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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-8598
A. H. BELO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-0135890
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. BOX 655237
DALLAS, TEXAS 75265-5237
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (214) 977-6606
Former name, former address and former fiscal year, if
changed since last report.
NONE
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT APRIL 30, 1997
----- -----------------------------
Common Stock, $1.67 par value *61,756,409
* Consisting of 52,548,893 shares of Series A Common Stock and 9,207,516
shares of Series B Common Stock.
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A. H. BELO CORPORATION
FORM 10-Q
TABLE OF CONTENTS
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PAGE
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements........................................... 1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations............... 6
PART II OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 10
Item 2. Changes in Securities.......................................... 10
Item 3. Defaults Upon Senior Securities................................ 10
Item 4. Submission of Matters to a Vote of Security Holders............ 11
Item 5. Other Information.............................................. 11
Item 6. Exhibits and Reports on Form 8-K............................... 11
</TABLE>
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PART I.
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
A. H. Belo Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three months ended March 31,
====================================================================================
In thousands, except per share amounts (unaudited) 1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C>
NET OPERATING REVENUES
Broadcasting $ 92,002 $ 70,607
Newspaper publishing 137,179 115,871
Other 3,521 766
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Total net operating revenues 232,702 187,244
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits 71,378 55,935
Other production, distribution and operating costs 61,308 49,694
Newsprint, ink and other supplies 29,231 39,133
Depreciation 14,356 11,635
Amortization 8,978 4,936
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Total operating costs and expenses 185,251 161,333
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Earnings from operations 47,451 25,911
OTHER INCOME AND EXPENSE
Interest expense (13,447) (8,864)
Other, net 1,249 4,341
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Total other income and expense (12,198) (4,523)
EARNINGS
Earnings before income taxes 35,253 21,388
Income taxes 17,626 8,664
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Net earnings $ 17,627 $ 12,724
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Net earnings per common and common equivalent share $ .38 $ .33
========= =========
Cash dividends declared per share $ .11 $ .08
========= =========
Average shares outstanding 45,874 38,876
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</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
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CONSOLIDATED CONDENSED BALANCE SHEETS
A. H. Belo Corporation and Subsidiaries
<TABLE>
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MARCH 31, December 31,
Dollars in thousands (Current year unaudited) 1997 1996
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ASSETS
Current assets:
Cash and temporary cash investments $ 18,104 $ 13,829
Accounts receivable, net 177,661 129,976
Other current assets 45,134 28,120
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Total current assets 240,899 171,925
Property, plant and equipment, net 591,883 370,780
Intangible assets, net 2,401,441 582,248
Other assets, at cost 148,905 99,119
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Total assets $ 3,383,128 $ 1,224,072
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,521 $ 26,101
Accrued expenses 110,630 40,972
Other current liabilities 39,773 22,240
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Total current liabilities 181,924 89,313
Long-term debt 1,483,957 631,857
Deferred income taxes 428,465 121,808
Other liabilities 31,837 10,611
Shareholders' equity:
Preferred stock
Common stock, $1.67 par value. Authorized
150,000,000 shares:
Series A: Issued 60,849,808 shares at March 31, 1997
and 35,404,850 shares at December 31, 1996 101,619 59,126
Series B: Issued 9,201,617 shares at March 31, 1997
and 9,177,133 shares at December 31, 1996 15,367 15,326
Additional paid-in capital 1,132,746 302,737
Retained earnings 314,954 301,316
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Total 1,564,686 678,505
Less cost of 8,321,700 shares of Series A treasury stock (306,146) (306,146)
Less deferred compensation - restricted shares (1,595) (1,876)
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Total shareholders' equity 1,256,945 370,483
Total liabilities and shareholders' equity $ 3,383,128 $ 1,224,072
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</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
A. H. Belo Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three months ended March 31,
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In thousands (unaudited) 1997 1996
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OPERATIONS
Net earnings $ 17,627 $ 12,724
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 23,334 16,571
Deferred income taxes 7,254 2,803
Other, net (232) (2,640)
Net change in current assets and liabilities:
Accounts receivable 8,738 11,025
Other current assets 1,895 (54)
Accounts payable (4,689) (7,469)
Accrued expenses (9,158) (4,885)
Other current liabilities 12,457 6,272
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Net cash provided by operations 57,226 34,347
INVESTING
Acquisitions (694,429) (35,281)
Capital expenditures (15,502) (7,078)
Sale of investment -- 3,750
Other, net 463 (59)
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Net cash used for investing (709,468) (38,668)
FINANCING
Borrowings for acquisitions 894,506 36,415
Refinancing of Providence Journal debt (200,000) --
Net proceeds from (payments on) debt (34,974) (29,708)
Payment of dividends on stock (3,989) (3,064)
Net proceeds from exercise of stock options 974 2,376
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Net cash provided by financing 656,517 6,019
Net increase in cash and temporary cash investments 4,275 1,698
Cash and temporary cash investments at beginning of period 13,829 12,846
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Cash and temporary cash investments at end of period $ 18,104 $ 14,544
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SUPPLEMENTAL DISCLOSURES
Value of stock issued for acquisition $ 870,399 $ --
Interest paid, net of amounts capitalized $ 10,399 $ 8,872
Income taxes paid, net of refunds $ 4,832 $ 538
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</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
(1) The accompanying unaudited consolidated condensed financial statements
of A. H. Belo Corporation and subsidiaries (the "Company" or "Belo")
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
balance sheet at December 31, 1996 has been derived from the audited
consolidated financial statements at that date but does not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended
March 31, 1997 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1997. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended December 31, 1996 and the consolidated financial
statements of The Providence Journal Company ("PJC") for the year
ended December 31, 1996 included in the Company's current report on
Form 8-K/A dated May 2, 1997.
Certain amounts for the prior periods have been reclassified to
conform to the current year presentation.
(2) On February 28, 1997, Belo completed the acquisition of PJC by issuing
25,394,564 shares of Series A Common Stock and paying $587 million to
former shareholders of PJC. Belo also incurred approximately $100
million in employee and transaction costs and refinanced $200 million
of PJC debt. The acquisition has been accounted for as a purchase. The
Company's consolidated financial results for the three-month period
ended March 31, 1997 include the operations of PJC since March 1,
1997.
The cost of the acquisition has been allocated on the basis of the
estimated fair market value of the assets acquired. This preliminary
purchase price allocation resulted in goodwill and intangibles of
approximately $1.8 billion, which includes approximately $300 million
of deferred taxes based on the value of identifiable intangibles.
Goodwill and intangibles arising from the purchase of PJC are being
amortized on a straight line basis over 40 years, except for the value
assigned to the newspaper subscriber list, which is being amortized
over 18 years.
The pro forma financial results of operations below assume the
transaction was completed at the beginning of each of the periods
presented and include adjustments for increased interest costs
associated with the transaction as well as increased depreciation and
amortization and effective income tax rates to reflect the effects of
the preliminary purchase price allocation (dollars in thousands,
except per share amounts):
<TABLE>
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Three months ended March 31, 1997 1996
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Net operating revenues $ 284,767 $ 265,384
Net earnings (loss)(1) $ 13,127 $ (12,600)
Net earnings (loss) per share $ .21 $ (.20)
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</TABLE>
(1) Net earnings for the three months ended March 31, 1997
include a pre-tax gain of $10,672 on the sale of an
investment. Net earnings for the three months ended March
31, 1996 include pre-tax charges for PJC stock-based
compensation ($11,730) and PJC newspaper restructuring
($1,150). Both periods exclude the effects of America's
Health Network ("AHN"). See footnote 3.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
The pro forma financial information is provided for informational
purposes only and is not necessarily representative of the operating
results that would have occurred had the acquisition been completed as
of the indicated dates, nor is it indicative of future operating
results.
(3) Net operating revenues, earnings from operations, and depreciation and
amortization by industry segment are shown below (in thousands):
<TABLE>
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Three months ended March 31, 1997 1996
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NET OPERATING REVENUES
Broadcasting $ 92,002 $ 70,607
Newspaper publishing 137,179 115,871
Other(1) 3,521 766
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Total net operating revenues $ 232,702 $ 187,244
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EARNINGS FROM OPERATIONS
Broadcasting $ 16,869 $ 10,213
Newspaper publishing 38,877 21,204
Other(1) (1,534) (1,001)
Corporate expenses (6,761) (4,505)
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Total earnings from operations $ 47,451 $ 25,911
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DEPRECIATION AND AMORTIZATION
Broadcasting $ 14,555 $ 9,990
Newspaper publishing 8,200 6,358
Other(1) 273 31
Corporate 306 192
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Total depreciation and amortization $ 23,334 $ 16,571
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</TABLE>
(1) On May 13, 1997, the Company announced the pending sale of its ownership
interest in AHN, which was acquired as a part of the PJC acquisition. In
anticipation of this disposition, the results of operations for AHN are
not included herein.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
RECENT DEVELOPMENTS
On February 19, 1997, the shareholders of the Company and The Providence
Journal Company ("PJC") approved Belo's acquisition of PJC. Upon completion of
the acquisition on February 28, 1997, Belo added to its broadcast holdings nine
network-affiliated television stations and four television stations operated
under local marketing agreements ("LMA"). The Company also acquired PJC's
interest in the Providence Journal-Bulletin, the largest daily newspaper in
terms of both advertising and circulation in Rhode Island and southeastern
Massachusetts. In addition, the acquisition included PJC's interest in two
cable networks, Television Food Network ("TVFN") and America's Health Network
("AHN"). Since the acquisition, the Company has pursued alternate financing
and operating strategies for AHN and on May 13, 1997, announced the pending
sale of its ownership interest in AHN. Accordingly, the results of operations
and financial position for AHN are not included herein. Other PJC media assets
acquired included a regional cable news channel (Northwest Cable News) and an
on-line electronic media service (projo.com). The following table sets forth the
Company's major media assets by segment subsequent to the acquisition:
<TABLE>
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BROADCASTING
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MARKET MARKET RANK(1) STATION NETWORK AFFILIATION STATUS
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Dallas-Fort Worth 8 WFAA ABC Owned
Houston 11 KHOU CBS Owned
Seattle-Tacoma(2) 12 KING NBC Owned
Seattle-Tacoma 12 KONG IND LMA
Sacramento 20 KXTV ABC Owned
St. Louis 21 KMOV CBS Owned(2)
Portland 24 KGW NBC Owned
Charlotte 28 WCNC NBC Owned
Hampton-Norfolk 40 WVEC ABC Owned
New Orleans 41 WWL CBS Owned
Albuquerque-Santa Fe 48 KASA FOX Owned
Louisville 50 WHAS ABC Owned
Tulsa 58 KOTV CBS Owned
Honolulu 69 KHNL NBC Owned
Honolulu 69 KFVE UPN LMA
Spokane 73 KREM CBS Owned
Spokane 73 KSKN IND LMA
Tucson 78 KMSB FOX Owned
Tucson 78 KTTU UPN LMA
Boise 127 KTVB NBC Owned
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</TABLE>
<TABLE>
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NEWSPAPER PUBLISHING
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DAILY SUNDAY
NEWSPAPER LOCATION CIRCULATION(3) CIRCULATION(3)
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The Dallas Morning News Dallas, Texas 523,955 800,306
Providence Journal-Bulletin Providence, Rhode Island 168,368 243,643
Owensboro Messenger-Inquirer Owensboro, Kentucky 31,748 34,370
Bryan-College Station Eagle Bryan-College Station, Texas 21,968 27,501
The Gleaner Henderson, Kentucky 11,624 13,752
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<TABLE>
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OTHER
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COMPANY DESCRIPTION
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Belo Productions, Inc. Produces television programming
Television Food Network(4) Cable network distributed to 24 million subscribers
Northwest Cable News Cable news network distributed to 1.7 million homes
dallasnews.com Web site featuring daily content from The Dallas Morning News
projo.com Web site featuring daily content from Providence Journal-Bulletin
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</TABLE>
(1) Market rank is based on the relative size of the television market or
Designated Market Area ("DMA") among the 211 generally recognized DMA's in
the United States, based on January 1997 Nielsen estimates.
(2) Currently, the Company also owns KIRO in Seattle, Washington which it
acquired in 1995. On February 20, 1997, the Company announced an agreement
among multiple parties whereby, through an exchange of assets, it will
exchange KIRO for CBS affiliate KMOV in St. Louis, Missouri. The exchange
is expected to close during the second quarter of 1997.
(3) Average paid circulation for the six months ended March 31, 1997,
according to the unaudited Publisher's Statement of the Audit Bureau of
Circulation, an independent agency.
(4) The Company is the managing general partner with a 55% ownership interest.
RESULTS OF OPERATIONS
Net earnings for the first quarter of 1997 were $17,627 or 38 cents per share
compared to $12,724 (33 cents per share) for the first quarter of 1996. First
quarter 1996 results included a gain of $3,895 (6 cents per share) on the sale
of Maxam Entertainment to CBS while 1997 results include the operations of PJC
beginning March 1, 1997. The acquisition of PJC is dilutive to Belo's earnings
due primarily to the amortization of intangibles and increased interest expense
on borrowings incurred to complete the transaction.
To enhance comparability of the Company's segment results of operations for the
three months ended March 31, 1997 and 1996, certain information below is
presented on an "as adjusted" basis and reflects the acquisition of PJC as
though it had occurred at the beginning of the respective periods presented.
The discussion that follows compares segment operations on an adjusted basis
only.
<TABLE>
<CAPTION>
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AS ADJUSTED AS REPORTED
(UNAUDITED; IN THOUSANDS) 1997 1996 % CHANGE 1997 1996 % CHANGE
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<S> <C> <C> <C> <C> <C> <C>
Revenues
Broadcasting $120,423 $113,989 5.6% $ 92,002 $ 70,607 30.3%
Newspaper Publishing 156,769 145,996 7.4% 137,179 115,871 18.4%
Other 7,575 5,399 40.3% 3,521 766 --
Operating cash flow (1)
Broadcasting $38,606 $32,588 18.5% $ 31,424 $ 20,203 55.5%
Newspaper publishing 50,468 30,312 66.5% 47,077 27,562 70.8%
Other (4,714) (5,196) 9.3% (1,261) (970) (30.0%)
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</TABLE>
(1) Operating cash flow is defined as segment earnings from operations plus
depreciation and amortization. Operating cash flow is used in the
television and newspaper publishing industries to analyze and compare
companies on the basis of operating performance, leverage and liquidity.
However, operating cash flow should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
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Broadcasting
Broadcasting revenues for first quarter 1997 were $120,423, an increase of
$6,434 or 5.6 percent over first quarter 1996 revenues of $113,989. Local
revenues were up 4.7 percent with the largest improvements noted in Dallas,
Seattle and Portland. These three markets posted a combined local revenue
improvement of nearly 10 percent. The higher local revenues are attributable to
strong ratings in both the November 1996 and February 1997 Nielsen ratings
periods. National revenues were also much stronger in 1997 versus 1996,
increasing 10.2 percent. All but three of Belo's television stations posted
higher national revenues. Telecommunications and automotive advertising
contributed to the strength in the national revenue category. National revenues
at KING, the Company's NBC affiliate in Seattle, also benefited as advertisers
looked to this established leader while other stations in the market prepare to
change network affiliations later this year. Overall, political advertising was
26.5 percent lower in 1997 than in 1996 due to the lack of any major elections;
however, both Texas stations had higher 1997 political advertising revenues due
to aggressive issues advertising by the telecommunication and public utility
industries.
Operating cash flow margins for the first quarter of 1997 and 1996 were 32.1
percent and 28.6 percent, respectively. Broadcasting's operating cash flow of
$38,606 improved 18.5 percent over last year's first quarter operating cash
flow of $32,588. While net operating revenues increased as noted above, total
cash expenses were relatively flat when compared to last year. Compensation and
benefits were up just 2.1 percent over last year due to changes in employee
headcount and merit increases from year to year. Outside services and other
operating costs also increased slightly over last year. However, advertising
and promotion expense was lower in 1997 than in 1996, which included a
significant advertising campaign in connection with the Honolulu station's
change in network affiliation. Programming expense was also lower in 1997 due
to lower costs for both barter and purchased programming.
Newspaper publishing
First quarter 1997 revenues for newspaper publishing were $156,769, an
improvement of $10,773 or 7.4 percent over 1996 revenues of $145,996. Revenues
at The Dallas Morning News rose 8.3 percent while the Providence
Journal-Bulletin revenues improved 3.7 percent. At The Dallas Morning News,
classified advertising was up 10.9 percent due to higher average rates, offset
somewhat by lower linage. Although classified employment linage improved nearly
7 percent, decreases in automotive and real estate linage more than offset this
volume gain. General advertising volume at The Dallas Morning News was up
substantially, primarily in the technology category, which contributed to a
14.1 percent general advertising revenue increase. Retail advertising revenue
was up 3.1 percent due to higher rates. Circulation revenues were flat compared
to last year's first quarter as daily volumes declined .9 percent and Sunday
circulation declined .2 percent.
Advertising revenues at the Providence Journal-Bulletin were up 5.3 percent
over last year, primarily in classified and general. Across-the-board rate
increases effective January 1, 1997, Providence Journal-Bulletin's first rate
increases since October 1, 1995, produced the higher revenues. Despite these
rate increases, volume in all full run ROP categories improved over first
quarter 1996 results. Classified revenues were especially strong, improving 19
percent over last year with increases in automotive, employment and education,
and real estate. General advertising improvement came from the automotive,
professional services and travel and entertainment categories. Circulation
revenues were up 1.1 percent over last year, due to a price increase last year
for Sunday single-copy and home delivery and a January 1997 increase in the
daily home delivery price. Circulation volumes for daily and Sunday were down
1.5 percent and 3.8 percent, respectively.
Operating cash flow margins for the first quarter of 1997 and 1996 were 32.2
percent and 20.8 percent, respectively. Operating cash flows for the newspaper
publishing segment improved dramatically in the first quarter of 1997 versus
first quarter 1996 due to a combination of higher revenues and lower cash
expenses. The most significant savings came in lower newsprint prices. The
Dallas Morning News' newsprint expense was one-third less than the first
quarter of last year and all other newspaper operations experienced similar
decreases. Salaries, wages and employee benefits were up only 2.4 percent over
last year. While employee expenses at The Dallas Morning News increased 6
percent over the first quarter of last year, an April 1996 restructuring at
8
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Providence Journal-Bulletin reduced its overall employee costs by 5.5 percent.
All other operating expenses for the newspaper publishing group were up 11.4
percent. Distribution expenses at The Dallas Morning News were higher due to an
increase in its TMC advertising program. The Dallas Morning News also had
higher bad debt expense and costs associated with contractor recognition
programs.
Other
Other revenues, primarily in cable programming and electronic media, increased
40.3 percent to $7,575 for the first quarter of 1997 due mostly to higher
revenues at TVFN, in which the Company has a controlling partnership interest.
Operating cash flow for this segment, while negative for the first quarters of
1997 and 1996, has improved in the current period, due to improving margins at
Northwest Cable News.
Consolidated results
Depreciation and amortization expenses were higher in first quarter 1997 versus
1996 because of the PJC acquisition. Amortization of intangibles associated
with PJC for first quarter 1997 was approximately $4 million while incremental
depreciation expense for PJC was $2.6 million.
Higher interest expense resulted from the higher debt levels associated with
the PJC acquisition and fourth quarter 1996 treasury stock repurchases.
Weighted average interest rates for the first quarter of 1997 were relatively
unchanged from last year.
The effective tax rate for the first quarter of 1997 was 50 percent versus a
first quarter 1996 effective rate of 40.5 percent. The increase in the
effective rate is due to the amortization of non-deductible goodwill associated
with the PJC acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Long-term debt outstanding increased $852.1 million from December 31, 1996 to
March 31, 1997 due to the purchase of PJC. Specifically, Belo paid $587 million
to shareholders of PJC and approximately $85 million in employee and
transaction costs, and refinanced $200 million of PJC's debt under its existing
credit facility. An additional $15 million in merger related costs are expected
to be paid during the remainder of 1997. Also, in connection with the PJC
acquisition, the Company issued 25,394,564 shares of Series A Common Stock
resulting in an increase in equity of $870,399.
Net cash provided by operations and bank borrowings are the Company's primary
sources of liquidity. On an as reported basis, during the first quarter of
1997, net cash provided by operations was $57,226, compared to $34,347 for the
same period in 1996. The increase was due primarily to higher earnings and
changes in working capital. Net cash provided by operations was sufficient to
fund capital expenditures and common stock dividends.
At March 31, 1997, the Company had a $1.5 billion five-year variable rate
revolving credit agreement and a $500 million 364-day facility. Borrowings
under these agreements at March 31, 1997 were $1,387 million. In addition, the
Company had short-term unsecured notes of $71.3 million outstanding at March
31, 1997. Based on the Company's intent and ability to renew these short-term
notes through the revolving credit agreement, short-term borrowing is
classified as long-term.
As defined in the credit agreements, the Company is required to maintain
certain ratios as of the end of each quarter. For the four quarters ended March
31, 1997, the Company's ratio of funded debt to pro forma operating cash flow,
which is not to exceed 5.0, was 4.2 compared to 2.7 for the year ended December
31, 1996. The Company's interest coverage ratio for the four quarters ended
March 31, 1997 was 4.4 versus 8.4 for the year ended December 31, 1996,
compared to a minimum coverage requirement of 2.5 times.
9
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Because substantially all of the Company's outstanding debt is currently at
floating interest rates, the Company is subject to interest rate volatility.
Weighted average interest rates during the first quarter of 1997 were
approximately 6 percent compared to 6.1 percent for the same period in 1996.
On April 21, 1997, the Company filed a shelf registration statement on Form S-3
with the Securities and Exchange Commission covering the issuance from time to
time of up to $1.5 billion in debt securities. This shelf registration enables
the Company to issue fixed-rate debt under which existing variable-rate debt
may be refinanced in whole or in part. With this financing option, combined
with the existing revolving credit facilities discussed above, the Company
believes its current financial condition and credit relationships are adequate
to fund both its current obligations as well as near-term growth.
The Company paid first quarter 1997 dividends of $3,989 or 11 cents per share
on Series A and Series B Common Stock compared to $3,064 or 8 cents per share
in first quarter 1996. The Company expects its aggregate dividend payment to be
higher in the remainder of 1997 due to the additional shares issued in the PJC
acquisition.
Capital expenditures for first quarter 1997 were $15,502. The majority of these
expenditures were for additional production equipment and major building
renovations at The Dallas Morning News and a building and studio remodeling
project at the Company's Dallas television station. The Company expects to
finance future capital expenditures using cash generated from operations and,
when necessary, borrowings under the revolving credit facilities.
OTHER MATTERS
As a result of the PJC acquisition, the Company currently owns two television
stations in the Seattle-Tacoma, Washington market (KIRO and KING). To comply
with FCC regulations that require the Company to divest one of these stations,
on February 20, 1997 the Company announced an agreement among multiple parties
whereby, through an exchange of assets, it will exchange KIRO for CBS affiliate
KMOV-TV in St. Louis, Missouri. The exchange is expected to close during the
second quarter of 1997.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share," which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements, basic earnings per share exclude the dilutive effect of
outstanding stock options. The effect of adopting this statement on the
calculation of both basic and fully diluted earnings per share is not expected
to be material.
PART II.
ITEM 1. LEGAL PROCEEDINGS
There are a number of legal proceedings pending against the Company, including
several actions for alleged libel. In the opinion of management, liabilities,
if any, arising from these actions would not have a material adverse effect on
the operations or financial position of the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
10
<PAGE> 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A meeting of the Company's shareholders was held on February 19, 1997 to vote
on a proposal to issue up to 25,600,000 shares of Series A Common Stock in
connection with the Company's acquisition of The Providence Journal Company.
The proposal was approved by a vote of 108,429,686 for, 92,976 against, and
111,437 abstaining.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by the Company with the Securities and
Exchange Commission, as indicated. Exhibits marked with a tilde (~)
are management contracts or compensatory plan contracts or
arrangements filed pursuant to Item 601 (b)(10)(iii)(A) of Regulation
S-K. All other documents are filed with this report.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
2.1* Amended and Restated Agreement and Plan of Merger, dated as
of September 26, 1996 (Appendix A of the Joint Proxy
Statement/Prospectus of Belo and Providence Journal included
in Belo's Registration Statement on Form S-4 (Registration
No. 333-19337) filed with the Commission on January 8, 1997)
3.1* Certificate of Incorporation of the Company (Exhibit 3.1 to
the Company's Amended Annual Report on Form 10-K/A dated
April 8, 1996 (the "1995 Form 10-K/A"))
3.2* Certificate of Correction to Certificate of Incorporation
dated May 13, 1987 (Exhibit 3.2 to the 1995 Form 10-K/A)
3.3* Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated April 16, 1987 (Exhibit
3.3 to the 1995 Form 10-K/A)
3.4* Certificate of Amendment of Certificate of Incorporation of
the Company dated May 4, 1988 (Exhibit 3.4 to the 1995 Form
10-K/A)
3.5* Certificate of Amendment of Certificate of Incorporation of
the Company dated May 3, 1995 (Exhibit 3.5 to the Company's
Annual Report on Form 10-K dated February 28, 1996 (the "1995
Form 10-K"))
3.6* Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4,
1988 (Exhibit 3.6 to the 1995 Form 10-K/A)
3.7* Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988 (Exhibit 3.7 to the 1995 Form
10-K/A)
3.8* Amended and Restated Bylaws of the Company, effective
February 22, 1995 (Exhibit 3.7 to the Company's Annual Report
on Form 10-K dated March 8, 1995 (the "1994 Form 10-K"))
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
4.1 Certain rights of the holders of the Company's Common Stock
are set forth in Exhibits 3.1-3.8 above
4.2* Specimen Form of Certificate representing shares of the
Company's Series A Common Stock (Exhibit 4.2 to the Company's
Annual Report on Form 10-K dated March 18, 1993 (the "1992
Form 10-K"))
4.3* Specimen Form of Certificate representing shares of the
Company's Series B Common Stock (Exhibit 4.3 to the Company's
Annual Report on Form 10-K dated March 20, 1989)
4.4* Amended and Restated Form of Rights Agreement as of February
28, 1996 between the Company and Chemical Mellon Shareholder
Services, L.L.C., a New York banking corporation (Exhibit 4.4
to the 1995 Form 10-K)
4.5* Supplement No. 1 to Amended and Restated Rights Agreement
between the Company and The First National Bank of Boston
dated as of November 11, 1996 (Exhibit 4.5 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996)
10.1 Contracts relating to television broadcasting:
*(1) Form of Agreement for Affiliation between WFAA-TV in
Dallas, Texas and ABC (Exhibit 10.1 (1) to the 1995
Form 10-K/A)
10.2 Financing agreements:
*(1) Credit Agreement (five year $1,500,000,000 revolving
credit and competitive advance facility dated as of
January 31, 1997 among the Company and Texas Commerce
Bank National Association as Administrative Agent, The
Chase Manhattan Bank, as Competitive Advance Facility
Agent, Bank of America National Trust and Savings
Association and Bank of Tokyo-Mitsubishi, Ltd. as
Co-Syndication Agents, and NationsBank as Documentation
Agent)(Exhibit 10.2(2) to the Company's Annual Report
on Form 10-K dated March 10, 1997 (the "1996 Form
10-K"))
*(2) Credit Agreement (364-day $500,000,000 revolving credit
and competitive advance facility dated as of January
31, 1997 among the Company and Texas Commerce Bank
National Association as Administrative Agent, The Chase
Manhattan Bank, as Competitive Advance Facility Agent,
Bank of America National Trust and Savings Association
and Bank of Tokyo-Mitsubishi, Ltd. as Co-Syndication
Agents, and NationsBank as Documentation Agent)
(Exhibit 10.2(3) to the 1996 Form 10-K)
10.3 Compensatory plans:
* (1) Management Security Plan (Exhibit 10.3(1) to the 1996
Form 10-K)
* (2) The A. H. Belo Corporation 1986 Long-Term Incentive
Plan (Effective May 3, 1989, as amended by Amendments
1, 2, 3, 4, and 5) (Exhibit 10.3(2) to the 1996 Form
10-K)
* (3) Amendment No. 6 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(13) to the 1992 Form 10-K)
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
* (4) Amendment No. 7 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(9) to the 1995 Form 10-K)
* (5) The A. H. Belo Corporation Employee Savings and
Investment Plan Amended and Restated February 2, 1996
(Exhibit 10.3(10) to the 1995 Form 10-K)
(6) First Amendment to the A. H. Belo Corporation Employee
Savings and Investment Plan
* (7) The G. B. Dealey Retirement Pension Plan (as Amended
and Restated Generally Effective January 1, 1989)
(Exhibit 10.3(11) to the 1995 Form 10-K)
(8) First Amendment to the G. B. Dealey Retirement Pension
Plan
* (9) Master Trust Agreement, effective as of July 1, 1992,
between A. H. Belo Corporation and Mellon Bank, N. A.
(Exhibit 10.3(26) to the Company's Annual Report on
Form 10-K dated March 18, 1994 (the "1993 Form 10-K"))
* (10) A. H. Belo Corporation Supplemental Executive
Retirement Plan (Exhibit 10.3(27) to the 1993 Form
10-K)
* (11) Trust Agreement dated February 28, 1994, between the
Company and Mellon Bank, N. A. (Exhibit 10.3(28) to
the 1993 Form 10-K)
* (12) A. H. Belo Corporation 1995 Executive Compensation
Plan (Exhibit 10.3(16) to the 1995 Form 10-K)
* (13) A. H. Belo Corporation Employee Thrift Plan, effective
January 1, 1995 (Exhibit 10.3(17) to the 1995 Form
10-K)
* (14) First Amendment to A. H. Belo Corporation Employee
Thrift Plan (Exhibit 10.3(18) to the 1995 Form 10-K)
* (15) Second Amendment to A. H. Belo Corporation Employee
Thrift Plan (Exhibit 10.3(19) to the 1995 Form 10-K)
* (16) Master Defined Contribution Trust Agreement by and
between A. H. Belo Corporation and Mellon Bank, N.A.
(Exhibit 10.3(20) to the 1995 Form 10-K)
* (17) First Amendment to Master Defined Contribution Trust
Agreement (Exhibit 10.3(21) to the 1995 Form 10-K)
* (18) Second Amendment to Master Defined Contribution Trust
Agreement (Exhibit 10.3(22) to the 1995 Form 10-K)
* (19) A. H. Belo Corporation 1995 Executive Compensation
Plan (as restated to incorporate amendments through
May 14, 1997) (Exhibit 10.3(17) to the 1996 Form 10-K)
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
99 Unaudited Pro Forma Combined Condensed Statements of
Earnings for the three months ended March 31, 1997 and
1996
</TABLE>
(b) Reports on Form 8-K
During the quarter covered by this report, there was a report on Form 8-K
filed on March 14, 1997 as amended by Form 8-K/A dated May 2, 1997
containing information under item 2, "Acquisition or Disposition of
Assets," and item 7 "Financial Statements, Pro Forma Financial Information
and Exhibits" concerning the acquisition of The Providence Journal
Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
A. H. BELO CORPORATION
May 15, 1997 By: /S/Michael D. Perry
---------------------------
Michael D. Perry
Senior Vice President and
Chief Financial Officer
14
<PAGE> 17
<TABLE>
<CAPTION>
SEQ.
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
<S> <C> <C>
2.1 Amended and Restated Agreement and Plan of Merger, dated as
of September 26, 1996 (Appendix A of the Joint Proxy
Statement/Prospectus of Belo and Providence Journal included
in Belo's Registration Statement on Form S-4 (Registration
No. 333-19337) filed with the Commission on January 8, 1997) N/A
3.1 Certificate of Incorporation of the Company (Exhibit 3.1 to
the Company's Amended Annual Report on Form 10-K/A dated
April 8, 1996 (the "1995 Form 10-K/A")) N/A
3.2 Certificate of Correction to Certificate of Incorporation
dated May 13, 1987 (Exhibit 3.2 to the 1995 Form 10-K/A) N/A
3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated April 16, 1987 (Exhibit
3.3 to the 1995 Form 10-K/A) N/A
3.4 Certificate of Amendment of Certificate of Incorporation of
the Company dated May 4, 1988 (Exhibit 3.4 to the 1995 Form
10-K/A) N/A
3.5 Certificate of Amendment of Certificate of Incorporation of
the Company dated May 3, 1995 (Exhibit 3.5 to the Company's
Annual Report on Form 10-K dated February 28, 1996 (the "1995
Form 10-K")) N/A
3.6 Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4,
1988 (Exhibit 3.6 to the 1995 Form 10-K/A) N/A
3.7 Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988 (Exhibit 3.7 to the 1995 Form
10-K/A) N/A
3.8 Amended and Restated Bylaws of the Company, effective
February 22, 1995 (Exhibit 3.7 to the Company's Annual Report
on Form 10-K dated March 8, 1995 (the "1994 Form 10-K")) N/A
4.1 Certain rights of the holders of the Company's Common Stock
are set forth in Exhibits 3.1-3.8 above N/A
4.2 Specimen Form of Certificate representing shares of the
Company's Series A Common Stock (Exhibit 4.2 to the Company's
Annual Report on Form 10-K dated March 18, 1993 (the "1992
Form 10-K")) N/A
4.3 Specimen Form of Certificate representing shares of the
Company's Series B Common Stock (Exhibit 4.3 to the Company's
Annual Report on Form 10-K dated March 20, 1989) N/A
4.4 Amended and Restated Form of Rights Agreement as of February
28, 1996 between the Company and Chemical Mellon Shareholder
Services, L.L.C., a New York banking corporation (Exhibit 4.4
to the 1995 Form 10-K) N/A
</TABLE>
E-1
<PAGE> 18
<TABLE>
<CAPTION>
SEQ.
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
<S> <C> <C>
4.5 Supplement No. 1 to Amended and Restated Rights Agreement
between the Company and The First National Bank of Boston
dated as of November 11, 1996 (Exhibit 4.5 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996) N/A
10.1 Contracts relating to television broadcasting: N/A
(1) Form of Agreement for Affiliation between WFAA-TV in
Dallas, Texas and ABC (Exhibit 10.1 (1) to the 1995
Form 10-K/A) N/A
10.2 Financing agreements:
(1) Credit Agreement (five year $1,500,000,000 revolving
credit and competitive advance facility dated as of
January 31, 1997 among the Company and Texas Commerce
Bank National Association as Administrative Agent, The
Chase Manhattan Bank, as Competitive Advance Facility
Agent, Bank of America National Trust and Savings
Association and Bank of Tokyo-Mitsubishi, Ltd. as
Co-Syndication Agents, and NationsBank as Documentation
Agent)(Exhibit 10.2(2) to the Company's Annual Report
on Form 10-K dated March 10, 1997 (the "1996 Form
10-K")) N/A
(2) Credit Agreement (364-day $500,000,000 revolving credit
and competitive advance facility dated as of January
31, 1997 among the Company and Texas Commerce Bank
National Association as Administrative Agent, The Chase
Manhattan Bank, as Competitive Advance Facility Agent,
Bank of America National Trust and Savings Association
and Bank of Tokyo-Mitsubishi, Ltd. as Co-Syndication
Agents, and NationsBank as Documentation Agent)
(Exhibit 10.2(3) to the 1996 Form 10-K) N/A
10.3 Compensatory plans:
(1) Management Security Plan (Exhibit 10.3(1) to the 1996
Form 10-K) N/A
(2) The A. H. Belo Corporation 1986 Long-Term Incentive
Plan (Effective May 3, 1989, as amended by Amendments
1, 2, 3, 4, and 5) (Exhibit 10.3(2) to the 1996 Form
10-K) N/A
(3) Amendment No. 6 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(13) to the 1992 Form 10-K) N/A
(4) Amendment No. 7 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(9) to the 1995 Form 10-K) N/A
(5) The A. H. Belo Corporation Employee Savings and
Investment Plan Amended and Restated February 2, 1996
(Exhibit 10.3(10) to the 1995 Form 10-K) N/A
(6) First Amendment to the A. H. Belo Corporation Employee
Savings and Investment Plan ____
</TABLE>
E-2
<PAGE> 19
<TABLE>
<CAPTION>
SEQ.
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
<S> <C> <C>
(7) The G. B. Dealey Retirement Pension Plan (as Amended
and Restated Generally Effective January 1, 1989)
(Exhibit 10.3(11) to the 1995 Form 10-K) N/A
(8) First Amendment to the G. B. Dealey Retirement Pension
Plan ____
(9) Master Trust Agreement, effective as of July 1, 1992,
between A. H. Belo Corporation and Mellon Bank, N. A.
(Exhibit 10.3(26) to the Company's Annual Report on
Form 10-K dated March 18, 1994 (the "1993 Form 10-K")) N/A
(10) A. H. Belo Corporation Supplemental Executive
Retirement Plan (Exhibit 10.3(27) to the 1993 Form
10-K) N/A
(11) Trust Agreement dated February 28, 1994, between the
Company and Mellon Bank, N. A. (Exhibit 10.3(28) to
the 1993 Form 10-K) N/A
(12) A. H. Belo Corporation 1995 Executive Compensation
Plan (Exhibit 10.3(16) to the 1995 Form 10-K) N/A
(13) A. H. Belo Corporation Employee Thrift Plan, effective
January 1, 1995 (Exhibit 10.3(17) to the 1995 Form
10-K) N/A
(14) First Amendment to A. H. Belo Corporation Employee
Thrift Plan (Exhibit 10.3(18) to the 1995 Form 10-K) N/A
(15) Second Amendment to A. H. Belo Corporation Employee
Thrift Plan (Exhibit 10.3(19) to the 1995 Form 10-K) N/A
(16) Master Defined Contribution Trust Agreement by and
between A. H. Belo Corporation and Mellon Bank, N.A.
(Exhibit 10.3(20) to the 1995 Form 10-K) N/A
(17) First Amendment to Master Defined Contribution Trust
Agreement (Exhibit 10.3(21) to the 1995 Form 10-K) N/A
(18) Second Amendment to Master Defined Contribution Trust
Agreement (Exhibit 10.3(22) to the 1995 Form 10-K) N/A
</TABLE>
E-3
<PAGE> 20
<TABLE>
<CAPTION>
SEQ.
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
<S> <C> <C>
(19) A. H. Belo Corporation 1995 Executive Compensation
Plan (as restated to incorporate amendments through
May 14, 1997) (Exhibit 10.3(17) to the 1996 Form 10-K) N/A
12 Computation of Ratio of Earnings to Fixed Charges ____
27 Financial Data Schedule N/A
99 Unaudited Pro Forma Combined Condensed Statements of
Earnings for the three months ended March 31, 1997 and 1996 ____
</TABLE>
E-4
<PAGE> 1
EXHIBIT 10.3(6)
FIRST AMENDMENT
TO
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
(As Amended and Restated Effective October 1, 1989)
A. H. Belo Corporation, a Delaware corporation (the "Company"),
pursuant to authority of the Compensation Committee of the Board of Directors,
adopts the following amendment to the A. H. Belo Corporation Employee Savings
and Investment Plan (the "Plan").
1. Section 3.2(a)(ii) of the Plan, relating to employer matching
contributions to the Plan after 1994, is amended by the addition of the
following sentence, which will appear immediately after the first sentence of
such Section:
Effective with the first payroll period beginning on or after January
1, 1997, the Participating Employers will pay to the Trustee as a
matching contribution for each payroll period an amount equal to 55%
of each Participant's Deferral Contributions, but only to the extent
that the Participant's Deferral Contributions do not exceed 6% of the
Participant's Compensation for the period.
2. Appendix A to the Plan ("Participating Employers") is amended
by the addition of the following subsidiaries of the Company, effective as of
the date indicated:
Belo Management Services, Inc.
(As of January 1, 1996)
Belo Capital Bureau, Inc.
(As of January 1, 1997)
3. Appendix A to the Plan is further amended by revising the
effective date of participation by Owensboro Messenger-Inquirer, Inc. from
January 5, 1996, to January 1, 1996.
Executed at Dallas, Texas, this 7th day of January, 1997.
A. H. BELO CORPORATION
By /s/ MICHAEL J. MCCARTHY
--------------------------
Michael J. McCarthy
Title: Secretary
<PAGE> 1
EXHIBIT 10.3(8)
FIRST AMENDMENT
TO
G. B. DEALEY RETIREMENT PENSION PLAN
(As Amended and Restated
Generally Effective January 1, 1989)
A. H. Belo Corporation, a Delaware corporation (the "Company"),
pursuant to authority of the Compensation Committee of the Board of Directors,
adopts the following amendment to the G. B. Dealey Retirement Pension Plan (the
"Plan").
1. Appendix A to the Plan ("Participating Employers") is amended
by the addition of the following subsidiaries of the Company, effective as of
the date indicated:
Belo Management Services, Inc.
(As of January 1, 1996)
Belo Capital Bureau, Inc.
(As of January 1, 1997)
2. Appendix A to the Plan is further amended by revising the
effective date of participation by Owensboro Messenger-Inquirer, Inc. from
January 5, 1996, to January 1, 1996.
Executed at Dallas, Texas, this 7th day of January, 1997.
A. H. BELO CORPORATION
By /s/ MICHAEL J. MCCARTHY
---------------------------
Michael J. McCarthy
Title: Secretary
<PAGE> 1
Exhibit 12
A. H. BELO CORPORATION Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
---------------------------------------------------- ----------------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings before income taxes
and the cumulative effect
of accounting changes $ 61,573 $ 75,578 $107,897 $111,014 $144,040 $ 21,388 $ 35,253
Add: Total fixed charges 26,597 18,792 17,294 32,089 29,009 9,100 14,019
Less: Interest capitalized 395 1,961 138 957 255 6 90
-------- -------- -------- -------- -------- -------- --------
Adjusted earnings $ 87,775 $ 92,409 $125,053 $142,146 $172,794 $ 30,482 $ 49,182
======== ======== ======== ======== ======== ======== ========
Fixed Charges:
Interest $ 24,554 $ 16,976 $ 16,250 $ 30,944 $ 27,898 $ 8,870 $ 13,537
Portion of rental expense
representative of the
interest factor (1) 2,043 1,816 1,044 1,145 1,111 230 482
-------- -------- -------- -------- -------- -------- --------
Total fixed charges $ 26,597 $ 18,792 $ 17,294 $ 32,089 $ 29,009 $ 9,100 $ 14,019
======== ======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 3.30x 4.92x 7.23x 4.43x 5.96x 3.35x 3.51x
======== ======== ======== ======== ======== ======== ========
</TABLE>
- --------------------------------------
(1) For purposes of calculating fixed charges, an interest factor of one third
was applied to total rent expense for the period indicated.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 18,104
<SECURITIES> 0
<RECEIVABLES> 186,331
<ALLOWANCES> (8,670)
<INVENTORY> 14,913
<CURRENT-ASSETS> 240,899
<PP&E> 893,230
<DEPRECIATION> (301,347)
<TOTAL-ASSETS> 3,383,128
<CURRENT-LIABILITIES> 181,924
<BONDS> 1,483,957
0
0
<COMMON> 116,986
<OTHER-SE> 1,139,959
<TOTAL-LIABILITY-AND-EQUITY> 3,383,128
<SALES> 0
<TOTAL-REVENUES> 232,702
<CGS> 0
<TOTAL-COSTS> 161,917
<OTHER-EXPENSES> 23,334
<LOSS-PROVISION> 1,788
<INTEREST-EXPENSE> 13,447
<INCOME-PRETAX> 35,253
<INCOME-TAX> 17,626
<INCOME-CONTINUING> 17,627
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,627
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
<PAGE> 1
Exhibit 99
A. H. Belo Corporation
Unaudited Pro Forma Combined Condensed Statement of Earnings
Three Months Ended March 31, 1997
<TABLE>
<CAPTION>
Historical Pro Forma
----------------------- ----------------------------------------
Providence
Providence Journal Elimination of
Belo Journal Adjustments AHN (g) Combined
--------- ---------- ----------- -------------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net operating revenues
Broadcasting $ 92,002 $ 28,421 $ -- $ -- $ 120,423
Newspaper publishing 137,179 19,590 -- -- 156,769
Other 3,521 4,351 -- (297) 7,575
--------- -------- -------- --------- ---------
Total net operating revenues 232,702 52,362 -- (297) 284,767
Operating costs and expenses 161,917 56,324 -- (8,069) 210,172
Depreciation 14,356 6,289 946 b (305) 21,286
Amortization 8,978 3,080 4,773 a -- 16,831
--------- -------- -------- --------- ---------
Earnings (Loss) from operations 47,451 (13,331) (5,719) 8,077 36,478
Interest expense (13,447) (2,700) (6,054)c -- (22,201)
Other, net 1,249 13,946 -- (2,454) 12,741
--------- -------- -------- --------- ---------
Earnings (Loss) before income taxes 35,253 (2,085) (11,773) 5,623 27,018
Income taxes 17,626 (509) (3,226)d -- 13,891
--------- -------- -------- --------- ---------
Net earnings (loss) $ 17,627 $ (1,576) $ (8,547) $ 5,623 $ 13,127
========= ======== ======== ========= =========
Net earnings per common and
common equivalent share(e) $ 0.38 $ 0.21
========= =========
Weighted average shares outstanding 45,874 62,239
========= =========
</TABLE>
See accompanying notes.
<PAGE> 2
Exhibit 99
A. H. Belo Corporation
Unaudited Pro Forma Combined Condensed Statement of Earnings
Three Months Ended March 31, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
---------------------- ----------------------------------------
Providence
Providence Journal Elimination of
Belo Journal Adjustments AHN (g) Combined
--------- ---------- ----------- -------------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net operating revenues
Broadcasting $ 70,607 $ 43,382 $ -- $ -- $ 113,989
Newspaper publishing 115,871 30,125 -- -- 145,996
Other 766 1,608 3,025 f -- 5,399
--------- -------- -------- ------- ---------
Total net operating revenues 187,244 75,115 3,025 -- 265,384
Operating costs and expenses 144,762 79,673 6,472 f (2,601) 228,306
Depreciation 11,635 5,675 1,758 b,f (11) 19,057
Amortization 4,936 4,170 7,881 a -- 16,987
--------- -------- -------- ------- ---------
Earnings (Loss) from operations 25,911 (14,403) (13,086) 2,612 1,034
Interest expense (8,864) (5,084) (9,447)c -- (23,395)
Other, net 4,341 954 2,395 f (1,190) 6,500
--------- -------- -------- ------- ---------
Earnings (Loss) before income taxes 21,388 (18,533) (20,138) 1,422 (15,861)
Income taxes 8,664 (4,834) (7,091)d -- (3,261)
--------- -------- -------- ------- ---------
Net earnings (loss) $ 12,724 $(13,699) $(13,047) $ 1,422 $ (12,600)
========= ======== ======== ======= =========
Net earnings (loss) per common and
common equivalent share(e) $ 0.33 $ (0.20)
========= =========
Weighted average shares outstanding 38,876 64,271
========= =========
</TABLE>
See accompanying notes.
<PAGE> 3
A. H. Belo Corporation
Notes to Unaudited Pro Forma Combined
Condensed Statement of Earnings
NOTE 1: GENERAL
The pro forma combined condensed statement of earnings reflects the following:
(i) Issuance of 25,395,000 shares of A. H. Belo Corporation (the "Company"
or "Belo") Series A Common Stock at a price of $34.275 per share and
the payment of $587,096,000 in cash to acquire all of the issued and
outstanding shares of The Providence Journal Company ("PJC");
(ii) Exclusion of the operations of America's Health Network ("AHN"), as
the Company has announced the pending sale of its ownership interest;
(iii) In 1996, acquisition by PJC for controlling interest in Television Food
Network ("TVFN") prior to execution of the PJC acquisition agreement;
Belo currently owns two television stations in the Seattle, Washington market
(KIRO and KING). To comply with FCC regulations that require the Company to
divest one of these stations, Belo has entered into an agreement among multiple
parties whereby, through an exchange of assets, it will exchange KIRO for CBS
affiliate KMOV in St. Louis, Missouri. The transaction is expected to close
during the second quarter of 1997. No effect has been given to this transaction
in these unaudited pro forma combined condensed statements of earnings.
NOTE 2: UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS
Pro forma adjustments giving effect to the PJC acquisition in the unaudited pro
forma combined condensed statement of earnings reflect the following:
(a) Amortization of the excess of the purchase price over net tangible
assets acquired, on a straight-line basis over 40 years, except for
certain amounts attributable to newspaper subscriber lists, which are
being amortized over 18 years. This adjustment is net of the
elimination of the PJC historical amortization of excess acquisition
costs over the values assigned to net tangible assets acquired in
prior acquisitions.
(b) Depreciation of the step-up in basis to the fair market value for fixed
assets acquired.
(c) Increase in interest expense resulting from net borrowings incurred to
finance a portion of the purchase price. The interest rate on
borrowings is assumed to be 6% and 6.1% for 1997 and 1996,
respectively, which is based on Belo's weighted average borrowing
rates during the quarters. A change of 1/8 of 1% in the assumed
interest rate would change the pro forma quarter interest expense by
approximately $500,000.
(d) Income tax effect of pro forma adjustments.
<PAGE> 4
A. H. Belo Corporation
Notes to Unaudited Pro Forma Combined
Condensed Statement of Earnings (Continued)
(e) Earnings per share based upon the weighted average number of shares of
Belo common and common equivalent shares outstanding, including
25,395,000 shares of Series A Common Stock issued in connection with
the acquisition, as if they had been issued at the beginning of the
year.
(f) To reflect the pro forma effect of PJC increasing its investment and
obtaining a controlling interest in TVFN as if the transaction had
been made as of the beginning of 1996.
(g) Elimination of the results of operations of AHN. See Note 1 (ii).
