##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended: June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 1-33741
 A. H. Belo Corporation
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    38-3765318(I.R.S. employer
identification no.)P. O. Box 224866
Dallas, Texas(Address of principal executive offices)
    
    75222-4866(Zip code)
 (214) 977-8200
  None
  Yes þ No o
  Yes o No o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o  Yes o No þ
  Class
    
    Outstanding at August 7, 2009Common Stock, $.01 par value
    
    20,544,560
 
 *
    
    Consisting of 18,100,946 shares of Series A Common Stock and 2,443,614 shares of Series B
Common Stock.




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##### 



A. H. BELO CORPORATION
 FORM 10-Q
 TABLE OF CONTENTS
 PagePART I FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4T. Controls and Procedures
    
    
    18PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults Upon Senior Securities
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Item 5. Other Information
    
    
    20Item 6. Exhibits
    
    
    20Signatures
    
    
    23EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



PART I.
 
 Item 1. Financial Statements
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three months ended June 30,
    
    
    Six months ended June 30,In thousands, except per share amounts (unaudited)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net Operating RevenuesAdvertising
    
    $
    87,492
    
    
    $
    125,341
    
    
    $
    176,823
    
    
    $
    249,764Circulation
    
    
    33,266
    
    
    
    30,275
    
    
    
    64,980
    
    
    
    59,380Other
    
    
    6,746
    
    
    
    7,639
    
    
    
    14,195
    
    
    
    14,298Total net operating revenues
    
    
    127,504
    
    
    
    163,255
    
    
    
    255,998
    
    
    
    323,442Operating Costs and ExpensesSalaries, wages and employee benefits
    
    
    51,720
    
    
    
    68,840
    
    
    
    114,614
    
    
    
    143,105Other production, distribution and operating costs
    
    
    50,867
    
    
    
    60,948
    
    
    
    106,734
    
    
    
    121,914Newsprint, ink and other supplies
    
    
    16,425
    
    
    
    23,738
    
    
    
    36,043
    
    
    
    46,707Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    80,940
    
    
    
    Asset impairment
    
    
    1,749
    
    
    
    
    
    
    
    1,749
    
    
    
    Depreciation
    
    
    9,662
    
    
    
    12,211
    
    
    
    20,198
    
    
    
    24,452Amortization
    
    
    1,625
    
    
    
    1,625
    
    
    
    3,249
    
    
    
    3,250Total operating costs and expenses
    
    
    132,048
    
    
    
    167,362
    
    
    
    363,527
    
    
    
    339,428Loss from operations
    
    
    (4,544
    )
    
    
    (4,107
    )
    
    
    (107,529
    )
    
    
    (15,986
    )Other (Expense) Income, NetInterest expense
    
    
    (291
    )
    
    
    (165
    )
    
    
    (591
    )
    
    
    (3,231
    )Other (expense) income, net
    
    
    (702
    )
    
    
    305
    
    
    
    120
    
    
    
    1,262Total other (expense) income, net
    
    
    (993
    )
    
    
    140
    
    
    
    (471
    )
    
    
    (1,969
    )Loss before income taxes
    
    
    (5,537
    )
    
    
    (3,967
    )
    
    
    (108,000
    )
    
    
    (17,955
    )Income tax expense (benefit)
    
    
    1,534
    
    
    
    (770
    )
    
    
    2,139
    
    
    
    (6,040
    )Net loss
    
    $
    (7,071
    )
    
    $
    (3,197
    )
    
    $
    (110,139
    )
    
    $
    (11,915
    )Net loss per share:Basic and diluted
    
    $
    (0.34
    )
    
    $
    (0.16
    )
    
    $
    (5.37
    )
    
    $
    (0.58
    )Weighted average shares outstanding:Basic and diluted
    
    
    20,537
    
    
    
    20,478
    
    
    
    20,521
    
    
    
    20,476Dividends declared per share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.25
 See accompanying Notes to Condensed Consolidated Financial Statements.
 3




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CONDENSED CONSOLIDATED BALANCE SHEETS
  June 30,2009
    
    
    December 31,In thousands, except share and per share amounts
    
    (unaudited)
    
    
    2008AssetsCurrent assets:Cash and
cash equivalents
    
    $
    12,205
    
    
    $
    9,934Accounts receivable (net of allowance of $5,385 and $5,332
at June 30, 2009 and December 31, 2008, respectively)
    
    
    52,236
    
    
    
    77,383Inventories
    
    
    14,752
    
    
    
    22,641Deferred income taxes
    
    
    5,754
    
    
    
    5,415Prepaids and other current assets
    
    
    9,659
    
    
    
    9,344Total current assets
    
    
    94,606
    
    
    
    124,717Property, plant and equipment at cost:Land
    
    
    30,890
    
    
    
    30,895Buildings and improvements
    
    
    231,742
    
    
    
    232,120Publishing equipment
    
    
    355,230
    
    
    
    358,413Other
    
    
    148,778
    
    
    
    150,065Advance payments on property, plant and equipment
    
    
    10,415
    
    
    
    9,358Total property, plant and equipment
    
    
    777,055
    
    
    
    780,851Less accumulated depreciation
    
    
    532,492
    
    
    
    517,107Property, plant and equipment, net
    
    
    244,563
    
    
    
    263,744Intangible assets, net
    
    
    30,677
    
    
    
    33,927Goodwill
    
    
    24,582
    
    
    
    105,522Investments
    
    
    20,362
    
    
    
    23,016Other assets
    
    
    6,469
    
    
    
    6,752Total assets
    
    $
    421,259
    
    
    $
    557,678
 See accompanying Notes to Condensed Consolidated Financial Statements.
 4




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CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
  June 30,2009
    
    
    December 31,In thousands, except share and per share amounts
    
    (unaudited)
    
    
    2008Liabilities and Shareholders EquityCurrent liabilities:Current portion of notes payable
    
    $
    3,540
    
    
    $
    10,000Accounts payable
    
    
    20,526
    
    
    
    32,950Accrued compensation and benefits
    
    
    21,087
    
    
    
    27,020Accrued interest on notes payable
    
    
    22
    
    
    
    11Other accrued expenses
    
    
    20,674
    
    
    
    18,826Advance subscription payments
    
    
    27,421
    
    
    
    26,335Total current liabilities
    
    
    93,270
    
    
    
    115,142Pension liabilities
    
    
    14,216
    
    
    
    17,096Other post employment benefits
    
    
    7,483
    
    
    
    7,738Deferred income taxes, net
    
    
    5,754
    
    
    
    6,620Other liabilities
    
    
    1,305
    
    
    
    2,430Commitments and contingent liabilitiesShareholders equity:Preferred stock, $.01 par value. Authorized 2,000,000 shares;
none issued.
    
    
    
    
    
    
    Common stock, $.01 par value. Authorized 125,000,000 sharesSeries A: issued and outstanding 18,094,417 and 17,774,549 shares at June 30,
2009 and December 31, 2008, respectively
    
    
    180
    
    
    
    176Series B: issued and outstanding 2,443,782 and 2,704,416 shares at June 30,
2009 and December 31, 2008, respectively
    
    
    25
    
    
    
    28Additional paid-in capital
    
    
    484,726
    
    
    
    484,009Accumulated other comprehensive loss
    
    
    (458
    )
    
    
    (458
    )Accumulated deficit
    
    
    (185,242
    )
    
    
    (75,103
    )Total shareholders equity
    
    
    299,231
    
    
    
    408,652Total liabilities and shareholders equity
    
    $
    421,259
    
    
    $
    557,678
 See accompanying Notes to Condensed Consolidated Financial Statements.
 5




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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
  In thousands, except share amounts (unaudited)
    
    Six months ended June 30, 2009AccumulatedCommon Stock
    
    
    
    
    
    Additional
    
    OtherShares
    
    Shares
    
    
    
    
    
    Paid-in
    
    Comprehensive
    
    AccumulatedSeries A
    
    Series B
    
    Amount
    
    Capital
    
    Loss
    
    Deficit
    
    TotalBalance at December 31, 2008
    
    
    17,774,149
    
    
    
    2,704,816
    
    
    $
    204
    
    
    $
    484,009
    
    
    $
    (458
    )
    
    $
    (75,103
    )
    
    $
    408,652Contribution to Belo Corp.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (321
    )
    
    
    
    
    
    
    
    
    
    
    (321
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,039
    
    
    
    
    
    
    
    
    
    
    
    1,039Conversion of Series B to Series A
    
    
    261,034
    
    
    
    (261,034
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of shares for restricted
stock units
    
    
    59,234
    
    
    
    
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110,139
    )
    
    
    (110,139
    )Balance at June 30, 2009
    
    
    18,094,417
    
    
    
    2,443,782
    
    
    $
    205
    
    
    $
    484,726
    
    
    $
    (458
    )
    
    $
    (185,242
    )
    
    $
    299,231
 See accompanying Notes to Condensed Consolidated Financial Statements.
 6




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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six months ended June 30,In thousands (unaudited)
    
    2009
    
    
    2008OperationsNet loss
    
    $
    (110,139
    )
    
    $
    (11,915
    )Adjustments to reconcile net loss to net cash provided by operations:Depreciation and amortization
    
    
    23,447
    
    
    
    27,702Asset impairment
    
    
    1,749
    
    
    
    Gain/loss on disposal of fixed assets
    
    
    
    
    
    
    (213
    )Impairment on investment
    
    
    1,000
    
    
    
    Goodwill impairment
    
    
    80,940
    
    
    
    Deferred income taxes
    
    
    (73
    )
    
    
    Employee retirement benefit expense
    
    
    103
    
    
    
    65Share-based compensation
    
    
    412
    
    
    
    336Other non-cash items
    
    
    54
    
    
    
    2,791Net changes in operating assets and liabilities, excluding the effects of the
Distribution:Accounts receivable
    
    
    25,094
    
    
    
    17,986Inventories
    
    
    7,889
    
    
    
    (5,880
    )Prepaids and other current assets
    
    
    (315
    )
    
    
    176Other, net
    
    
    (566
    )
    
    
    (5,871
    )Accounts payable
    
    
    (12,424
    )
    
    
    3,813Accrued compensation and benefits
    
    
    (6,056
    )
    
    
    (1,072
    )Accrued interest payable
    
    
    11
    
    
    
    Other accrued expenses
    
    
    (874
    )
    
    
    1,557Advance subscription payments
    
    
    1,086
    
    
    
    2,148Net cash provided by operations
    
    
    11,338
    
    
    
    31,623InvestmentsCapital expenditures, net
    
    
    (4,796
    )
    
    
    (8,808
    )Other, net
    
    
    2,189
    
    
    
    313Net cash used for investments
    
    
    (2,607
    )
    
    
    (8,495
    )FinancingDividends and distributions
    
    
    
    
    
    
    (5,120
    )Payments on credit facility
    
    
    (6,460
    )
    
    
    Net cash used for financing activities
    
    
    (6,460
    )
    
    
    (5,120
    )Net increase
in cash and cash equivalents
    
    
    2,271
    
    
    
    18,008Cash and
cash equivalents at beginning of period
    
    
    9,934
    
    
    
    6,874Cash and
cash equivalents at end of period
    
    $
    12,205
    
    
    $
    24,882Supplemental DisclosuresInterest paid, net of amounts capitalized
    
    $
    221
    
    
    $
    Income taxes paid, net of refunds
    
    $
    2,515
    
    
    $
    
 See accompanying Notes to Condensed Consolidated Financial Statements.
 7




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   (1)
    
    The accompanying unaudited condensed consolidated financial statements of A. H. Belo
Corporation and its subsidiaries (the Company or A. H. 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. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. These condensed consolidated financial statements
should be read in conjunction with the audited financial statements and footnotes thereto
included in the Companys Annual Report on Form 10-K for the year ended December 31, 2008.
Operating results for the three and six month periods ended June 30, 2009 are not necessarily
indicative of the results that may be expected for the year ending December 31, 2009.(2)
    
    Accumulated Other Comprehensive Loss contains the minimum liability related to other
postemployment benefits. Comprehensive loss for all periods presented is equivalent to net
loss.(3)
    
    The Company owns and operates three primary daily newspapers: The Dallas Morning News, The
Providence Journal, and The Press-Enterprise(Riverside, CA). They publish and distribute
local, state, national, and international news. In addition to these three daily newspapers,
the Company publishes various niche products in the same or nearby markets where the primary
daily newspapers are located. Each of the Companys daily newspapers and niche publications
operates and maintains its own Web site. The Company also operates direct mail and commercial
printing businesses. The Companys operating segments are defined as its newspapers within a
given market. The Company has determined that all of its operating segments meet the criteria
under Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, to be aggregated into one reporting
segment.
    8




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(4)
    
    The following table presents stock-based awards that are excluded for purposes of calculating
diluted earnings per share for the three and six months ended June 30, 2009 and 2008:
 Three Months Ended
    
    Six Months EndedJune 30, 2009
    
    June 30, 2008
    
    June 30, 2009
    
    June 30, 2008Options excluded as the
effects are antidilutive:Number outstanding
    
    
    4,132
    
    
    
    2,471
    
    
    
    4,132
    
    
    
    2,471Weighted average exercise price
    
    $
    12.83
    
    
    $
    21.04
    
    
    $
    12.83
    
    
    $
    21.04
 (5)
    
    Prior to the Distribution, the Company established a long-term incentive plan under which
awards may be granted to employees and outside directors in the form of non-qualified stock
options, incentive stock options, restricted shares, restricted stock units, performance shares,
performance units and stock appreciation rights. In addition, options may be
accompanied by stock appreciation rights and limited stock appreciation rights. Rights and
limited rights may also be issued without accompanying options. Cash-based bonus awards are
also available under the plan.
     A. H. Belo Option Activity
  Number of
    
    Weighted AverageOptions
    
    Exercise PriceOutstanding at December 31, 2008
    
    
    3,784,388
    
    
    $
    14.32Granted
    
    
    466,620
    
    
    $
    1.26Exercised
    
    
    
    
    
    $
    Canceled
    
    
    (118,734
    )
    
    $
    14.90Outstanding at June 30, 2009
    
    
    4,132,274
    
    
    $
    12.83
 9




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A. H. Belo RSU Activity
  Number of
    
    Weighted AverageRSUs
    
    Exercise PriceOutstanding at December 31, 2008
    
    
    402,951
    
    
    $
    16.63Granted
    
    
    155,540
    
    
    $
    1.26Vested
    
    
    (98,907
    )
    
    $
    19.91Canceled
    
    
    (4,211
    )
    
    $
    16.43Outstanding at June 30, 2009
    
    
    455,373
    
    
    $
    10.62
  (6)
    
    As described in Note 7 in the 2008 Annual Report on Form 10-K, Belo retained sponsorship and
funding obligations of the G. B. Dealey Retirement Pension Plan (Pension Plan), in which
some of A. H. Belo employees participate. Under the employee matters agreement between the
Company and Belo, A. H. Belo is obligated to reimburse Belo for 60 percent of each
contribution Belo makes to the Pension Plan. As of June 30, 2009, the Company has recorded a
liability of $17,096 for these anticipated future fundings, of which $2,880 is included in
other current liabilities on the balance sheet as the amount anticipated to be reimbursed to
Belo in the second quarter of 2010. Both the fair value of the plan assets and the projected
benefit obligations are measured annually on December 31, and as such, the funded status (the
difference between the fair value of plan assets and the projected benefit obligation) of the
Pension Plan as of June 30, 2009, does not reflect changes in the fair value of plan assets or
changes in discount rates on benefit obligations. Changes in general market conditions may
affect the funded status of the Pension Plan at each December 31 measurement date.(7)
    
    On August 23, 2004, August 26, 2004 and October 5, 2004, three related lawsuits, now
consolidated, were filed by purported shareholders of Belo in the United States District Court
for the Northern District of Texas against Belo, Robert W. Decherd, and Barry T. Peckham, a
former executive officer of The Dallas Morning News, arising out of the circulation
overstatement at The Dallas Morning News. James M. Moroney III was added later as a defendant.
The plaintiffs seek to represent a purported class of shareholders who purchased Belo common
stock between May 12, 2003 and August 6, 2004, and allege violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934. On April 2, 2008, the court denied plaintiffs
motion for class certification and on April 16, 2008, plaintiffs petitioned the United States
Court of Appeals for the Fifth Circuit for permission to appeal that denial. On June 17, 2008,
permission was granted and on April 2, 2009 the Fifth Circuit heard oral argument.
On August 12, 2009, the Fifth Circuit affirmed the District Courts denial of class certification.
No amount
of damages has been specified. The Company believes the complaints are without merit and is
defending vigorously against them.
  The Dallas Morning News The Dallas Morning News
 10




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The
Press-Enterprise
  (8)
    
    In connection with the Distribution, the Company entered into a separation and distribution
agreement; a services agreement; a tax matters agreement; an employee matters agreement, which
allocates liabilities and responsibilities regarding employee compensation and benefit plans
and related matters; and, other agreements with Belo or its subsidiaries. In the separation
and distribution agreement, effective as of the Distribution Date, A. H. Belo and Belo have
agreed to indemnify each other and certain related parties from all liabilities existing or
arising from acts and events occurring, or failing to occur (or alleged to have occurred or to
have failed to occur), regarding each others businesses, whether occurring before, at or
after the effective time of the Distribution; provided, however, that under the terms of the
separation and distribution agreement, the Company and Belo will share equally in any
liabilities, net of any applicable insurance, resulting from certain circulation-related
litigation.
   The Dallas Morning News,
 (9)
    
    On January 30, 2009, the Company announced that it would pursue a number of initiatives that
focus on cost reduction. Included in these cost reduction initiatives was a reduction-in-force
of approximately 500 jobs. These reductions were completed in the first half of 2009 with all
costs of $3,336 being expensed and paid in the same period.(10)
    
    The Company had approximately $777,055 of property, plant and equipment as of June 30, 2009,
including approximately $504,008 related to publishing equipment and other fixed assets. In
addition to the original cost of these assets, their recorded value is determined by a number
of estimates made by the Company, including estimated useful lives. In accordance with SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company records
impairment charges on long-lived assets used in operations when events and circumstances
indicate that the assets may be impaired, the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amount of those assets and the net book
value of the assets exceeds their estimated fair value. In making these determinations, the
Company uses certain assumptions, including, but not limited to: (i) the estimated fair value
of the assets; and (ii) the estimated future cash flows expected to be generated by the
assets, which estimates are based on additional assumptions such as asset utilization, length
of service and estimated salvage values.
 11




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##### Table of Contents



(11)
    
    SFAS 142, Goodwill and Other Intangible Assets, requires that goodwill be tested for
impairment using the two-step method at least annually or between annual tests if an event
occurs or circumstances change that would more likely than not reduce the fair value of a
reporting unit below its carrying amount. The Company measures the fair value of its reporting
units annually on December 31. Changes in general market conditions may affect the fair value
of a reporting unit at the December 31 measurement date, which could lead to an impairment
when the Company completes its annual impairment test. However, any such impairment would not
impact the Companys liquidity. Please refer to Notes 1 and 3 to the Companys consolidated
financial statements in the 2008 Annual Report on Form 10-K for a full description of the
Companys goodwill impairment policies.
 The Dallas Morning News The Providence Journal
 The
Providence Journal The Dallas Morning News The Dallas Morning News The Dallas Morning News The
Providence Journal The Providence Journal The Providence Journal The Providence Journal The Providence Journal.
  The Dallas
    
    
    The Providence
    
    
    TheTotal Goodwill
    
    
    Morning News
    
    
    Journal
    
    
    Press-EnterpriseBalance at December 31,
2008
    
    $
    105,522
    
    
    $
    24,582
    
    
    $
    80,940
    
    
    $
    Goodwill impairment
    
    
    (80,940
    )
    
    
    
    
    
    
    (80,940
    )
    
    
    Balance at June 30, 2009
    
    
    24,582
    
    
    
    24,582
    
    
    
    
    
    
    
    
 (12)
    
    On January 30, 2009, the Company entered into an amendment and restatement of its existing
Credit Agreement dated as of February 4, 2008 with JP Morgan Chase Bank, N.A., J.P. Morgan
Securities Inc., Banc of America Securities LLC, Bank of America, N.A. and certain other
lenders party thereto (the Amended and Restated Credit Agreement). The Amended and Restated
Credit Agreement was effective as of January 30, 2009 and matures April 30, 2011. The Amended
and Restated Credit Agreement provides for a $50,000 working capital facility that is subject
to a borrowing base. Among other matters, the Amended and Restated Credit Agreement creates an
asset-based revolving credit facility secured by the Companys accounts receivable, inventory,
specified real property and other assets; sets pricing at LIBOR plus 375 basis points;
establishes minimum quarterly adjusted EBITDA covenant requirements in 2009; establishes a
fixed charge coverage ratio in 2010 of 1.0 to 1.0; allows capital expenditures and investments
of up to $16,000 per year in total; allows the Company to pay dividends when the Companys
fixed charge coverage ratio exceeds 1.2 to 1.0 and the aggregate availability under the credit
facility exceeds $15,000; and contains other covenants and restrictions, including those which
have limitations on indebtedness, liens, and asset sales. Adjusted EBITDA means, for any
period, net income for such period plus (a) without duplication and to the extent deducted in
determining net income for such period, the sum of (i) interest expense for such period, (ii)
income tax expense for such period, (iii) all amounts attributable to depreciation and
amortization expense for such period, (iv) any
 12




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##### Table of Contents



For the six months ended March 31, 2009:
    
    $
    (4,000
    )For the nine months ended June 30, 2009:
    
    $
    6,500For the 12 months ended September 30, 2009:
    
    $
    15,000For the 12 months ended December 31, 2009:
    
    $
    22,500
     June 30, 2009
    
    December 31, 2008Current maturity of revolving notes
    
    $
    3,540
    
    
    $
    10,000
 (13)
    
    Management has determined that the fair value of the Companys financial instruments which
include cash and cash equivalents, accounts receivable, cost method investments, accounts
payable and notes payable approximate their carrying values as of June 30, 2009 and
December 31, 2008 primarily due to the short-term nature, and/or the variable interest rates
associated with such instruments.
 13




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##### Table of Contents



(14)
    
    Management has evaluated the period from June 30, 2009 to August 14, 2009, the date the
financial statements were issued, for recognizable and reportable subsequent events.(15)
    
    In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB
Accounting Standards CodificationTM and the Hierarchy of Generally Accepted
Accounting Principles  a replacement of FASB Statement No. 162 (SFAS 168). SFAS 168
replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles and
establishes the FASB Accounting Standards CodificationTM (Codification) as the
source of authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in conformity with
generally accepted accounting principles in the United States. All guidance contained in the
Codification carries an equal level of authority. On the effective date of SFAS 168, the
Codification will supersede all then-existing non-SEC accounting and reporting standards. All
other nongrandfathered non-SEC accounting literature not included in the Codification will
become nonauthoritative. SFAS 168 is effective for financial statements issued for interim and
annual periods ending after September 15, 2009. The Company evaluated this new statement, and
has determined that it will not have a significant impact on the Companys consolidated
financial statements.
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands, except per share amounts)
 The following information should be read in conjunction with the Companys Condensed Consolidated
Financial Statements and related Notes filed as part of this report.
 Overview
 The Dallas Morning News, The Providence Journal The
Press-Enterprise
  Results of Operations
 (Dollars in thousands, except per share amounts)
 Consolidated Results of Operations
 Three months ended June 30,
    
    
    Six months ended June 30,Percentage
    
    
    
    
    
    
    
    
    
    
    Percentage2009
    
    
    Change
    
    
    2008
    
    
    2009
    
    
    Change
    
    
    2008Net operating revenues
    
    $
    127,504
    
    
    
    (21.9)
    %
    
    $
    163,255
    
    
    $
    255,998
    
    
    
    (20.9)
    %
    
    $
    323,442Operating costs and
expenses
    
    
    132,048
    
    
    
    (21.1)
    %
    
    
    167,362
    
    
    
    363,527
    
    
    
    7.1
    %
    
    
    339,428Other income (expense), net
    
    
    (993
    )
    
    
    (809.3)
    %
    
    
    140
    
    
    
    (471
    )
    
    
    (76.1)
    %
    
    
    (1,969
    )Loss before income taxes
    
    
    (5,537
    )
    
    
    39.6
    %
    
    
    (3,967
    )
    
    
    (108,000
    )
    
    
    501.5
    %
    
    
    (17,955
    )Income tax expense
(benefit)
    
    
    1,534
    
    
    
    (299.2)
    %
    
    
    (770
    )
    
    
    2,139
    
    
    
    (135.4)
    %
    
    
    (6,040
    )Net loss
    
    $
    (7,071
    )
    
    
    121.2
    %
    
    $
    (3,197
    )
    
    $
    (110,139
    )
    
    
    824.4
    %
    
    $
    (11,915
    )
 14




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##### Table of Contents



Revenues
 Three months ended June 30,
    
    
    Six months ended June 30,Percentage
    
    
    
    
    
    
    
    
    
    
    Percentage2009
    
    
    Change
    
    
    2008
    
    
    2009
    
    
    Change
    
    
    2008Advertising
    
    $
    87,492
    
    
    
    (30.2)
    %
    
    $
    125,341
    
    
    $
    176,823
    
    
    
    (29.2)
    %
    
    $
    249,764Circulation
    
    
    33,266
    
    
    
    9.9
    %
    
    
    30,275
    
    
    
    64,980
    
    
    
    9.4
    %
    
    
    59,380Other
    
    
    6,746
    
    
    
    (11.7)
    %
    
    
    7,639
    
    
    
    14,195
    
    
    
    (0.7)
    %
    
    
    14,298Net operating
revenues
    
    $
    127,504
    
    
    
    (21.9)
    %
    
    $
    163,255
    
    
    $
    255,998
    
    
    
    (20.9)
    %
    
    $
    323,442
  The Dallas Morning News, The Press-Enterprise The Providence Journal The Dallas Morning News The Press-Enterprise The Providence Journal
   Operating Costs and Expenses
 The Providence Journal
 15




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##### Table of Contents



Interest Expense
  Other Income, Net
  Income Taxes
  Liquidity and Capital Resources
 Operating Cash Flows
   Investing Cash Flows
  16




---



##### Table of Contents



Financing Cash Flows
    For the six months ended March 31, 2009:
    
    $
    (4,000
    )For the nine months ended June 30, 2009:
    
    $
    6,500For the 12 months ended September 30, 2009:
    
    $
    15,000For the 12 months ended December 31, 2009:
    
    $
    22,500
   17




---



##### Table of Contents



Forward-Looking Statements
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4T. Controls and Procedures
   18




---



##### Table of Contents



PART II.
 
 Item 1. Legal Proceedings
 The Dallas Morning News The Dallas Morning News.
   
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Issuer Purchases of Equity Securities
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  WithheldNominee
    
    For
    
    AuthorityDouglas G. Carlston  Class I
    
    
    38,599,633
    
    
    
    2,381,129Dealey D. Herndon  Class I
    
    
    39,031,133
    
    
    
    1,949,629David R. Morgan  Class I
    
    
    39,817,606
    
    
    
    1,163,156Tyree B. (Ty) Miller  Class III
    
    
    39,822,319
    
    
    
    1,158,443
   For
    
    Against
    
    AbstainProposal II
    
    
    33,023,648
    
    
    
    994,560
    
    
    
    92,591
  For
    
    Against
    
    AbstainProposal III
    
    
    40,626,283
    
    
    
    268,534
    
    
    
    85,945
  19




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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
  20




---



##### Table of Contents



Exhibit Number
    
    Description2.1
    
    *   Separation and Distribution Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of February 8, 2008 (Exhibit 2.1 to the
Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2008 (Securities and Exchange
Commission File No. 001-33741) (the February 12, 2008 Form 8-K))3.1
    
    *   Amended and Restated Certificate of Incorporation of the Company (Exhibit 3.1 to Amendment No. 3 to the Companys Form 10 dated January 18,
2008 (Securities and Exchange Commission File No. 001-33741) (the Third Amendment to Form 10))3.2
    
    *   Certificate of Designations of Series A Junior Participating Preferred Stock of the Company dated January 11, 2008 (Exhibit 3.2 to
Post-Effective Amendment No. 1 to Form 10 dated January 31, 2008 (Securities and Exchange Commission File No. 001-33741))3.3
    
    *   Amended and Restated Bylaws of the Company, effective January 11, 2008 (Exhibit 3.3 to the Third Amendment to Form 10)4.1
    
    Certain rights of the holders of the Companys Common Stock are set forth in Exhibits 3.1-3.3 above4.2
    
    *   Specimen Form of Certificate representing shares of the Companys Series A Common Stock (Exhibit 4.2 to the Third Amendment to Form 10)4.3
    
    *   Specimen Form of Certificate representing shares of the Companys Series B Common Stock (Exhibit 4.3 to the Third Amendment to Form 10)4.4
    
    *   Rights Agreement dated as of January 11, 2008 between the Company and Mellon Investor Services LLC (Exhibit 4.4 to the Third Amendment to
Form 10)10.1
    
    Financing agreements:(1)* Credit Agreement dated as of February 4, 2008 among the Company, as Borrower, JPMorgan Chase, N.A., as Administrative Agent, JPMorgan
Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers and Bookrunners, Bank of America, N.A., as Syndication Agent,
SunTrust Bank and Capitol One Bank, N.A. as Co-Documentation Agents (Exhibit 99.1 to the Companys Current Report on Form 8-K filed with
the Securities and Exchange Commission on February 5, 2008 (Securities and Exchange Commission File No. 001-33741))~   (2)* First Amendment and Waiver to the Credit Agreement dated as of October 23, 2008 (Exhibit 10.1 to the Companys Current Report on Form
8-K filed with the Securities and Exchange Commission on October 24, 2008 (Securities and Exchange Commission File No. 001-33741))~   (3)* Amended and Restated Credit Agreement dated as of January 30, 2009, (Exhibit 10.1 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on February 2, 2009 (Securities and Exchange Commission File No. 001-33741) (the February 2,
2009 Form 8-K)~   (4)* Amended and Restated Pledge and Security Agreement dated as of January 30, 2009 (Exhibit 10.2 to the February 2, 2009 From 8-K)10.2
    
    Compensatory plans:~ (1)*    A. H. Belo Corporation Savings Plan (Exhibit 10.4 to the February 12, 2008 Form 8-K)* (a)  First Amendment to the A. H. Belo Savings Plan dated September 23, 2008 (Exhibit
10.2(1)(A) to the Companys Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission on November 14, 2008 (Securities and Exchange Commission
File No. 001-33741))* (b)  Second Amendment to the A. H. Belo Savings Plan effective March 27, 2009 (Exhibit
10.1 to the Companys Current Report on From 8-K filed with the Securities and
Exchange Commission on April 2, 2009 (Securities and Exchange Commission File No.
001-33741) (the April 2, 2009 Form 8-K)* (b)  Third Amendment to the A. H. Belo Savings Plan effective March 31, 2009 (Exhibit
10.2 to the April 2, 2009 Form 8-K)~ (2)*   A. H. Belo Corporation 2008 Incentive Compensation Plan (Exhibit 10.5 to the
February 12, 2008 Form 8-K)* (a)   First Amendment to A. H. Belo 2008 Incentive Compensation Plan effective July 23,
2008 (Exhibit 10.2(2)(A) to the Companys Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on August 14, 2008 (Securities and Exchange
Commission File No. 001-33741))
 21




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##### Table of Contents



Exhibit Number
    
    Description* (b)  Form of A. H. Belo 2008 Incentive Compensation Plan Non-Employee Director Evidence
of Award (Exhibit 10.2(2)(A) to the Companys Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission on May 15, 2008 (Securities and
Exchange Commission File No. 001-33741) (the First Quarter 2008 Form 10-Q))* (c)   Form of A. H. Belo 2008 Incentive Compensation Plan Evidence of Award (for Employee
Awards) (Exhibit 10.2(2)(B) to the First Quarter 2008 Form 10-Q)~ (3)*   A. H. Belo Pension Transition Supplement Restoration Plan effective January 1, 2008
(Exhibit 10.6 to the February 12, 2008 Form 8-K)* (a)  First Amendment to the A. H. Belo Pension Transition Supplement Restoration Plan
dated March 31, 2009 (Exhibit 10.4 to the April 2, 2009 From 8-K)~ (4)*   A. H. Belo Corporation Change In Control Severance Plan (Exhibit 10.7 to the
February 12, 2008 Form 8-K)* (a)  Amendment to the A. H. Belo Change in Control Severance Plan dated March 31, 2009
(Exhibit 10.3 to the April 2, 2009 Form 8-K)10.3
    
    Agreements relating to the Distribution of A. H. Belo:(1)*   Tax Matters Agreement by and between Belo Corp. and A. H. Belo Corporation dated as
of February 8, 2008 (Exhibit 10.1 to the February 12, 2008 Form 8-K)(2)*  Employee Matters Agreement by and between Belo Corp. and A. H. Belo Corporation
dated as of February 8, 2008 (Exhibit 10.2 to the February 12, 2008 Form 8-K)(3)*  Services Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of
February 8, 2008 (Exhibit 10.3 to the February 12, 2008 Form 8-K)(4)*  Separation and Distribution Agreement by and between Belo Corp. and A. H. Belo
Corporation dated as of February 8, 2008 (See Exhibit 2.1 to the February 12, 2008
Form 8-K)31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 22




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##### Table of Contents



SIGNATURES
  A. H. BELO CORPORATIONAugust 14, 2009
    By:
    /s/ Alison K. EngelAlison K. EngelSenior Vice President/Chief Financial Officer and
Treasurer (Principal Financial Officer)August 14, 2009
    By:
    /s/ George F. FinfrockGeorge F. FinfrockVice President/Corporate Controller
(Principal Accounting Officer) EXHIBIT INDEX
 Exhibit Number
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 23