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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: JUNE 30, 1999
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)
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<S> <C>
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)
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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.
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CLASS OUTSTANDING AT JULY 31, 1999
----------------------------- ----------------------------
Common Stock, $1.67 par value *118,325,546
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* Consisting of 99,285,026 shares of Series A Common Stock and 19,040,520
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
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings.............................................................. 11
Item 2. Changes in Securities and Use of Proceeds...................................... 11
Item 3. Defaults Upon Senior Securities................................................ 11
Item 4. Submission of Matters to a Vote of Security Holders............................ 11
Item 5. Other Information.............................................................. 12
Item 6. Exhibits and Reports on Form 8-K............................................... 12
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PART I.
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
A. H. Belo Corporation and Subsidiaries
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Three months Six months
ended June 30, ended June 30,
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In thousands, except per share amounts
(unaudited) 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
NET OPERATING REVENUES
Broadcast $158,063 $ 159,643 $ 289,448 $ 292,528
Newspaper publishing 205,977 200,790 398,450 391,159
Other 2,862 2,338 5,624 4,721
------------------------------------------------
Total net operating revenues 366,902 362,771 693,522 688,408
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits 118,217 112,710 233,978 225,491
Other production, distribution and operating costs 85,396 83,968 164,892 163,341
Newsprint, ink and other supplies 40,672 43,250 81,822 85,078
Depreciation 22,353 21,551 44,630 42,969
Amortization 18,864 18,703 37,559 37,347
------------------------------------------------
Total operating costs and expenses 285,502 280,182 562,881 554,226
------------------------------------------------
Earnings from operations 81,400 82,589 130,641 134,182
OTHER INCOME AND EXPENSE
Interest expense (26,282) (27,363) (52,852) (54,597)
Gain on sale of KXTV 50,312 -- 50,312 --
Other, net 1,587 850 2,804 2,122
------------------------------------------------
Total other income and expense 25,617 (26,513) 264 (52,475)
EARNINGS
Earnings before income taxes 107,017 56,076 130,905 81,707
Income taxes 27,254 26,253 38,552 38,249
------------------------------------------------
Net earnings $ 79,763 $ 29,823 $ 92,353 $ 43,458
================================================
NET EARNINGS PER SHARE
Basic $ .68 $ .24 $ .78 $ .35
Diluted $ .67 $ .24 $ .78 $ .34
AVERAGE SHARES OUTSTANDING
Basic 118,108 125,213 118,210 125,023
Diluted 119,289 126,874 119,143 126,822
CASH DIVIDENDS DECLARED PER SHARE $ .06 $ .06 $ .12 $ .12
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See accompanying Notes to Consolidated Condensed Financial Statements.
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CONSOLIDATED CONDENSED BALANCE SHEETS
A. H. Belo Corporation and Subsidiaries
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In thousands, except share and per share data June 30, December 31,
(Current year unaudited) 1999 1998
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ASSETS
Current assets:
Cash and temporary cash investments $ 29,495 $ 19,451
Accounts receivable, net 214,662 211,428
Other current assets 55,277 44,902
---------------------------------------
Total current assets 299,434 275,781
Property, plant and equipment, net 638,453 626,753
Intangible assets, net 2,611,773 2,543,143
Other assets 86,397 93,412
---------------------------------------
Total assets $ 3,636,057 $ 3,539,089
=======================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 42,995 $ 56,044
Accrued expenses 81,305 84,026
Other current liabilities 56,320 40,678
---------------------------------------
Total current liabilities 180,620 180,748
Long-term debt 1,660,778 1,634,029
Deferred income taxes 428,743 439,240
Other liabilities 52,151 36,972
Shareholders' equity:
Preferred stock, $1.00 par value. Authorized
5,000,000 shares; none issued.
Common stock, $1.67 par value. Authorized
450,000,000 shares:
Series A: Issued 99,248,675 shares at June 30, 1999
and 100,028,891 shares at December 31, 1998 165,745 167,048
Series B: Issued 19,022,417 shares at June 30, 1999
and 18,896,263 shares at December 31, 1998 31,767 31,557
Additional paid-in capital 879,468 879,856
Retained earnings 236,785 169,639
---------------------------------------
Total shareholders' equity 1,313,765 1,248,100
Total liabilities and shareholders' equity $ 3,636,057 $ 3,539,089
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See accompanying Notes to Consolidated Condensed Financial Statements.
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
A. H. Belo Corporation and Subsidiaries
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Six months ended June 30,
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In thousands
(unaudited) 1999 1998
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OPERATIONS
Net earnings $ 92,353 $ 43,458
Adjustments to reconcile net earnings
to net cash provided by operations:
Net gain on sale of KXTV (48,981) --
Depreciation and amortization 82,189 80,316
Deferred income taxes (605) (2,102)
Other, net 6,019 7,727
Net change in current assets and liabilities:
Accounts receivable (2,304) 4,738
Other current assets 164 (2,593)
Accounts payable (16,741) (13,699)
Accrued expenses (4,051) (22,645)
Other current liabilities 8,261 (10,598)
---------------------------------------
Net cash provided by operations 116,304 84,602
INVESTING
Acquisitions (64,151) --
Capital expenditures (47,173) (31,708)
Other, net 6,875 (4,440)
---------------------------------------
Net cash used for investing (104,449) (36,148)
FINANCING
Borrowings for acquisitions 64,151 --
Purchase of treasury shares (21,793) --
Net payments on debt (33,745) (27,333)
Payment of dividends on stock (14,190) (15,003)
Net proceeds from exercise of stock options 3,766 7,176
---------------------------------------
Net cash used for financing (1,811) (35,160)
Net increase in cash and temporary cash investments 10,044 13,294
Cash and temporary cash investments at beginning of period 19,451 11,852
---------------------------------------
Cash and temporary cash investments at end of period $ 29,495 $ 25,146
=======================================
SUPPLEMENTAL DISCLOSURES
Interest paid, net of amounts capitalized $ 53,701 $ 55,609
Income taxes paid, net of refunds $ 26,282 $ 52,576
KXTV/KVUE asset exchange $ 112,098 $ --
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</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
3
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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 in accordance 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, 1998 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 and six-month periods
ended June 30, 1999 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1999. 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, 1998.
Certain amounts for the prior periods have been reclassified to conform
to the current year presentation, including a change in presentation of
revenue and expense with respect to certain barter programming
transactions.
(2) The Company had total comprehensive income for the three and six months
ended June 30, 1998 of $28,177 and $42,468, respectively. During 1998,
Belo either sold or donated all of its available-for-sale securities;
therefore, total comprehensive income for the three and six months
ended June 30, 1999 is equivalent to net earnings.
(3) The following table sets forth the reconciliation between weighted
average shares used for calculating basic and diluted earnings per
share for the three and six months ended June 30, 1999 and 1998 (in
thousands):
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Three months ended June 30, Six months ended June 30,
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1999 1998 1999 1998
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Weighted average shares for basic earnings
per share 118,108 125,213 118,210 125,023
Effect of employee stock options 1,181 1,661 933 1,799
---------------------------------------------------
Weighted average shares for diluted earnings
per share 119,289 126,874 119,143 126,822
===================================================
</TABLE>
(4) On June 1, 1999, Belo acquired ABC-affiliated KVUE-TV in Austin, Texas,
in exchange for ABC-affiliated KXTV in Sacramento, California and
certain cash consideration. The transaction was accounted for as a
purchase and recorded based on the fair value of the assets exchanged.
The preliminary purchase price allocation resulted in a net increase in
intangible assets of approximately $106 million. The excess cost over
values assigned to tangible assets of KVUE-TV is being amortized on a
straight-line basis over 40 years. Belo recognized a gain on the
transaction of $48,981, net of taxes incurred on the exchange.
On June 30, 1999, Belo acquired Denton Publishing Company, publisher of
the Denton Record-Chronicle and two free-distribution newspapers. The
acquisition will be accounted for as a purchase. Pending a final
purchase price allocation, the acquisition price is included in other
assets at June 30, 1999.
4
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
The cash portion of both acquisitions was funded with borrowings from
the Company's existing credit agreement.
(5) Net operating revenues, earnings from operations, depreciation and
amortization and operating cash flow by industry segment are shown
below. Operating cash flow is defined as earnings from operations plus
depreciation and amortization. Operating cash flow is used in the
broadcast and 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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Three months ended June 30, Six months ended June 30,
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In thousands 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
NET OPERATING REVENUES
Broadcast $ 158,063 $ 159,643 $ 289,448 $ 292,528
Newspaper publishing 205,977 200,790 398,450 391,159
Other 2,862 2,338 5,624 4,721
-------------------------------------------------
Total net operating revenues $ 366,902 $ 362,771 $ 693,522 $ 688,408
=================================================
EARNINGS FROM OPERATIONS
Broadcast $ 45,137 $ 47,991 $ 65,113 $ 71,633
Newspaper publishing 48,699 44,043 88,148 83,229
Other (1,947) (763) (3,665) (1,860)
Corporate expenses (10,489) (8,682) (18,955) (18,820)
--------------------------------------------------
Total earnings from operations $ 81,400 $ 82,589 $ 130,641 $ 134,182
=================================================
DEPRECIATION AND AMORTIZATION
Broadcast $ 25,990 $ 24,998 $ 51,779 $ 49,969
Newspaper publishing 13,724 14,427 27,409 28,769
Other 666 245 1,331 501
Corporate 837 584 1,670 1,077
-------------------------------------------------
Total depreciation and amortization $ 41,217 $ 40,254 $ 82,189 $ 80,316
=================================================
OPERATING CASH FLOW
Broadcast $ 71,127 $ 72,989 $ 116,892 $ 121,602
Newspaper publishing 62,423 58,470 115,557 111,998
Other (1,281) (518) (2,334) (1,359)
Corporate (9,652) (8,098) (17,285) (17,743)
--------------------------------------------------
Total operating cash flow $ 122,617 $ 122,843 $ 212,830 $ 214,498
=================================================
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS)
The Company is the owner and operator of 17 network-affiliated television
stations and publisher of seven daily newspapers. The following table sets forth
Belo's major media assets by segment as of June 30, 1999:
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BROADCAST
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NETWORK
MARKET MARKET RANK(a) STATION AFFILIATION STATUS ACQUIRED
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Dallas/Fort Worth 7 WFAA ABC Owned March 1950
Houston 11 KHOU CBS Owned February 1984
Seattle/Tacoma 12 KING NBC Owned February 1997
Seattle/Tacoma 12 KONG IND LMA February 1997
St. Louis 21 KMOV CBS Owned June 1997
Portland 23 KGW NBC Owned February 1997
Charlotte 28 WCNC NBC Owned February 1997
San Antonio 37 KENS CBS Owned October 1997
Hampton/Norfolk 40 WVEC ABC Owned February 1984
New Orleans 41 WWL CBS Owned June 1994
Louisville 48 WHAS ABC Owned February 1997
Albuquerque(b) 49 KASA FOX Owned February 1997
Tulsa 59 KOTV CBS Owned February 1984
Austin 60 KVUE ABC Owned June 1999
Honolulu(b) 71 KHNL NBC Owned February 1997
Honolulu(b)(c) 71 KFVE UPN/WB LMA February 1997
Spokane 72 KREM CBS Owned February 1997
Spokane(c) 72 KSKN UPN/WB LMA February 1997
Tucson 78 KMSB FOX Owned February 1997
Tucson 78 KTTU UPN LMA February 1997
Boise 125 KTVB NBC Owned February 1997
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NEWSPAPER PUBLISHING
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DAILY SUNDAY
NEWSPAPER LOCATION ACQUIRED CIRCULATION(d) CIRCULATION(d)
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<S> <C> <C> <C> <C>
The Dallas Morning News ("TDMN") Dallas, TX (e) 513,544 775,493
The Providence Journal ("PJ") Providence, RI February 1997 164,626 237,786
The Press-Enterprise ("PE") Riverside, CA July 1997 166,418 172,798
Messenger-Inquirer Owensboro, KY January 1996 32,022 35,014
The Eagle Bryan-College Station, TX December 1995 23,994 28,839
Denton Record-Chronicle(d) Denton, TX June 1999 15,843 19,005
The Gleaner Henderson, KY March 1997 11,302 13,069
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OTHER
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COMPANY DESCRIPTION
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Northwest Cable News ("NWCN") Cable news network distributed to approximately 2 million homes
Texas Cable News ("TXCN") Cable news network offering regional news in Texas
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) 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 May 1999 Nielsen estimates.
(b) The Company has announced an agreement to sell KASA (FOX) in Albuquerque,
New Mexico and KHNL (NBC) in Honolulu, Hawaii, along with its rights to
operate KFVE (UPN) in Honolulu under a local marketing agreement, for $88
million in cash.
(c) The primary affiliation is with UPN. The WB network is currently a
secondary affiliation.
(d) Average paid circulation for the six months ended March 31, 1999, according
to the Audit Bureau of Circulation's FAS-FAX report, except for the Denton
Record-Chronicle, for which circulation data is taken from the Certified
Audit of Circulations Report for the twelve month period ended December 31,
1998.
(e) The first issue of The Dallas Morning News was published October 1, 1885.
RESULTS OF OPERATIONS
Net earnings for the three and six months ended June 30, 1999 were $79,763 (67
cents per share) and $92,353 (78 cents per share), respectively. These results
include a second quarter net gain of $48,981 on the exchange of KXTV (the ABC
affiliate in Sacramento, California) plus certain cash consideration, for
KVUE-TV (the ABC affiliate in Austin, Texas). Excluding this gain, results of
operations for the second quarter and year-to-date 1999 were $30,782 (26 cents
per share) and $43,372 (36 cents per share), respectively. Results for the
comparable periods of 1998 were $29,823 (24 cents per share) and $43,458 (34
cents per share), respectively.
Broadcast
Broadcast revenues for the second quarter of 1999 were $158,063, a decrease of 1
percent compared with second quarter 1998 revenues of $159,643. Year-to-date
broadcast revenues were down 1.1 percent from $292,528 in 1998 to $289,448 in
the current year. Advertising revenues in 1998 were influenced by the broadcast
of the Super Bowl on Belo's five NBC television stations and the Winter Olympics
on Belo's six CBS television stations. Political advertising was higher in 1998
for both the three and six-month periods as well. In 1999, local advertising
revenues increased 10.3 percent and 9.2 percent for the quarter and year-to-date
periods, respectively, with the most significant improvements in the Dallas/Fort
Worth and Seattle/Tacoma markets. National advertising revenues decreased 9.9
and 9.3 percent for the quarter and year-to-date periods of 1999, respectively,
compared with 1998, due to declines in nearly all major Belo markets, most
significantly in Dallas/Fort Worth, Seattle/Tacoma, Portland and Houston. On a
pro forma basis, which assumes the KVUE/KXTV transaction took place on January
1, 1998, revenues were up .1 percent and down .5 percent for the quarter and
year-to-date periods, respectively.
Broadcast operating cash flow margins for the three and six-month periods of
1999 were 45 percent and 40.4 percent, respectively, and 45.7 percent and 41.6
percent for the comparable periods in 1998. Broadcast operating cash flow for
the quarter of $71,127 was 2.6 percent lower than last year's second quarter
operating cash flow of $72,989. Year-to-date broadcast operating cash flow in
1999 was $116,892, or 3.9 percent lower when compared with $121,602 in 1998.
Before considering the KVUE/KXTV transaction, cash expenses were up .3 percent
for the quarter and 1 percent year-to-date. Contributing to the increase were
higher programming, outside services and advertising and promotion expenses,
offset somewhat by lower communications expense and lower compensation and
benefits as a result of last year's early retirement offer and other employee
reduction initiatives. On a pro forma basis, excluding KXTV and including
KVUE-TV, cash expenses were up 2 percent and 2.2 percent, respectively, and
operating cash flow was down 2 percent and 4 percent, respectively.
7
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Newspaper Publishing
Second quarter 1999 revenues for newspaper publishing were $205,977, or 2.6
percent higher than second quarter 1998 revenues of $200,790. Newspaper
publishing year-to-date revenues in 1999 were $398,450 or 1.9 percent better
than 1998 year-to-date revenues of $391,159.
Revenues at TDMN were up slightly in second quarter 1999 when compared with
second quarter 1998 and were flat year-over-year. In the three and six-month
periods of 1999, gains from both higher average rates and increased volume
resulted in higher general advertising revenues, while retail advertising
revenues were flat in the second quarter and up slightly on a year-to-date
basis, due to lower volumes and higher average rates than last year. Classified
advertising revenue was down for both the three and six-month periods in 1999
due to lower classified employment advertising volumes. Higher volumes in
automotive and real estate classified advertising partially offset the
employment classified decline. Circulation revenues for the quarter were up
approximately 4 percent and flat for the year-to-date period due primarily to an
increase in second quarter 1999 average daily circulation and an increase in
home delivery prices initiated in December 1998.
Revenues for PJ increased 2.7 percent for the quarter and 3 percent year-to-date
as compared with 1998, with improvements in retail, general and classified
advertising in both periods in 1999. The increase in classified advertising
revenue was primarily due to employment advertising, which had both higher
volume and average rates. The general advertising revenue increase was due to
volume gains, primarily in automotive advertising, while the increase in retail
advertising came almost entirely from higher average rates. Circulation revenues
were down slightly for the second quarter of 1999 and flat on a year-to-date
basis due to lower average daily and Sunday circulation volumes.
Total revenue for PE increased 9.3 percent for the quarter and 7.4 percent
year-to-date. While retail advertising revenues for the quarter and year-to-date
periods in 1999 were generally flat, higher volume in both general (from
automotive and telecommunications advertising) and classified (employment and
real estate) contributed to the significant revenue increases for PE.
Newspaper publishing operating cash flow margins for the three and six-month
periods of 1999 were 30.3 percent and 29 percent, respectively. Newspaper
publishing operating cash flow margins in 1998 were 29.1 percent and 28.6
percent for the three and six-month periods, respectively. Publishing operating
cash flow for the second quarter of 1999 was $62,423 or 6.8 percent higher than
second quarter 1998 operating cash flow of $58,470. For the year-to-date
periods, 1999 operating cash flow was $115,557 or 3.2 percent better than 1998.
Cash expenses were up .9 percent and 1.3 percent for the three and six-month
periods ended June 30, 1999, respectively. While compensation and benefit costs
were higher in 1999, newsprint expense was lower due to a decline in the average
cost per metric ton of newsprint. Increases in distribution and outside services
expenses were largely offset by savings in communications, travel and
entertainment and supplies expenses.
Consolidated results
Depreciation expense was higher for the three and six-month periods of 1999
compared with 1998 due to prior year capital expenditures. Interest expense for
the three and six-month periods of 1999 was lower than in 1998 due to lower
weighted average interest rates on revolving debt.
Excluding the effect of the KVUE/KXTV exchange transaction, the effective tax
rates for the three and six-month periods of 1999 were 45.7 percent and 46.2
percent, respectively, compared with a 46.8 percent rate for the comparable 1998
periods. The effective tax rates for the three and six-month periods of 1999
after consideration of the KVUE/KXTV transaction, were 25.5 percent and 29.5
percent, respectively.
8
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations, bank borrowings and term debt are the Company's
primary sources of liquidity. During the first six months of 1999, net cash
provided by operations was $116,304, compared with $84,602 for the same period
in 1998. Working capital requirements for taxes, interest and bonus payments
were lower in the first six months of 1999 than in 1998, contributing to the
increase in cash provided by operations. Net cash provided by operations was
sufficient to fund capital expenditures, share repurchases and common stock
dividends. Total debt increased $30,406 due to borrowings of $64,151 to complete
the acquisitions of KVUE-TV and Denton Publishing Company, partially offset by
reductions in debt from cash provided by operations.
At June 30, 1999, the Company had $1 billion in fixed-rate debt securities as
follows: $250,000 of 6-7/8% Senior Notes due 2002; $300,000 of 7-1/8% Senior
Notes due 2007; $200,000 of 7-3/4% Senior Debentures due 2027; and $250,000 of
7-1/4% Senior Debentures due 2027. The weighted average effective interest rate
for the fixed-rate debt instruments is 7.3 percent. The Company also has
$500,000 available for issuance under a shelf registration statement filed in
April of 1997. Future issuances of debt may be used to refinance variable-rate
debt in whole or in part or for other corporate needs as determined by
management.
At June 30, 1999, the Company had a $1 billion variable-rate revolving credit
agreement with a syndicate of 26 banks under which borrowings were $620,000. The
weighted average interest rate of these borrowings at June 30, 1999 was 5.3
percent. Borrowings under the agreement mature upon expiration of the agreement
on August 29, 2002, with one year extensions possible through August 29, 2004,
at the request of the Company and with the consent of the participating banks.
In addition, the Company had $25,000 of short-term unsecured notes outstanding
at June 30, 1999. These borrowings may be converted at the Company's option to
revolving debt. Accordingly, such borrowings are classified as long-term in the
Company's financial statements. The Company is required to maintain certain
financial ratios as of the end of each quarter, as defined in its revolving
credit agreement. For the four quarters ended June 30, 1999, the Company's ratio
of funded debt to pro forma operating cash flow, which is not to exceed 5.0, was
3.9. The Company's interest coverage ratio for the four quarters ended June 30,
1999 was 4 times compared with a minimum coverage requirement of 2.5 times.
The Company paid dividends in the first six months of 1999 of $14,190 or 12
cents per share on its outstanding shares of common stock, compared with $15,003
or 12 cents per share in 1998. The lower dividends in 1999 were due to the
repurchase of 6,727,400 treasury shares during 1998. In addition, during the six
months ended June 30, 1999, 1,187,300 shares were repurchased for an aggregate
cost of $21,793.
Year-to-date 1999 capital expenditures were $47,173. Approximately $16,000 of
this amount represents the first installment payment of a new press at TDMN. The
remaining expenditures were mainly for broadcast equipment purchases, including
those for the conversion to digital television, and other publishing equipment
purchases.
Other Matters
On July 2, 1999, the Company announced an agreement to acquire independent
television station KTVK in Phoenix, Arizona, along with the rights to operate
WB-affiliated KASW-TV in Phoenix through a local marketing agreement. In
connection with the acquisition, the Company will also acquire a 50 percent
interest in a cable news joint venture with Cox Cable. The acquisition price is
$315,000 in cash. Belo has also reached an agreement to sell KASA-TV (FOX) in
Albuquerque, New Mexico, KHNL-TV (NBC) in Honolulu, Hawaii and the rights to
operate KFVE-TV, also in Honolulu, for $88,000 in cash. Belo currently expects
to fund the net cash amount of these transactions with borrowings under its
revolving credit agreement or other debt financing. Pending FCC and other
regulatory approvals, these transactions are each expected to close in late
third quarter or early fourth quarter of 1999.
The Company currently expects to realize a net gain of approximately $29,000
from the pending sale of Falcon Communications, a cable system operator in which
Belo has an investment. This transaction is expected to close in late 1999 or
early 2000.
9
<PAGE> 12
Year 2000
The Company has performed an enterprise-wide evaluation to assess the ability of
its information technology ("IT") and non-IT systems to function properly and
execute transactions relating to the year 2000. The program includes the
following phases: (1) project identification, (2) estimation of costs and target
end dates, (3) system remediation or replacement, (4) testing, (5) integration,
and (6) vendor compliance assessment. The Company has substantially completed
the first two phases of the program. Active management of projects in all other
phases is ongoing. All phases of the program are expected to be completed by
December 31, 1999 or sooner.
The Company is in the process of replacing systems in the Publishing Division,
including certain systems related to advertising, circulation and editorial
applications. Those circulation and editorial applications not completed by the
end of the second quarter are expected to be complete before the end of the
third quarter of 1999. Classified advertising system replacements will be
completed in the third and fourth quarters of 1999. Remediation and replacement
of other systems in both the Publishing and Broadcast Divisions is also
underway. The Company expects to remediate or replace these systems in a timely
manner.
The Company's program includes testing of systems that have been corrected,
upgraded or replaced and testing of applications and equipment identified as
compliant. Once a system has been fully tested, it is integrated into the
production environment. While testing provides assurance that individual
applications of IT and non-IT systems will properly perform required functions
in 2000, it is not possible to completely simulate the effect of Year 2000
requirements.
The vendor compliance assessment phase includes contacting significant
third-party vendors in an effort to determine the state of their Year 2000
readiness. As are all businesses, Belo is dependent upon certain vendors and
suppliers whose delivery of product or service is material to the production and
distribution of the Company's products. Material vendors include, but are not
limited to, utilities providers, telecommunications, news and content providers,
television network and programming suppliers, and newsprint suppliers. The
Company has initiated formal communications with its significant vendors and is
monitoring responses and implementing additional follow-up measures as
necessary. However, there can be no assurances that IT and non-IT systems of
third parties upon which the Company may rely will be Year 2000 compliant in a
timely manner, and therefore the Company could be adversely affected by failure
of a significant third party to be Year 2000 compliant.
The Company believes the Year 2000 issues associated with its IT and non-IT
systems will be mitigated by the implementation of previously planned system
replacements. Costs associated with these system replacements have been included
in the Company's capital plans and have been funded primarily with cash provided
by operations. The Company has expensed $3,200 in connection with its Year 2000
program through June 30, 1999, including $2,800 expensed in 1997 and $300 in
1998, and does not expect remaining Year 2000 expenses to be significant.
In terms of project counts (number of projects identified), the Company has
completed in excess of 90 percent of its projects as of June 30, 1999.
The business risks to the Company for failure to achieve Year 2000 compliance
vary, and depend upon the system and the business unit affected. While the
Company believes its Year 2000 projects will be completed on a timely basis,
failure to successfully complete significant portions of its Year 2000 program
or failure by significant third parties to be Year 2000 compliant could have a
material adverse effect on various phases of the Company's newspaper and
broadcasting operations, and therefore, on its operating results and financial
condition.
The Company is in the process of adopting contingency plans for its broadcast
and publishing operating units.
10
<PAGE> 13
Forward-Looking Statements
Statements in this Form 10-Q concerning the Company's future financings, pending
acquisitions and dispositions, and the Year 2000, as well as any other
statements concerning the Company's business outlook or future economic
performance, anticipated profitability, revenues, expenses, cash flows or other
financial and non-financial items that are not historical facts, are
"forward-looking statements" as the term is defined under applicable Federal
Securities Laws. Forward-looking statements are subject to risks, uncertainties
and other factors that could cause actual results to differ materially from
those statements.
Such risks, uncertainties and factors include, but are not limited to, changes
in capital market conditions and prospects, continuing internal and external
Year 2000-related developments, and other factors such as changes in advertising
demand, interest rates and newsprint prices; technological changes; development
of Internet commerce; industry cycles; changes in pricing or other actions by
competitors and suppliers; regulatory changes; the effects of Company
acquisitions and dispositions; and general economic conditions, as well as other
risks detailed in the Company's filings with the Securities and Exchange
Commission ("SEC"), including the Annual Report on Form 10-K and in the
Company's periodic press releases.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No disclosure required.
PART II.
ITEM 1. LEGAL PROCEEDINGS
A number of legal proceedings are 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
results of operations, liquidity or financial position of the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Shareholders was held on May 12, 1999. All nominees
standing for election as directors were elected. The following chart indicates
the number of votes cast with respect to each nominee for director:
<TABLE>
<CAPTION>
Broker
Nominee For Withheld Abstain Non-Votes
-------------------- ----------- --------- ------- ---------
<S> <C> <C> <C> <C>
John W. Bassett, Jr. 262,849,424 918,780 --- ---
Robert W. Decherd 262,807,391 960,813 --- ---
Burl Osborne 262,739,606 1,028,598 --- ---
J. McDonald Williams 262,835,477 932,727 --- ---
</TABLE>
No other matters were submitted to a vote of security holders at the Annual
Meeting.
11
<PAGE> 14
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.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
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 * Certificate of Amendment of Certificate of Incorporation of the
Company dated May 15, 1998 (Exhibit 3.6 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1998 (the "2nd Quarter 1998 Form 10-Q"))
3.7 * 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)
3.8 * 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)
3.9 * Amended and Restated Bylaws of the Company, effective September
18, 1998 (Exhibit 3.9 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1998)
4.1 * Certain rights of the holders of the Company's Common Stock are
set forth in Exhibits 3.1-3.9 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, 1998 (the "1997 Form 10-K"))
4.3 * Specimen Form of Certificate representing shares of the Company's
Series B Common Stock (Exhibit 4.3 to the 1997 Form 10-K)
12
<PAGE> 15
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
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)
4.6 Instruments defining rights of debt securities:
(1) * Indenture dated as of June 1, 1997 between the Company
and The Chase Manhattan Bank, as Trustee (Exhibit
4.6(1) to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1997 (the "2nd
Quarter 1997 Form 10-Q"))
(2) * (a) $200 million 6-7/8% Senior Note due 2002 (Exhibit
4.6 (2)(a) to the 2nd Quarter 1997 Form 10-Q)
* (b) $50 million 6-7/8% Senior Note due 2002 (Exhibit
4.6 (2)(b) to the 2nd Quarter 1997 Form 10-Q)
(3) * (a)$200 million 7-1/8% Senior Note due 2007 (Exhibit
4.6 (3)(a) to the 2nd Quarter 1997 Form 10-Q)
* (b)$100 million 7-1/8% Senior Note due 2007 (Exhibit
4.6 (3)(b) to the 2nd Quarter 1997 Form 10-Q)
(4) * $200 million 7-3/4% Senior Debenture due 2027 (Exhibit
4.6 (4) to the 2nd Quarter 1997 Form 10-Q)
(5) * Officer's Certificate dated June 13, 1997 establishing
terms of debt securities pursuant to Section 3.1 of the
Indenture (Exhibit 4.6 (5) to the 2nd Quarter 1997 Form
10-Q)
(6) * (a)$200 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6 (6)(a) to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended September
30, 1997 (the "3rd Quarter 1997 Form 10-Q"))
* (b)$50 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6 (6)(b) to the 3rd Quarter 1997 Form 10-Q)
(7) * Officer's Certificate dated September 26, 1997
establishing terms of debt securities pursuant to
Section 3.1 of the Indenture (Exhibit 4.6 (7) to the
3rd Quarter 1997 Form 10-Q)
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)
13
<PAGE> 16
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.2 Financing agreements:
(1) * Amended and Restated Credit Agreement (Five-year
$1,000,000,000 revolving credit and competitive advance
facility dated as of August 29, 1997 among the Company
and The Chase Manhattan Bank, as Administrative Agent
and 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(1) to
the 3rd Quarter 1997 Form 10-Q)
10.3 Compensatory plans:
~(1) The A. H. Belo Corporation Employee Savings and Investment
Plan:
* (a) The A. H. Belo Corporation Employee Savings and
Investment Plan Amended and Restated January 1, 1998
(Exhibit 10.3(1)(a) to the 1997 Form 10-K)
* (b) First Amendment to A. H. Belo Corporation Employee
Savings and Investment Plan (Exhibit 10.3(1)(b) to the
Company's Annual Report on Form 10-K dated March 17,
1999 (the "1998 Form 10-K"))
* (c) Second Amendment to A. H. Belo Corporation Employee
Savings and Investment Plan (Exhibit 10.3(1)(c) to the
1998 Form 10-K)
(d) Third Amendment to A. H. Belo Corporation Employee
Savings and Investment Plan
* (e) Restated Master Trust Agreement between the Company
and Fidelity Management Trust Company, as restated and
dated March 13, 1998 (Exhibit 10.3(1)(b) to the 1997
Form 10-K)
~(2) The A. H. Belo Corporation 1986 Long-Term Incentive Plan:
* (a) 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 Company's
Annual Report on Form 10-K dated March 10, 1997 (the
"1996 Form 10-K"))
* (b) Amendment No. 6 to 1986 Long-Term Incentive Plan
(Exhibit 10.3 (2)(b) to the 1997 Form 10-K)
* (c) Amendment No. 7 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(9) to the 1995 Form 10-K)
* (d) Amendment No. 8 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(2)(d) to the 2nd Quarter 1998 Form 10-Q)
~(3) * A. H. Belo Corporation 1995 Executive Compensation Plan as
restated to incorporate amendments through December 4,
1997 (Exhibit 10.3 (3) to the 1997 Form 10-K)
* (a) Amendment to 1995 Executive Compensation Plan, dated
July 21, 1998 (Exhibit 10.3(3)(a) to the 2nd Quarter
1998 Form 10-Q)
~(4) * Management Security Plan (Exhibit 10.3 (1) to the 1996
Form 10-K)
~(5) A. H. Belo Corporation Supplemental Executive Retirement
Plan:
* (a) A. H. Belo Corporation Supplemental Executive
Retirement Plan (Exhibit 10.3(27) to the Company's
Annual Report on Form 10-K dated March 18, 1994 (the
"1993 Form 10-K"))
* (b) Trust Agreement dated February 28, 1994, between the
Company and Mellon Bank, N.A. (Exhibit 10.3(28) to the
1993 Form 10-K)
14
<PAGE> 17
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter covered by this report, there were no reports on
Form 8-K filed.
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
August 9, 1999 By:/s/ DUNIA A. SHIVE
-----------------------------------
Dunia A. Shive
Senior Vice President and
Chief Financial Officer
15
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ----------
<S> <C> <C>
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 Certificate of Amendment of Certificate of Incorporation of the
Company dated May 15, 1998 (Exhibit 3.6 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1998
(the "2nd Quarter 1998 Form 10-Q")) N/A
3.7 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
3.8 Certificate of Designation of Series B Common Stock of the Company dated May 4,
1995 Form 10-K/A) N/A
3.9 Amended and Restated Bylaws of the Company, effective September
18, 1998 (Exhibit 3.9 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1998) N/A
4.1 Certain rights of the holders of the Company's Common Stock are set forth in Exhibits
3.1-3.9 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, 1998 (the "1997 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 1997 Form 10-K) 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
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
</TABLE>
E-1
<PAGE> 19
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ----------
<S> <C> <C>
4.6 Instruments defining rights of debt securities:
(1) Indenture dated as of June 1, 1997 between the Company and The Chase
Manhattan Bank, as Trustee (Exhibit 4.6(1) to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1997 (the
"2nd Quarter 1997 Form 10-Q")) N/A
(2) (a) $200 million 6-7/8% Senior Note due 2002 (Exhibit 4.6 (2)(a) to the
2nd Quarter 1997 Form 10-Q) N/A
(b) $50 million 6-7/8% Senior Note due 2002 (Exhibit 4.6 (2)(b) to the
2nd Quarter 1997 Form 10-Q) N/A
(3) (a) $200 million 7-1/8% Senior Note due 2007 (Exhibit 4.6 (3)(a) to the
2nd Quarter 1997 Form 10-Q) N/A
(b) $100 million 7-1/8% Senior Note due 2007 (Exhibit 4.6 (3)(b) to the
2nd Quarter 1997 Form 10-Q) N/A
(4) $200 million 7-3/4% Senior Debenture due 2027 (Exhibit 4.6 (4) to the 2nd
Quarter 1997 Form 10-Q) N/A
(5) Officer's Certificate dated June 13, 1997 establishing terms of debt securities
pursuant to Section 3.1 of the Indenture (Exhibit 4.6 (5) to the 2nd Quarter 1997
Form 10-Q) N/A
(6) (a) $200 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6 (6)(a) to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended September
30, 1997 (the "3rd Quarter 1997 Form 10-Q")) N/A
(b) $50 million 7-1/4% Senior Debenture due 2027 (Exhibit 4.6 (6)(b) to the
3rd Quarter 1997 Form 10-Q) N/A
(7) Officer's Certificate dated September 26, 1997 establishing
terms of debt securities pursuant to Section 3.1 of the
Indenture (Exhibit 4.6 (7) to the 3rd Quarter 1997 Form 10-Q) N/A
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) N/A
10.2 Financing agreements:
(1) Amended and Restated Credit Agreement (Five-year $1,000,000,000 revolving
credit and competitive advance facility dated as of August 29, 1997 among the
Company and The Chase Manhattan Bank, as Administrative Agent and
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 (1) to the 3rd
Quarter 1997 Form 10-Q) N/A
</TABLE>
E-2
<PAGE> 20
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ----------
<S> <C> <C>
10.3 Compensatory plans:
(1) The A. H. Belo Corporation Employee Savings and Investment Plan:
(a) The A. H. Belo Corporation Employee Savings and Investment Plan
Amended and Restated January 1, 1998 (Exhibit 10.3(1)(a) to the
1997 Form 10-K) N/A
(b) First Amendment to A. H. Belo Corporation Employee Savings and
Investment Plan (Exhibit 10.3(1)(b) to the Company's Annual Report
on Form 10-K dated March 17, 1999 (the "1998 Form 10-K")) N/A
(c) Second Amendment to A. H. Belo Corporation Employee Savings and
Investment Plan (Exhibit 10.3(1)(c) to the 1998 Form 10-K) N/A
(d) Third Amendment to A. H. Belo Corporation Employee Savings and
Investment Plan ___
(e) Restated Master Trust Agreement between the Company and Fidelity
Management Trust Company, as restated and dated March 13, 1998
(Exhibit 10.3(1)(b) to the 1997 Form 10-K) N/A
(2) The A. H. Belo Corporation 1986 Long-Term Incentive Plan:
(a) 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 Company's Annual
Report on Form 10-K dated March 10, 1997 (the "1996 Form 10-K")) N/A
(b) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit
10.3(2)(b) to the 1997 Form 10-K) N/A
(c) Amendment No. 7 to 1986 Long-Term Incentive Plan (Exhibit 10.3(9)
to the 1995 Form 10-K) N/A
(d) Amendment No. 8 to 1986 Long-Term Incentive Plan (Exhibit 10.3(2)(d)
to the 2nd Quarter 1998 Form 10-Q) N/A
(3) A. H. Belo Corporation 1995 Executive Compensation Plan as restated to
incorporate amendments through December 4, 1997 (Exhibit 10.3(3) to
the 1997 Form 10-K) N/A
(a) Amendment to 1995 Executive Compensation Plan, dated July 21, 1998
(Exhibit 10.3(3)(a) to the 2nd Quarter 1998 Form 10-Q) N/A
(4) Management Security Plan (Exhibit 10.3 (1) to the 1996 Form 10-K) N/A
(5) A. H. Belo Corporation Supplemental Executive Retirement Plan:
(a) A. H. Belo Corporation Supplemental Executive Retirement Plan
(Exhibit 10.3(27) to the Company's Annual Report on Form 10-K
dated March 18, 1994 (the "1993 Form 10-K")) N/A
(b) 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 Ratio of Earnings to Fixed Charges ___
27 Financial Data Schedule N/A
</TABLE>
E-3
<PAGE> 1
EXHIBIT 10.3(1)(d)
THIRD AMENDMENT
TO
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
(As Restated Effective January 1, 1998)
A. H. Belo Corporation, a Delaware corporation (the "Company"),
pursuant to authority of the Compensation Committee of the Board of Directors,
adopts the following amendments to the A. H. Belo Corporation Employee Savings
and Investment Plan (the "Plan"):
1. Section 1.31 of the Plan ("Year of Service") is amended by the
addition of the following paragraph:
An Employee who became an employee of KVUE-TV, Inc., a Delaware
corporation, on June 1, 1999, and who immediately prior to that date
was an employee of KVUE-TV, Inc., a Michigan corporation, will receive
credit for an Hour of Service for each hour for which such Employee was
paid or entitled to be paid by KVUE-TV, Inc., a Michigan corporation,
or any of its affiliates, determined in accordance with Section 1.17
and will receive credit for his period of employment with KVUE-TV,
Inc., a Michigan corporation, or any of its affiliates, calculated in
the same manner as if it had been employment with a Controlled Group
Member.
2. Section 2.1 of the Plan ("Eligibility to Participate") is
amended by the addition of the following paragraph:
(x) Each Employee of KVUE-TV, Inc., a Delaware corporation, who on May
31, 1999, was an employee of KVUE-TV, Inc., a Michigan corporation, and
scheduled to work at least 20 hours a week or who was otherwise
eligible to participate in the Gannett Co., Inc. 401(k) Savings Plan
will be eligible to participate as of the first payroll period
beginning after May 31, 1999.
3. Clause (ii) of Section 6.8(b) of the Plan, relating to the
definition of an eligible rollover distribution, is amended by
the addition of the following phrase:
and, effective for distributions after December 31, 1998, any
distribution that qualifies as a hardship distribution under
Section 6.3,
<PAGE> 2
4. The first sentence of Section 10.2(i) is amended in its
entirety to read as follows :
"Defined Contribution Dollar Limitation" means for any Limitation Year
$30,000 as adjusted pursuant to Code Section 415(d) for Limitation
Years beginning on or after January 1, 1995.
5. The last paragraph of Section 10.2(m), relating to the
definition of a highly compensated employee, is amended in its entirety to read
as follows:
For Plan Years beginning after December 31, 1996, the term "Highly
Compensated Employee" means an Employee who was a 5-percent owner of a
Controlled Group Member at any time during the Plan Year or who for the
preceding Plan Year had Compensation in excess of $80,000 (as adjusted
pursuant to Code Section 415(d)).
6. Appendix A to the Plan ("Participating Employers") is amended
to remove the following employers as Participating Employers in the Plan as of
the dates indicated:
The Dallas Morning News Company
(After February 28, 1999)
Great Western Broadcasting Corporation
(After May 31, 1999)
KHOU-TV, Inc.
(After February 28, 1999)
WFAA Television, Inc.
(After February 28, 1999)
7. Appendix A to the Plan is further amended to add the following
employers as Participating Employers as of the dates indicated:
The Dallas Morning News, L.P.
(As of March 1, 1999)
KHOU-TV, L.P.
(As of March 1, 1999)
<PAGE> 3
KVUE-TV, Inc.
(As of June 1, 1999)
WFAA-TV, L.P.
(As of March 1, 1999)
Executed at Dallas, Texas, this 29th day of July, 1999.
A. H. BELO CORPORATION
By: /s/ DUNIA A. SHIVE
----------------------------------
Name: Dunia A. Shive
Title: Senior Vice President/CFO
<PAGE> 1
EXHIBIT 12
A. H. BELO CORPORATION
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Six months ended
Year Ended December 31, June 30,
---------------------------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings before income taxes
and the cumulative effect
of accounting changes $107,897 $111,014 $144,040 $154,122 $130,460 $ 81,707 $130,905 (2)
Add: Total fixed charges 17,294 32,089 29,009 94,069 112,082 56,210 55,799
Less: Interest capitalized 138 957 255 510 1,680 237 1,633
-------- -------- -------- -------- -------- -------- --------
Adjusted earnings $125,053 $142,146 $172,794 $247,681 $240,862 $137,680 $185,071
======== ======== ======== ======== ======== ======== ========
Fixed Charges:
Interest $ 16,250 $ 30,944 $ 27,898 $ 91,288 $109,318 $ 54,834 $ 54,485
Portion of rental expense
representative of the
interest factor (1) 1,044 1,145 1,111 2,781 2,764 1,376 1,314
-------- -------- -------- -------- -------- -------- --------
Total fixed charges $ 17,294 $ 32,089 $ 29,009 $ 94,069 $112,082 $ 56,210 $ 55,799
======== ======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 7.23x 4.43x 5.96x 2.63x 2.15x 2.45x 3.32x
======== ======== ======== ======== ======== ======== ========
</TABLE>
- ---------------------------------------
(1) For the purposes of calculating fixed charges, an interest factor of one
third was applied to total rent expense for the period indicated.
(2) Earnings before income taxes and the cumulative effect of accounting
changes includes a gain of $50,312 related to the June 1, 1999 sale of
television station KXTV. Excluding this item, the Ratio of Earnings to
Fixed Charges is 2.42 times.
<TABLE> <S> <C>
<ARTICLE> 5
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