Whoops! ‘Dallas Morning News’ Parent Restating Financial Results on Pension Accounting Error

By: Mark Fitzgerald

Dallas Morning News parent A.H. Belo Corp. said Wednesday will restate its financial results dating back to its spin-off as a newspaper pure-play in February 2008.

A.H. Belo said it discovered an error in its pension accounting from the time it spun off from Belo Corp., which is now a television broadcast company. Under the agreement, A.H. Belo had agreed to reimburse Belo for 60% of Belo’s future contributions to the pension plan, or about $118 million.

“The company re-evaluated the facts and circumstances and accounting literature related to this contractual obligation and as a result, concluded it incorrectly accounted for the contractual obligation,” A.H. Belo said. “In substance, the obligation under the employee matters agreement is analogous to a multiemployer plan, and the company determined it should follow the multiemployer pension plan accounting principle.”

As a result of the restatement, A.H. Belo will reverse about $17.1 million in non-cash pension liabilities. It said the restatement would not affect its credit agreement.

This year, A.H. Belo expects to contribute about $8.6 million to the plan, which was frozen in 2007.

“Belo is holding approximately $12 million on deposit on behalf of A. H. Belo to apply to A. H. Belo’s 2010 and other future reimbursement obligations,” A.H. Belo said.

But the newspaper publisher added it expects it will be required to make “significant future contributions” to the plan. In its annual report for the year ended Dec. 31, 2009, Belo said the pension plan was underfunded by $196 million. A.H. Belo is on the hook for 60% of that, or
$118 million.

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