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: March 31, 2010
 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
    
    38-3765318(State or other jurisdiction of
    
    (I.R.S. employerincorporation or organization)
    
    identification no.)P. O. Box 224866Dallas, Texas
    
    75222-4866(Address of principal executive offices)
    
    (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 May 3, 2010Common Stock, $.01 par value
    
    20,868,296
 
 *
    
    Consisting of 18,344,202 shares of Series A Common Stock and
2,524,094 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
    
    
    15Item 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
    
    
    23
 2




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##### 



PART I.
 
 Item 1. Financial Statements
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three months ended March 31,In thousands, except per share amounts (unaudited)
    
    2010
    
    
    2009Net Operating RevenuesAdvertising
    
    $
    72,186
    
    
    $
    89,331Circulation
    
    
    35,586
    
    
    
    31,714Other
    
    
    7,986
    
    
    
    7,449Total net operating revenues
    
    
    115,758
    
    
    
    128,494Operating Costs and ExpensesSalaries, wages and employee benefits
    
    
    56,254
    
    
    
    62,894Other production, distribution and operating costs
    
    
    46,030
    
    
    
    55,866Newsprint, ink and other supplies
    
    
    11,222
    
    
    
    19,619Asset impairment
    
    
    
    
    
    
    80,940Depreciation
    
    
    9,164
    
    
    
    10,536Amortization
    
    
    1,310
    
    
    
    1,624Total operating costs and expenses
    
    
    123,980
    
    
    
    231,479Loss from operations
    
    
    (8,222
    )
    
    
    (102,985
    )Other Income and ExpenseInterest expense
    
    
    (203
    )
    
    
    (300
    )Other income, net
    
    
    25
    
    
    
    822Total other income (expense)
    
    
    (178
    )
    
    
    522Loss before income taxes
    
    
    (8,400
    )
    
    
    (102,463
    )Income tax expense (benefit)
    
    
    728
    
    
    
    (1,756
    )Net loss
    
    $
    (9,128
    )
    
    $
    (100,707
    )Net loss per share:Basic and diluted
    
    $
    (0.44
    )
    
    $
    (4.91
    )Weighted average shares outstanding:Basic and diluted
    
    
    20,767
    
    
    
    20,506
 See accompanying Notes to Condensed Consolidated Financial Statements.
 3




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##### 



CONDENSED CONSOLIDATED BALANCE SHEETS
  March 31, 2010
    
    
    December 31, 2009In thousands, except share and per share amounts
    
    (unaudited)AssetsCurrent assets:Cash and temporary cash investments
    
    $
    42,863
    
    
    $
    24,503Accounts receivable (net of allowance of $5,832 and $6,505
at March 31, 2010 and December 31, 2009, respectively)
    
    
    48,722
    
    
    
    62,977Funds held by Belo Corp. for future pension payments
    
    
    7,908
    
    
    
    11,978Inventories
    
    
    10,829
    
    
    
    10,460Assets held for sale
    
    
    5,268
    
    
    
    5,268Prepaids and other current assets
    
    
    8,290
    
    
    
    6,758Total current assets
    
    
    123,880
    
    
    
    121,944Property, plant and equipment at cost:Land
    
    
    27,844
    
    
    
    27,844Buildings and improvements
    
    
    211,768
    
    
    
    211,793Publishing equipment
    
    
    348,236
    
    
    
    348,089Other
    
    
    153,449
    
    
    
    146,174Advance payments on property, plant and equipment
    
    
    5,674
    
    
    
    12,996Total property, plant and equipment
    
    
    746,971
    
    
    
    746,896Less accumulated depreciation
    
    
    552,393
    
    
    
    543,567Property, plant and equipment, net
    
    
    194,578
    
    
    
    203,329Intangible assets, net
    
    
    26,117
    
    
    
    27,427Goodwill
    
    
    24,582
    
    
    
    24,582Investments
    
    
    21,238
    
    
    
    21,314Other assets
    
    
    5,573
    
    
    
    5,831Total assets
    
    $
    395,968
    
    
    $
    404,427
 See accompanying Notes to Condensed Consolidated Financial Statements.
 4




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##### 



CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
  March 31, 2010
    
    
    December 31, 2009In thousands, except share and per share amounts
    
    (unaudited)Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    15,360
    
    
    $
    19,191Accrued compensation and benefits
    
    
    14,998
    
    
    
    11,692Other accrued expenses
    
    
    17,512
    
    
    
    18,096Advance subscription payments
    
    
    26,479
    
    
    
    26,713Total current liabilities
    
    
    74,349
    
    
    
    75,692Other post employment benefits
    
    
    3,500
    
    
    
    3,876Deferred income taxes
    
    
    566
    
    
    
    223Other liabilities
    
    
    3,778
    
    
    
    3,039Commitments 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 18,282,918 and 18,248,970 shares at March 31,
2010 and December 31, 2009, respectively
    
    
    183
    
    
    
    182Series B: issued 2,507,330 and 2,507,590 shares at March 31,
2010 and December 31, 2009, respectively
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    489,546
    
    
    
    488,241Accumulated other comprehensive income (loss)
    
    
    3,364
    
    
    
    3,364Accumulated deficit
    
    
    (179,343
    )
    
    
    (170,215
    )Total shareholders equity
    
    
    313,775
    
    
    
    321,597Total liabilities and shareholders equity
    
    $
    395,968
    
    
    $
    404,427
 See accompanying Notes to Condensed Consolidated Financial Statements.
 5




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##### 



CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
  In thousands, except shareamounts (unaudited)
    
    Three months ended March 31, 2010Common Stock
    
    
    
    
    
    Additional
    
    OtherShares
    
    Shares
    
    
    
    
    
    Paid-in
    
    Comprehensive
    
    RetainedSeries A
    
    Series B
    
    Amount
    
    Capital
    
    Income
    
    Deficit
    
    TotalBalance at December 31, 2009
    
    
    18,248,970
    
    
    
    2,507,590
    
    
    $
    207
    
    
    $
    488,241
    
    
    $
    3,364
    
    
    $
    (170,215
    )
    
    $
    321,597Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,306
    
    
    
    
    
    
    
    
    
    
    
    1,306Conversion of Series B to Series A
    
    
    260
    
    
    
    (260
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of shares for restricted
stock units
    
    
    144
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Issuance of shares for stock
option exercises
    
    
    33,544
    
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    
    
    
    
    
    
    
    
    172Income tax on stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (173
    )
    
    
    
    
    
    
    
    
    
    
    (173
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,128
    )
    
    
    (9,128
    )Balance at March 31, 2010
    
    
    18,282,918
    
    
    
    2,507,330
    
    
    $
    208
    
    
    $
    489,546
    
    
    $
    3,364
    
    
    $
    (179,343
    )
    
    $
    313,775
 See accompanying Notes to Condensed Consolidated Financial Statements.
 6




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##### 



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three months ended March 31,In thousands (unaudited)
    
    2010
    
    
    2009OperationsNet loss
    
    $
    (9,128
    )
    
    $
    (100,707
    )Adjustments to reconcile net loss to net cash (used in) provided by operations:Depreciation and amortization
    
    
    10,474
    
    
    
    12,160Impairment on investment
    
    
    
    
    
    
    500Asset impairment
    
    
    
    
    
    
    80,940Deferred income taxes
    
    
    343
    
    
    
    (1,302
    )Employee retirement benefit expense (income)
    
    
    (95
    )
    
    
    69Pension expense
    
    
    4,072
    
    
    
    Share-based compensation
    
    
    2,106
    
    
    
    (126
    )Other non-cash items
    
    
    (673
    )
    
    
    (1,192
    )Net changes in operating assets and liabilities,
excluding the effects of the Distribution:Accounts receivable
    
    
    14,927
    
    
    
    20,481Inventories
    
    
    (369
    )
    
    
    3,796Prepaids and other current assets
    
    
    (1,532
    )
    
    
    (1,612
    )Other, net
    
    
    (85
    )
    
    
    (790
    )Accounts payable
    
    
    (3,831
    )
    
    
    (13,284
    )Accrued compensation and benefits
    
    
    3,306
    
    
    
    (5,540
    )Accrued interest payable
    
    
    
    
    
    
    32Other accrued expenses
    
    
    (584
    )
    
    
    1,180Advance subscription payments
    
    
    (234
    )
    
    
    725Net cash (used for) provided by operations
    
    
    18,697
    
    
    
    (4,670
    )InvestmentsCapital expenditures, net
    
    
    (793
    )
    
    
    (2,050
    )Other, net
    
    
    457
    
    
    
    945Net cash used for investments
    
    
    (336
    )
    
    
    (1,105
    )FinancingProceeds from credit facility
    
    
    
    
    
    
    2,650Proceeds from credit facility
    
    
    
    
    
    
    2,650Net (decrease) increase in cash and temporary cash investments
    
    
    18,361
    
    
    
    (3,125
    )Cash and temporary cash investments at beginning of period
    
    
    24,503
    
    
    
    9,934Cash and temporary cash investments at end of period
    
    $
    42,864
    
    
    $
    6,809Supplemental DisclosuresInterest paid, net of amounts capitalized
    
    $
    
    
    
    $
    115Income taxes paid, net of refunds
    
    $
    261
    
    
    $
    1
 See
accompanying Notes to Condensed Consolidated Financial Statements.
 7




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##### 



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 United States Generally Accepted Accounting Principles, (GAAP) 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 GAAP for complete financial statements. The preparation of consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Transactions between the companies comprising A. H. Belo have
been eliminated in the condensed consolidated financial statements. 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, 2009. Operating results for the three month period ended March 31,
2010 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2010.
 (2)
    
    The Company owns and operates three primary daily newspapers: The Dallas Morning News, The
Providence Journal, and The Press-Enterprise(Riverside, CA). Each publishes and distributes
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 and distribution businesses. The Companys operating segments are defined as its
newspapers within a given market. The Company has determined that according to the applicable
accounting guidance all of its operating segments meet the criteria to be aggregated into one
reporting segment.
  (3)
    
    Accumulated Other Comprehensive Gain/(Loss) contains the minimum liability related to other
post-employment benefits and deferral of the gain resulting from a negative plan amendment
to The Press-Enterprisepost-employment benefit plan. The gain is being recognized over six
years, the average life expectancy of the remaining plan participants.
 (4)
    
    The following table presents stock-based awards that are excluded for purposes of calculating
diluted earnings per share for the three months ended March 31, 2010 and 2009:
 Three Months EndedMarch 31, 2010
    
    March 31, 2009Options excluded as the effects are
antidilutive:Number outstanding
    
    
    3,019,792
    
    
    
    3,754,268Weighted average exercise price
    
    $
    14.50
    
    
    $
    14.32
 (5)
    
    Prior to the Distribution, A. H. Belo 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
 8




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##### 



A. H. Belo Option Activity
  Number of
    
    Weighted AverageOptions
    
    Exercise PriceOutstanding at December 31, 2009
    
    
    3,127,424
    
    
    $
    14.20Granted
    
    
    
    
    
    $
    Exercised
    
    
    (33,544
    )
    
    $
    4.02Canceled
    
    
    (74,088
    )
    
    $
    6.32Outstanding at March 31, 2010
    
    
    3,019,792
    
    
    $
    14.50
  A. H. Belo RSU Activity
  9




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##### 



Number of
    
    Weighted Average PriceRSUs
    
    on Date of GrantOutstanding at December 31, 2009
    
    
    438,582
    
    
    $
    16.63Granted
    
    
    726,979
    
    
    $
    6.19Vested
    
    
    (241
    )
    
    $
    19.78Canceled
    
    
    (24,568
    )
    
    $
    12.17Outstanding at March 31, 2010
    
    
    1,140,752
    
    
    $
    7.72
  (6)
    
    Subsequent to the Distribution, Belo retained sponsorship of The G. B. Dealey Retirement
Pension Plan (Pension Plan), and, jointly with A. H. Belo, oversees the investments of the
Pension Plan. Belo administers benefits for the Belo and A. H. Belo current and former
employees who participate in the Pension Plan in accordance with the terms of the Pension
Plan. As sponsor of the Pension Plan, Belo is solely responsible for directly satisfying the
funding obligations with respect to the Pension Plan and retains sole discretion to determine
the amount and timing of any contributions required to satisfy such funding obligations. Belo
also retains the right, in its sole discretion, to terminate the Pension Plan.
   (7)
    
    On October 24, 2006, 18 former employees of The Dallas Morning Newsfiled a lawsuit against
various A. H. Belo-related parties in the United States District Court for the Northern
District of Texas. The plaintiffs lawsuit mainly consists of claims of unlawful
discrimination and ERISA violations. In June 2007, the court issued a memorandum order
granting in part and denying in part defendants motion to dismiss. In August 2007 and in
March 2009, the court dismissed certain additional claims. A trial date is tentatively planned
for March or April 2011. The Company believes the lawsuit is without merit and is defending
vigorously against it.
 The
Press-Enterprise
  10




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##### 



(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 and
other agreements with Belo or its subsidiaries. Under 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 certain 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.
     (9)
    
    The Company had approximately $746,971 of property, plant and equipment as of March 31, 2010,
including approximately $348,236 related to publishing equipment. 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 the applicable accounting
guidance, the Company records impairment charges on property plant and equipment 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. No
related impairment was recorded in the three month periods ended March 31, 2010 or March 31,
2009.
 (10)
    
    Assets held for sale consist of land and buildings and improvements related to the decision
to market for sale a 133,390 square foot warehouse-assembly facility located on 49.85 acres in
Dallas near Interstate 20 and Interstate 45 (the South Plant). During 2009, in an
additional step to reduce its costs, The Dallas Morning Newselected to consolidate its
production facilities and relocated production equipment from the South Plant to its plant in
Plano, Texas where newspapers are printed (the North Plant). The South Plant was built in
2007 and was used by The Dallas Morning Newsfor the collating and assembly of the preprint
packages included in the Sunday newspaper. The Company, with the assistance of a third party,
estimated the market value of the South Plant based on market information for comparable
properties in the Dallas-Fort Worth area. The estimated market value was compared to carrying
value and, as a result, the Company recorded $20,000 of impairment expense in the third
quarter of 2009, to align the carrying value with estimated market value, less selling costs.
The Company began marketing the South Plant for sale during the third quarter of 2009. There
have been no changes in the status of the property since December 31, 2009.
 11




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##### 



March 31, 2010
    
    
    December 31, 2009Land
    
    $
    1,067
    
    
    $
    1,067Building and improvements
    
    
    4,201
    
    
    
    4,201Total assets held for sale
    
    $
    5,268
    
    
    $
    5,268
 (11)
    
    Accounting guidance related to goodwill 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 2009 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 Providence Journal, The Providence Journal The Providence Journal The Providence Journal The Providence Journal.
  The Dallas
    
    
    The Providence
    
    
    The Press-Total Goodwill
    
    
    Morning News
    
    
    Journal
    
    
    EnterpriseGross goodwill balance as of January 1,
2009
    
    
    526,248
    
    
    
    26,076
    
    
    
    370,155
    
    
    
    130,017Accumulated amortization
    
    
    (62,157
    )
    
    
    (1,494
    )
    
    
    (46,421
    )
    
    
    (14,242
    )Accumulated impairment
    
    
    (358,569
    )
    
    
    
    
    
    
    (242,794
    )
    
    
    (115,775
    )Impairment recorded in 2009
    
    
    (80,940
    )
    
    
    
    
    
    
    (80,940
    )
    
    
    Net goodwill balance at December 31, 2009
    
    $
    24,582
    
    
    $
    24,582
    
    
    $
    
    
    
    $
    Gross goodwill balance as of January 1,
2010
    
    
    526,248
    
    
    
    26,076
    
    
    
    370,155
    
    
    
    130,017Accumulated amortization
    
    
    (62,157
    )
    
    
    (1,494
    )
    
    
    (46,421
    )
    
    
    (14,242
    )Accumulated impairment
    
    
    (439,509
    )
    
    
    
    
    
    
    (323,734
    )
    
    
    (115,775
    )Net goodwill balance at March 31, 2010
    
    $
    24,582
    
    
    $
    24,582
    
    
    $
    
    
    
    $
    
 12




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##### 



Total Subscriber
    
    
    The Dallas
    
    
    The Providence
    
    
    The Press-Lists
    
    
    Morning News
    
    
    Journal
    
    
    EnterpriseGross balance at December 31, 2009
    
    $
    114,824
    
    
    $
    22,896
    
    
    $
    78,698
    
    
    $
    13,230Accumulated amortization
    
    
    (87,397
    )
    
    
    (22,896
    )
    
    
    (56,109
    )
    
    
    (8,392
    )Net balance at December 31, 2009
    
    $
    27,427
    
    
    $
    
    
    
    $
    22,589
    
    
    $
    4,838Gross balance at December 31, 2009
    
    $
    114,824
    
    
    $
    22,896
    
    
    $
    78,698
    
    
    $
    13,230Accumulated amortization at March
31, 2010
    
    
    (88,707
    )
    
    
    (22,896
    )
    
    
    (57,202
    )
    
    
    (8,609
    )Net balance at March 31, 2010
    
    $
    26,117
    
    
    $
    
    
    
    $
    21,496
    
    
    $
    4,621
 (12)
    
    On December 3, 2009, the Company entered into the Second Amendment (Second Amendment) to
the Amended and Restated Credit Agreement (the Amended and Restated Credit Agreement as so
amended, the Credit Agreement). Among other matters, the Second Amendment to the Credit
Agreement extended the maturity date of the credit facility from April 30, 2011 to September
30, 2012, reduced the total commitment amount from $50,000 to $25,000, and released the lien
on certain real property securing the facility. The amended facility remains subject to a
borrowing base. If borrowing capacity under the Credit Facility becomes less than $17,500,
then a fixed charge coverage ratio covenant of 1:1 will apply. The Second Amendment also makes
certain minor administrative amendments to the Amended and Restated Pledge and Security
Agreement dated as of January 30, 2009. The decrease in the Companys revolving credit
facility from $50,000 to $25,000 was a decision made by management. Management concluded that
based on estimated future borrowing needs, the cost of the revolving credit facility, and
borrowing base availability, $25,000 was sufficient to meet the Companys borrowing needs.
The borrowing base is calculated using eligible accounts receivable and inventory, as defined
in the Credit Agreement. A decrease in the borrowing base could potentially limit the
Companys borrowing capacity. At March 31, 2010, the Company had eligible collateral to secure
the Credit Agreement of $32,822, resulting in a borrowing base of $25,000. When letters of
credit and other required reserves are deducted from the borrowing base, the Company had
$18,911 of borrowing capacity available under the credit facility. At December 31, 2009, the
Company had eligible collateral to secure the Credit Agreement of $44,202, resulting in a
borrowing base of $25,000. When letters of credit and other required reserves are deducted
from the borrowing base, the Company had $18,871 of borrowing capacity available under the
Credit Agreement as of December 31, 2009.
  (13)
    
    Management has determined that the fair value of the Companys financial instruments which
include cash and cash equivalents, accounts receivable, accounts payable and notes payable
approximate their carrying values as of March 31, 2010 and December 31, 2009 primarily due to
the short-term nature, and/or the variable interest rates associated with such instruments.
The fair value of assets held for sale, based on current market values, also approximate their
carrying values as of March 31, 2010.
 (14)
    
    In connection with the February 2008 Distribution and after an assessment of their
respective downtown Dallas real estate needs, A. H. Belo and Belo Corp. agreed to co-own,
through the creation of a limited liability company (LLC), The Belo Building, (a seventeen
story office building in downtown Dallas), related parking sites, and other real estate. A. H. Belo and Belo each own 50 percent of the LLC and each lease from the LLC 50 percent of the
available rental space in The Belo Building and related parking sites under long-term leases.
These leases are terminable under various conditions. A third party real estate services firm,
engaged by the LLC, manages The Belo Building and other real estate owned by the LLC. The
Company accounts for this investment using the equity method.
  13




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##### 



In addition to the LLC, A. H. Belo has invested in other startup companies related to the
news and information industry. Details of the investment amounts are in the table below:
 March 31, 2010
    
    
    December 31, 2009LLC owning The Belo Building
    
    $
    16,112
    
    
    $
    16,344Other equity method investments
    
    
    1,515
    
    
    
    Other cost method investments
    
    
    3,611
    
    
    
    4,970Total investments
    
    $
    21,238
    
    
    $
    21,314
 Although, some of the real estate owned by the LLC is currently being marketed for sale,
management considers all of the investments long-term in nature. The ability to readily
convert these investments into cash is limited.
 (15)
    
    Income taxes are recorded using the liability method in accordance with applicable accounting
guidance. The provision for income taxes reflects the Companys estimate of the effective rate
expected to be applicable for the full fiscal year, adjusted by any discrete events, which are
reported in the period in which they occur. This estimate is re-evaluated each quarter based
on the Companys estimated tax expense for the year.
 The Company recognized income tax expense of approximately $728 for the three months ended
March 31, 2010, representing an effective income tax rate of (8.67) percent. The Company
recognized an income tax benefit of approximately $1,756 for the three months ended March 31,
2009, representing an effective income tax rate of 1.71 percent. The tax expense for the three
months ended March 31, 2010 is primarily attributable to tax expense incurred related to the
Texas margin tax and Rhode Island state income tax. The tax benefit for the three months ended
March 31, 2009 is primarily attributable to the operating losses incurred by the Company during
the first quarter of 2009.The Company projects taxable losses for the year for federal income tax purposes and some state
jurisdictions in which the Company operates. Net operating losses can be carried forward to
offset future taxable income. The Companys net operating loss carryforwards begin to expire
in the years 2030 and 2031 if not utilized.The applicable accounting guidance places a threshold for recognition of deferred tax assets.
Based on the criteria established by the applicable accounting guidance, the Company
established a valuation allowance against the deferred tax assets in certain jurisdictions in
March of 2009, as it was more likely than not that the benefit resulting from these deferred
tax assets would not be realized. The factors used to assess the likelihood of realization of
the deferred tax assets include reversal of future deferred tax liabilities, available tax
planning strategies, and future taxable income. Any reversal relating to the valuation
allowance will be recorded as a reduction of income tax expense. The Company increased the
valuation allowance for the quarter ended March 31, 2010 by $3,449. The applicable accounting
guidance places a threshold for recognition of deferred tax assets. Based on the criteria
established by the applicable accounting guidance, the Company established a valuation
allowance against the deferred tax assets in certain jurisdictions in March of 2009, as it was
more likely than not that the benefit resulting from these deferred tax assets would not be
realized. The factors used to assess the likelihood of realization of the deferred tax assets
include reversal of future deferred tax liabilities, available tax planning strategies, and
future taxable income. Any reversal relating to the valuation allowance will be recorded as a
reduction of income tax expense.
 (16)
    
    The total number of authorized shares of common stock is 125,000,000 shares. The Company has
two series of common stock outstanding, Series A and Series B, each with a par value of $0.01
per share. The Series A and Series B shares are identical except as noted herein. Series B
shares are entitled to 10 votes per share on all matters submitted to a vote of shareholders,
while the Series A shares are entitled to one vote per share. Series B shares are convertible
at any time on a one-for-one basis into Series A shares but Series A shares are not
convertible into Series B shares. Shares of the Companys Series A common stock are traded on
the New York Stock Exchange (NYSE symbol: AHC). There is no established public trading market
for shares of Series B common stock. Transferability of the Series B shares is limited to
family members and affiliated entities of the holder. Upon any other type of transfer, the
Series B shares automatically convert into Series A shares.
 14




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##### 



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)
 Condensed Consolidated Results of Operations
 Three months ended March 31,Percentage2010
    
    
    Change
    
    
    2009Net operating revenues
    
    $
    115,758
    
    
    
    (9.9
    )%
    
    $
    128,494Operating costs and expenses
    
    
    123,980
    
    
    
    (46.4
    )%
    
    
    231,479Other income (expense)
    
    
    (178
    )
    
    
    (134.1
    )%
    
    
    522Loss before income taxes
    
    
    (8,400
    )
    
    
    (91.8
    )%
    
    
    (102,463
    )Income tax expense (benefit)
    
    
    728
    
    
    
    (141.5
    )%
    
    
    (1,756
    )Net loss
    
    $
    (9,128
    )
    
    
    (90.9
    )%
    
    $
    (100,707
    )
  Revenues
 Three months ended March 31,Percentage2010
    
    
    Change
    
    
    2009Advertising
    
    $
    72,186
    
    
    
    (19.2
    )%
    
    $
    89,331Circulation
    
    
    35,586
    
    
    
    12.2
    %
    
    
    31,714Other
    
    
    7,986
    
    
    
    7.2
    %
    
    
    7,449Net operating revenues
    
    $
    115,758
    
    
    
    (9.9
    )%
    
    $
    128,494
 15




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##### 



The Dallas Morning News, The Press-Enterprise The Providence Journal The Dallas Morning News The
Press-Enterprise The Providence Journal
 The Press-Enterprise.
  Operating Costs and Expenses
 Three months ended March 31,Percentage2010
    
    
    Change
    
    
    2009Salaries, wages and employee benefits
    
    $
    56,254
    
    
    
    (10.6
    )%
    
    $
    62,894Other production, distribution and operating costs
    
    
    46,030
    
    
    
    (17.6
    )%
    
    
    55,866Newsprint, ink and other supplies
    
    
    11,222
    
    
    
    (42.8
    )%
    
    
    19,619Asset impairment
    
    
    
    
    
    
    (100.0
    )%
    
    
    80,940Depreciation
    
    
    9,164
    
    
    
    (13.0
    )%
    
    
    10,536Amortization
    
    
    1,310
    
    
    
    (19.3
    )%
    
    
    1,624Total operating costs and expenses
    
    $
    123,980
    
    
    
    (46.4
    )
    
    $
    231,479
 The Providence Journal
 16




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##### 



The Dallas Morning News
 Interest Expense
  Other Income, Net
 The Dallas Morning News
 Income Taxes
   Liquidity and Capital Resources
 Operating Cash Flows
    Investing Cash Flows
  17




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##### 



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




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##### 




    
    Preparing more robust documentation over the Companys analysis and conclusions over the
Companys critical accounting policies;
    
    Preparing more detailed analyses of conclusions reached in (a) the selection of new
accounting policies and (b) the accounting for significant non-routine transactions.
    
    Enhancing management review controls over conclusions reached with regard to
documentation of critical accounting policies, selection of new policies and accounting for
significant non-routine transactions.
  
 PART II.
 
 Item 1.
    
    Legal Proceedings
  
 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
  19




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##### 



Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
  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)(5)*
    
    First Amendment to the Amended and Restated Credit Agreement dated as of August 18, 2009 (Exhibit 10.1(5)
to the Companys Quarterly Report on Form 10-Q file with the Securities and Exchange Commission on December 13,
2009 (Securities and Exchange Commission File No. 001-33741))
 20




---



##### 



Exhibit Number
    
    Description(6)*
    
    Second Amendment to the Amended and Restated Credit Agreement dated as of December 3, 2009, 2009 (Exhibit
10.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on December
4, 2009 (Securities and Exchange Commission File No. 001-33741))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))*(c)
    
    Third Amendment to the A. H. Belo Savings Plan effective March 31, 2009 (Exhibit 10.2 to the April 2, 2009
Form 8-K)*(d)
    
    Fourth Amendment to the A. H. Belo Savings Plan dated September 10, 2009,
(Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 10, 2009 (Securities and Exchange Commission File No. 001-33741))~ (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))(b)
    
    Form of A. H. Belo 2008 Incentive Compensation Plan Non-Employee Director Evidence of Grant
(for Non-Employee Director Awards)(c)
    
    Form of A. H. Belo 2008 Incentive Compensation Plan Evidence of Grant (for Employee Awards)~ (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)* (a)
    
    First Amendment to Tax Matters Agreement by and between Belo Corp. and A. H. Belo
Corporation dated September 14, 2009 (Exhibit 10.1 to the Companys Current Report on Form
8-K filed with the Securities and Exchange Commission on September 15, 2009 (Securities and
Exchange Commission file No. 00-00741))(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)
 21




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##### 



Exhibit Number
    
    Description(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




---



##### 



SIGNATURES
  A. H. BELO CORPORATIONMay 13, 2010
    By:
    /s/ Alison K. EngelAlison K. EngelSenior Vice President/Chief Financial Officer and
Treasurer (Principal Financial Officer)May 13, 2010
    By:
    /s/ Michael N. LaveyMichael N. LaveyVice President/Corporate Controller
(Principal Accounting Officer) EXHIBIT INDEX
 Exhibit Number
    
    Description10.2(2)(b)
    
    Form of A. H. Belo 2008 Incentive Compensation Plan Non-Employee Director Evidence of Grant (for
Non-Employee Director Awards)10.2(2)(c)
    
    Form of A. H. Belo 2008 Incentive Compensation Plan Evidence of Grant (for Employee Awards)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
 23