The news about A.H. Belo paying shareholders a special dividend is a bit curious. The company’s board of directors has declared a special cash dividend of 24 cents per share. That’s in addition to the regular quarterly cash dividend of 6 cents per share. Chairman and chief executive Robert Decherd said, “Despite pension funding requirements and various business challenges, the company has consistently generated cash. As a result, we are able to distribute additional cash to shareholders.”
Generating cash and making a profit are two different things. Generally, dividends are distributed when a company is making a profit — which A.H. Belo is most decidedly not. The company has an accumulated deficit on its balance sheet of $316 million. Now let’s take a look at its performance in the first six months of this year. EBITDA was $18 million. That’s a measure of cash generated from operations. Here’s what it spent: $24 million on pension payments (ouch), $4 million on capital expenditures, $3 million on dividends, and $3 million on other working capital and financing needs. Add that all up, and it comes to $34 million. Meaning it had to get $16 million from someplace because its earnings didn’t cover its costs. More bad news: the company saw total revenues decline by 6 percent in the first six months of this year when compared to 2011.
So, yes, the company is generating cash. But the cash is going out faster than it’s coming in.
Here’s some more interesting math: according to a proxy statement filed in April, Decherd owns about 1.6 million series B shares (those are the good ones, worth 10 votes each). He owns more than 333,000 series A shares (the kind the hoi polloi like you and I can buy). So call it 2 million shares total. That means this special 24-cent dividend is worth about $480,000 to him. Nice!