UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☑þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2017March 31, 2021
OR
☐¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file no.1-33741
A. H. Belo Corporation
(Exact name of registrant as specified in its charter)
Texas | 38-3765318 | |
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
P. O. Box 224866, Dallas, Texas 75222-4866 | (214) | |
(Address of principal executive offices, including zip code) | (Registrant’s telephone number, including area code) | |
Former name, former address and former fiscal year, if changed since last report. | ||
None |
Former name, former address and former fiscal year, if changed since last report.Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Series A Common Stock, $0.01 par value | AHC | New York Stock Exchange |
None
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑þ No ☐ ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑þ No ☐ ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large Accelerated Filer: ¨ | Accelerated Filer: ¨ |
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| Smaller Reporting Company: þ | Emerging Growth Company ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐¨ No ☑þ
Indicate the numberShares of shares outstanding of each of the issuer’s classes of common stock, as of the latest possible date.
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Total Common Stock consistsoutstanding at April 22, 2021: 21,410,423 shares (consisting of 19,281,01118,941,420 shares of Series A Common Stock and 2,472,1552,469,003 shares of Series B Common Stock. Stock).
FORM 10-Q
TABLE OF CONTENTS
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Item 1. | ||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||
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Item 3. | ||||||
Item 4. | ||||||
Item 5. | ||||||
Item 6. | ||||||
A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Operations
Three Months Ended March 31, | ||||||
In thousands, except share and per share amounts (unaudited) | 2021 | 2020 | ||||
Net Operating Revenue: | ||||||
Advertising and marketing services | $ | 16,769 | $ | 19,327 | ||
Circulation | 16,022 | 16,414 | ||||
Printing, distribution and other | 4,024 | 4,602 | ||||
Total net operating revenue | 36,815 | 40,343 | ||||
Operating Costs and Expense: | ||||||
Employee compensation and benefits | 17,947 | 19,016 | ||||
Other production, distribution and operating costs | 19,090 | 20,992 | ||||
Newsprint, ink and other supplies | 2,341 | 3,271 | ||||
Depreciation | 1,074 | 1,765 | ||||
Amortization | 64 | 64 | ||||
Gain on sale/disposal of assets, net | (1) | (5) | ||||
Total operating costs and expense | 40,515 | 45,103 | ||||
Operating loss | (3,700) | (4,760) | ||||
Other income, net | 1,254 | 1,352 | ||||
Loss Before Income Taxes | (2,446) | (3,408) | ||||
Income tax provision (benefit) | 319 | (1,787) | ||||
Net Loss | $ | (2,765) | $ | (1,621) | ||
Per Share Basis | ||||||
Net loss | ||||||
Basic and diluted | $ | (0.13) | $ | (0.08) | ||
Number of common shares used in the per share calculation: | ||||||
Basic and diluted | 21,410,423 | 21,410,423 |
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||
In thousands, except share and per share amounts (unaudited) |
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Net Operating Revenue: |
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Advertising and marketing services |
| $ | 34,875 |
| $ | 38,304 |
| $ | 106,101 |
| $ | 111,581 |
Circulation |
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| 18,845 |
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| 19,633 |
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| 57,099 |
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| 59,806 |
Printing, distribution and other |
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| 6,839 |
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| 6,843 |
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| 21,349 |
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| 22,502 |
Total net operating revenue |
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| 60,559 |
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| 64,780 |
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| 184,549 |
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| 193,889 |
Operating Costs and Expense: |
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Employee compensation and benefits |
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| 29,693 |
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| 25,626 |
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| 82,421 |
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| 77,417 |
Other production, distribution and operating costs |
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| 27,460 |
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| 30,615 |
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| 85,522 |
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| 88,844 |
Newsprint, ink and other supplies |
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| 5,648 |
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| 6,315 |
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| 17,542 |
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| 18,834 |
Depreciation |
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| 2,607 |
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| 2,488 |
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| 7,840 |
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| 7,725 |
Amortization |
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| 200 |
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| 225 |
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| 599 |
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| 680 |
Goodwill impairment |
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| — |
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| — |
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| 228 |
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| — |
Total operating costs and expense |
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| 65,608 |
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| 65,269 |
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| 194,152 |
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| 193,500 |
Operating income (loss) |
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| (5,049) |
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| (489) |
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| (9,603) |
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| 389 |
Other income, net |
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| 7,639 |
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| 114 |
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| 7,209 |
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| 601 |
Income (Loss) from Continuing Operations Before Income Taxes |
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| 2,590 |
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| (375) |
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| (2,394) |
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| 990 |
Income tax provision |
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| 10 |
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| 77 |
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| 261 |
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| 1,361 |
Net Income (Loss) |
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| 2,580 |
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| (452) |
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| (2,655) |
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| (371) |
Net income attributable to noncontrolling interests |
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| 45 |
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| — |
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| 65 |
Net Income (Loss) Attributable to A. H. Belo Corporation |
| $ | 2,580 |
| $ | (497) |
| $ | (2,655) |
| $ | (436) |
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Per Share Basis |
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Net income (loss) attributable to A. H. Belo Corporation |
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Basic and diluted |
| $ | 0.12 |
| $ | (0.02) |
| $ | (0.13) |
| $ | (0.02) |
Number of common shares used in the per share calculation: |
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Basic |
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| 21,753,166 |
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| 21,676,260 |
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| 21,729,212 |
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| 21,601,828 |
Diluted |
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| 21,754,627 |
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| 21,676,260 |
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| 21,729,212 |
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| 21,601,828 |
See the accompanying Notes to the Consolidated Financial Statements.
A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended March 31, | ||||||
In thousands (unaudited) | 2021 | 2020 | ||||
Net Loss | $ | (2,765) | $ | (1,621) | ||
Other Comprehensive Income, Net of Tax: | ||||||
Amortization of actuarial losses | 360 | 219 | ||||
Total other comprehensive income, net of tax | 360 | 219 | ||||
Total Comprehensive Loss | $ | (2,405) | $ | (1,402) |
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||
In thousands (unaudited) |
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Net Income (Loss) |
| $ | 2,580 |
| $ | (452) |
| $ | (2,655) |
| $ | (371) |
Other Comprehensive Income (Loss), Net of Tax: |
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Actuarial gains |
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| 3,648 |
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| — |
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| 3,648 |
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Amortization of actuarial (gains) losses |
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| 5,967 |
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| (17) |
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| 6,080 |
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| (49) |
Total other comprehensive income (loss) |
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| 9,615 |
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| (17) |
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| 9,728 |
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| (49) |
Comprehensive Income (Loss) |
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| 12,195 |
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| (469) |
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| 7,073 |
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| (420) |
Comprehensive income attributable to noncontrolling interests |
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| 45 |
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| 65 |
Total Comprehensive Income (Loss) Attributable to A. H. Belo Corporation |
| $ | 12,195 |
| $ | (514) |
| $ | 7,073 |
| $ | (485) |
See the accompanying Notes to the Consolidated Financial Statements.
A. H. Belo Corporation and Subsidiaries
Consolidated Balance Sheets
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| September 30, |
| December 31, | March 31, | December 31, | ||||||
In thousands, except share amounts (unaudited) |
| 2017 |
| 2016 | 2021 | 2020 | ||||||
Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 49,955 |
| $ | 80,071 | $ | 38,132 | $ | 42,015 | ||
Accounts receivable (net of allowance of $937 and $1,115 at September 30, 2017 and December 31, 2016, respectively) |
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| 25,914 |
| 29,114 | |||||||
Accounts receivable (net of allowance of $863 and $712 at March 31, 2021 and December 31, 2020, respectively) | 15,503 | 16,562 | ||||||||||
Notes receivable | 22,775 | 22,775 | ||||||||||
Inventories |
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| 3,417 |
| 3,386 | 2,366 | 1,974 | |||||
Prepaids and other current assets |
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| 10,185 |
| 9,553 | 6,312 | 4,780 | |||||
Assets held for sale |
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| 5,510 |
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Total current assets |
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| 94,981 |
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| 122,124 | 85,088 | 88,106 | ||||
Property, plant and equipment, at cost |
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| 440,432 |
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| 445,874 | 312,578 | 312,532 | ||||
Less accumulated depreciation |
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| (406,841) |
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| (402,115) | (301,646) | (300,573) | ||||
Property, plant and equipment, net |
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| 33,591 |
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| 43,759 | 10,932 | 11,959 | ||||
Operating lease right-of-use assets | 19,764 | 20,406 | ||||||||||
Intangible assets, net |
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| 4,273 |
| 4,872 | — | 64 | |||||
Goodwill |
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| 13,973 |
| 14,201 | |||||||
Deferred income taxes, net | 91 | 76 | ||||||||||
Other assets |
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| 6,975 |
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| 7,775 | 2,213 | 2,604 | ||||
Total assets |
| $ | 153,793 |
| $ | 192,731 | $ | 118,088 | $ | 123,215 | ||
Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Accounts payable |
| $ | 9,121 |
| $ | 9,036 | $ | 7,381 | $ | 7,759 | ||
Accrued compensation and benefits |
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| 7,641 |
| 8,657 | 5,557 | 5,754 | |||||
Other accrued expense |
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| 5,395 |
| 6,318 | 4,967 | 5,075 | |||||
Advance subscription payments |
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| 12,179 |
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| 13,243 | ||||||
Contract liabilities | 13,760 | 12,896 | ||||||||||
Total current liabilities |
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| 34,336 |
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| 37,254 | 31,665 | 31,484 | ||||
Long-term pension liabilities |
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| 28,413 |
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| 54,843 | 17,119 | 18,520 | ||||
Long-term operating lease liabilities | 21,216 | 21,890 | ||||||||||
Other post-employment benefits |
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| 2,189 |
| 2,329 | 1,360 | 1,372 | |||||
Other liabilities |
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| 3,919 |
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| 6,483 | 3,581 | 3,541 | ||||
Total liabilities |
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| 68,857 |
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| 100,909 | 74,941 | 76,807 | ||||
Noncontrolling interest - redeemable |
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| 2,670 | |||||||
Shareholders’ equity: |
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Preferred stock, $.01 par value; Authorized 2,000,000 shares; none issued |
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Common stock, $.01 par value; Authorized 125,000,000 shares |
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Series A: issued 20,697,892 and 20,620,461 shares at September 30, 2017 and December 31, 2016, respectively |
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| 208 |
| 207 | |||||||
Series B: issued 2,472,155 and 2,472,680 shares at September 30, 2017 and December 31, 2016, respectively |
| 24 |
| 24 | ||||||||
Treasury stock, Series A, at cost; 1,416,881 shares held at September 30, 2017 |
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| (11,233) |
| (11,233) | |||||||
Preferred stock, $0.01 par value; Authorized 2,000,000 shares; NaN issued | — | — | ||||||||||
Common stock, $0.01 par value; Authorized 125,000,000 shares | ||||||||||||
Series A: issued 20,855,280 and 20,855,200 shares at March 31, 2021 and December 31, 2020, respectively | 209 | 209 | ||||||||||
Series B: issued 2,469,003 and 2,469,083 shares at March 31, 2021 and December 31, 2020, respectively | 24 | 24 | ||||||||||
Treasury stock, Series A, at cost; 1,913,860 shares held at March 31, 2021 and December 31, 2020 | (13,443) | (13,443) | ||||||||||
Additional paid-in capital |
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| 494,820 |
| 499,552 | 494,389 | 494,389 | |||||
Accumulated other comprehensive loss |
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| (29,580) |
| (39,308) | (32,108) | (32,468) | |||||
Accumulated deficit |
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| (369,303) |
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| (361,324) | (405,924) | (402,303) | ||||
Total shareholders’ equity attributable to A. H. Belo Corporation |
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| 84,936 |
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| 87,918 | ||||||
Noncontrolling interests |
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| 1,234 | ||||||
Total shareholders’ equity |
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| 84,936 |
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| 89,152 | 43,147 | 46,408 | ||||
Total liabilities and shareholders’ equity |
| $ | 153,793 |
| $ | 192,731 | $ | 118,088 | $ | 123,215 |
See the accompanying Notes to the Consolidated Financial Statements.
A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Shareholders’ Equity
Three Months Ended March 31, 2021 and 2020 | ||||||||||||||||
Common Stock | Treasury Stock | |||||||||||||||
In thousands, except share amounts (unaudited) | Shares | Shares | Amount | Additional | Shares | Amount | Accumulated | Accumulated | Total | |||||||
Balance at December 31, 2019 | 20,854,975 | 2,469,308 | $ | 233 | $ | 494,389 | (1,913,860) | $ | (13,443) | $ | (32,294) | $ | (391,148) | $ | 57,737 | |
Net loss | — | — | — | — | — | — | — | (1,621) | (1,621) | |||||||
Other comprehensive income | — | — | — | — | — | — | 219 | — | 219 | |||||||
Conversion of Series B to Series A | 225 | (225) | — | — | — | — | — | — | — | |||||||
Dividends declared ($0.08 per share) | — | — | — | — | — | — | — | (1,713) | (1,713) | |||||||
Balance at March 31, 2020 | 20,855,200 | 2,469,083 | $ | 233 | $ | 494,389 | (1,913,860) | $ | (13,443) | $ | (32,075) | $ | (394,482) | $ | 54,622 | |
Balance at December 31, 2020 | 20,855,200 | 2,469,083 | 233 | 494,389 | (1,913,860) | (13,443) | (32,468) | (402,303) | 46,408 | |||||||
Net loss | — | — | — | — | — | — | — | (2,765) | (2,765) | |||||||
Other comprehensive income | — | — | — | — | — | — | 360 | — | 360 | |||||||
Conversion of Series B to Series A | 80 | (80) | — | — | — | — | — | — | — | |||||||
Dividends declared ($0.04 per share) | — | — | — | — | — | — | — | (856) | (856) | |||||||
Balance at March 31, 2021 | 20,855,280 | 2,469,003 | $ | 233 | $ | 494,389 | (1,913,860) | $ | (13,443) | $ | (32,108) | $ | (405,924) | $ | 43,147 |
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| Common Stock |
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| Treasury Stock |
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In thousands, except share amounts (unaudited) | Shares | Shares | Amount | Additional |
| Shares | Amount | Accumulated | Accumulated | Noncontrolling | Total | |||||||
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 |
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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) |
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| — |
| — |
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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 |
Balance at December 31, 2016 | 20,620,461 | 2,472,680 | $ | 231 | $ | 499,552 |
| (1,416,881) | $ | (11,233) | $ | (39,308) | $ | (361,324) | $ | 1,234 | $ | 89,152 |
Net loss | — | — |
| — |
| — |
| — |
| — |
| — |
| (2,655) |
| — |
| (2,655) |
Other comprehensive income | — | — |
| — |
| — |
| — |
| — |
| 9,728 |
| — |
| — |
| 9,728 |
Distributions to noncontrolling interests | — | — |
| — |
| — |
| — |
| — |
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| — |
| (118) |
| (118) |
Issuance of shares for restricted stock units | 76,906 | — |
| 1 |
| (1) |
| — |
| — |
| — |
| — |
| — |
| — |
Share-based compensation | — | — |
| — |
| 775 |
| — |
| — |
| — |
| — |
| — |
| 775 |
Purchases of noncontrolling interests | — | — |
| — |
| (5,506) |
| — |
| — |
| — |
| — |
| (1,116) |
| (6,622) |
Conversion of Series B to Series A | 525 | (525) |
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| — |
| — |
| — |
| — |
| — |
| — |
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Dividends | — | — |
| — |
| — |
| — |
| — |
| — |
| (5,324) |
| — |
| (5,324) |
Balance at September 30, 2017 | 20,697,892 | 2,472,155 | $ | 232 | $ | 494,820 |
| (1,416,881) | $ | (11,233) | $ | (29,580) | $ | (369,303) | $ | — | $ | 84,936 |
See the accompanying Notes to the Consolidated Financial Statements.
A. H. Belo Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended March 31, | ||||||
In thousands (unaudited) | 2021 | 2020 | ||||
Operating Activities | ||||||
Net loss | $ | (2,765) | $ | (1,621) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||
Depreciation and amortization | 1,138 | 1,829 | ||||
Net periodic pension and other post-employment benefit | (1,035) | (1,154) | ||||
Bad debt expense | 211 | 296 | ||||
Deferred income taxes | (15) | 14 | ||||
Gain on sale/disposal of assets, net | (1) | (5) | ||||
Loss on investment related activity | — | 18 | ||||
Changes in working capital and other operating assets and liabilities: | ||||||
Accounts receivable | 848 | 3,199 | ||||
Inventories, prepaids and other current assets | (1,924) | (4,189) | ||||
Other assets | 391 | (1) | ||||
Accounts payable | (378) | (1,114) | ||||
Compensation and benefit obligations | (197) | (2,112) | ||||
Other accrued expenses | 16 | 78 | ||||
Contract liabilities | 864 | 2,185 | ||||
Other post-employment benefits | (18) | (17) | ||||
Net cash used for operating activities | (2,865) | (2,594) | ||||
Investing Activities | ||||||
Purchases of assets | (163) | (390) | ||||
Sales of assets | 1 | 5 | ||||
Net cash used for investing activities | (162) | (385) | ||||
Financing Activities | ||||||
Dividends paid | (856) | (1,713) | ||||
Net cash used for financing activities | (856) | (1,713) | ||||
Net decrease in cash and cash equivalents | (3,883) | (4,692) | ||||
Cash and cash equivalents, beginning of period | 42,015 | 48,626 | ||||
Cash and cash equivalents, end of period | $ | 38,132 | $ | 43,934 | ||
Supplemental Disclosures | ||||||
Income tax paid, net | $ | 8 | $ | 5 | ||
Noncash investing and financing activities: | ||||||
Dividends payable | 856 | 1,713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Nine Months Ended September 30, | ||||
In thousands (unaudited) |
| 2017 |
| 2016 | ||
Operating Activities |
|
|
|
|
|
|
Net loss |
| $ | (2,655) |
| $ | (371) |
Adjustments to reconcile net loss to net cash provided by (used for) operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
| 8,439 |
|
| 8,405 |
Net periodic benefit and contributions related to employee benefit plans |
|
| (16,667) |
|
| (2,626) |
Share-based compensation |
|
| 775 |
|
| 534 |
Deferred income taxes |
|
| — |
|
| 13 |
Loss on investment related activity |
|
| 250 |
|
| 200 |
Gain on disposal of fixed assets |
|
| (7,118) |
|
| (328) |
Goodwill impairment |
|
| 228 |
|
| — |
Changes in working capital and other operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
Accounts receivable |
|
| 3,200 |
|
| 4,752 |
Inventories, prepaids and other current assets |
|
| (663) |
|
| 76 |
Other assets |
|
| 568 |
|
| (582) |
Accounts payable |
|
| 85 |
|
| (1,898) |
Compensation and benefit obligations |
|
| (932) |
|
| 1,740 |
Other accrued expenses |
|
| (62) |
|
| (1,926) |
Advance subscription payments |
|
| (1,064) |
|
| (1,213) |
Other post-employment benefits |
|
| (174) |
|
| (97) |
Net cash provided by (used for) operating activities |
|
| (15,790) |
|
| 6,679 |
Investing Activities |
|
|
|
|
|
|
Purchases of assets |
|
| (7,837) |
|
| (4,168) |
Sales of assets |
|
| 8,252 |
|
| 328 |
Purchases of investments |
|
| (18) |
|
| — |
Net cash provided by (used for) investing activities |
|
| 397 |
|
| (3,840) |
Financing Activities |
|
|
|
|
|
|
Purchases of noncontrolling interests |
|
| (9,231) |
|
| — |
Dividends paid |
|
| (5,313) |
|
| (5,265) |
Proceeds from other financing activities |
|
| — |
|
| 2,566 |
Distributions to noncontrolling interests |
|
| (179) |
|
| (335) |
Proceeds from exercise of stock options |
|
| — |
|
| 156 |
Net cash used for financing activities |
|
| (14,723) |
|
| (2,878) |
Net decrease in cash and cash equivalents |
|
| (30,116) |
|
| (39) |
Cash and cash equivalents, beginning of period |
|
| 80,071 |
|
| 78,380 |
Cash and cash equivalents, end of period |
| $ | 49,955 |
| $ | 78,341 |
|
|
|
|
|
|
|
Supplemental Disclosures |
|
|
|
|
|
|
Income tax paid, net of refunds |
| $ | 1,200 |
| $ | 1,623 |
Noncash investing and financing activities: |
|
|
|
|
|
|
Investments in property, plant and equipment payable |
|
| 228 |
|
| 603 |
Dividends payable |
|
| 1,775 |
|
| 1,763 |
See the accompanying Notes to the Consolidated Financial Statements.
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 athe leading local news and information publishing company within Texas. The Company has a growing presence in emerging media and digital marketing, and maintains capabilities related to 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,mail. A. H. Belo delivers news and information in innovative ways to a broad spectrumrange 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,Prizes, and various niche publications targeting specific audiences. A. H. BeloIts newspaper operations also offersprovide commercial printing and distribution services to several large national newspapers. In addition, the Company has the capabilities of a full-service strategy, creative and media agency that focuses on strategic and digital marketing, solutions through DMV Digital Holdingsand data intelligence that provide a measurable return on investment to its clients.
COVID-19 Pandemic. Currently, the rapid spread of coronavirus (COVID-19 pandemic) globally has resulted in increased travel restrictions, and disruption and shutdown of businesses. The outbreak and any preventative or protective actions that the Company (“DMV Holdings”)has taken and Your Speakeasy, LLC (“Speakeasy”),may continue to take, or may be imposed on the Company by governmental intervention, in respect of the pandemic may result in a period of disruption to the Company’s financial reporting capabilities, its printing operations, and provides event activation, promotionits operations generally. COVID-19 is impacting, and marketing services through DMN CrowdSource LLC (“CrowdSource”).may continue to impact, the Company’s customers, distribution partners, advertisers, production facilities, and third parties, and could result in additional loss of advertising revenue or supply chain disruption. The Company has been following the recommendations of local government and health authorities to minimize exposure risk for employees, including the temporary closure of some of the Company’s offices and having employees work remotely. Employees, including financial reporting staff, have been working remotely since on or about March 10, 2020, even as the stay-at-home orders were lifted in Texas. If the pandemic were to affect a significant number of the workforce employed in printing operations, the Company may experience delays or be unable to produce, print and deliver its publications and other third-party print publications on a timely basis. The extent to which the coronavirus impacts the Company’s results will depend on future developments, which are highly uncertain and include the actions taken by governments and private businesses to contain the coronavirus. The coronavirus is likely to continue to have an adverse impact on the Company’s business, results of operations and financial condition at least for the near term.
Media was designated an essential business, therefore the Company’s operations have continued throughout the pandemic. The Company is experiencing an increase in digital subscriptions, which currently does not offset the loss of advertising revenue. On April 6, 2020, the Company announced that it was taking several actions in response to the financial impact of COVID-19. The Company reduced operating and capital expenditures, and lowered the quarterly dividend rate to $0.04 per share for dividends declared. Beginning with the 2020 annual meeting of shareholders, the board of directors’ compensation was reduced and the board was reduced in size by 2. In addition, employees’ base compensation was reduced Company-wide, and the annual bonus tied to financial metrics for eligible employees was not achieved. In August 2020, the Company began to restore base salaries and by October, the Company restored base salaries prospectively for all employees, with the exception of the executive officers that report to the Chief Executive Officer. The executive officers’ base salaries were restored effective January 1, 2021. The Company continues to evaluate the future material impacts on its consolidated financial statements that may result from the actions taken by the Company and its customers in respect of the pandemic.
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.indicated in conformity with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim periods. All significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates its majority owned subsidiaries over which the Company exercises control. 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, 2016.2020. All dollar amounts presented herein, except share and per share amounts, are in thousands, unless the context indicates otherwise.
Use of Estimates.The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)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 January 2017, the FASB issued ASU 2017-04 – Intangibles – GoodwillThe COVID-19 pandemic has caused increased uncertainty in management’s estimates and Other (Topic 350):Simplifying the Test for Goodwill Impairment. This update simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. The guidance will be effective for fiscal years beginning after December 15, 2019, includingassumptions affecting these interim periods within those fiscal years. Early adoption is permitted. In the three months ended September 30, 2017, the Company early adopted this standard. The adoption of this standard did not materially impact the Company’s consolidated financial statements. Areas where significant estimates are used include pension and other post-employment benefit obligation assumptions, income taxes, leases, self-insured liabilities, and long-lived assets impairment review.
Segment Presentation.Based on the Company’s structure and organizational chart, the Company’s chief operating decision-maker (the “CODM”) is its Chief Executive Officer, Robert W. Decherd. Based on how the Company’s CODM makes decisions about allocating resources and assessing performance, the Company determined it has one reportable segment.
New Accounting Pronouncements. The Financial Accounting Standards Board (“FASB”) issued the following accounting pronouncements and guidance, which may be applicable to the Company but have not yet become effective.
In May 2014,June 2016, the FASB issued Accounting Standards Update (“ASU”) 2014-09 2016-13 – Revenue from Contracts with CustomersFinancial Instruments – Credit Losses (Topic 606).326): Measurement of Credit Losses on Financial Instruments. This guidance prescribes a single comprehensive model for entities to use in the accounting of revenue arising from contracts with customers. The core principle contemplated by this new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount reflecting the consideration the entity expectsupdate requires financial assets measured at amortized cost basis to be entitled in exchange for those goods or services. New disclosurespresented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the nature, amount, timing and uncertaintycollectibility of revenue and cash flows arising from contracts with customers are also required.the reported amount. Since May 2014,June 2016, the FASB issued clarifying updates to the new standard specifically to address certain core principles including changing the identification of performance obligations, licensing guidance, the assessment of the collectability criterion, the presentation of taxes collected from customers, noncash considerations, contract modifications, and completed contracts at transition. The new guidance will supersede virtually all existing revenue guidance under GAAP and is effective date for fiscal years beginning after December 31, 2017. There are two transition options available to entities, the full retrospective approach, in which the Company would restate prior periods, or the modified retrospective approach. The Company currently anticipates adopting ASU 2014-09 using the modified retrospective approach as of January 1, 2018. This approach consists of recognizing the cumulative effect of initially applying the standard as an adjustment to opening retained earnings.
The Company coordinated a team of key stakeholders to develop a bottom-up approach to analyze the impact of the new standard on its portfolio of contracts. Based upon the Company’s initial evaluation, some of the issues currently being reviewed include the impact of gross versus net, level of disaggregation of revenue disclosed in the Company’s financial statements and evaluating the standalone selling price related to certain performance obligations. The Company is currently quantifying the impact that the updated guidance will have on the Company’s financial statements and related disclosures.
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 8
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.smaller reporting companies. The guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years2022, and will be applied retrospectively. 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 February 2017, the FASB issued ASU 2017-06 – Plan Accounting – Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962) and Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting. This update clarifies the presentation requirements for a plan’s interest in a master trust and requires more detailed disclosures of the plan’s interest in the master trust. 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 2017,
Note 2: Revenue
Revenue Recognition
Revenue is recognized when obligations under the FASB issued ASU 2017-07 – Compensation – Retirement Benefits (Topic 715): Improving the Presentationterms of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.a contract with our customer are satisfied. This update clarifies the presentation and classificationoccurs when control of the componentspromised goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services, typically at contract price or determined by stand-alone selling price. The Company has an estimated allowance for credits, refunds and similar obligations. Sales tax collected concurrent with revenue-producing activities are excluded from revenue.
Accounts receivable are reported net of a valuation reserve that represents an estimate of amounts considered uncollectible. The Company estimates the allowance for doubtful accounts based on historical write-off experience and the Company’s knowledge of the customers’ ability to pay amounts due. Accounts are written-off after all collection efforts fail; generally, after one year has expired. Expense for such uncollectible amounts is included in other production, distribution and operating costs. Credit terms are customary.
The table below sets forth revenue disaggregated by revenue source.
Three Months Ended March 31, | |||||||
2021 | 2020 | ||||||
Advertising and Marketing Services | |||||||
Print advertising | $ | 11,226 | $ | 12,799 | |||
Digital advertising and marketing services | 5,543 | 6,528 | |||||
Total | $ | 16,769 | $ | 19,327 | |||
Circulation | |||||||
Print circulation | $ | 13,976 | $ | 15,017 | |||
Digital circulation | 2,046 | 1,397 | |||||
Total | $ | 16,022 | $ | 16,414 | |||
Printing, Distribution and Other | $ | 4,024 | $ | 4,602 | |||
Total Revenue | $ | 36,815 | $ | 40,343 |
Advertising and Marketing Services
Print advertising revenue represents sales of advertising space within the Company’s core and niche newspapers, as well as preprinted advertisements inserted into the Company’s core newspapers and niche publications or distributed to non-subscribers through the mail.
Digital advertising and marketing services revenue consists of strategic marketing management, consulting, creative services, targeted and multi-channel (programmatic) advertising placed on third-party websites, digital sales of banner, classified and native advertisements on the Company’s news and entertainment-related websites and mobile apps, social media management, search optimization, direct mail and the sale of promotional materials.
Advertising and marketing services revenue is primarily recognized at a point in time when the ad or service is complete and delivered, based on the customers’ contract price. Barter advertising transactions are recognized at estimated fair value based on the negotiated contract price and the range of prices for similar advertising from customers unrelated to the barter transaction. The Company expenses barter costs as incurred, which is independent from the timing of revenue recognition. In addition, certain digital advertising revenue related to website access is recognized over time, based on the customers’ monthly rate. The Company typically extends credit to advertising and marketing services customers, although for certain advertising campaigns the customer may pay in advance.
For ads placed on certain third-party websites, the Company must evaluate whether it is acting as the principal, where revenue is reported on a gross basis, or acting as the agent, where revenue is reported on a net periodic benefit costbasis. Generally, the Company reports advertising revenue for ads placed on third-party websites on a net basis, meaning the amount recorded to revenue is the amount billed to the customer net of amounts paid to the publisher of the third-party website. The Company is acting as the agent because the publisher controls the advertising inventory.
Circulation
Print circulation revenue is generated primarily by selling home delivery subscriptions, including premium publications, and from single copy sales to non-subscribers. Home delivery revenue is recognized over the subscription period based on the days of actual delivery over the total subscription days and single copy revenue is recognized at a point in time when the paper is purchased. Revenue is directly reduced for any non-payment for the grace period of home delivery subscriptions where the Company recorded revenue for newspapers delivered after a subscription expired.
Digital circulation revenue is generated by digital-only subscriptions and is recognized over the subscription period based on daily or monthly access to the content in the subscription period.
Payment of circulation fees is typically received in advance and deferred over the subscription period.
Printing, Distribution and Other
Printing, distribution and other revenue is primarily generated from printing and distribution of other newspapers, as well as production of preprinted advertisements for other newspapers. Printing, distribution and other revenue is recognized at a point in time when the product or service is delivered. The Company typically extends credit to printing and distribution customers.
Deferred Revenue
Deferred revenue is recorded when cash payments are received in advance of the Company’s performance, including amounts which are refundable. The Company’s primary sources of deferred revenue are from circulation subscriptions and advertising paid in advance of the service provided. These up-front payments are recorded upon receipt as contract liabilities in the Consolidated StatementBalance Sheets and the revenue is recognized when the Company’s obligations under the terms of Operations. Specifically, this standard requires the service cost componentcontract are satisfied. In the three months ended March 31, 2021, the Company recognized $7,199 of net periodic benefit cost to be recordedrevenue that was included in the same income statement linecontract liabilities balance as otherof December 31, 2020. The Company typically recognizes deferred revenue within 1 to 12 months.
Practical Expedients and Exemptions
The Company generally expenses sales commissions and circulation acquisition costs when incurred because the amortization period would have been one year or less. These costs are recorded within employee compensation and benefits expense and other production, distribution and operating costs and all other components of net periodic benefit cost must be presented as non-operating items. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. expense, respectively.
The Company currently anticipates adopting this standard retrospectively asdoes not disclose the value of January 1, 2018.unsatisfied performance obligations for contracts with an original expected length of one year or less and contracts for which revenue is recognized at the amount invoiced for services performed.
Note 3: Leases
Lease Accounting
The Company has various operating leases primarily for office space and other distribution centers, some of which include escalating lease payments and options to extend or terminate the lease. The Company’s defined benefit plansleases have been frozen, soremaining terms of less than 1 year to 13 years. The Company determines if a contract is a lease at the inception of the arrangement.
Operating lease right-of-use assets and liabilities are recognized at commencement date of lease agreements greater than one year based on the present value of lease payments over the lease term. In determining the present value of lease payments, the implicit rate was not readily determinable in the Company’s lease agreements. Therefore, the Company used an estimated secured incremental borrowing rate, based on the Company’s credit rating, adjusted for the weighted average term of each lease. Lease expense is recognized on a straight-line basis over the lease term and variable lease costs are expensed as incurred. For leases with terms of 12 months or less, no longer incurring service costs relatedasset or liability is recorded and lease expense is recognized on a straight-line basis over the lease term. The exercise of lease renewal options are at the Company’s sole discretion and options are recognized when it is reasonably certain the Company will exercise the option. The recognized right-of-use assets and lease liabilities as calculated do not assume renewal options. The Company does not have lease agreements with residual value guarantees, sale leaseback terms or material restrictive covenants. Additionally, the Company does not separately identify lease and nonlease components, such as maintenance costs.
The Company subleases office space to the plans. Therefore, after adoption,Denton Publishing Company and, beginning in the entire net periodic benefit cost will be presentedfourth quarter of 2020, office space in Dallas, Texas both with a remaining lease term of approximately three years. Additionally, the Company has various subleases with distributors, for distribution center space, with varying remaining lease terms of less than one year to two years and are cancellable with notice by either party. Sublease income is included in printing, distribution and other revenue in the Consolidated Statements of OperationsOperations. As of March 31, 2021, sublease income is expected to approximate $570 for the remainder of 2021, $550 in non-operating income (expense). 2022, and $320 in 2023.
Note 2: Segment Reporting
In the first quarter As of 2017, in conjunction with the promotion of Grant Moise from Senior Vice President Business Development / Niche Products to General Manager of The Dallas Morning News and Executive Vice President of A. H. Belo,March 31, 2021, the Company reorganized its two reportable segments based on changes in reporting structure and the go-to-marketdid 0t have any significant operating leases that have not yet commenced.
The table below sets forth supplemental Consolidated Balance Sheet information for the Company’s service and product offerings. The two reportable segments are Publishing and Marketing Services.leases.
Classification | March 31, 2021 | December 31, 2020 | |||||||
Assets | |||||||||
Operating | Operating lease right-of-use assets | $ | 19,764 | $ | 20,406 | ||||
Liabilities | |||||||||
Operating | |||||||||
Current | Other accrued expense | $ | 2,330 | $ | 2,306 | ||||
Noncurrent | Long-term operating lease liabilities | 21,216 | 21,890 | ||||||
Total lease liabilities | $ | 23,546 | $ | 24,196 | |||||
Lease Term and Discount Rate | |||||||||
Operating leases | |||||||||
Weighted average remaining lease term (years) | 10.5 | 10.6 | |||||||
Weighted average discount rate (%) | 7.4 | 7.4 |
The Publishing segment includes the Company’s core print and digital operations associated with its newspapers, niche publications and related websites. These operations generate revenue from sales of advertising within its newspaper and digital platforms, subscription and retail sales of its newspapers, sponsorship advertising for events, commercial printing and distribution services, primarily related to national and regional newspapers, and preprint advertisers. Businesses within the Publishing segment leverage the production facilities, subscriber and advertiser base, and digital news platforms to provide additional contribution margin. The Company evaluates Publishing operations based on operating profit and cash flows from operating activities.
The Marketing Services segment includes the operations of DMV Holdings, Speakeasy and digital advertising through Connect (programmatic advertising). The Company operates the portfolio of assets within its Marketing Services segment as separate businesses that sell digital marketing and advertising through different channels, including programmatic advertising and content marketing within the social media environment.
Based on the organization of the Company’s structure and organizational chart, we believe the Company’s chief operating decision makers (the “CODMs”) are its Chief Executive Officer, Jim Moroney, and Grant Moise, the General Manager of The Dallas Morning News and Executive Vice President of A. H. Belo Corporation. The CODMs allocate resources and capital to the Publishing and Marketing Services segments at the segment level.
The following tables show summarized financialtable below sets forth components of lease cost and supplemental cash flow information for the Company’s reportable segments. Due toleases.
Three Months Ended March 31, | ||||||
2021 | 2020 | |||||
Lease Cost | ||||||
Operating lease cost | $ | 1,075 | $ | 1,046 | ||
Short-term lease cost | 4 | 4 | ||||
Variable lease cost | 179 | 138 | ||||
Sublease income | (237) | (195) | ||||
Total lease cost | $ | 1,021 | $ | 993 | ||
Supplemental Cash Flow Information | ||||||
Cash paid for operating leases included in operating activities | $ | 1,075 | $ | 1,017 | ||
Right-of-use assets obtained in exchange for operating lease liabilities | — | 1,540 |
The table below sets forth the first quarter 2017 reorganizationremaining maturities of the Company’s two reportable segments, the prior year periods financial information by segment were recast for comparative purposes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
|
|
|
|
| (Recast) |
|
|
|
| (Recast) | ||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Publishing |
| $ | 52,603 |
| $ | 55,825 |
| $ | 160,916 |
| $ | 172,905 |
Marketing Services |
|
| 7,956 |
|
| 8,955 |
|
| 23,633 |
|
| 20,984 |
Total |
| $ | 60,559 |
| $ | 64,780 |
| $ | 184,549 |
| $ | 193,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Publishing |
| $ | (5,885) |
| $ | (1,654) |
| $ | (11,818) |
| $ | (2,456) |
Marketing Services |
|
| 836 |
|
| 1,165 |
|
| 2,215 |
|
| 2,845 |
Total |
| $ | (5,049) |
| $ | (489) |
| $ | (9,603) |
| $ | 389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncash Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Publishing |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
| $ | 2,565 |
| $ | 2,471 |
| $ | 7,762 |
| $ | 7,669 |
Amortization |
|
| — |
|
| 27 |
|
| — |
|
| 79 |
Goodwill impairment |
|
| — |
|
| — |
|
| 228 |
|
| — |
Total |
| $ | 2,565 |
| $ | 2,498 |
| $ | 7,990 |
| $ | 7,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing Services |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
| $ | 42 |
| $ | 17 |
| $ | 78 |
| $ | 56 |
Amortization |
|
| 200 |
|
| 198 |
|
| 599 |
|
| 601 |
Total |
| $ | 242 |
| $ | 215 |
| $ | 677 |
| $ | 657 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| December 31, | ||
|
| 2017 |
| 2016 | ||
|
|
|
|
| (Recast) | |
Total Assets |
|
|
|
|
|
|
Publishing |
| $ | 129,933 |
| $ | 170,820 |
Marketing Services |
|
| 23,860 |
|
| 21,911 |
Total |
| $ | 153,793 |
| $ | 192,731 |
Note 3: Acquisitions
On February 16, 2017, the Company acquired the remaining 30 percent voting interest in Speakeasy for a cash purchase price of $2,111, and on March 2, 2017, the Company acquired the remaining 20 percent voting interest in DMV Holdings for a cash purchase price of $7,120.
The initial purchase of 80 percent voting interest in DMV Holdings occurred in January 2015 for a cash purchase price of $14,110. DMV Digital Holdings Company holds all outstanding ownership interests of three Dallas-based businesses, Distribion, Inc., Vertical Nerve, Inc. and CDFX, LLC. These businesses specialize in local marketing automation, search engine marketing, and direct mail and promotional products, respectively.
These acquisitions complement 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.
Pro-rata distributions. In connection with the 2015 acquisition of 80 percent voting interest in DMV Holdings, the shareholder agreement provided for a pro-rata distribution of 50 percent and 100 percent of DMV Holdings’ free cash flow for fiscal years 2016 and 2015, 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, 2017 and 2016, the Company recorded pro-rata distributions to noncontrolling interests of $163 and $264, respectively, in connection with this agreement based on 2016 and 2015 free cash flow as defined, respectively.
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 10
Redeemable noncontrolling interest. Also, in connection with the 2015 acquisition of 80 percent voting interest in DMV Holdings, the Company entered into a shareholder agreement which provided for a put option to a noncontrolling shareholder. The put option provided 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.
Redeemable noncontrolling interest was recorded at fair value on the acquisition date and the carrying value was adjusted each period for its share of the earnings related to DMV Holdings and for any distributions. The carrying value was also adjusted for the change in fair value, which was based on the estimated redemption value as of December 31, 2016. Adjustments were 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, 2017 and 2016, redeemable noncontrolling interest was decreased by $61 and $99, respectively, for distributions related to the 2016 and 2015 free cash flow, respectively, as required under the shareholder agreement.
The exercisability of the noncontrolling interest put option was outside the control of the Company. As such, the redeemable noncontrolling interest of $2,670 was reported in the mezzanine equity section of the Consolidated Balance Sheet as of December 31, 2016. As a result of the purchase of the remaining 20 percent voting interest in DMV Holdings, the shareholder agreement was terminated and the redeemable noncontrolling interest was eliminatedlease liabilities as of March 31, 2017.2021.
Years Ending December 31, | Operating Leases | ||
2021 | $ | 2,901 | |
2022 | 4,232 | ||
2023 | 3,325 | ||
2024 | 2,467 | ||
2025 | 2,430 | ||
Thereafter | 19,691 | ||
Total lease payments | 35,046 | ||
Less: imputed interest | 11,500 | ||
Total lease liabilities | $ | 23,546 |
Note 4: Goodwill and Intangible Assets
The following table shows goodwill and otherbelow sets forth intangible assets by reportable segment as of September 30, 2017March 31, 2021 and December 31, 2016. Due to the first quarter 2017 reorganization of the Company’s two reportable segments, the prior year period financial information by segment was recast for comparative purposes.2020.
March 31, | December 31, | ||||
2020 | 2020 | ||||
Intangible Assets | |||||
Cost | $ | 2,030 | $ | 2,030 | |
Accumulated Amortization | (2,030) | (1,966) | |||
Net Carrying Value | $ | — | $ | 64 |
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| September 30, |
| December 31, | ||
| 2017 |
| 2016 | ||
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| (Recast) | |
Goodwill |
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|
|
|
Publishing | $ | — |
| $ | 228 |
Marketing Services |
| 13,973 |
|
| 13,973 |
Total | $ | 13,973 |
| $ | 14,201 |
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|
|
Intangible Assets |
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|
Publishing |
|
|
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|
|
Cost | $ | — |
| $ | 240 |
Accumulated Amortization |
| — |
|
| (240) |
Net Carrying Value | $ | — |
| $ | — |
Marketing Services |
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|
|
Cost | $ | 6,470 |
| $ | 6,470 |
Accumulated Amortization |
| (2,197) |
|
| (1,598) |
Net Carrying Value | $ | 4,273 |
| $ | 4,872 |
In the nine months ended September 30, 2017, the Publishing segment’s fully amortizedThe intangible assets of $240 of customer relationships were written-off and had no remaining useful life. Intangible assets consist of $4,950 of customer relationships with estimated useful lives of 10 years andinclude $1,520 of developed technology with an estimated useful life of five years. Aggregate amortization expense was $200years, fully amortized in 2019, and $599 for the three and nine months ended September 30, 2017, respectively, and $225 and $680 for the three and nine months ended September 30, 2016, respectively.
Certain goodwill and intangible assets previously reported in the Marketing Services segment were moved to the Publishing segment as a result$510 of the first quarter 2017 segment reorganization. The Publishing reporting unit’s goodwill was determined to becustomer relationships with estimated useful lives of two years, fully impaired as of December 31, 2016. Therefore, the Company recorded a noncash goodwill impairment charge of $228amortized in the first quarter of 2017.2021. Aggregate amortization expense was $64 for the three months ended March 31, 2021 and 2020.
As of March 31, 2021, the Company performed a review of potential impairment indicators for its long-lived assets, including property, plant and equipment, and right-of-use assets. The Company tested goodwill for impairmentdetermined there was no significant decrease in the market value of the long-lived assets or significant change in the extent or manner in which the asset group is being used or in its physical condition as of DecemberMarch 31, 2016 at2021, and there was no significant adverse change in legal factors or in the reporting unit level using a discounted cash flow methodology with a peer-based, risk-adjusted weighted average costbusiness climate during the period that could affect the value of capital, combined with a market approach using peer-based earnings multiples. Thethe asset group. Based upon the review of indicators, the Company believes its long-lived assets continue to be recoverable based upon the use of a discounted cash flow approach, combined with the market approach, is the most reliable indicatorestimate of the estimated fair valuesexpected undiscounted cash flows, including the cash flows from ultimate disposition of the businesses.assets of the asset group.
BecauseNote 5: Income Taxes
The Company calculated the Company’s annual test indicated that the Publishing reporting unit’s carrying value exceeded its estimated fair value, a second phase of the goodwill impairment test (“Step 2”) was performed specific to the Publishing reporting unit. Under Step 2, the fair value of the Publishing reporting unit’s assets and liabilities were estimated, including intangible assets,income tax provision (benefit) for the purpose of deriving2021 and 2020 interim periods using an estimate of the implied fair value of goodwill. The implied fair value of goodwill was then compared to the recorded goodwill to determine the amount of the impairment.
Upon completion of the annual test, the Publishing reporting unit’s goodwill was determined to be impaired, and the Company recorded a noncash goodwill impairment charge of $22,682 in the fourth quarter of 2016, fully impairing the Publishing reporting unit’s goodwill.
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 and Series B 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. Due to the expiration of the Plan on February 8, 2018, A. H. Belo implemented, and shareholders approved, a new long-term incentive plan (the “2017 Plan”) under which an additional 8,000,000 shares of the Company’s Series A and Series B common stock are authorized for equity-based awards. Like its predecessor plan, awards under the 2017 Plan 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, RSUs, performance shares, performance units or stock appreciation rights. No grants have yet been made under the 2017 Plan.
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, 2017.
The table below sets forth a summary of stock option activity under the Plan.
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|
|
| Number of |
| Weighted Average | |
Outstanding at December 31, 2016 | 114,979 |
| $ | 8.21 |
Canceled | (14,635) |
|
| 20.16 |
Outstanding at September 30, 2017 | 100,344 |
|
| 6.46 |
As of September 30, 2017, the aggregate intrinsic value of outstanding options was $8 and the weighted average remaining contractual life of the Company’s stock options was approximately 1 year. No options were exercised in the three months ended September 30, 2016. The aggregate intrinsic value of options exercised in the nine months ended September 30, 2016, was $300.
Restricted Stock Units. The Company’s RSUs have service and/or performance conditions 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 up to three years. As of September 30, 2017, the liability for the portion of the awards to be redeemed in cash was $853.
The table below sets forth a summary of RSU activity under the Plan.
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| Total |
| Issuance of |
| RSUs |
| Cash |
| Weighted | ||
Non-vested at December 31, 2016 | 121,131 |
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|
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|
|
|
|
| $ | 5.65 |
Granted | 284,868 |
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|
|
|
|
| 6.11 |
Vested and outstanding | (159,212) |
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|
|
|
|
|
| 5.71 |
Vested and issued | (22,734) |
| 13,634 |
| 9,100 |
| $ | 57 |
|
| 6.90 |
Non-vested at September 30, 2017 | 224,053 |
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|
|
|
|
|
| 6.07 |
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 12
In the nine months ended September 30, 2017, the Company issued 63,272 shares of Series A common stock and 42,189 shares were redeemed in cash for RSUs that were previously vested as of December 31, 2016. In addition, there were 290,825 and 237,074 RSUs that were vested and outstanding as of September 30, 2017 and December 31, 2016, 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, 2017, unrecognized compensation expense related to non-vested RSUs totaled $1,160, which is expected to be recognized over a weighted average period of 1.7 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.
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| RSUs Redeemable in Stock |
| RSUs |
| Total | |||
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
2017 | $ | 149 |
| $ | 82 |
| $ | 231 |
2016 |
| 86 |
|
| 303 |
|
| 389 |
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
2017 | $ | 775 |
| $ | 399 |
| $ | 1,174 |
2016 |
| 534 |
|
| 604 |
|
| 1,138 |
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 estimatedits expected annual loss before income tax expensetaxes, adjusted for the year. Under certain circumstances, the Company may be precluded from estimating an annual effective tax rate. Such circumstances may include periods inpermanent differences, which tax rates vary significantly due to earnings trends, in additionit applied to the existence of significant permanent or temporary differences. Under such circumstances, a discrete tax rate is calculated for the period.year-to-date loss before income taxes and specific events that are discretely recognized as they occur.
The Company recognized income tax provision from continuing operations(benefit) of $10$319 and $77$(1,787) for the three months ended September 30, 2017March 31, 2021 and 2016, respectively, and $261 and $1,361 for the nine months ended September 30, 2017 and 2016,2020, respectively. Effective income tax rates from continuing operations were (10.9)(13.0) percent and 137.552.4 percent for the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, respectively. The effective income tax rateprovision for the ninethree months ended September 30, 2017,March 31, 2021, was due to the federal tax benefit fully reserved with a valuation allowance and the effect of the Texas margin tax. The 2017 effectiveCompany expects it is reasonably possible to recognize a tax benefit of approximately $2,575 within the next six months from the release of a federal uncertain tax reserve, due to the statute lapsing in August 2021.
The income tax rate benefit for the three months ended March 31, 2020, was lower when compareddue to the recognition of the 2018 net operating loss carryback permitted by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), partially offset by the effect of the Texas margin tax.
In response to COVID-19, the CARES Act was signed into law in March 2020. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior year period due to taxable income generatedand future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from operationsprior tax legislation for tax depreciation of certain qualified improvement property, and the dispositioncreation of certain fixedrefundable employee retention credits. The Company has benefited from the temporary five year net operating loss carryback provision and the technical correction for qualified leasehold improvements, which changes 39-year property to 15-year property, eligible for 100 percent tax bonus depreciation. Applying the technical correction to 2018 resulted in reporting additional tax depreciation of $1,017 and increased the 2018 net operating loss to approximately $6,829. The loss was carried back against 2014 taxes paid at the federal statutory rate of 35 percent that was previously in effect, resulting in a cash refund of $2,425, including interest, received in October 2020. The Company also applied the technical correction for qualified leasehold improvements to the 2019 and 2020 tax years, the results of which were reflected in the deferred tax assets and liabilities as of December 31, 2020.
The Consolidated Appropriations Act, 2021, which includes the COVID-related Tax Relief Act of 2020 and the Taxpayer Certainty and Disaster Tax Relief Act of 2020, was passed and signed into law the last week of 2020. Among others, the provisions in 2016.this act included items such as guidance on expenses associated with forgiven Paycheck Protection Program loans, business meals deductions, individual tax rebates and unemployment benefits. In addition, the American Rescue Plan Act of 2021, designed to speed up the United States’ economic recovery, was passed and signed into law on March 11, 2021. The Company did not avail itself of any of the items contained in these recent acts.
Note 7: 6: Pension and Other Retirement Plans
Defined Benefit Plans. The Company sponsors the A. H. Belo Pension Plans (the “Pension Plans”), which provide benefits to approximately 1,5001,400 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 newspaper operations of The Providence Journal. NoNaN 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 20172021 under the applicable tax and labor laws governing pension plan funding. In the third quarter, the Company made a voluntary contribution of $20,000 to the Pension Plans and using the contribution, in addition to liquidating $23,455 of plan assets, transferred $43,455 of pension liabilities to an insurance company. As a result of this de-risking action, the Company reduced the number of participants in our Pension Plans by 796, or 36 percent. In the three months ended September 30, 2017, a charge to pension expense for $5,911 was recorded to reflect the amortization of losses in accumulated other comprehensive loss associated with this transaction. In addition, the projected benefit obligation was remeasured as of September 30, 2017, which resulted in an actuarial gain of $3,648 that was recorded to other comprehensive income (loss) in the three months ended September 30, 2017; see Note 8 – Shareholders’ Equity. This transaction occurred on September 20, 2017, but the Company elected to use the measurement date practical expedient, allowing the Company to use September 30, 2017 as the alternative measurement date. No material transactions or changes in market conditions occurred between the transaction date and the alternative measurement date.
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 13
Net Periodic Pension Expense (Benefit)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. Participation in and accrual of new benefits to participants has been frozen since 2007 and, accordingly, on-going service costs are not a component of net periodic pension expense (benefit).
The table below sets forth components of net periodic pension expense (benefit).benefit, which are included in other income, net in the Consolidated Statements of Operations.
Three Months Ended March 31, | ||||||
2021 | 2020 | |||||
Interest cost | $ | 1,174 | $ | 1,559 | ||
Expected return on plans' assets | (2,574) | (2,941) | ||||
Amortization of actuarial loss | 361 | 220 | ||||
Net periodic pension benefit | $ | (1,039) | $ | (1,162) |
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Interest cost |
| $ | 2,386 |
| $ | 2,525 |
| $ | 7,158 |
| $ | 7,574 |
Expected return on plans' assets |
|
| (3,313) |
|
| (3,396) |
|
| (9,940) |
|
| (10,189) |
Amortization of actuarial loss |
|
| 75 |
|
| 11 |
|
| 224 |
|
| 42 |
Recognized settlement loss |
|
| 5,911 |
|
| — |
|
| 5,911 |
|
| — |
Net periodic pension expense (benefit) |
| $ | 5,059 |
| $ | (860) |
| $ | 3,353 |
| $ | (2,573) |
Defined Contribution Plans. The A. H. Belo Savings Plan (the “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 Savings 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, 2017 and 2016, the Company recordedcompensation. Aggregate expense of $175 and $248, respectively, and during the nine months ended September 30, 2017 and 2016, the Company recorded expense of $670 and $749, respectively, for matching contributions to the Savings Plan.Plan was $220 for the three months ended March 31, 2021 and 2020.
Note 8:7: Shareholders’ Equity
Dividends.On September 6, 2017,March 4, 2021, the Company’s board of directors declared an $0.08a $0.04 per share dividend to shareholders of record and holders of RSUs as of the close of business on November 9, 2017,May 14, 2021, which is payable on June 4, 2021.
Outstanding Shares. The Company had Series A and Series B common stock outstanding of 18,941,420 and 2,469,003, respectively, net of treasury shares at March 31, 2021. At December 1, 2017. During the three months ended September 30, 2017,31, 2020, the Company recorded $1,775 to accrue for dividends declared but not yet paid.had Series A and Series B common stock outstanding of 18,941,340 and 2,469,083, respectively, net of treasury shares.
On October 27, 2017, the Company’s board of directors declared a special, one-time cash dividend of $0.14 per share to shareholders of record and holders of RSUs as of the close of business on November 9, 2017, which is payable on December 1, 2017.
Accumulated other comprehensive loss. 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 Pension Plans’ amendments and other actuarial experience attributable to other post-employment benefit (“OPEB”) plans. The Company records amortization of the components of accumulated other comprehensive loss in employee compensation and benefitsother income, net in its Consolidated Statements of Operations. Gains and losses associated with the A. H. Belo Pension Plans are amortized over the weighted average remaining life expectancy of the OPEB plans and Pension Plans’ participants. Gains and losses associated with the Company’s OPEB plans are amortized over the average remaining service period of active OPEB plans’ participants. Net deferred tax assets associated with the accumulated other comprehensive loss are fully reserved.
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 14
The table below sets forth the changes in accumulated other comprehensive loss, net of tax, as presented in the Company’s consolidated financial statements.
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| |||||||||||||||||||||||
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| Three Months Ended September 30, | Three Months Ended March 31, | |||||||||||||||||||||||||||||||||
|
| 2017 |
| 2016 | 2021 | 2020 | ||||||||||||||||||||||||||||||
|
| Total |
| Defined |
| Other post- |
| Total |
| Defined |
| Other post- | Total | Defined | Other post- | Total | Defined | Other post- | ||||||||||||||||||
Balance, beginning of period |
| $ | (39,195) |
| $ | (39,588) |
| $ | 393 |
| $ | (38,474) |
| $ | (38,867) |
| $ | 393 | $ | (32,468) | $ | (32,571) | $ | 103 | $ | (32,294) | $ | (32,443) | $ | 149 | ||||||
Actuarial gains |
| 3,648 |
| 3,648 |
| — |
| — |
| — |
| — | ||||||||||||||||||||||||
Amortization |
|
| 5,967 |
|
| 5,986 |
|
| (19) |
|
| (17) |
|
| 11 |
|
| (28) | 360 | 361 | (1) | 219 | 220 | (1) | ||||||||||||
Balance, end of period |
| $ | (29,580) |
| $ | (29,954) |
| $ | 374 |
| $ | (38,491) |
| $ | (38,856) |
| $ | 365 | $ | (32,108) | $ | (32,210) | $ | 102 | $ | (32,075) | $ | (32,223) | $ | 148 |
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| Nine Months Ended September 30, | ||||||||||||||||
|
| 2017 |
| 2016 | ||||||||||||||
|
| Total |
| Defined |
| Other post- |
| Total |
| Defined |
| Other post- | ||||||
Balance, beginning of period |
| $ | (39,308) |
| $ | (39,737) |
| $ | 429 |
| $ | (38,442) |
| $ | (38,898) |
| $ | 456 |
Actuarial gains |
|
| 3,648 |
|
| 3,648 |
|
| — |
|
| — |
|
| — |
|
| — |
Amortization |
|
| 6,080 |
|
| 6,135 |
|
| (55) |
|
| (49) |
|
| 42 |
|
| (91) |
Balance, end of period |
| $ | (29,580) |
| $ | (29,954) |
| $ | 374 |
| $ | (38,491) |
| $ | (38,856) |
| $ | 365 |
Note 9:8: Earnings Per Share
The table below sets forth the reconciliations for net income (loss)loss available to common shareholders and weighted average shares used for calculating basic and diluted earnings per share (“EPS”). The Company’s Series A and Series B common stock equally share in the distributed and undistributed earnings.
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Earnings (Numerator) |
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|
Net income (loss) attributable to A. H. Belo Corporation |
| $ | 2,580 |
| $ | (497) |
| $ | (2,655) |
| $ | (436) |
Less: Dividends to participating securities |
|
| 35 |
|
| 29 |
|
| 117 |
|
| 83 |
Net income (loss) available to common shareholders from continuing operations |
| $ | 2,545 |
| $ | (526) |
| $ | (2,772) |
| $ | (519) |
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Shares (Denominator) |
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Weighted average common shares outstanding (basic) |
|
| 21,753,166 |
|
| 21,676,260 |
|
| 21,729,212 |
|
| 21,601,828 |
Effect of dilutive securities |
|
| 1,461 |
|
| — |
|
| — |
|
| — |
Adjusted weighted average shares outstanding (diluted) |
|
| 21,754,627 |
|
| 21,676,260 |
|
| 21,729,212 |
|
| 21,601,828 |
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Earnings Per Share from Continuing Operations |
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Basic and diluted |
| $ | 0.12 |
| $ | (0.02) |
| $ | (0.13) |
| $ | (0.02) |
Three Months Ended March 31, | ||||||
2021 | 2020 | |||||
Earnings (Numerator) | ||||||
Net loss available to common shareholders | $ | (2,765) | $ | (1,621) | ||
Shares (Denominator) | ||||||
Weighted average common shares outstanding (basic and diluted) | 21,410,423 | 21,410,423 | ||||
Loss Per Share | ||||||
Basic and diluted | $ | (0.13) | $ | (0.08) |
HoldersThere were 0 options or RSUs outstanding as of service-based RSUs participateMarch 31, 2021 and 2020, that would result in A. H. Belo dividends on a one-for-one share basis. Distributed and undistributed income associated with participating securities is included indilution of shares or 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 615,222 and 504,648 options and RSUs outstanding as of September 30, 2017 and 2016, respectively, were excluded from the calculation because the effect was anti-dilutive. Note 9: Contingencies
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 15
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 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. 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.
Note 11: Sales10: Disposal 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 second quarter of 2017,May 2019, the Company announced that three parcelsfinalized a Purchase and Sale Agreement with Charter DMN Holdings, LP (the “Purchaser”) for the sale of land locatedthe real estate assets in downtown Dallas, Texas, were availablepreviously used as the Company’s headquarters for sale. On September 22, 2017,a sale price of $28,000 and a pretax gain of $25,908. The sale price consisted of $4,597 cash received, after selling costs of approximately $1,000, and a two year seller-financed promissory note of $22,400 (the “Promissory Note”), included in current notes receivable in the Consolidated Balance Sheets. The sale provided the Company completedan additional $1,000 contingency payment if certain conditions were met. The contingency expired as of June 30, 2020, with no payment made by the Purchaser related to the contingency.
The Promissory Note is secured by a first lien deed of trust covering the property and bears interest payable in quarterly installments that began on July 1, 2019, continuing through its maturity on June 30, 2021, and includes a pre-payment feature. Interest will be accrued at 3.5 percent during the first year and at 4.5 percent during the second year. In the three months ended March 31, 2021 and 2020, the Company recorded $249 and $195, respectively, of interest income related to the Promissory Note, included in other income, net in the Consolidated Statements of Operations.
As a direct result of COVID-19 uncertainties, on April 3, 2020, the Company and the Purchaser entered into an amendment to the Promissory Note deferring the Purchaser’s interest payment of $195 that was due April 1, 2020, and adding it to a second promissory note (the “Second Promissory Note”). In addition, the Second Promissory Note includes a 2019 real property tax reconciliation payment due from the Purchaser under the Purchase and Sale Agreement in the amount of $180. The Second Promissory Note, in the principal amount of $375, included in current notes receivable in the Consolidated Balance Sheet, is secured by a second lien deed of trust covering the property and due June 30, 2021. The Company evaluated the collectability of the notes as a result of the Purchaser’s request to defer the first quarter 2020 interest payment and the continuation of the pandemic. Management believes as of March 31, 2021, the promissory notes are recoverable since the Purchaser is in compliance with the terms, is publicly indicating its intent to develop the property, and management believes that the value of the collateral has not materially changed from the sale of one parcel of land and received net cash proceeds of $8,252, generating a gain of approximately $5,000. The remaining two parcels of land, with a total carrying value of $5,510, are reported as assets held for sale as of September 30, 2017. date.
On October 19, 2017, the Company completed the sale of the remaining two parcels of land and received net cash proceeds of $13,048, generating a gain of approximately $7,500.
The timing in general of commercial development may have been impacted by the pandemic, and thus capital constraints in commercial real estate markets may exist. Management continues to closely monitor the collectability of the notes and the value of the underlying collateral. Continued economic and other effects of the pandemic could impact the timing of payment or realization of the notes.
Notes receivable are recorded net of an allowance for doubtful accounts. Interest income is accrued on the unpaid principal balance, included in accounts receivable in the Consolidated Balance Sheets. The Company puts notes receivable on non-accrual status and provides an allowance against accrued interest if it is determined the likelihood of collecting substantially all of the note and accrued interest is not probable. Notes are written-off against the allowance when all possible means of collection have been exhausted and the potential for recovery is considered remote. As of March 31, 2021 and December 31, 2020, there was 0 allowance recorded for the notes receivable or accrued interest receivable.
Note 11: Subsequent Events
The Company evaluates subsequent events at the date of the consolidated balance sheet as well as conditions that arise after the balance sheet date but before the consolidated financial statements are issued. To the extent any events and conditions exist, disclosures are made regarding the nature of events and the estimated financial effects, if known, for those events and conditions.
On April 1, 2021, the Purchaser of the Company’s previous headquarters paid the first quarter 2021 interest payment of $249.
On April 22, 2021, the Company signed a non-binding Memorandum of Understanding (“MOU”) to extend the due date of the Promissory Note of $22,400 due from the Purchaser (the “Note Extension”), subject to the execution and delivery of a definitive extension agreement. The MOU provides for a one-year extension of the maturity date to June 30, 2022. In connection with the extension, the Purchaser must pay the Promissory Note’s second quarter 2021 interest of approximately $250 and the Second Promissory Note of $375, plus accrued interest, upon execution of the Note Extension. The Promissory Note will continue to be secured by a first lien deed of trust covering the property and will bear interest payable in quarterly installments at 4.5 percent through its maturity on June 30, 2022. Although the Company expects that a definitive extension agreement will be executed, there are no assurances that it will be, or when such extension would be completed.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
A. H. Belo Corporation (“A. H. Belo” or the “Company”) 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 allAll dollar amounts are presented in thousands,herein, except share and per share amounts.amounts, are in thousands, unless the context indicates otherwise.
OVERVIEWThis section and other parts of this Quarterly Report on Form 10-Q contain certain forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. See Forward-Looking Statements of this Quarterly Report for further discussion.
OVERVIEW
A. H. Belo, headquartered in Dallas, Texas, is athe leading local news and information publishing company within Texas. The Company has a growing presence in emerging media and digital marketing, and maintains capabilities related to 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,mail. A. H. Belo delivers news and information in innovative ways to a broad spectrumrange of audiences with diverse interests and lifestyles.
In the first quarter of 2017, in conjunction with the promotion of Grant Moise from Senior Vice President Business Development / Niche Products to General Manager of The Company publishes The Dallas Morning News and Executive Vice President of A. H. Belo, the Company reorganized its two reportable segments based on changes in reporting structure and the go-to-market for the Company’s service and product offerings. The two reportable segments are Publishing and Marketing Services.
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,Prizes, and various niche publications targeting specific audiences. TheseIts newspaper operations generate revenue from sales of advertising within its newspaper and digital platforms, subscription and retail sales of its newspapers, sponsorship advertising for events,also provide commercial printing and distribution services primarily related to several large national newspapers. In addition, the Company has the capabilities of a full-service strategy, creative and regional newspapers,media agency that focuses on strategic and preprint advertisers. Businesses within the Publishing segment leverage the production facilities, subscriber and advertiser base, and digital news platforms to provide additional contribution margin.
The Marketing Services segment includes marketing services generated by DMV Digital Holdings Company (“DMV Holdings”) and its subsidiaries Distribion, Inc., Vertical Nerve, Inc. and CDFX, LLC (“MarketingFX”). The Marketing Services segment also includes Your Speakeasy, LLC (“Speakeasy”) and digital advertising through Connect (programmatic advertising). The Company operates the portfolio of assets within its Marketing Services segment as separate businesses that sell digital marketing, and advertising through different channels, including programmatic advertisingdata intelligence that provide a measurable return on investment to its clients.
Currently, the rapid spread of coronavirus (COVID-19 pandemic) globally has resulted in increased travel restrictions, and content marketing within the social media environment.
On February 16, 2017,disruption and shutdown of businesses. The outbreak and any preventative or protective actions that the Company acquired the remaining 30 percent voting interest in Speakeasy for a cash purchase price of $2,111,has taken and may continue to take, or may be imposed on March 2, 2017, the Company acquiredby governmental intervention, in respect of the remaining 20 percent voting interestpandemic may result in DMV Holdings for a cash purchase priceperiod of $7,120.
The initial purchase of 80 percent voting interest in DMV Holdings occurred in January 2015 for a cash purchase price of $14,110. DMV Holdings holds all outstanding ownership interests of three Dallas-based companies, Distribion, Inc., Vertical Nerve, Inc. and MarketingFX. These businesses specialize in local marketing automation, search engine marketing, and direct mail and promotional products, respectively.
These acquisitions complement the product and service offerings currently availabledisruption to A. H. Belo clients, thereby strengthening the Company’s diversified product portfoliofinancial reporting capabilities, its printing operations, and allowingits operations generally. COVID-19 is impacting, and may continue to impact, the Company’s customers, distribution partners, advertisers, production facilities, and third parties, and could result in additional loss of advertising revenue or supply chain disruption. Media was designated an essential business, therefore the Company’s operations have continued throughout the pandemic. While digital subscriptions continue to grow, the Company experienced decreased demand for greater penetrationits print and digital advertising. As a result, beginning in 2020, the Company implemented measures to reduce costs and preserve cash flow. These measures included reduction in the quarterly dividend rate, temporary decreases in employee compensation, as well as reductions in discretionary spending. In addition, the Company benefited from tax provisions permitted under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). However, these measures do not fully offset the impact of the COVID-19 pandemic on the Company’s business and, as such, the coronavirus is likely to continue to have an adverse impact on the Company’s business, results of operations and financial condition at least for the near term.
As of March 31, 2021, the Company performed a competitive advertising market.review of potential impairment indicators for its long-lived assets, including property, plant and equipment, and right-of-use assets. The Company determined there was no significant decrease in the market value of the long-lived assets or significant change in the extent or manner in which the asset group is being used or in its physical condition as of March 31, 2021, and there was no significant adverse change in legal factors or in the business climate during the period that could affect the value of the asset group. Based upon the review of indicators, the Company believes its long-lived assets continue to be recoverable based upon the estimate of the expected undiscounted cash flows, including the cash flows from ultimate disposition of the assets of the asset group.
RESULTS OF CONTINUING OPERATIONS
Consolidated Results of Continuing Operations (unaudited)
This section contains discussion and analysis of net operating revenue, operating costs and expense and other information relevant to an understanding of results of operations for the three and nine months ended September 30, 2017March 31, 2021 and 2016. Due to the first quarter 2017 reorganization of2020. Based on how the Company’s twochief operating decision-maker makes decisions about allocating resources and assessing performance, the Company determined it has one reportable segments, the prior year periods financial information by segment were recast for comparative purposes.segment.
The table below sets forth the components of A. H. Belo’s operating income (loss) by segment.loss.
Three Months Ended March 31, | |||||||||
2021 | Percentage | 2020 | |||||||
Advertising and marketing services | $ | 16,769 | (13.2) | % | $ | 19,327 | |||
Circulation | 16,022 | (2.4) | % | 16,414 | |||||
Printing, distribution and other | 4,024 | (12.6) | % | 4,602 | |||||
Total Net Operating Revenue | 36,815 | (8.7) | % | 40,343 | |||||
Total Operating Costs and Expense | 40,515 | (10.2) | % | 45,103 | |||||
Operating Loss | $ | (3,700) | 22.3 | % | $ | (4,760) |
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||||
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| 2017 |
| Percentage |
| 2016 |
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| 2017 |
| Percentage |
| 2016 | |||||
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Publishing |
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Advertising and marketing services |
| $ | 26,919 |
| (8.3) | % |
| $ | 29,349 |
| $ | 82,468 |
| (9.0) | % |
| $ | 90,597 |
Circulation |
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| 18,845 |
| (4.0) | % |
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| 19,633 |
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| 57,099 |
| (4.5) | % |
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| 59,806 |
Printing, distribution and other |
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| 6,839 |
| (0.1) | % |
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| 6,843 |
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| 21,349 |
| (5.1) | % |
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| 22,502 |
Total Net Operating Revenue |
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| 52,603 |
| (5.8) | % |
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| 55,825 |
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| 160,916 |
| (6.9) | % |
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| 172,905 |
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Total Operating Costs and Expense |
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| 58,488 |
| 1.8 | % |
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| 57,479 |
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| 172,734 |
| (1.5) | % |
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| 175,361 |
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Operating Loss |
| $ | (5,885) |
| (255.8) | % |
| $ | (1,654) |
| $ | (11,818) |
| (381.2) | % |
| $ | (2,456) |
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Marketing Services |
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Advertising and marketing services |
| $ | 7,956 |
| (11.2) | % |
| $ | 8,955 |
| $ | 23,633 |
| 12.6 | % |
| $ | 20,984 |
Total Net Operating Revenue |
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| 7,956 |
| (11.2) | % |
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| 8,955 |
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| 23,633 |
| 12.6 | % |
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| 20,984 |
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Total Operating Costs and Expense |
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| 7,120 |
| (8.6) | % |
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| 7,790 |
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| 21,418 |
| 18.1 | % |
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| 18,139 |
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Operating Income |
| $ | 836 |
| (28.2) | % |
| $ | 1,165 |
| $ | 2,215 |
| (22.1) | % |
| $ | 2,845 |
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 26.6 percent of consolidated revenue in 2014, have declined to 19.0 percent of consolidated revenue thus far in 2017, 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. As a result ofIn addition, the continuedCompany did experience declines resulting from the Publishing segment experienced, and expects to continue to experience, in advertising and print circulation revenues, the Publishing reporting unit’s goodwill was determined to be fully impaired as of December 31, 2016. Certain goodwill and intangible assets previously reportedCOVID-19 pandemic beginning late in the Marketing Services segment were moved to the Publishing segment as a result of the first quarter 2017 segment reorganization. The Publishing reporting unit’s goodwill was fully impaired. Therefore, the Company recorded a noncash goodwill impairment charge of $228 in the first quarter of 2017.2020 and continuing into 2021.
In response to the decline in print revenue, the Company has developed agency and digital advertising capabilities through multiple media channels. The Company leverages its news content to improve engagement on the Company’s digital platforms that results in increased digital subscriptions and associated revenue. The Company also continues to diversify its revenue base by leveraging the available capacity of its existing assets to provide print and distribution services for newspapers and other customers requiring these services, by introducing new advertising and marketing services products, and by increasing circulation prices.
Because of declining print circulation, the Company has developed broad digital strategies designed to provide readers with multiple platforms for obtaining online access to local news. The Company redesigned and expanded its website platforms and mobile applications in 2019 to provide a better customer experience with its digital news and information content. The Company continues to obtain additional key demographic data from readers, which allows the Company to provide content desired by readers and to modify marketing and distribution strategies to target and reach audiences valued by advertisers. The Company has respondedaccess to these challenges by expandinga programmatic channels through which it works to meet customer demand for digital advertisement opportunities in display, mobile, videoadvertising platform that provides digital ad placement and social media categories. By utilizing advertising exchanges to apply marketing insight,targeting efficiencies and increases utilization of digital inventory within the Company believes it offers greater value to clients through focused targeting of advertising to potential customers.Company’s websites and external websites.
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.
Advertising and marketing services revenue
Advertising and marketing services revenue was 57.645.5 percent and 57.547.9 percent of total revenue for the three and nine months ended September 30, 2017, respectively,March 31, 2021 and 59.1 percent2020, respectively.
Three Months Ended March 31, | |||||||||
2021 | Percentage | 2020 | |||||||
Print advertising | $ | 11,226 | (12.3) | % | $ | 12,799 | |||
Digital advertising and marketing services | 5,543 | (15.1) | % | 6,528 | |||||
Advertising and Marketing Services | $ | 16,769 | (13.2) | % | $ | 19,327 |
Print advertising
Print advertising is comprised of display, classified and 57.5 percent for the threepreprint advertising revenue.
Display and nine months ended September 30, 2016, respectively.
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||||
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| 2017 |
| Percentage |
| 2016 |
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| Percentage |
| 2016 | |||||
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Publishing |
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Display advertising |
| $ | 6,750 |
| (14.9) | % |
| $ | 7,933 |
| $ | 21,487 |
| (13.7) | % |
| $ | 24,910 |
Classified advertising |
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| 4,432 |
| (11.1) | % |
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| 4,984 |
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| 13,534 |
| (9.1) | % |
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| 14,882 |
Preprint advertising |
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| 9,971 |
| (12.3) | % |
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| 11,365 |
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| 30,503 |
| (10.7) | % |
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| 34,140 |
Digital advertising |
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| 5,766 |
| 13.8 | % |
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| 5,067 |
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| 16,944 |
| 1.7 | % |
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| 16,665 |
Marketing Services |
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Digital services |
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| 6,194 |
| (21.4) | % |
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| 7,880 |
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| 19,902 |
| 8.7 | % |
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| 18,301 |
Other services |
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| 1,762 |
| 63.9 | % |
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| 1,075 |
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| 3,731 |
| 39.1 | % |
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| 2,683 |
Advertising and Marketing Services | $ | 34,875 |
| (9.0) | % |
| $ | 38,304 |
| $ | 106,101 |
| (4.9) | % |
| $ | 111,581 |
Publishing
Display – Displayclassified print 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 and classified advertising continues to decline. RevenueDisplay and classified print revenue decreased due to lower retail advertising in substantially all categories in both periods, except the financial category$842 in the three and nine months ended September 30, 2017. The department store, entertainment, food and beverage, medical, furniture and other retail categories experienced the greatest declines with a combined revenue decrease of approximately $1,178 and $3,086, for the three and nine months ended September 30, 2017, respectively. The revenue decrease was driven heavily by a retail volume decline of 10.4 percent and 10.1 percent, for the three and nine months ended September 30, 2017, respectively.
Classified – ClassifiedMarch 31, 2021, 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 declined for the three and nine months ended September 30, 2017, due to lower volumesa revenue decline in substantially all categories except employment.retail advertising. In addition to the general trends adversely impacting the publishing industry, the Company experienced unfavorable impacts resulting from the COVID-19 pandemic, which started in the latter part of the first quarter of 2020.
Preprint – Preprint revenue primarily reflects preprinted advertisements inserted into the Company’s core newspapers and niche publications, or distributed to non-subscribers through the mail. Revenue decreased $731 in the three months ended March 31, 2021, due to a ratevolume decline in home delivery mail advertising and preprint newspaper inserts as a result of the impact of the COVID-19 pandemic.
Digital advertising and home delivery mail advertising.marketing services
Digital – Digital publishing is primarily comprisedadvertising and marketing services revenue consists of banner and real estate classified advertising on The Dallas Morning News’ website dallasnews.com, sales of online automotive classifieds on the cars.com platform, as well as online employment and obituary classified advertising on third-party websites sold under a print/digital bundle package. Revenue increased in the three and nine months ended September 30, 2017, due to a higher volume of online automotive classifieds on the cars.com platform.
Marketing Services
Digitalstrategic marketing management, consulting, creative services, – Digital marketing includes targeted and multi-channel (programmatic) advertising placed on third-party websites, content development,digital sales of banner, classified and native advertisements on the Company’s news and entertainment-related websites and mobile apps, social media management, search optimization, direct mail and other consulting. DMV Holdings provided a significant portion of the growth in digital marketing revenue. DMV Holdings revenue increased $992 and $4,868 in the three and nine months ended
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 19
September 30, 2017, respectively. The digital services revenue increase offset 36.5 percent of the core print advertising revenue decline in the nine months ended September 30, 2017.
Other services – Other services revenue increased $687 and $1,048 in the three and nine months ended September 30, 2017, respectively, due to the sale of promotional merchandise by MarketingFX.materials. Revenue decreased $985 in the three months ended March 31, 2021, primarily due to COVID-19 related declines in sales of promotional materials and programmatic advertising placed on third-party websites.
Circulation revenue
Circulation revenue was 31.143.5 percent and 30.940.7 percent of total revenue for the three and nine months ended September 30, 2017, respectively,March 31, 2021 and 30.3 percent and 30.8 percent for the three and nine months ended September 30, 2016,2020, respectively.
Three Months Ended March 31, | |||||||||
2021 | Percentage | 2020 | |||||||
Print circulation | $ | 13,976 | (6.9) | % | $ | 15,017 | |||
Digital circulation | 2,046 | 46.5 | % | 1,397 | |||||
Circulation | $ | 16,022 | (2.4) | % | $ | 16,414 |
Print circulation
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||||
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| 2017 |
| Percentage |
| 2016 |
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| 2016 | |||||
Publishing |
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Circulation |
| $ | 18,845 |
| (4.0) | % |
| $ | 19,633 |
| $ | 57,099 |
| (4.5) | % |
| $ | 59,806 |
Revenue decreased primarily due to a declinedriven by volume declines, partially offset by rate increases. Home delivery revenue decreased $578 or 4.3 percent in home delivery volume of 7.1 percent and 8.3 percent, for the three and nine months ended September 30, 2017, respectively.March 31, 2021. Single copy revenue also decreased $462 or 27.1 percent compared to prior year, driven bydue to the significant reduction in the number of locations selling newspapers as a declineresult of the pandemic.
Digital circulation
Revenue increased in single copy paid print circulation volume of 21.4 percent and 19.3 percent, for the three and nine months ended September 30, 2017, respectively. The single copy volume decline was partially offset byMarch 31, 2021, due to an increase in digital-only subscriptions of 29.2 percent when compared to March 31, 2020, primarily resulting from a broad interest in news topics including the daily single copy rate, which we put in place in November 2016.COVID-19 pandemic.
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, 2017, the Company generated $109 and $400, 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 11.311.0 percent and 11.611.4 percent of total revenue for the three and nine months ended September 30, 2017, respectively,March 31, 2021 and 10.6 percent and 11.7 percent for the three and nine months ended September 30, 2016,2020, respectively.
Three Months Ended March 31, | |||||||||
2021 | Percentage | 2020 | |||||||
Printing, Distribution and Other | $ | 4,024 | (12.6) | % | $ | 4,602 |
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||||
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| 2017 |
| Percentage |
| 2016 |
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| Percentage |
| 2016 | |||||
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Publishing |
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Printing, Distribution and Other |
| $ | 6,839 |
| (0.1) | % |
| $ | 6,843 |
| $ | 21,349 |
| (5.1) | % |
| $ | 22,502 |
The Company aggressively markets the capacity of its printing and distribution assets to other newspapers that would benefit from cost sharing arrangements. Additionally, the Company’s event activation, promotion and marketing services provider, CrowdSource, works closely with cities and other corporate sponsors to bring large entertainment events to local communities. Revenue remained flatdecreased in the three months ended September 30, 2017, and decreased in the nine months ended September 30, 2017,March 31, 2021, primarily due to a declinedeclines in revenue related to events the Company did not host in 2017.commercial printing and distribution revenue.
Operating Costs and Expense
The table below sets forth the components of the Company’s operating costs and expense.
Three Months Ended March 31, | |||||||||
2021 | Percentage | 2020 | |||||||
Employee compensation and benefits | $ | 17,947 | (5.6) | % | $ | 19,016 | |||
Other production, distribution and operating costs | 19,090 | (9.1) | % | 20,992 | |||||
Newsprint, ink and other supplies | 2,341 | (28.4) | % | 3,271 | |||||
Depreciation | 1,074 | (39.2) | % | 1,765 | |||||
Amortization | 64 | - | % | 64 | |||||
Gain on sale/disposal of assets, net | (1) | 80.0 | % | (5) | |||||
Total Operating Costs and Expense | $ | 40,515 | (10.2) | % | $ | 45,103 |
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||||
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| 2017 |
| Percentage |
| 2016 |
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| Percentage |
| 2016 | ||||||
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Employee compensation and benefits |
| $ | 26,384 |
| 16.0 | % |
| $ | 22,753 |
| $ | 72,426 |
| 4.5 | % |
| $ | 69,280 |
Other production, distribution and operating costs |
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| 24,192 |
| (7.8) | % |
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| 26,225 |
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| 75,637 |
| (5.6) | % |
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| 80,138 |
Newsprint, ink and other supplies |
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| 5,347 |
| (10.9) | % |
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| 6,003 |
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| 16,681 |
| (8.3) | % |
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| 18,195 |
Depreciation |
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| 2,565 |
| 3.8 | % |
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| 2,471 |
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| 7,762 |
| 1.2 | % |
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| 7,669 |
Amortization |
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| — |
| (100.0) | % |
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| 27 |
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| — |
| (100.0) | % |
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| 79 |
Goodwill impairment |
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| — |
| N/A |
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| — |
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| 228 |
| N/A |
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| — |
Marketing Services |
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Employee compensation and benefits |
|
| 3,309 |
| 15.2 | % |
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| 2,873 |
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| 9,995 |
| 22.8 | % |
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| 8,137 |
Other production, distribution and operating costs |
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| 3,268 |
| (25.6) | % |
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| 4,390 |
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| 9,885 |
| 13.5 | % |
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| 8,706 |
Newsprint, ink and other supplies |
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| 301 |
| (3.5) | % |
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| 312 |
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| 861 |
| 34.7 | % |
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| 639 |
Depreciation |
|
| 42 |
| 147.1 | % |
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| 17 |
|
| 78 |
| 39.3 | % |
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| 56 |
Amortization |
|
| 200 |
| 1.0 | % |
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| 198 |
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| 599 |
| (0.3) | % |
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| 601 |
Total Operating Costs and Expense |
| $ | 65,608 |
| 0.5 | % |
| $ | 65,269 |
| $ | 194,152 |
| 0.3 | % |
| $ | 193,500 |
Publishing
Employee compensation and benefits – TheThe Company continues to implement measures to optimize its workforce and evaluate strategies to reduce risk associated with future obligations towardsfor employee benefit plans. Employee compensation and benefits increased $3,631 and $3,146decreased $1,069 in the three and nine months ended September 30, 2017, respectively,March 31, 2021, primarily due to a noncash pension settlement chargeheadcount reductions of $5,911 recorded in three months ended September 30, 2017.75 since March 31, 2020.
Other production, distribution and operating costs – Expense decreased $1,902 in the Company’s Publishing segment three months ended March 31, 2021, reflecting savings as the Company continuescontinued to manage discretionary spending. Savings were generated byspending and implemented measures to reduce costs in response to the unfavorable financial impact of the pandemic, including expense reductions in temporaryoutside services, and travel and entertainment. Additionally, distribution expense decreased related to delivery of the Company’s various publications and products.
Newsprint, ink and other supplies – Expense decreased $930 in the three months ended March 31, 2021, due to competitive pricing available under its paper supply agreement, reduced newsprint costs associated with lower circulation volumes from the Company and certain third-party newspapers and the discontinuation of unprofitable product lines.decline in commercial printing. Newsprint consumption for the three months ended September 30, 2017March 31, 2021 and 2016,2020, approximated 5,7212,059 and 6,6272,571 metric tons, respectively, at an average cost per metric ton of $560 and $542, respectively. Newsprint consumption for the nine months ended September 30, 2017 and 2016, approximated 17,475 and 20,022 metric tons, respectively, at an average cost per metric ton of $561 and $523, respectively. The average purchase price for newsprint was $558 and $561 for the three months ended September 30, 2017 and 2016, respectively, and $561 and $532 for the nine months ended September 30, 2017 and 2016, respectively.
Depreciation – Expense increased in the three and nine months ended September 30, 2017, due to capital purchases to support the Company’s financial and human resource software application.
Amortization – All definite-lived intangible assets are fully amortized.
Goodwill impairment – In the nine months ended September 30, 2017, operating costs and expense for the Publishing segment reflect a noncash goodwill impairment charge of $228.
Marketing Services
Employee compensation and benefits – Expense increased in the three and nine months ended September 30, 2017, primarily related to the growth associated with DMV Holdings of $335 and $1,682, respectively. As of September 30, 2017 and 2016, DMV Holdings employed 81 and 76 personnel, respectively.
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 21
Other production, distribution and operating costs – Expense decreased $1,122due to a lower depreciable asset base as a higher level of in-service assets are now fully depreciated and the Company has reduced capital spending.
Amortization – Expense remained flat and all intangible assets were fully amortized in the three months ended September 30, 2017,March 31, 2021.
Gain on sale/disposal of assets, net –From time to time, the Company will sell disposed assets, primarily production related to expense reductions at Speakeasy. Expense increased $1,179assets that are no longer in the nine months ended September 30, 2017, in connection with growth in DMV Holdings.use.
Newsprint, ink and other supplies – Expense decreased $11 in the three months ended September 30, 2017. Expense increased $222 in the nine months ended September 30, 2017, primarily due to an increase in promotional material printing costs associated with MarketingFX.
Other
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 is primarily related to customer lists associated with DMV Holdings.
Other
The table below sets forth the other components of the Company’s results of operations.
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | Three Months Ended March 31, | ||||||||||||||||||||||
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| 2017 |
| Percentage |
| 2016 |
| 2017 |
| Percentage Change |
| 2016 | 2021 | Percentage | 2020 | ||||||||||||
Other income, net |
| $ | 7,639 |
| N/M |
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| $ | 114 |
| $ | 7,209 |
| N/M |
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| $ | 601 | $ | 1,254 | (7.2) | % | $ | 1,352 | |||
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Income tax provision |
| $ | 10 |
| (87.0) | % |
| $ | 77 |
| $ | 261 |
| (80.8) | % |
| $ | 1,361 | |||||||||
Income tax provision (benefit) | $ | 319 | 117.9 | % | $ | (1,787) |
“N/M” – not meaningful
Other income, (expense)net – Other income, (expense)net is primarily comprised of investment activitynet periodic pension and gainother post-employment benefit of $1,035 and $1,154 for the three months ended March 31, 2021 and 2020, respectively, resulting from a favorable return on pension assets, partially offset by a decrease in the discount rate. Gain (loss) on disposalfrom investments and interest income (expense) are also included in other income, net. In the three months ended March 31, 2021 and 2020, the Company recorded $249 and $195, respectively, of fixed assets.interest income related to the promissory note from the sale of the Company’s former headquarters.
TaxIncome tax provision (benefit) – The Company recognized income tax provision from continuing operations(benefit) of $10$319 and $77$(1,787) for the three months ended September 30, 2017March 31, 2021 and 2016, respectively, and $261 and $1,361 for the nine months ended September 30, 2017 and 2016,2020, respectively. Effective income tax rates from continuing operations were (10.9)(13.0) percent and 137.552.4 percent for the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, respectively. The effective income tax rateprovision for the ninethree months ended September 30, 2017,March 31, 2021, was due to the federal tax benefit fully reserved with a valuation allowance and the effect of the Texas margin tax. The 2017 effective incomeCompany expects it is reasonably possible to recognize a tax rate was lower when compared to the prior year period due to taxable income generated from operations and the dispositionbenefit of certain fixed assets in 2016.
Sales of assets – Assets held for sale include long-lived assets being actively marketed for which a sale is considered probableapproximately $2,575 within the next 12 months. These assets are recorded atsix months from the lowerrelease of their fair value less costsa federal uncertain tax reserve, due to sell or their carrying value at the time they are classified as assets heldstatute lapsing in August 2021.
The income tax benefit for sale. In the second quarter of 2017,three months ended March 31, 2020, was due to the Company announced that three parcels of land located in downtown Dallas, Texas were available for sale. On September 22, 2017, the Company completed the sale of one parcel of land and received net cash proceeds of $8,252, generating a gain of approximately $5,000. The remaining two parcels of land, with a total carrying value of $5,510, are reported as assets held for sale as of September 30, 2017.
On October 19, 2017, the Company completed the salerecognition of the remaining two parcels2018 net operating loss carryback permitted by the CARES Act, partially offset by the effect of land and received net cash proceeds of $13,048, generating a gain of approximately $7,500.the Texas margin tax.
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. 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.
Liquidity and Capital Resources
The Company’s cash balances as of September 30, 2017March 31, 2021 and December 31, 2016,2020, were $49,955$38,132 and $80,071,$42,015, respectively.
The Company intends to hold the majority of 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 businessescash flows and other cost cutting measures are expected to be sufficient to fund operating activities and capital spending of approximately $5,000less than $1,000 over the remainder of the year.
The future paymentapproval of dividends is dependent upon available cash after considering future operating and investing requirements and cannot be guaranteed. The Company planscontinues to resume open market stock repurchases in the fourth quarter of 2017 under its priorhave a board-authorized repurchase authority. Current holdingsHowever, the agreement to repurchase the Company’s stock expired and was not renewed.
As a result of treasury stockthe recent COVID-19 outbreak that began in January 2020, the Company is experiencing an increase in digital subscriptions, which currently does not offset the loss of advertising revenue. On April 6, 2020, the Company announced that it was taking several actions to reduce cash outflow in response to the financial impact of COVID-19. The Company reduced operating expenses, reduced capital expenditures to less than $1,000 in 2020, and lowered the quarterly dividend rate to $0.04 per share for dividends declared. Beginning with the 2020 annual meeting of shareholders, the board of directors’ compensation was reduced and the board was reduced in size by two. In addition, employees’ base compensation was reduced Company-wide, and the annual bonus tied to financial metrics for eligible employees was not achieved. In August 2020, the Company began to restore base salaries and by October, the Company restored base salaries prospectively for all employees, with the exception of the executive officers that report to the Chief Executive Officer. The executive officers’ base salaries were restored effective January 1, 2021.
In response to COVID-19, the CARES Act was signed into law in March 2020. The CARES Act provides numerous tax provisions and other stimulus measures. The Company has benefited from the temporary five-year net operating loss carryback provision and the technical correction for qualified leasehold improvements, which changes 39-year property to 15-year property, eligible for 100 percent tax bonus depreciation. Applying the technical correction to 2018 has resulted in reporting additional tax depreciation of $1,017 and increased the 2018 net operating loss to approximately $6,829. The loss was carried back against 2014 taxes paid at the federal statutory rate of 35 percent that was previously in effect, resulting in a cash refund of $2,425, including interest, received in October 2020.
The Consolidated Appropriations Act, 2021, which includes the COVID-related Tax Relief Act of 2020 and the Taxpayer Certainty and Disaster Tax Relief Act of 2020, was passed and signed into law the last week of 2020. Among others, the provisions in this act included items such as guidance on expenses associated with forgiven Paycheck Protection Program loans, business meals deductions, individual tax rebates and unemployment benefits. In addition, the American Rescue Plan Act of 2021, designed to speed up the United States’ economic recovery, was passed and signed into law on March 11, 2021. The Company did not avail itself of any of the items contained in these recent acts.
As a direct result of COVID-19 uncertainties, on April 3, 2020, the Company and Charter DMN Holdings, LP (the “Purchaser”) entered into an amendment to the two-year seller-financed promissory note of $22,400 (the “Promissory Note”), for the sale of the real estate assets previously used as the Company’s headquarters. The amendment (the “Second Promissory Note”), in the principal amount of $375, includes a deferred interest payment of $195 that was due April 1, 2020, and a 2019 real property tax reconciliation payment due from the Purchaser. The Company evaluated the collectability of the notes as a result of the Purchaser’s request to defer the first quarter 2020 interest payment and the continuation of the pandemic. Management believes as of March 31, 2021, the promissory notes are recoverable since the Purchaser is in compliance with the terms, is publicly indicating its intent to develop the property, and management believes that the value of the collateral has not materially changed from the sale date. In addition, on April 1, 2021, the Purchaser paid the first quarter 2021 interest payment of $249.
On April 22, 2021, the Company signed a non-binding Memorandum of Understanding (“MOU”) to extend the due date of the Promissory Note of $22,400 due from the Purchaser (the “Note Extension”), subject to the execution and delivery of a definitive extension agreement. The MOU provides for a one-year extension of the maturity date to June 30, 2022. In connection with the extension, the Purchaser must pay the Promissory Note’s second quarter 2021 interest of approximately $250 and the Second Promissory Note of $375, plus accrued interest, upon execution of the Note Extension. The Promissory Note will continue to be secured by a first lien deed of trust covering the property and will bear interest payable in quarterly installments at 4.5 percent through its maturity on June 30, 2022. Although the Company expects that a definitive extension agreement will be executed, there are no assurances that it will be, or when such extension would be completed.
The timing in general of commercial development may have been impacted by the pandemic, and thus capital constraints in commercial real estate markets may exist. Management continues to closely monitor the collectability of the notes and the value of the underlying collateral. Continued economic and other effects of the pandemic could be usedimpact the timing of payment or realization of the notes.
The Company continues to satisfyevaluate the future material impacts on its obligations related to share-based awards issued to employeesconsolidated financial statements that may result from the actions taken by the Company and directors, or can be sold onits customers in respect of the open market.pandemic.
The following discusses the changes in cash flows by operating, investing and financing activities.
Operating Cash Flows
Net cash provided by (used for)used for operating activities for the ninethree months ended months ended September 30, 2017March 31, 2021 and 2016,2020, was $(15,790)$2,865 and $6,679,$2,594, respectively. Cash flows fromused for operating activities decreasedincreased by $22,469$271 during the ninethree months ended September 30, 2017,March 31, 2021, when compared to the prior year period, primarily due to the voluntary contributiona net loss of $20,000 to the A. H. Belo Pension Plans.$2,765 in 2021.
Investing Cash Flows
Net cash provided by (used for)used for investing activities was $397$162 and $(3,840)$385 for the ninethree months ended September 30, 2017March 31, 2021 and 2016, respectively. Cash flow for investing activities include $7,837 and $4,168 of2020, respectively, primarily related to capital spending, which continues to be reduced in 2017 and 2016, respectively. Cash proceeds of $8,252 were received during 2017 relatedresponse to the salefinancial impact of a parcel of land in downtown Dallas, Texas.the COVID-19 pandemic.
Financing Cash Flows
Net cash used for financing activities was $14,723$856 and $2,878$1,713 for the ninethree months ended September 30, 2017March 31, 2021 and 2016, respectively. Cash flows used2020, respectively, all of which is attributable to dividend payments.
Financing Arrangements
None.
Contractual Obligations
The Company has contractual obligations for financing activities increased in 2017 compared to 2016, due to the first quarter 2017 acquisitionsoperating leases, primarily for office space and other distribution centers, some of the remaining interests in DMV Holdings and Speakeasy which include escalating lease payments. See Note 3 – Leasesfor a purchase price of $7,120 and $2,111, respectively. Cash used for financing activities also included dividendfuture lease payments of $5,313 and $5,265 in 2017 and 2016, respectively. by year.
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 2017.2021.
On September 6, 2017,March 4, 2021, the Company’s board of directors declared an $0.08a $0.04 per share dividend to shareholders of record and holders of RSUs as of the close of business on November 9, 2017,May 14, 2021, which is payable on December 1, 2017. On October 27, 2017, the Company’s board of directors declared a special, one-time cash dividend of $0.14 per share to shareholders of record and holders of RSUs as of the close of business on November 9, 2017, which is payable on December 1, 2017.June 4, 2021.
Additional information related to the Company’s contractual obligations is available in Company’s Annual Report on Form 10‑10-K for the year ended December 31, 2016,2020, filed on March 10, 2017,11, 2021, with the Securities and Exchange Commission (“SEC”).
Critical Accounting Policies and Estimates
No material changes were made to the Company’s critical accounting policies as set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2016.2020.
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, including statements of the Company’s expectations relating to its plans to regain NYSE compliance, 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 the current and future impacts of the COVID-19 pandemic on the Company’s financial reporting capabilities and its operations generally and the potential impact of the pandemic on the Company’s customers, distribution partners, advertisers, production facilities, and third parties, as well as changes in advertising demand and other economic conditions; consumers’ tastes; newsprint prices; program costs; labor relations; cybersecurity incidents; 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. Among other risks, there can be no guarantee that the board of directors will approve a quarterly dividend in future quarters. 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, 2016.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controlsDisclosure Controls and procedures. Based on the evaluation of the Company’s disclosureProcedures
Disclosure controls and procedures, (asas defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) required by Securities under the Exchange Act, Rules 13a-15(b)are controls that are designed to ensure that information required to be disclosed by the Company in reports filed or 15d-15(b),submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and the Company’s ChiefPrincipal Financial Officer, have concludedas appropriate, to allow timely decisions regarding required disclosure. In designing disclosure controls and procedures, management is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
The Company’s management, with the participation of its Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report,report. Based on that evaluation, as of March 31, 2021, management concluded that the Company’s disclosure controls and procedures were effective.
(b) Changes in internal controls. As required by Exchange Act Rule 13a-15(d), the Company’s management, including the Chief Executive Officer and ChiefInternal Control Over Financial Officer, also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the last fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on that evaluation, thereReporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the lastfirst fiscal quarter of the period covered by this reportended March 31, 2021, that hashave materially affected, or isare reasonably likely to materially affect, the Company’s internal control over financial reporting.
A number of legal proceedings are pending against A. H. Belo. In the opinion of management, liabilities, if any, arising from these legal proceedings would not have a material adverse effect on A. H. Belo’s results of operations, liquidity or financial condition.
There were no material changes from the risk factors disclosed under the heading “Risk Factors” in Item 1A in the Annual Report on Form 10-K for the year ended December 31, 2016.
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.The Company continues to have a board-authorized repurchase authority. However, the agreement to repurchase the Company’s stock expired and was not renewed.
A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 24
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
None.
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 | |||||
| * | |||||
| * | |||||
3.2 | * | |||||
3.3 | * | |||||
3.4 | * | |||||
(1) | * | |||||
(2) | * | |||||
| * | Certain rights of the holders of the Company’s Common Stock set forth in Exhibits | ||||
| * | Description of Capital Stock (Exhibit 4.1 to the July 2, 2018 Form 8-K) | ||||
4.2 | * | |||||
4.3 | * | |||||
| * |
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(1) |
| * | ||||
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A. H. Belo Corporation Third Quarter 2017 on Form 10-Q 26
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| * | Guaranty of Lease dated December 30, 2016 (Exhibit 10.2 to the January 3, 2017 Form 8-K) | |||||||||||||
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| (3) | * | ||||||||||||
(4) | * | ||||||||||||||
* | (a) | ||||||||||||||
* | (b) |
Exhibit Number | Description | |||||||||||||||
10.2 | * | Compensatory plans and arrangements: | ||||||||||||||
~(1) | * | |||||||||||||||
* | (a) | |||||||||||||||
* | (b) | |||||||||||||||
* | (c) | |||||||||||||||
| * | (d) | ||||||||||||||
* | (e) | |||||||||||||||
* |
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* | (g) | |||||||||||||||
* |
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~(2) | * |
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* | (a) | |||||||||||||||
* | (b) | |||||||||||||||
| * | (c) | ||||||||||||||
* | (d) | |||||||||||||||
~(3) | * | |||||||||||||||
~(4) | * | |||||||||||||||
* | (a) |
Exhibit Number | Description | ||||||||
~(5) | * | ||||||||
10.3 | * |
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| Agreements relating to the separation of A. H. Belo from its former parent company: | |||||||
(1) | * | ||||||||
(2) | * | ||||||||
31.1 | |||||||||
31.2 | |||||||||
32 | |||||||||
101.INS | ** | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH | ** | Inline XBRL Taxonomy Extension | |||||||
101.CAL | ** | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | ** | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | ** | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | ** | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | ** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
A. H. BELOCORPORATION | |||
By: | /s/ | Katy Murray | |
Katy Murray | |||
| |||
(Principal Financial Officer) | |||
Dated: |
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Exhibit Number | Description | |
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31.2 | ||
32 | ||
101.INS | ** | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH | ** | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | ** | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | ** | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | ** | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | ** | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | ** | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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.