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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: SEPTEMBER 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)
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.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT OCTOBER 29, 1999
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<S> <C>
Common Stock, $1.67 par value * 118,440,477
</TABLE>
* Consisting of 99,342,218 shares of Series A Common Stock and 19,098,259
shares of Series B Common Stock.
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A. H. BELO CORPORATION
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements................................................. 1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations..................... 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk........... 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings.................................................... 12
Item 2. Changes in Securities and Use of Proceeds............................ 12
Item 3. Defaults Upon Senior Securities...................................... 12
Item 4. Submission of Matters to a Vote of Security Holders.................. 12
Item 5. Other Information.................................................... 12
Item 6. Exhibits and Reports on Form 8-K..................................... 13
</TABLE>
i
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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 Nine months ended
September 30, September 30,
======================= =======================
In thousands, except per share amounts
(unaudited) 1999 1998 1999 1998
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET OPERATING REVENUES
Broadcast $ 138,747 $ 133,795 $ 428,195 $ 426,323
Newspaper publishing 203,544 192,276 601,994 583,435
Other 3,003 2,457 8,627 7,178
--------- ---------- ---------- ----------
Total net operating revenues 345,294 328,528 1,038,816 1,016,936
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits 120,019 112,513 353,997 338,004
Other production, distribution and operating costs 86,819 85,934 251,711 249,275
Newsprint, ink and other supplies 37,724 42,894 119,546 127,972
Depreciation 23,588 20,717 68,218 63,686
Amortization 19,404 18,704 56,963 56,051
--------- ---------- ---------- ----------
Total operating costs and expenses 287,554 280,762 850,435 834,988
--------- ---------- ---------- ----------
Earnings from operations 57,740 47,766 188,381 181,948
OTHER INCOME AND EXPENSE
Interest expense (27,239) (27,124) (80,091) (81,721)
Gain on sale of KXTV -- -- 50,312 --
Other, net 742 355 3,546 2,477
--------- ---------- ---------- ----------
Total other income and expense (26,497) (26,769) (26,233) (79,244)
EARNINGS
Earnings before income taxes 31,243 20,997 162,148 102,704
Income taxes 14,655 11,290 53,207 49,539
--------- ---------- ---------- ----------
Net earnings $ 16,588 $ 9,707 $ 108,941 $ 53,165
========= ========== ========== ==========
NET EARNINGS PER SHARE
Basic $ .14 $ .08 $ .92 $ .43
Diluted $ .14 $ .08 $ .91 $ .42
AVERAGE SHARES OUTSTANDING
Basic 118,333 123,784 118,252 124,605
Diluted 119,177 124,881 119,155 126,170
CASH DIVIDENDS DECLARED PER SHARE $ .14 $ .12 $ .26 $ .24
--------- ---------- ---------- ----------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
1
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CONSOLIDATED CONDENSED BALANCE SHEETS
A. H. Belo Corporation and Subsidiaries
<TABLE>
<CAPTION>
==============================================================================================================
In thousands, except share and per share data September 30, December 31,
(Current year unaudited) 1999 1998
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and temporary cash investments $ 30,780 $ 19,451
Accounts receivable, net 202,085 211,428
Other current assets 56,299 44,902
------------- -------------
Total current assets 289,164 275,781
Property, plant and equipment, net 635,851 626,753
Intangible assets, net 2,627,796 2,543,143
Other assets 85,397 93,412
------------- -------------
Total assets $ 3,638,208 $ 3,539,089
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 40,735 $ 56,044
Accrued expenses 87,015 84,026
Other current liabilities 54,007 40,678
------------- -------------
Total current liabilities 181,757 180,748
Long-term debt 1,653,585 1,634,029
Deferred income taxes 426,672 439,240
Other liabilities 51,635 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 99,333,204 shares at September 30, 1999
and 100,028,891 shares at December 31, 1998 165,886 167,048
Series B: Issued 19,077,606 shares at September 30, 1999
and 18,896,263 shares at December 31, 1998 31,860 31,557
Additional paid-in capital 881,724 879,856
Retained earnings 245,089 169,639
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Total shareholders' equity 1,324,559 1,248,100
Total liabilities and shareholders' equity $ 3,638,208 $ 3,539,089
============= =============
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
A. H. Belo Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine months ended September 30,
============================================================================================
In thousands
(unaudited) 1999 1998
--------- ---------
<S> <C> <C>
OPERATIONS
Net earnings $ 108,941 $ 53,165
Adjustments to reconcile net earnings
to net cash provided by operations:
Net gain on sale of KXTV (48,981) --
Depreciation and amortization 125,181 119,737
Deferred income taxes (10,828) 6,895
Other, net 10,143 9,411
Net change in current assets and liabilities:
Accounts receivable 11,734 33,814
Other current assets 2,036 (4,304)
Accounts payable (19,015) (5,560)
Accrued expenses 185 (19,337)
Other current liabilities 3,937 (24,781)
--------- ---------
Net cash provided by operations 183,333 169,040
INVESTING
Acquisitions (76,286) --
Capital expenditures (63,505) (59,694)
Investments and other, net (13,577) (4,226)
--------- ---------
Net cash used for investing (153,368) (63,920)
FINANCING
Borrowings for acquisitions 76,286 --
Purchase of treasury shares (21,793) (72,533)
Net payments on debt (54,947) (10,825)
Payment of dividends on stock (22,474) (22,466)
Net proceeds from exercise of stock options 4,292 7,554
--------- ---------
Net cash used for financing (18,636) (98,270)
Net increase in cash and temporary cash investments 11,329 6,850
Cash and temporary cash investments at beginning of period 19,451 11,852
--------- ---------
Cash and temporary cash investments at end of period $ 30,780 $ 18,702
========= =========
SUPPLEMENTAL DISCLOSURES
Interest paid, net of amounts capitalized $ 72,014 $ 73,538
Income taxes paid, net of refunds $ 65,563 $ 79,797
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 nine month periods
ended September 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 nine
months ended September 30, 1998 of $8,825 and $51,293, respectively.
During 1998, Belo either sold or donated all of its available-for-sale
securities; therefore, total comprehensive income for the three and
nine months ended September 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 nine months ended September 30, 1999 and 1998
(in thousands):
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
======= ======= ======= =======
<S> <C> <C> <C> <C>
Weighted average shares for basic earnings
per share 118,333 123,784 118,252 124,605
Effect of employee stock options 844 1,097 903 1,565
------- ------- ------- -------
Weighted average shares for diluted earnings
per share 119,177 124,881 119,155 126,170
======= ======= ======= =======
</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 $106,000. 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 was accounted for as a purchase.
4
<PAGE> 7
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.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------- ------------------------
In thousands 1999 1998 1999 1998
========= ========== =========== ===========
<S> <C> <C> <C> <C>
NET OPERATING REVENUES
Broadcast $ 138,747 $ 133,795 $ 428,195 $ 426,323
Newspaper publishing 203,544 192,276 601,994 583,435
Other 3,003 2,457 8,627 7,178
--------- ---------- ----------- -----------
Total net operating revenues $ 345,294 $ 328,528 $ 1,038,816 $ 1,016,936
========= ========== =========== ===========
EARNINGS FROM OPERATIONS
Broadcast $ 26,960 $ 24,732 $ 92,073 $ 96,365
Newspaper publishing 42,810 35,379 130,958 118,608
Other (1,997) (1,116) (5,662) (2,976)
Corporate expenses (10,033) (11,229) (28,988) (30,049)
--------- ---------- ----------- -----------
Total earnings from operations $ 57,740 $ 47,766 $ 188,381 $ 181,948
========= ========== =========== ===========
DEPRECIATION AND AMORTIZATION
Broadcast $ 27,530 $ 24,772 $ 79,309 $ 74,741
Newspaper publishing 13,919 13,463 41,328 42,233
Other 700 253 2,031 753
Corporate 843 933 2,513 2,010
--------- ---------- ----------- -----------
Total depreciation and amortization $ 42,992 $ 39,421 $ 125,181 $ 119,737
========= ========== =========== ===========
OPERATING CASH FLOW
Broadcast $ 54,490 $ 49,504 $ 171,382 $ 171,106
Newspaper publishing 56,729 48,842 172,286 160,841
Other (1,297) (863) (3,631) (2,223)
Corporate (9,190) (10,296) (26,475) (28,039)
--------- ---------- ----------- -----------
Total operating cash flow $ 100,732 $ 87,187 $ 313,562 $ 301,685
========= ========== =========== ===========
</TABLE>
5
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
(6) On October 29, 1999, the Company completed the sale of KASA-TV in
Albuquerque, New Mexico, and KHNL-TV in Honolulu, Hawaii, along with
its rights to operate KFVE-TV in Honolulu under a local marketing
agreement. The selling price was $88,000 in cash. The Company expects
to realize a gain on the sale transaction.
On November 1, 1999, the Company completed the acquisition of
independent television station KTVK in Phoenix, Arizona, along with the
rights to operate WB-affiliated KASW-TV in Phoenix through a local
marketing agreement and an option to purchase KASW-TV. The acquisition
also includes a 50 percent interest in a cable news joint venture. The
acquisition price was $315,000 in cash. The transaction will be
accounted for as a purchase.
The Company funded the net amount of the purchase of KTVK and sale of
KASA-TV and KHNL-TV with borrowings under its revolving credit
agreement. If the transactions had closed at the end of the third
quarter, total debt outstanding at September 30, 1999 would have been
approximately $1,887,000.
Belo has announced its intention to purchase KASW-TV in Phoenix,
Arizona and KONG-TV, an independent station in the Seattle/Tacoma,
Washington market. Both stations are currently operated under local
marketing agreements. These transactions are subject to the Federal
Communications Commission's ("FCC") procedures, not yet finalized, for
processing applications for television market duopoly ownership.
Subject to FCC processing and approval, the transactions could close
during first quarter 2000. Total acquisition cost for both KASW and
KONG will be less than $20,000 in cash.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
The Company is 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 September 30, 1999:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
BROADCAST
- ---------------------------------------------------------------------------------------------------------------------
NETWORK
MARKET(a) MARKET RANK(b) STATION AFFILIATION STATUS ACQUIRED
- ----------------------- ------------------ ------------------ ----------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
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(c) 49 KASA FOX Owned February 1997
Tulsa 59 KOTV CBS Owned February 1984
Austin 60 KVUE ABC Owned June 1999
Honolulu(c) 71 KHNL NBC Owned February 1997
Honolulu(c)(d) 71 KFVE UPN/WB LMA February 1997
Spokane 72 KREM CBS Owned February 1997
Spokane(d) 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
- ----------------------- ------------------ ------------------ ----------------- ----------------- -------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NEWSPAPER PUBLISHING
- ---------------------------------------------------------------------------------------------------------------------
DAILY SUNDAY
NEWSPAPER LOCATION ACQUIRED CIRCULATION(e) CIRCULATION(f)
- ----------------------------------- ---------------------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
The Dallas Morning News ("TDMN") Dallas, TX (f) 518,548 781,959
The Providence Journal ("PJ") Providence, RI February 1997 166,888 237,629
The Press-Enterprise ("PE") Riverside, CA July 1997 165,043 171,813
Messenger-Inquirer Owensboro, KY January 1996 31,764 34,574
The Eagle Bryan-College Station, TX December 1995 23,493 28,295
Denton Record-Chronicle(e) Denton, TX June 1999 15,843 19,005
The Gleaner Henderson, KY March 1997 11,109 13,044
- ----------------------------------- ---------------------------- ------------------ ---------------- ----------------
</TABLE>
7
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
OTHER
- ---------------------------------------------------------------------------------------------------------------------
COMPANY DESCRIPTION
- ----------------------------- ---------------------------------------------------------------------
<S> <C>
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
- ----------------------------- ---------------------------------------------------------------------
(a) Table is as of September 30, 1999 and does not include KTVK, an independent station in Phoenix, Arizona
(market rank 17), which was acquired on November 1, 1999. The acquisition also includes the rights to operate
WB-affiliated KASW-TV in Phoenix through a local marketing agreement and an option to purchase KASW-TV.
(b) 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.
(c) On October 29, 1999, the Company completed the sale of KASA-TV (FOX) in Albuquerque, New Mexico and KHNL-TV
(NBC) in Honolulu, Hawaii, along with its rights to operate KFVE-TV (UPN) in Honolulu under a local marketing
agreement, for $88,000 in cash.
(d) The primary affiliation is with UPN. The WB network is currently a secondary affiliation.
(e) Average paid circulation for the six months ended September 30, 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.
(f) The first issue of The Dallas Morning News was published October 1, 1885.
</TABLE>
RESULTS OF OPERATIONS
Net earnings for the three and nine months ended September 30, 1999 were $16,588
(14 cents per share) and $108,941 (91 cents per share), respectively. The
year-to-date 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, net earnings for 1999 year-to-date were $59,960 (50 cents per share).
Results for the three and nine-month periods of 1998 were $9,707 (8 cents per
share) and $53,165 (42 cents per share), respectively.
Broadcast
Broadcast revenues for the third quarter of 1999 were $138,747, an increase of
3.7 percent compared with third quarter 1998 revenues of $133,795. Year-to-date
broadcast revenues were up .4 percent from $426,323 in 1998 to $428,195 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 significantly
higher in 1998 for both the three and nine-month periods as well. In 1999, local
advertising revenues increased 15.4 percent and 10.8 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
improved 1.8 percent for the quarter, primarily in Houston and Seattle/Tacoma.
Year-to-date national advertising revenues were 6 percent lower in 1999 than in
1998, with the largest declines in Dallas/Fort Worth, New Orleans and Norfolk.
Pro forma for the KVUE/KXTV transaction, total broadcast revenues were up 5.5
percent and 1.4 percent for the quarter and year-to-date periods, respectively.
Broadcast operating cash flow margins for the three and nine-month periods of
1999 were 39.3 percent and 40 percent, respectively, and 37 percent and 40.1
percent for the comparable periods in 1998. Broadcast operating cash flow for
the quarter of $54,490 was 10.1 percent higher than last year's third quarter
operating cash flow of $49,504. Year-to-date broadcast operating cash flow in
1999 was $171,382 or .2 percent higher when compared with $171,106 in 1998.
Before considering the KVUE/KXTV transaction, cash expenses were flat for the
quarter and up .6 percent year-to-date when compared with the prior year
periods. Higher programming and outside services expenses were offset by lower
communications and advertising and promotion expense and slightly lower
compensation and benefits expense due to last year's early retirement program
and other employee reduction initiatives. Pro forma for the KVUE/KXTV
transaction, for the three and nine-month periods of 1999 versus 1998, cash
expenses were up 4 percent and 2.8 percent, respectively, and operating cash
flow was up 7.9 percent and down .6 percent, respectively.
8
<PAGE> 11
Newspaper Publishing
Third quarter 1999 revenues for newspaper publishing were $203,544 or 5.9
percent higher than third quarter 1998 revenues of $192,276. Newspaper
publishing year-to-date revenues in 1999 were $601,994 or 3.2 percent better
than 1998 year-to-date revenues of $583,435. Pro forma for the Denton Publishing
Company acquisition, revenues were 4.3 percent and 2.7 percent higher for the
three and nine-month periods of 1999, respectively, when compared with 1998.
Revenues at TDMN were up 1.6 percent in third quarter 1999 when compared with
third quarter 1998 and increased .8 percent year-over-year. In the three and
nine-month periods of 1999, gains from both higher average rates and increased
volume resulted in higher general advertising revenues. Retail advertising
revenues were higher in the third quarter and year-to-date periods of 1999 as
relatively flat quarter volume and lower year-to-date volumes were offset by
higher average rates. Classified advertising revenue was down for both the three
and nine-month periods in 1999 due to lower overall classified rates and
volumes. While classified automotive and real estate volumes were favorable for
the quarter and year-to-date periods, classified employment volumes were down
significantly. Circulation revenues for the quarter and year-to-date periods
were up approximately 4.3 percent and 1.5 percent, respectively, due primarily
to an increase in 1999 average daily circulation and an increase in home
delivery prices initiated in December 1998.
Revenues for PJ increased 6.4 percent for the quarter and 4.2 percent
year-to-date when compared with 1998, with improvements in retail, general and
classified advertising in both the quarter and year-to-date periods in 1999. The
increase in classified advertising revenue was primarily due to strength in the
employment and automotive advertising categories. The general advertising
revenue increase was due to volume gains, primarily in automotive advertising.
The increase in retail advertising revenue was due to higher volumes and rates.
Circulation revenues for the quarter and year-to-date periods in 1999 were flat
when compared to the comparable 1998 periods.
Total revenue for PE increased 14.5 percent for the quarter and 9.8 percent
year-to-date compared with the same periods in 1998. Classified advertising
revenues in 1999 increased significantly for both the three and nine-month
periods when compared with 1998 due primarily to higher employment advertising
rates. Retail and general advertising revenues also improved in 1999 compared
with 1998. Other advertising revenues were up considerably in 1999 due mainly to
new initiatives including certain new publications.
Newspaper publishing operating cash flow margins for the three and nine-month
periods of 1999 were 27.9 percent and 28.6 percent, respectively. Newspaper
publishing operating cash flow margins in 1998 were 25.4 percent and 27.6
percent for the three and nine month periods, respectively. Publishing operating
cash flow for the third quarter of 1999 was $56,729 or 16.1 percent higher than
third quarter 1998 operating cash flow of $48,842. For the year-to-date periods,
1999 operating cash flow was $172,286 or 7.1 percent better than 1998. Cash
expenses were up 2.4 percent and 1.7 percent for the three and nine-month
periods ended September 30, 1999, respectively. While compensation and benefit
costs were higher in 1999, newsprint expense was 17 percent lower due to a
decline in the average cost per metric ton of newsprint. Higher distribution and
advertising and promotion expenses were offset somewhat by lower communications
and travel and entertainment expenses.
Consolidated results
Depreciation and amortization expenses were higher for the three and nine-month
periods of 1999 compared with 1998 due mostly to prior year capital expenditures
and the KVUE/KXTV exchange transaction. Interest expense for the third quarter
of 1999 was relatively flat while interest expense for the 1999 year-to-date
period was lower due primarily to lower weighted average interest rates on
revolving debt.
The effective tax rates for the three and nine-month periods of 1999 were 46.9
percent and 32.8 percent, respectively. Excluding the effect of the KVUE/KXTV
exchange transaction, the year-to-date effective tax rate for 1999 was 46.4
percent. Comparable 1998 rates for the three and nine-month periods were 53.8
percent and 48.2 percent respectively. The higher effective rates for 1998 were
due to lower 1998 pre-tax earnings.
9
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations, bank borrowings and term debt are the Company's
primary sources of liquidity. During the period ended September 30, 1999, net
cash provided by operations was $183,333, compared with $169,040 for the same
period in 1998. Working capital requirements for taxes and bonus payments were
lower in 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
$23,213 due mainly to borrowings of $76,286 to complete acquisitions, which
include KVUE-TV and Denton Publishing Company, partially offset by reductions in
debt from cash provided by operations.
At September 30, 1999, the Company had $1 billion in fixed-rate debt securities
outstanding 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 of debt available for issuance under a shelf registration
statement filed in April 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 September 30, 1999, the Company had a $1 billion variable-rate revolving
credit agreement with a syndicate of 26 banks under which borrowings were
$605,000. The weighted average interest rate of these borrowings at September
30, 1999 was 5.6 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 $42,000 of short-term
unsecured notes outstanding at September 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 September 30, 1999, the Company's ratio of funded debt to pro
forma operating cash flow, which is not to exceed 5.0, was 3.8. The Company's
interest coverage ratio for the four quarters ended September 30, 1999 was 4.1
times compared with a minimum coverage requirement of 2.5 times.
The Company paid dividends of $22,474 (19 cents per share) during 1999 compared
with $22,466 (18 cents per share) in 1998.
During 1999, the Company purchased 1,187,300 treasury shares for an aggregate
cost of $21,793, all in the first quarter.
Year-to-date 1999 capital expenditures were $63,505. 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 October 29, 1999, the Company completed the sale of KASA-TV in Albuquerque,
New Mexico, and KHNL-TV in Honolulu, Hawaii, along with its rights to operate
KFVE-TV in Honolulu under a local marketing agreement. The sales price was
$88,000 in cash. The Company expects to realize a gain on the sale transaction.
On November 1, 1999, the Company completed the acquisition of independent
television station KTVK in Phoenix, Arizona, along with the rights to operate
WB-affiliated KASW-TV in Phoenix through a local marketing agreement and an
option to purchase KASW-TV. The acquisition also includes a 50 percent interest
in a cable news joint venture. The acquisition price was $315,000 in cash. The
transaction will be accounted for as a purchase. The Company funded the net
amount of these sale and purchase transactions with borrowings under its
revolving credit agreement, which resulted in a net increase in outstanding
revolving debt of approximately $227,000.
10
<PAGE> 13
Belo has announced its intention to purchase KASW-TV in Phoenix, Arizona and
KONG-TV in the Seattle/Tacoma, Washington market. Both stations are currently
operated under local marketing agreements. These transactions are subject to the
FCC's procedures, not yet finalized, for processing applications for television
market duopoly ownership. Subject to FCC processing and approval, the
transactions could close during first quarter 2000. Total acquisition cost for
both KASW and KONG will be less than $20,000 in cash.
The Company currently expects to realize a net gain of approximately $30,000
from the pending sale of Falcon Communications, a cable system operator in which
Belo has an investment. This transaction is expected to close in the fourth
quarter of 1999.
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 major projects included in the first five phases of the program. All phases
of the program are expected to be completed by December 31, 1999 or sooner.
The Company has been in the process of replacing or upgrading systems in the
Publishing Division, including certain systems related to advertising,
circulation and editorial applications. Each of the advertising, circulation and
editorial system projects have been completed as of September 30, 1999, with the
exception of the circulation system at The Providence Journal and the classified
advertising system at the Press-Enterprise, both of which are expected to be
completed by November 30, 1999. Remediation and replacement of other systems in
both the Publishing and Broadcast Divisions is also underway. In terms of
project counts (number of projects identified) as of September 30, 1999, the
Company has completed 98 percent of its projects relating to Year 2000 issues.
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 many 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 approximately $3,300 in connection with
its Year 2000 program through September 30, 1999, including $2,800 expensed in
1997 and $300 in 1998, and does not expect remaining Year 2000 expenses to be
significant.
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
11
<PAGE> 14
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's broadcast and publishing operating units are currently finalizing
contingency plans. These plans should be in place by November 30, 1999.
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
None.
ITEM 5. OTHER INFORMATION
None.
12
<PAGE> 15
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> <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"))
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)
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)
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<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)
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)
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)
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <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)
* (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 (Exhibit 10.3(1)(d) to the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1999)
* (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)
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
During the quarter covered by this report, there were no reports on
Form 8-K filed.
15
<PAGE> 18
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
November 11, 1999 By: /s/ Dunia A. Shive
-------------------------------
Dunia A. Shive
Senior Vice President and
Chief Financial Officer
16
<PAGE> 19
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, 1988 (Exhibit 3.7 to the 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> 20
<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> 21
<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 (Exhibit 10.3(1)(d) to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1999) N/A
(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 12
A. H. BELO CORPORATION
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine months ended
Year Ended December 31, September 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 $ 102,704 $162,148
Add: Total fixed charges 17,294 32,089 29,009 94,069 112,082 84,062 84,165
Less: Interest capitalized 138 957 255 510 1,680 273 2,168
--------- --------- --------- --------- --------- --------- --------
Adjusted earnings $ 125,053 $ 142,146 $ 172,794 $ 247,681 $ 240,862 $ 186,493 $244,144
========= ========= ========= ========= ========= ========= ========
Fixed Charges:
Interest $ 16,250 $ 30,944 $ 27,898 $ 91,288 $ 109,318 $ 81,994 $ 82,259
Portion of rental expense
representative of the
interest factor (1) 1,044 1,145 1,111 2,781 2,764 2,068 1,905
--------- --------- --------- --------- --------- --------- --------
Total fixed charges $ 17,294 $ 32,089 $ 29,009 $ 94,069 $ 112,082 $ 84,062 $ 84,165
========= ========= ========= ========= ========= ========= ========
Ratio of Earnings to Fixed Charges 7.23 x 4.43 x 5.96 x 2.63 x 2.15 x 2.22 x 2.90 x
========= ========= ========= ========= ========= ========= ========
</TABLE>
- ---------------------------------------
(1) For the purpose 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 30,780
<SECURITIES> 0
<RECEIVABLES> 208,965
<ALLOWANCES> (6,880)
<INVENTORY> 18,097
<CURRENT-ASSETS> 289,164
<PP&E> 1,114,272
<DEPRECIATION> (478,421)
<TOTAL-ASSETS> 3,638,208
<CURRENT-LIABILITIES> 181,757
<BONDS> 1,653,585
0
0
<COMMON> 197,746
<OTHER-SE> 1,126,813
<TOTAL-LIABILITY-AND-EQUITY> 3,638,208
<SALES> 0
<TOTAL-REVENUES> 1,038,816
<CGS> 0
<TOTAL-COSTS> 725,254
<OTHER-EXPENSES> 125,181
<LOSS-PROVISION> 4,879
<INTEREST-EXPENSE> 80,091
<INCOME-PRETAX> 162,148
<INCOME-TAX> 53,207
<INCOME-CONTINUING> 108,941
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,941
<EPS-BASIC> 0.92
<EPS-DILUTED> 0.91
</TABLE>
