1 	 	(1)	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	
Issuance of shares for stock option exercises	 —	85,926 	 	1 	 	155 	 	 —	 	 —	 	 —	 	 —	 	 —	 	156 	
Share-based compensation	 —	 —	 	 —	 	534 	 	 —	 	 —	 	 —	 	 —	 	 —	 	534 	
Conversion of Series B to Series A	739 	(739)	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	 —	
Dividends	 —	 —	 	 —	 	 —	 	 —	 	 —	 	 —	 	(7,028)	 	 —	 	(7,028)	
Balance at
September 30, 2016	20,620,445 	2,472,696 	$	231 	$	500,741 	 	(1,416,881)	$	(11,233)	$	(38,491)	$	(340,686)	$	1,281 	$	111,843 	
﻿
See the accompanying Notes to the Consolidated Financial Statements.
 
6     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
Table of Contents
 
A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Cash Flows
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﻿	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	
﻿	 	Nine Months Ended September 30,	
In thousands (unaudited)	 	2016	 	2015	
Operating Activities	 	 	 	 	 	 	
Net Loss	 	$	(371)	 	$	(4,404)	
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:	 	 	 	 	 	 	
Loss from divestiture of discontinued operations	 	 	 —	 	 	62 	
Depreciation and amortization	 	 	8,405 	 	 	9,802 	
Net periodic pension and other post-employment benefits	 	 	(2,626)	 	 	(3,425)	
Equity method investment loss in excess of dividends	 	 	 —	 	 	1,334 	
Share-based compensation	 	 	534 	 	 	528 	
Deferred income taxes	 	 	13 	 	 	(3,978)	
(Gain) loss on investment related activity	 	 	200 	 	 	(1,046)	
(Gain) loss on disposal of fixed assets	 	 	(328)	 	 	810 	
Other operating activities	 	 	 —	 	 	675 	
Changes in working capital and other operating assets and liabilities, net of acquisitions	 	 	852 	 	 	(9,203)	
Net cash provided by (used for) continuing operations	 	 	6,679 	 	 	(8,845)	
Net cash used for discontinued operations	 	 	 —	 	 	(23)	
Net cash provided by (used for) operating activities	 	 	6,679 	 	 	(8,868)	
Investing Activities	 	 	 	 	 	 	
Acquisition costs, net of cash acquired	 	 	 —	 	 	(14,110)	
Sales of assets	 	 	328 	 	 	5,911 	
Purchases of assets	 	 	(4,168)	 	 	(4,546)	
Other investment related proceeds	 	 	 —	 	 	1,045 	
Purchases of investments	 	 	 —	 	 	(500)	
Net cash used for investing activities	 	 	(3,840)	 	 	(12,200)	
Financing Activities	 	 	 	 	 	 	
Dividends paid	 	 	(5,265)	 	 	(55,450)	
Proceeds from other financing activities	 	 	2,566 	 	 	 —	
Distributions to noncontrolling interests	 	 	(335)	 	 	 —	
Purchases of treasury stock	 	 	 —	 	 	(2,589)	
Proceeds from exercise of stock options	 	 	156 	 	 	71 	
Excess tax benefit on share-based compensation	 	 	 —	 	 	546 	
Net cash used for financing activities	 	 	(2,878)	 	 	(57,422)	
Net decrease in cash and cash equivalents	 	 	(39)	 	 	(78,490)	
Cash and cash equivalents, beginning of period	 	 	78,380 	 	 	158,171 	
Cash and cash equivalents, end of period	 	$	78,341 	 	$	79,681 	
Supplemental Disclosures	 	 	 	 	 	 	
Income tax paid, net of refunds	 	$	1,623 	 	$	11,599 	
Noncash investing and financing activities:	 	 	 	 	 	 	
Investments in property and equipment not paid	 	$	603 	 	$	 —	
Noncash contributions from noncontrolling interests	 	$	 —	 	$	3,368 	
﻿
See the accompanying Notes to the Consolidated Financial Statements.
 
﻿
 
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     7

 
Table of Contents
 
A. H. Belo Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
 
Note 1:  Basis of Presentation and Recently Issued Accounting Standards
﻿
Description of Business.    A. H. Belo Corporation and subsidiaries are referred to collectively herein as “A. H. Belo” or the “Company.” 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 digital marketing. With a continued focus on extending the Company’s media platform, A. H. Belo delivers 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 marketing solutions through Your Speakeasy, LLC (“Speakeasy”) and DMV Digital Holdings Company (“DMV Holdings”), and provides event promotion and marketing services through DMN CrowdSource LLC (“CrowdSource”).
﻿
Basis of Presentation.     The interim consolidated financial statements included herein are unaudited; however, they include adjustments of a normal recurring nature which, in the Company’s opinion, are necessary to present fairly the interim consolidated financial information as of and for the periods indicated. All significant intercompany balances and transactions have been eliminated in consolidation. A. H. Belo consolidates the financial results of the entities in which it has controlling financial interests, including Speakeasy and DMV Holdings, in which the Company holds ownership percentages of 70 percent and 80 percent, respectively. As a consequence, the assets and liabilities of such entities are presented on a consolidated basis in A. H. Belo’s financial statements. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. All dollar amounts presented herein, except share and per share amounts, are in thousands, unless the context requires otherwise.
﻿
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net operating revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.
﻿
Recently Adopted Accounting Pronouncements.
﻿
In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-05  –   Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.  This update provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The standard became effective for annual and interim reporting periods beginning after December 15, 2015. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
﻿
In September 2015, the FASB issued ASU 2015-16 – Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.  This update requires that an acquirer in a business combination recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer is required to record, in the same period’s financial statements, the effect on earnings, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued. The Company adopted this standard in the fourth quarter of 2015.  Accordingly, the Company has not retroactively accounted for the changes in the purchase price allocation for DMV Holdings, which was finalized in the fourth quarter of 2015.
﻿
In March 2016, the FASB issued ASU 2016-09 – Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.   The amendments in this update affect all entities that issue share-based payment awards to their employees. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of
8     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
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cash flows. The guidance will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted in any interim or annual period. The Company early adopted this standard in the first quarter of 2016. Adoption of this standard did not materially impact the Company's financial statements.
﻿
New Accounting Pronouncements.    The FASB has issued the following accounting pronouncements and guidance which may be applicable to the Company but have not yet become effective.
﻿
In May 2014, the FASB issued ASU 2014-09 –  Revenue from Contracts with Customers (Topic 606). This guidance is intended to improve the financial reporting requirements for revenue from contracts with customers by providing a principle-based approach. It also requires disclosures designed to enable readers of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Further, in March 2016, the FASB issued ASU 2016-08 –  Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),  and in April 2016, the FASB issued ASU 2016-10 –  Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing . In May 2016, the FASB issued ASU 2016-12 –  Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients . These updates clarify implementation guidance on the related topic. The accounting guidance updates will replace most existing revenue recognition guidance in GAAP. The standard was to be effective for annual and interim reporting periods beginning after December 15, 2016. ASU 2015-14 deferred the effective date of this update for all entities by one year. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the requirements of these updates and has not yet determined its impact on the Company's consolidated financial statements.
﻿
In February 2016, the FASB issued ASU 2016-02 – Leases (Topic 842). This update requires an entity to recognize a right-of-use asset and a lease liability for virtually all of its leases. The liability will be equal to the present value of lease payments. The asset will generally be based on the liability. For income statement purposes operating leases will result in straight-line expense and finance leases will result in expenses similar to current capital leases. The guidance also requires additional disclosures to enable users of financial statements to understand the amount, timing and uncertainty of cash flows arising from leases. The guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the requirements of this update and has not yet determined its impact on the Company’s consolidated financial statements.
﻿
In March 2016, the FASB issued ASU 2016-07 – Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.  This update addresses the use of the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments in this update eliminate the requirement to retroactively adopt the equity method of accounting. The guidance will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the requirements of this update and has not yet determined its impact on the Company’s consolidated financial statements.
﻿
Note 2:  Segment Reporting
﻿
The Company’s operating segments are based on internal management reporting as well as product and service offerings, and are defined as: Publishing (“Publishing”) and Marketing, Event Marketing and Other Services (“MEMO”).
﻿
The Publishing segment includes the Company’s core print operations associated with its newspapers, niche publications and related websites. These operations generate revenue from sales of advertising within newspaper and digital platforms, subscription and retail sales of newspapers and commercial printing and distribution services primarily related to national and regional newspapers and preprint advertisers. Businesses within the Publishing segment leverage production facilities, subscriber base and digital news platforms to provide additional contribution margin. The Company assesses the performance of Publishing operations on the basis of operating profit and cash flows from operating activities.
﻿
The MEMO segment is comprised of the Company’s marketing, event marketing and other businesses. Marketing services and product offerings include multi-channel marketing services and software, targeted-channel marketing services, marketing analytics, content development, social media management and other consulting services. Marketing services also include non-digital marketing products, including sales of business promotional items and sales of pay-for-performance services directed primarily to other newspaper companies. Marketing services include the operations of DMV Holdings, Speakeasy and Proven Performance Media, as well as its operating division doing business as Connect and its  cars.com  sales division.
﻿
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     9

 
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Event marketing includes the operations of CrowdSource, which promotes community events.
﻿
The Company assesses the performance of MEMO operations on the basis of revenue growth and operating profit in conjunction with the expansion of these businesses within their respective markets.
﻿
The following tables show summarized financial information for the Company’s reportable segments.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	2015	 	2016	 	2015	
Revenue	 	 	 	 	 	 	 	 	 	 	 	 	
Publishing	 	$	52,606 	 	$	57,060 	 	$	160,821 	 	$	173,271 	
MEMO	 	 	12,174 	 	 	9,848 	 	 	33,068 	 	 	25,749 	
Total	 	$	64,780 	 	$	66,908 	 	$	193,889 	 	$	199,020 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income (Loss)	 	 	 	 	 	 	 	 	 	 	 	 	
Publishing	 	$	(1,975)	 	$	(3,939)	 	$	(3,018)	 	$	(9,083)	
MEMO	 	 	1,486 	 	 	837 	 	 	3,407 	 	 	340 	
Total	 	$	(489)	 	$	(3,102)	 	$	389 	 	$	(8,743)	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and Amortization	 	 	 	 	 	 	 	 	 	 	 	 	
Publishing	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation	 	$	2,467 	 	$	2,752 	 	$	7,665 	 	$	8,607 	
Amortization	 	 	 —	 	 	30 	 	 	 —	 	 	90 	
Total	 	$	2,467 	 	$	2,782 	 	$	7,665 	 	$	8,697 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
MEMO	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation	 	$	21 	 	$	28 	 	$	60 	 	$	88 	
Amortization	 	 	225 	 	 	331 	 	 	680 	 	 	1,017 	
Total	 	$	246 	 	$	359 	 	$	740 	 	$	1,105 	
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	
﻿	 	September 30,	 	December 31,	
﻿	 	2016	 	2015	
Total Assets	 	 	 	 	 	 	
Publishing	 	$	189,446 	 	$	196,912 	
MEMO	 	 	23,936 	 	 	24,589 	
Total	 	$	213,382 	 	$	221,501 	
﻿
Note 3: Sales of Assets
﻿
Assets held for sale include long-lived assets being actively marketed for which a sale is considered probable within the next 12 months. These assets are recorded at the lower of their fair value less costs to sell or their carrying value at the time they are classified as assets held for sale. In the third quarter of 2016, the Company commenced due diligence related to the sale of a parking lot located in downtown Dallas, Texas. This asset, with a total carrying value of $2,600, is reported as assets held for sale as of September 30,  2016.
﻿
In June 2015, the Company completed the sale of land and a building which served as the headquarters of The Providence Journal , a publication formerly owned by the Company. The Company received net proceeds of $6,119 in the second quarter of 2015 upon closing of the transaction, generating a loss of $265, which was offset by $328 of returned escrow received in the second quarter of 2016. Also during the second quarter of 2015, the Company demolished existing structures on an additional property in Providence, Rhode Island, at a cost of $412.
10     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
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Note 4:  Goodwill and Intangible Assets
﻿
Goodwill and other intangible assets by reportable segment as of September 30, 2016 and December 31, 2015 are as follows:
﻿
﻿
﻿	 	 	 	 	 	
﻿	 	 	 	 	 	
﻿	September 30,	 	December 31,	
﻿	2016	 	2015	
Goodwill	 	 	 	 	 	
Publishing	$	22,682 	 	$	22,682 	
MEMO	 	14,201 	 	 	14,201 	
Total	$	36,883 	 	$	36,883 	
﻿	 	 	 	 	 	
Intangible Assets	 	 	 	 	 	
MEMO	 	 	 	 	 	
Cost	$	6,710 	 	$	6,710 	
Accumulated Amortization	 	(1,612)	 	 	(932)	
Net Carrying Value	$	5,098 	 	$	5,778 	
﻿
Intangible assets consist of $5,190 of customer relationships with estimated useful lives of 10 years and $1,520 of developed technology with an estimated useful life of five years. Aggregate amortization expense was $225 and $680 for the three and nine months ended September 30, 2016, respectively, and $361 and $1,107 for the three and nine months ended September 30, 2015, respectively.
﻿
Note 5:  Long-term Incentive Plan
﻿
A. H. Belo sponsors a long-term incentive plan (the “Plan”) under which 8,000,000 shares of the Company’s Series A common stock are 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 share awards,  restricted stock units (“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. Awards under the Plan were also granted to holders of stock options issued by A.H. Belo’s former parent company in connection with the Company’s separation from its former parent in 2008.
﻿
Stock Options.    Stock options granted under the Plan are fully vested and exercisable. No options have been granted since 2009, and all compensation expense associated with stock options has been fully recognized as of September 30, 2016.
﻿
The table below sets forth a summary of stock option activity under the Plan.
﻿
﻿
﻿	 	 	 	 	
﻿	 	 	 	 	
﻿	Number of
Options	 	Weighted­Average
Exercise Price	
Outstanding at December 31, 2015	259,311 	 	$	8.37 	
Exercised	(85,926)	 	 	1.81 	
Canceled	(26,942)	 	 	18.57 	
Outstanding at September 30, 2016	146,443 	 	$	10.34 	
﻿
No options were exercised in the three months ended September 30, 2016 and 2015. The aggregate intrinsic value of options exercised in the nine months ended September 30, 2016 and 2015, was $300 and $100, respectively. The aggregate intrinsic value of outstanding options at September 30, 2016,  was $89. The weighted average remaining contractual life of the Company’s stock options was 1.4 years as of September 30, 2016.
﻿
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     11

 
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Restricted Stock Units.    The Company’s RSUs have a  service condition and, subject to retirement eligibility, 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 over a period of three years. As of September 30, 2016, the liability for the portion of the award to be redeemed in cash was $793. The table below sets forth a summary of RSU activity under the 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, 2015	92,355 	 	 	 	 	 	 	 	 	$	7.13 	
Granted	202,955 	 	 	 	 	 	 	 	 	 	5.47 	
Vested and outstanding	(142,113)	 	 	 	 	 	 	 	 	 	5.90 	
Vested and issued	(18,668)	 	11,196 	 	7,472 	 	$	44 	 	 	8.10 	
Non-vested at September 30, 2016	134,529 	 	 	 	 	 	 	 	 	$	5.79 	
﻿
For the nine months ended September 30, 2016, the Company issued 86,007 shares that were previously vested as of December 31, 2015. In addition, there were 223,676 and 224,911 RSUs that were vested and outstanding as of September 30, 2016 and December 31, 2015, respectively.
﻿
The fair value of RSU grants is determined using the closing trading price of the Company’s Series A common stock on the grant date. As of September 30, 2016, unrecognized compensation expense related to non-vested RSUs totaled $496, which is expected to be recognized over a weighted-average period of 1.1 years.
﻿
Compensation Expense.     A. H. Belo recognizes compensation expense for awards granted under the Plan over the vesting period of the award. Compensation expense related to RSUs granted under the Plan is set forth in the table below.
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	
﻿	RSUs
Redeemable
in Stock	 	RSUs
 Redeemable
 in Cash	 	Total
RSU Awards
 Expense	
Three months ended September 30,	 	 	 	 	 	 	 	 	
2016	$	86 	 	$	303 	 	$	389 	
2015	 	77 	 	 	(32)	 	 	45 	
Nine months ended September 30,	 	 	 	 	 	 	 	 	
2016	$	534 	 	$	604 	 	$	1,138 	
2015	 	528 	 	 	(399)	 	 	129 	
﻿
Note 6:  Income Taxes
﻿
The interim provision for income 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 annual effective tax rate is reviewed each quarter based on the Company’s estimated income tax expense for the year. Under certain circumstances, the Company may be precluded from estimating an annual effective tax rate. Such circumstances may include periods in which tax rates vary significantly due to earnings trends, in addition to the existence of significant permanent or temporary differences. Under such circumstances, a discrete tax rate is calculated for the period.
﻿
The Company recognized income tax provision (benefit) from continuing operations of $77 and $(188) for the three months ended September 30, 2016 and 2015, respectively, and $1,361 and $(5,601) for the nine months ended September 30, 2016 and 2015, respectively. Effective income tax rates from continuing operations were 137.5 percent and 56.3 percent for the nine months ended September 30, 2016 and 2015, respectively. The effective income tax rate for the nine months ended September 30, 2016, was higher when compared to the prior year period due to taxable income, changes in valuation allowance and the disposition of fixed assets.
﻿
Note 7:  Pension and Other Retirement Plans
﻿
Defined Benefit Plans.   The Company sponsors the A. H. Belo Pension Plans, which provide benefits to approximately 2,300 current and former employees of the Company. A. H. Belo Pension Plan I provides benefits to certain current and former 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 former employees of The Providence Journal Company. This obligation was retained by the Company upon the sale of the
12     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
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newspaper operations of The Providence Journal.  No additional benefits are accruing under the A. H. Belo Pension Plans, as future benefits were frozen.
﻿
No contributions are required to the A. H. Belo Pension Plans in 2016 under the applicable tax and labor laws governing pension plan funding.
﻿
Net Periodic Pension Benefit
﻿
The Company’s estimates of net periodic pension expense or benefit are based on the expected return on plan assets, interest on the projected benefit obligations and the amortization of actuarial gains and losses that are deferred in accumulated other comprehensive loss.  The table below sets forth components of net periodic pension benefit.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	2015	 	2016	 	2015	
Interest cost	 	$	2,525 	 	$	3,540 	 	$	7,574 	 	$	10,620 	
Expected return on plans' assets	 	 	(3,396)	 	 	(5,008)	 	 	(10,189)	 	 	(15,024)	
Amortization of actuarial loss	 	 	11 	 	 	313 	 	 	42 	 	 	938 	
Net periodic pension benefit	 	$	(860)	 	$	(1,155)	 	$	(2,573)	 	$	(3,466)	
﻿
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 September 30, 2016 and 2015, the Company recorded expense of $248 and $239, respectively, and during the nine months ended September 30, 2016 and 2015, the Company recorded expense of $749 and $765, respectively, for matching contributions to the plan.
 
Note 8:  Shareholders’ Equity
﻿
Dividends.     On September 8, 2016, the Company announced a $0.08 per share dividend to shareholders of record and holders of RSUs as of the close of business on November 10, 2016, which is payable on December 2, 2016. During the three months ended September 30, 2016, the Company recorded $1,763 to accrue for dividends declared but not yet paid.
﻿
Accumulated other comprehensive loss.    Accumulated other comprehensive loss consists of actuarial gains and losses attributable to the A. H. Belo Pension Plans,  gains and losses resulting from plan amendments and other actuarial experience attributable to other post-employment benefit plans. The Company records amortization of the components 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 plan 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. Net deferred tax assets associated with the accumulated other comprehensive loss are fully reserved.
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     13

 
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The tables below sets forth the changes in accumulated other comprehensive loss, net of tax, as presented in the Company’s consolidated financial statements.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	
﻿	 	2016	 	2015	
﻿	 	Total	 	Defined
benefit pension
plans	 	Other post-
employment
benefit plans	 	Total	 	Defined
benefit pension
plans	 	Other post-
employment
benefit plans	
Balance, beginning of period	 	$	(38,474)	 	$	(38,867)	 	$	393 	 	$	(56,742)	 	$	(57,028)	 	$	286 	
Amortization	 	 	(17)	 	 	11 	 	 	(28)	 	 	313 	 	 	314 	 	 	(1)	
Balance, end of period	 	$	(38,491)	 	$	(38,856)	 	$	365 	 	$	(56,429)	 	$	(56,714)	 	$	285 	
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Nine Months Ended September 30,	
﻿	 	2016	 	2015	
﻿	 	Total	 	Defined
benefit pension
plans	 	Other post-
employment
benefit plans	 	Total	 	Defined
benefit pension
plans	 	Other post-
employment
benefit plans	
Balance, beginning of period	 	$	(38,442)	 	$	(38,898)	 	$	456 	 	$	(57,367)	 	$	(57,654)	 	$	287 	
Amortization	 	 	(49)	 	 	42 	 	 	(91)	 	 	938 	 	 	940 	 	 	(2)	
Balance, end of period	 	$	(38,491)	 	$	(38,856)	 	$	365 	 	$	(56,429)	 	$	(56,714)	 	$	285 	
﻿
﻿
﻿
Note 9:  Earnings Per Share
﻿
The table below sets forth the reconciliation for net 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 September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	2015	 	2016	 	2015	
Earnings (Numerator)	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss attributable to A. H. Belo Corporation	 	$	(497)	 	$	(3,956)	 	$	(436)	 	$	(4,185)	
Less: Loss from discontinued operations	 	 	 —	 	 	(52)	 	 	 —	 	 	(62)	
Less: Dividends to participating securities	 	 	29 	 	 	26 	 	 	83 	 	 	88 	
Net loss available to common shareholders from continuing operations	 	$	(526)	 	$	(3,930)	 	$	(519)	 	$	(4,211)	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Shares (Denominator)	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding (basic and diluted)	 	 	21,676,260 	 	 	21,651,670 	 	 	21,601,828 	 	 	21,721,875 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Loss Per Share from Continuing Operations	 	 	 	 	 	 	 	 	 	 	 	 	
Basic and diluted	 	$	(0.02)	 	$	(0.18)	 	$	(0.02)	 	$	(0.19)	
﻿
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 earnings per share. A  total of 504,648 and 699,780 options and RSUs outstanding during the three and nine months ended September 30, 2016 and 2015, respectively, were excluded from the calculation because the effect was anti-dilutive. 
﻿
Note 10:  Contingencies
﻿
Legal proceedings.    From time to time, the Company is involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. Management routinely assesses the likelihood of adverse judgments or outcomes in these matters, as well as the ranges of probable losses to the extent losses are reasonably estimable. Accruals for contingencies are recorded when, in the
14     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
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judgment of management, adverse judgments or outcomes are probable and the financial impact, should an adverse outcome occur, is reasonably estimable. The determination of likely outcomes of litigation matters relates to factors that include, but are not limited to, past experience and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. Predicting the outcome of claims and litigation and estimating related costs and financial exposure involves substantial uncertainties that could cause actual results to vary materially from estimates and accruals.
﻿
The Company is currently involved in a dispute with a customer regarding performance and pricing terms with respect to a change order to its printing services contract with the Company. Although the Company believes its position related to the contract can be sustained on its legal merits, it is reasonably possible that losses from zero up to the total amount of disputed invoices, totaling approximately $1,500, could be incurred in connection with the dispute.
﻿
In the opinion of management, liabilities, if any, arising from other currently existing claims against the Company would not have a material adverse effect on A. H. Belo’s results of operations, liquidity or financial condition.
﻿
Pro-rata distributions.    In connection with the acquisition of DMV Holdings, the shareholder agreement provides for a pro-rata distribution of 100 percent and 50 percent of DMV Holdings’ 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. In the nine months ended September 30, 2016, the Company made pro-rata distributions to noncontrolling interests of $264 in connection with this agreement based on 2015 free cash flow as defined.
﻿
Note 11:  Redeemable Noncontrolling Interest
﻿
In connection with the acquisition of DMV Holdings, the Company entered into a shareholder agreement which provides for 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 the noncontrolling ownership interest in DMV Holdings between the second and third anniversaries of the agreement and up to 50 percent of the noncontrolling ownership interest in DMV Holdings between the fourth and fifth anniversaries of the agreement.
﻿
The exercisability of the noncontrolling interest put option is outside the control of the Company. As such, the redeemable noncontrolling interest of $1,335 and $1,421 is reported in the mezzanine equity section of the Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, respectively. In the event that the put option expires unexercised, the related portion of noncontrolling interest would be classified as a component of equity in the Consolidated Balance Sheets.
﻿
Redeemable noncontrolling interest is recorded at fair value on the acquisition date and the carrying value is adjusted each period for its share of the earnings related to DMV Holdings. After the carrying value is adjusted for its share of the earnings related to DMV Holdings, the carrying value is adjusted for the change in fair value, which is the greater of the estimated redemption value or the value that would otherwise be assigned if the interest was not redeemable. Adjustments are recorded to retained earnings or additional paid in capital, as applicable, and have no effect to earnings of the Company. During the nine months ended September 30, 2016,  redeemable noncontrolling interest was increased by $13 for its share of the DMV Holdings’ earnings and decreased by $99 for distributions related to 2015 free cash flow as required under the shareholder agreement.
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     15

 
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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
﻿
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 consolidated financial statements and related notes filed as part of this report. 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 digital marketing. 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’s Publishing segment includes the operations of 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. Its newspaper operations also provide commercial printing and distribution services to large national and regional newspapers and other businesses in the North Texas region.
﻿
All other operations are reported within the Company’s Marketing, Event Marketing and Other Services segment. These operations primarily include sales of online automotive classifieds on the  cars.com  platform; marketing services generated by the Company’s branded marketing division Connect; Speakeasy; Proven Performance Media; and DMV Holdings and its subsidiaries Distribion, Inc., Vertical Nerve, Inc. and CDFX, LLC (“MarketingFX”). The segment also includes event promotion and marketing services provided by CrowdSource.
﻿
In January 2015, the Company acquired an 80 percent voting interest in DMV Holdings, into which the stock of three Dallas-based companies, Distribion, Inc., Vertical Nerve, Inc. and MarketingFX, were contributed. These businesses specialize in local marketing automation, search engine marketing, and direct mail and promotional products, respectively. The Company believes this acquisition complements 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. DMV Holdings was acquired for a cash purchase price of $14,110.
16     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
Table of Contents
 
RESULTS OF CONTINUING OPERATIONS
﻿
Consolidated Results of Continuing Operations
﻿
The table below sets forth the components of A. H. Belo’s operating income (loss) by segment.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	Percentage
Change	 	2015	 	2016	 	Percentage
Change	 	2015	
Publishing	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advertising and marketing services	 	$	26,487 	 	(11.4)	%	 	$	29,909 	 	$	81,219 	 	(10.4)	%	 	$	90,635 	
Circulation	 	 	19,633 	 	(3.2)	%	 	 	20,279 	 	 	59,806 	 	(3.7)	%	 	 	62,133 	
Printing, distribution and other	 	 	6,486 	 	(5.6)	%	 	 	6,872 	 	 	19,796 	 	(3.4)	%	 	 	20,503 	
Total Net Operating Revenue	 	 	52,606 	 	(7.8)	%	 	 	57,060 	 	 	160,821 	 	(7.2)	%	 	 	173,271 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Operating Costs and Expense	 	 	54,581 	 	(10.5)	%	 	 	60,999 	 	 	163,839 	 	(10.2)	%	 	 	182,354 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Loss	 	$	(1,975)	 	49.9 	%	 	$	(3,939)	 	$	(3,018)	 	66.8 	%	 	$	(9,083)	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
MEMO	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advertising and marketing services	 	$	11,817 	 	27.4 	%	 	$	9,275 	 	$	30,362 	 	28.4 	%	 	$	23,646 	
Printing, distribution and other	 	 	357 	 	(37.7)	%	 	 	573 	 	 	2,706 	 	28.7 	%	 	 	2,103 	
Total Net Operating Revenue	 	 	12,174 	 	23.6 	%	 	 	9,848 	 	 	33,068 	 	28.4 	%	 	 	25,749 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Operating Costs and Expense	 	 	10,688 	 	18.6 	%	 	 	9,011 	 	 	29,661 	 	16.7 	%	 	 	25,409 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	 	$	1,486 	 	77.5 	%	 	$	837 	 	$	3,407 	 	902.1 	%	 	$	340 	
﻿
﻿
Traditionally, 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 newspaper industry has faced a significant revenue decline over the past decade. Therefore, 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 commercial printing and distribution services to its local markets. The Company continually evaluates the overall performance of its core products to ensure existing assets are deployed adequately to maximize return.
﻿
The Company’s advertising revenue from its core newspapers continues to be adversely affected by the shift of advertiser spending to other forms of media and the increased accessibility of free online news content, as well as news content from other sources, which resulted in declines in advertising and paid print circulation volumes and revenue. The most significant decline in advertising revenue has been attributable to print display and classified categories. These categories, which represented 29.9 percent of consolidated revenue in 2013, have declined to 20.5 percent of consolidated revenue thus far in 2016, and further declines are likely in future periods. Decreases in print display and classified categories are indicative of continuing trends by advertisers towards digital platforms, which are widely available from many sources. In the current environment, companies are allocating more of their advertising spending towards programmatic channels that provide digital advertising on multiple platforms with enhanced technology for targeted delivery and measurement. The Company has responded to these challenges by expanding the programmatic channels through which it works to meet customer demand for digital advertisement opportunities in display, mobile, video and social media categories. By utilizing advertising exchanges to apply marketing insight, the Company believes it offers greater value to clients through focused targeting of advertising to potential customers.
﻿
The Company’s expanded digital and marketing services product offerings leverage the Company’s existing resources and relationships to offer additional value to existing and new advertising clients. Solutions provided by DMV Holdings 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.
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     17

 
Table of Contents
 
Advertising and marketing services revenue
﻿
Advertising and marketing services revenue was 59.1 percent and 57.5 percent of total revenue for the three and nine months ended September 30, 2016,  respectively, and 58.6 percent and 57.4 percent for the three and nine months ended September 30, 2015, respectively.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	Percentage
Change	 	2015	 	2016	 	Percentage
Change	 	2015	
Publishing	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Display advertising	 	$	7,933 	 	(21.5)	%	 	$	10,108 	 	$	24,910 	 	(22.6)	%	 	$	32,167 	
Classified advertising	 	 	4,984 	 	2.3 	%	 	 	4,871 	 	 	14,882 	 	(3.6)	%	 	 	15,437 	
Preprint advertising	 	 	11,365 	 	(8.3)	%	 	 	12,392 	 	 	34,140 	 	(3.9)	%	 	 	35,530 	
Digital advertising	 	 	2,205 	 	(13.1)	%	 	 	2,538 	 	 	7,287 	 	(2.9)	%	 	 	7,501 	
MEMO	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Digital services	 	 	10,742 	 	24.7 	%	 	 	8,616 	 	 	27,679 	 	25.3 	%	 	 	22,099 	
Other services	 	 	1,075 	 	63.1 	%	 	 	659 	 	 	2,683 	 	73.4 	%	 	 	1,547 	
Advertising and Marketing Services	$	38,304 	 	(2.2)	%	 	$	39,184 	 	$	111,581 	 	(2.4)	%	 	$	114,281 	
﻿
Publishing
﻿
Display – Display revenue primarily represents sales of non-classified advertising space within the Company’s core and niche newspapers. 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 lower retail advertising in substantially all categories except other retail in the three months ended September 30, 2016 and sporting goods in both periods. The department store, food and beverage, entertainment and furniture categories experienced the greatest declines with a combined revenue decrease of approximately $1,557 and $2,303, for the three and nine months ended September 30, 2016, respectively. The revenue decrease was driven heavily by a volume decline of 16.0 percent and 14.5 percent for the three and nine months ended September 30, 2016, respectively.
﻿
Classified – Classified primarily represents sales of classified advertising space within the Company’s core and niche newspapers. Growth in classified advertising revenue continues to be challenging as alternative digital outlets continue to emerge. Rate improvement trends in certain display advertising categories partially offset the volume decline. Overall classified revenue increased slightly during the three months ended September 30, 2016, and decreased in the nine months ended September 30, 2016, due to lower volumes in all categories except real estate and legal. This decline was partially offset by higher rates in automotive and employment.
﻿
Preprint – Preprint primarily reflects preprinted advertisements inserted into the Company’s core newspapers and niche publications, or distributed to non-subscribers through the mail. Revenue decreased due to a decline in the volume of preprint newspaper inserts, consistent with the decline in circulation volumes, discussed below, partially offset by higher volumes in home delivery mail advertising.
﻿
Digital – Digital publishing is primarily comprised of banner and real estate classified advertising on The Dallas Morning News’  website  dallasnews.com  as well as online employment and obituary classified advertising on third-party websites sold under a print/digital bundle package. Revenue decreased due to a lower volume of online banner advertisements on  dallasnews.com .
﻿
Marketing, Event Marketing and Other Services
﻿
Digital services – Digital marketing includes targeted and multi-channel advertising placed on third-party websites, content development, social media management, search optimization, other consulting, and sales of online automotive classifieds on the  cars.com  platform. The 2015 acquisition of DMV Holdings provided a significant portion of the growth in digital marketing revenue. DMV Holdings revenue increased $2,109 and $4,332 in the three and nine months ended September 30, 2016, respectively. The DMV Holdings revenue increase offset approximately 61.6 percent and 46.0 percent of the core print advertising revenue decline in the three and nine months ended September 30, 2016, respectively.
﻿
Other services – Other services revenue increased $416 and $1,136 in the three and nine months ended September 30, 2016, respectively, due to the sale of promotional merchandise by MarketingFX.
﻿
18     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
Table of Contents
 
Circulation revenue
﻿
Circulation revenue was 30.3 percent and 30.8 percent of total revenue for the three and nine months ended September 30, 2016, respectively, and 30.3 percent and 31.2 percent for the three and nine months ended September 30, 2015, respectively.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	Percentage
Change	 	2015	 	2016	 	Percentage
Change	 	2015	
Publishing	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Circulation	 	$	19,633 	 	(3.2)	%	 	$	20,279 	 	$	59,806 	 	(3.7)	%	 	$	62,133 	
﻿
Revenue decreased due to a decline in home delivery and single copy paid print circulation volumes of 9.2 percent and 12.5 percent, respectively, for the three months ended September 30, 2016, and 8.5 percent and 14.1 percent, respectively, for the nine months ended September 30, 2016. These volume declines were partially offset by a rate increase of 6.9 percent in both periods for home delivery.
﻿
Volume declines in circulation revenue have been more pronounced with single copy sales as it competes for retail space. Price increases and supplemental editions are critical to maintaining the revenue base to support this product. During the three and nine months ended September 30, 2016, the Company generated $315 and $402, respectively, of incremental circulation revenue through the distribution of specialty magazines to its core subscribers.
﻿
Printing, distribution and other revenue
﻿
Printing, distribution and other revenue was 10.6 percent and 11.7 percent of total revenue for the three and nine months ended September 30, 2016, respectively, and 11.1 percent and 11.4 percent for the three and nine months ended September 30, 2015, respectively.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	Percentage
Change	 	2015	 	2016	 	Percentage
Change	 	2015	
Publishing	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Commercial print and distribution	 	$	6,486 	 	(5.6)	%	 	$	6,872 	 	$	19,796 	 	(3.4)	%	 	$	20,503 	
MEMO	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Event marketing and other	 	 	357 	 	(37.7)	%	 	 	573 	 	 	2,706 	 	28.7 	%	 	 	2,103 	
Printing, Distribution and Other	 	$	6,843 	 	(8.1)	%	 	$	7,445 	 	$	22,502 	 	(0.5)	%	 	$	22,606 	
﻿
Publishing –  The Company aggressively markets the capacity of their printing and distribution assets to other newspapers that would benefit from cost sharing arrangements. Revenue decreased due to a decline in volumes associated with certain national newspapers. This decrease was partially offset by commencement of printing operations related to a regional newspaper in January 2016.
﻿
Marketing, Event Marketing and Other Services – CrowdSource, the Company’s event marketing provider, works closely with cities and other corporate sponsors to bring large entertainment events to local communities. Revenue decreased $216 for the three months ended September 30, 2016, and increased $603 for the nine months ended September 30, 2016. The decrease for the three months ended September 30, 2016, is primarily related to an event hosted by CrowdSource in the third quarter of 2015, which the Company will not host in 2016.
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     19

 
Table of Contents
 
Operating Costs and Expense
﻿
The table below sets forth the components of the Company’s operating costs and expense.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	Percentage
Change	 	2015	 	2016	 	Percentage
Change	 	2015	
Publishing	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Employee compensation and benefits	 	$	22,047 	 	(14.9)	%	 	$	25,910 	 	$	66,840 	 	(8.1)	%	 	$	72,693 	
Other production, distribution and operating costs	 	 	24,109 	 	(4.4)	%	 	 	25,207 	 	 	71,274 	 	(9.0)	%	 	 	78,324 	
Newsprint, ink and other supplies	 	 	5,958 	 	(16.1)	%	 	 	7,100 	 	 	18,060 	 	(20.2)	%	 	 	22,640 	
Depreciation	 	 	2,467 	 	(10.4)	%	 	 	2,752 	 	 	7,665 	 	(10.9)	%	 	 	8,607 	
Amortization	 	 	 —	 	(100.0)	%	 	 	30 	 	 	 —	 	(100.0)	%	 	 	90 	
MEMO	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Employee compensation and benefits	 	 	3,579 	 	14.3 	%	 	 	3,131 	 	 	10,577 	 	18.1 	%	 	 	8,956 	
Other production, distribution and operating costs	 	 	6,506 	 	21.5 	%	 	 	5,355 	 	 	17,570 	 	19.4 	%	 	 	14,713 	
Newsprint, ink and other supplies	 	 	357 	 	115.1 	%	 	 	166 	 	 	774 	 	21.9 	%	 	 	635 	
Depreciation	 	 	21 	 	(25.0)	%	 	 	28 	 	 	60 	 	(31.8)	%	 	 	88 	
Amortization	 	 	225 	 	(32.0)	%	 	 	331 	 	 	680 	 	(33.1)	%	 	 	1,017 	
Total Operating Costs and Expense	 	$	65,269 	 	(6.8)	%	 	$	70,010 	 	$	193,500 	 	(6.9)	%	 	$	207,763 	
﻿
Publishing
﻿
Employee compensation and benefits – The Company continues to implement measures to optimize its workforce and reduce risk associated with future obligations towards employee benefit plans. Employee compensation and benefits decreased $3,863 and $5,853 in the three and nine months ended September 30, 2016, respectively, due to headcount reductions within the Company that were effected in the second half of 2015.
﻿
Other production, distribution and operating costs – Expense decreased in the Company’s Publishing segment reflecting savings as the Company continues to manage discretionary spending. Savings were generated by reductions in temporary and personnel recruiting services, promotional spending and travel.
﻿
Newsprint, ink and other supplies –  Expense decreased due to reduced newsprint costs associated with lower circulation volumes from the Company and certain third-party newspapers and the discontinuation of unprofitable product lines. Newsprint consumption for the three months ended September 30, 2016 and 2015, approximated 6,627 and 7,516 metric tons, respectively, at an average cost per metric ton of $542 and  $550, respectively. Newsprint consumption for the nine months ended September 30, 2016 and 2015, approximated 20,022 and 23,162 metric tons, respectively, at an average cost per metric ton of $523 and $543, respectively. The average purchase price for newsprint was $561 and $529 for the three months ended September 30, 2016 and 2015, respectively,  and $532 and $551 for the nine months ended September 30, 2016 and 2015, respectively.
﻿
Depreciation – Expense decreased due to a lower depreciable asset base as a higher level of in-service assets are now fully depreciated.
﻿
Amortization –All definite-lived intangible assets are fully amortized.
﻿
Marketing, Event Marketing and Other Services
﻿
Employee compensation and benefits – Expense increased in the three and nine months ended September 30, 2016, primarily related to the growth associated with DMV Holdings of $731 and $2,208, respectively. As of September 30, 2016 and 2015, DMV Holdings employed 76 and 54 personnel, respectively.
﻿
Other production, distribution and operating costs –  Expense increased in the three and nine months ended September 30, 2016, in connection with growth in DMV Holdings of  $1,412 and $2,490, respectively.
﻿
Newsprint, ink and other supplies – Expense increased $191 and $139 in the three and nine months ended September 30, 2016, respectively, primarily due to an increase in promotional material printing costs associated with MarketingFX.
20     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
Table of Contents
 
Depreciation – Marketing and event services’ cost structure is primarily labor driven. Capital purchases are required to support technology investments, the Company’s websites and customer engaging applications. Capital assets are primarily depreciated over a life of three years.
﻿
Amortization –  Expense decreased in the three and nine months ended September 30, 2016, primarily related to customer lists associated with DMV Holdings of $80 and $241, respectively.
﻿
Other
﻿
The table below sets forth the other components of the Company’s results of operations.
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	2016	 	Percentage
Change	 	2015	 	2016	 	Percentage Change	 	2015	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from equity method investments, net	 	$	 —	 	100.0 	%	 	$	(564)	 	$	 —	 	100.0 	%	 	$	(288)	
Other income (expense), net	 	 	114 	 	123.3 	%	 	 	(489)	 	 	601 	 	165.9 	%	 	 	(912)	
Total other income (expense), net	 	$	114 	 	110.8 	%	 	$	(1,053)	 	$	601 	 	150.1 	%	 	$	(1,200)	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income Tax Provision (Benefit)	 	$	77 	 	141.0 	%	 	$	(188)	 	$	1,361 	 	124.3 	%	 	$	(5,601)	
﻿
Other Income (Expense) – Other income (expense) is primarily comprised of losses from investments and gain (loss) on disposal of fixed assets. In the fourth quarter of 2015, the Company’s ownership interest in Wanderful Media, LLC (“Wanderful”) decreased to less than 20 percent of the outstanding membership interests of Wanderful. Accordingly, the Company discontinued the use of the equity method of accounting for the investment in Wanderful, and began accounting for the investment under the cost method.
﻿
Tax provision –  The effective income tax rate for the nine months ended September 30, 2016, was higher when compared to the prior year period due to taxable income, changes in valuation allowance and the disposition of fixed assets.
﻿
Sales of Assets – Assets held for sale include long-lived assets being actively marketed for which a sale is considered probable within the next 12 months. These assets are recorded at the lower of their fair value less costs to sell or their carrying value at the time they are classified as assets held for sale. In the third quarter of 2016, the Company commenced due diligence related to the sale of a parking lot located in downtown Dallas, Texas. This asset, with a total carrying value of $2,600, is reported as assets held for sale as of September 30,  2016.
﻿
In June 2015, the Company completed the sale of land and a building which served as the headquarters of The Providence Journal , a publication formerly owned by the Company. The Company received net proceeds of $6,119 in the second quarter of 2015 upon closing of the transaction, generating a loss of $265, which was offset by $328 of returned escrow received in the second quarter of 2016. Also during the second quarter of 2015, the Company demolished existing structures on an additional property in Providence, Rhode Island, at a cost of $412.
﻿
Legal proceedings – From time to time, the Company is involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. Management routinely assesses the likelihood of adverse judgments or outcomes in these matters, as well as the ranges of probable losses to the extent losses are reasonably estimable. Accruals for contingencies are recorded when, in the judgment of management, adverse judgments or outcomes are probable and the financial impact, should an adverse outcome occur, is reasonably estimable. The determination of likely outcomes of litigation matters relates to factors that include, but are not limited to, past experience and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. Predicting the outcome of claims and litigation and estimating related costs and financial exposure involves substantial uncertainties that could cause actual results to vary materially from estimates and accruals.
﻿
The Company is currently involved in a dispute with a customer regarding performance and pricing terms with respect to a change order to its printing services contract with the Company. Although the Company believes its position related to the contract can be sustained on its legal merits, it is reasonably possible that losses from zero up to the total amount of disputed invoices, totaling approximately $1,500, could be incurred in connection with the dispute.
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     21

 
Table of Contents
 
Liquidity and Capital Resources
﻿
The Company’s cash balances as of September 30, 2016 and December 31, 2015,  were $78,341 and $78,380,  respectively.
﻿
The Company intends to hold existing cash for purposes of future investment opportunities, potential return of capital to shareholders and for contingency purposes. Although revenue from publishing operations is expected to continue to decline in future periods, operating contributions expected from the Company’s marketing services businesses, as well as planned adjustments for tax, pension and other cost cutting measures, are expected to be sufficient to fund operating activities and capital spending of approximately $2,000 over the remainder of the year.
﻿
The future payment of dividends is dependent upon available cash after considering future operating and investing requirements and cannot be guaranteed. The Company discontinued stock repurchases in December 2015, and current holdings of treasury stock could be used to satisfy its obligations related to share-based awards issued to employees and directors, or can be sold on the open market.
﻿
The following discusses the changes in cash flows by operating, investing and financing activities.
﻿
Operating Cash Flows
﻿
Net cash provided by (used for) continuing operations for the nine months ended months ended September 30, 2016 and 2015, was $6,679 and $(8,845), respectively. Cash flows from continuing operating activities improved by $15,524 during the nine months ended September 30, 2016, when compared to the prior year period,  primarily due to changes in working capital and other operating assets and liabilities of $10,055. In addition, the Company had improved net loss of $4,033, when compared to the prior year period.
﻿
Investing Cash Flows
﻿
Net cash used for investing activities was $3,840 and $12,200 for the nine months ended September 30, 2016 and 2015, respectively. Cash flows used for investing activities include $4,168 and $4,546 of capital spending in 2016 and 2015, respectively. Sales proceeds of $5,911, net of disposal costs for fixed assets, were received during 2015 related to the Providence, Rhode Island properties. Cash outflows during 2015 also include the payment of $14,110 related to the DMV Holdings acquisition.
﻿
Financing Cash Flows
﻿
Net cash used for financing activities was $2,878 and $57,422 for the nine months ended September 30, 2016 and 2015, respectively. Cash used for continuing financing activities included dividend payments of $5,265 and $55,450 in 2016 and 2015, 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, the Company purchased 369,952 shares of its Series A common stock at a total cost of $2,589 under its share repurchase program. The Company’s agreement to repurchase its stock was terminated in December 2015.
﻿
Financing Arrangements
﻿
None.
﻿
Contractual Obligations
﻿
Under the applicable tax and labor laws governing pension plan funding, no contributions to the A. H. Belo Pension Plans are required in 2016.
﻿
On September 8, 2016, the Company announced a $0.08 per share dividend to shareholders of record and holders of RSUs as of the close of business on November 10, 2016, which is payable on December 2, 2016. During the three months ended September 30, 2016, the Company recorded $1,763 to accrue for dividends declared but not yet paid.
﻿
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, 2015, filed on March 8, 2016, with the Securities and Exchange Commission (“SEC”).
22     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
Table of Contents
 
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, 2015.
﻿
Forward-Looking Statements
﻿
Statements in this communication concerning A. H. Belo Corporation’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, trends and uncertainties are, in most instances, beyond the Company’s control, and include changes in advertising demand and other economic conditions; consumers’ tastes; newsprint prices; program costs; labor relations; technology obsolescence; 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. Forward-looking statements, which are as of the date of this filing, are not updated to reflect events or circumstances after the date of the statement.
﻿
Item 3.  Quantitative and Qualitative Disclosures about Market Risk
﻿
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, 2015.
﻿
Item 4.  Controls and Procedures
﻿
(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.
﻿
PART II
﻿
Item 1.  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.
﻿
Item 1A.  Risk Factors
﻿
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, 2015.
﻿
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
﻿
There were no unregistered sales of the Company’s equity securities during the period covered by this report.
﻿
Issuer Purchases of Equity Securities
﻿
None.
﻿
Item 3.  Defaults Upon Senior Securities
﻿
None.
﻿
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     23

 
Table of Contents
 
Item 4.  Mine Safety Disclosures
﻿
None.
﻿
Item 5.  Other Information
﻿
None.
24     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
Table of Contents
 
Item 6.  Exhibits
﻿
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)	
10.2	*	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))	
﻿	 	 	 	(a)	First Amendment to the A. H. Belo Savings Plan effective January 1, 2016	
﻿	 	 	 	(b)	Second Amendment to the A. H. Belo Savings Plan effective September 8, 2016	
﻿	 	~(2)	*	A. H. Belo Corporation 2008 Incentive Compensation Plan (Exhibit 10.5 to 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)	
﻿	 	 	 	 	 	
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     25

 
Table of Contents
 
﻿	 	 	 	 	 	
Exhibit Number	Description	
﻿	 	~(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)	
﻿	 	 	*	(b)	Second Amendment to the A. H. Belo Pension Transition Supplement Restoration Plan dated July 29, 2016 (Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2016 (Securities and Exchange Commission File No. 001‑33741))	
 	 	~(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)	
10.3	 	Agreements relating to the separation of A. H. Belo Corporation from its former parent company:	
 	 	(1)	*	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 (October 8, 2010 Form 8-K))	
 	 	(2)	*	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))	
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	
﻿
 
26     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

 
Table of Contents
 
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.
﻿
11/1/2016	 	 	 	
﻿	
﻿	 	 	 	
 	A. H. BELO CORPORATION	
 	 	 	
 	By:	/s/	Katy Murray	
 	 	 	Katy Murray	
 	 	 	Senior Vice President/Chief Financial Officer	
 	 	 	(Principal Financial Officer)	
 	 	
 	Dated:	November 1, 2016	
 	 	 	
﻿
 
A. H. Belo Corporation Third Quarter 2016 on Form 10-Q     27

 
Table of Contents
 
﻿
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.
 
﻿
28     A. H. Belo Corporation Third Quarter 2016 on Form 10-Q

Exhibit 10.2(1)(a)
﻿
FIRST AMENDMENT
TO THE
A. H. BELO
SAVINGS PLAN
A. H. Belo Corporation, a Delaware corporation (the "Company"), pursuant to its authority to amend the A. H. Belo Savings Plan (the “Plan”) contained in Article 15 of the Plan,  hereby adopts this First Amendment to the A. H. Belo Savings Plan (the "Plan").
﻿
1. The first sentence of Section 7.1(a) of the Plan is deleted in its entirety and amended and replaced with the following effective with respect to distributions commenced on or after January 1, 2016:
﻿
(a) Timing of Distributions. Except as set forth in Sections 7.1(a) through (d), 7.2 and 7.3, distribution of a Participant’s vested Account balance will be made as soon as practicable after the Valuation Date coinciding with or immediately following the Participant’s termination of employment, or if earlier, the date on which the Participant becomes eligible to receive benefits under the Social Security Act on account of total and permanent disability.
﻿
2. The first sentence of Section 7.1(b) of the Plan is deleted in its entirety and amended and replaced with the following effective with respect to distributions commenced on or after January 1, 2016:
﻿
(b) Form of Distributions. Except as provided in Section 7.2(a) through (f) below, distributions made before age 70 and ½ years will be in the form of a single lump sum payment.
﻿
3.Section 7.2 of the Plan is deleted in its entirety and amended and replaced to read as follows effective with respect to distributions commenced on and after of January 1, 2016:
﻿
7.2Withdrawals.
﻿
(a)After Age 59½ While In Service.  A Participant who has not terminated employment may request a distribution from his Account if he has reached age 59½ years.  A Participant who is a director, officer or principal stockholder of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934 may exercise the foregoing withdrawal right only in accordance with rules and procedures established from time to time by the Committee.  Participants may exercise their withdrawal rights under this Section 7.2(a) a maximum of one time during each quarter of the Plan Year.
﻿
(b)After Termination of Employment.  A Participant may elect to receive either (i) his entire account in a single sum payment under Section 7.1, or (ii) up to five (5) withdrawals in a calendar year followed by a lump sum distribution of the entire remaining account upon the sixth withdrawal request in a calendar year in a single sum payment pursuant to Section 7.2(c) provided such withdrawals meet the requirements for satisfying the minimum required distributions under Sections 12.4 through 12.8 hereof, when such rules are applicable. Notwithstanding the provision for withdrawals in Section 7.2(c) below, in the event a withdrawal reduces a Participant’s vested Account balance to $1,000 or less, his full account shall be automatically distributed pursuant to Section 7.1 hereof.  
﻿
(c)Withdrawals Following Termination of Employment.  A Participant who has terminated employment may request a distribution from his Account without requesting a full distribution of his account for up to five (5) separate withdrawal requests in a calendar year, and the sixth withdrawal request in a calendar year will result in a lump sum distribution of all of his vested

 

benefits remaining in his Account, provided such withdrawals must comply with the requirements of Sections 12.4 through 12.8 hereof, once the Participant attains the age of 70 and ½ years. Such withdrawal distributions shall be available to a Participant according to the procedures and limitations established by the Plan Administrator from time to time. There shall be no minimum withdrawal amount required.  Any such withdrawal shall be subject to any fees which may be charged for processing a withdrawal, if any. A Participant who is a director, officer or principal stockholder of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934 may exercise the foregoing withdrawal right only in accordance with rules and procedures established from time to time by the Committee. 
﻿
(d)Former Journal Broadcasting Employees.  A Participant who, on December 31, 1997, was a participant in the Journal Broadcasting 401(k) Plan may withdraw, in accordance with rules and procedures established from time to time by the Committee, all or any portion of his Rollover Account attributable to his after-tax contributions and rollover contributions that were transferred to the Plan from the Journal Broadcasting 401(k) Plan effective January 1, 1998.
﻿
(e)Qualified Reservist Distributions.  Effective January 1, 2011, a Participant may elect to receive a “qualified reservist distribution” within the meaning of Code section 72(t)(2)(G)(iii).
﻿
(f)Deemed Severance From Employment. Effective January 1, 2011, a Participant will be treated as having incurred a severance from employment with the Controlled Group for purposes of Code section 401(k)(2)(B)(i)(1) during any period that the Participant is performing service in the uniformed services described in Code section 3401(h)(2)(A).  A Participant who receives a distribution from the Plan by reason of this Section 7.2(d) will have his Deferral Contributions suspended for a period of six months beginning on the date of distribution.
﻿
4.Distribution Procedures.  Section 7.4 of the Plan is deleted in its entirety and amended and replaced to read as follows effective as of January 1, 2016:
﻿
7.4Distribution Procedures.  Distributions pursuant to Sections 7.2 and 7.3 will be made as soon as practicable following the Committee’s approval of the Participant’s written request for withdrawal and will be made in the form described in Section 7.1(b).  Distributions pursuant to Sections 7.2(a)-(d) and 7.3 will be made pro rata from each contribution source in the Participant’s Account, provided, however, that in the case of a hardship distribution under Section 7.3, the cumulative amount distributed to a Participant from his Deferral Contribution Account will not exceed the amount of his Deferral Contributions that have not been previously withdrawn (but not the income allocable to his Deferral Contributions).  No distribution under Section 7.2 or Section 7.3 will be made in an amount that is greater than the excess of the Participant’s vested interest in the Account from which the distributions are made over the aggregate amount of outstanding loans, plus accrued interest, secured by such Account.  For purposes of determining the amount available for distribution, a Participant’s Account will be valued as of the Valuation Date immediately preceding the date on which the Participant requests a distribution.

 

﻿
5.No other provision of the Plan is amended by this First Amendment to the Plan.
﻿
﻿
Executed at Dallas, Texas, this 10th day of December, 2015.
﻿
﻿	 	 	 	
 	A. H. BELO CORPORATION	
 	 	 	
 	By:	/s/	Katy Murray	
 	Name:	 	Katy Murray	
 	Title:	 	Senior Vice President & Chief Financial Officer	

﻿	 	 	
﻿
﻿

Exhibit 10.2(1)(b)
﻿
SECOND AMENDMENT
TO THE
A. H. BELO
SAVINGS PLAN
A. H. Belo Corporation, a Delaware corporation (the "Company"), pursuant to its authority to amend the A. H. Belo Savings Plan (the “Plan”) contained in Article 15, Section 15.1 of the Plan, hereby adopts this Second Amendment to the A. H. Belo Savings Plan (the "Plan").
﻿
1.Appendix A of the Plan is amended to add AHC Proven Performance Media LLC as a participating employer, and Appendix A is replaced in its entirety to read as follows effective as of September 8, 2016:
﻿
APPENDIX A

EMPLOYERS AS OF July 22, 2016
﻿
A. H. Belo Corporation
A. H. Belo Management Services, Inc.
Al Dia, Inc.
CDFX, LLC
The Dallas Morning News, Inc.
Denton Publishing Company
Distribion, Inc.
Vertical Nerve, Inc.
CDFX, LLC
AHC Proven Performance Media LLC
﻿
2.No other provision of the Plan is amended by this Second Amendment to the Plan.
﻿
﻿
Executed at Dallas, Texas, this 8th day of September, 2016.
﻿
﻿
﻿	 	 	 	
 	A. H. BELO CORPORATION	
 	 	 	
 	By:	/s/	Julie Hoagland	
 	Name:	 	Julie Hoagland	
 	Title:	 	Senior Vice President/Chief People Officer	

﻿	 	 	
﻿
﻿

Exhibit 31.1
﻿
SECTION 302 CERTIFICATION
﻿
﻿
I, James M. Moroney III, Chairman of the Board, President and Chief Executive Officer of A. H. Belo Corporation, certify that:
﻿
 	1.	 	I have reviewed this quarterly report on Form 10-Q of A. H. Belo Corporation;	
﻿
 	2.	 	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
﻿
 	3.	 	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
﻿
 	4.	 	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
﻿
 	a)	 	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
﻿
 	b)	 	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
﻿
 	c)	 	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
﻿
 	d)	 	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
﻿
 	5.	 	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
﻿
 	a)	 	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
﻿
 	b)	 	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	
﻿
﻿	 	 	
﻿	By:	/s/ James M. Moroney III	
﻿	 	James M. Moroney III	
﻿	 	Chairman of the Board, President and Chief Executive Officer	
﻿	 	 	
﻿	 	 	
﻿	Date:	November 1, 2016	
﻿

Exhibit 31.2
﻿
SECTION 302 CERTIFICATION
﻿
﻿
I, Katy Murray, Senior Vice President/Chief Financial Officer of A. H. Belo Corporation, certify that:
﻿
 	1.	 	I have reviewed this quarterly report on Form 10-Q of A. H. Belo Corporation;	
﻿
 	2.	 	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
﻿
 	3.	 	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
﻿
 	4.	 	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
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 	a)	 	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
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 	b)	 	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
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 	c)	 	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
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 	d)	 	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
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 	5.	 	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
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 	a)	 	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
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 	b)	 	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	
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﻿	 	 	
﻿	By:	/s/ Katy Murray	
﻿	 	Katy Murray	
﻿	 	Senior Vice President/Chief Financial Officer	
﻿	 	 	
﻿	 	 	
﻿	Date:	November 1, 2016	
﻿
﻿

Exhibit 32
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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
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In connection with the Quarterly Report of A. H. Belo Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, James M. Moroney III, Chairman of the Board, President and Chief Executive Officer of the Company, and Katy Murray, Senior Vice President/Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
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 	(1)	 	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
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 	(2)	 	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	
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overm	 	 	
﻿	By:	/s/ James M. Moroney III	
﻿	 	James M. Moroney III	
﻿	 	Chairman of the Board, President and Chief Executive Officer	
﻿	 	 	
﻿	 	 	
﻿	Date:	November 1, 2016	
﻿
﻿
﻿	 	 	
﻿	By:	/s/ Katy Murray	
﻿	 	Katy Murray	
﻿	 	Senior Vice President/Chief Financial Officer	
﻿	 	 	
﻿	 	 	
﻿	Date:	November 1, 2016	
﻿