A. H. Belo Corporation to Restate Financial Results to Reflect Change in Pension Accounting

A. H. Belo Corporation to Restate Financial Results to Reflect Change in Pension Accounting

Lance E. Barba

ACC537 - FINANCIAL ACCOUNTING

January 30, 2012

Caryn Callahan

A. H. Belo Corporation to Restate Financial Results to Reflect Change in Pension Accounting

During the regular audit of its December 31, 2009, A.H. Belo Corporation (AHC) identified a potential error of generally accepted accounting principles related to a spin-off of Belo Corporation (BELO). Apparently, the contractual obligation of a pension plan was incorrectly accounted for, and was determined they should use the multiemployer pension plan accounting principle.

No contributions were required during the years ended December 31, 2009 and 2008. AHC will restate its consolidated financial statements to correct the error. These adjustments are non-cash. A.H. Belo will reverse $3.1 million of pension plan liability at the time of the spinoff and $14 million of pension plan expense recorded at the end of 2008.

Under settlement accounting, the pension split is expected to result in a significant reduction to Belo Corp.'s net unfunded pension liability; with an associated reduction in pension-related deferred tax assets and a significant increase in the Company's total shareholders' equity.

Belo Corp. currently expects to report a non-cash loss associated with the split of the Pension Plan in the first quarter of 2011 in the range of $19 to $23 million with an associated tax benefit in the range of $5 to $7 million; however, the actual amount of the non-cash loss and associated tax benefit is subject to change and may be more or less than these ranges depending on several factors, including differences in the Company's current estimates related to asset performance, the discount rate, contributions and benefit payments.

I also read the press release on the company’s website, but it did not add any additional value beyond the three references I’ve cited. I also reviewed a Reuter’s article...