Television Company Belo Corp. (BLC) Reports Results for Second Quarter 2011

Television Company Belo Corp. (BLC) Reports Results for Second Quarter 2011

DALLAS, Aug. 4, 2011 /PRNewswire/ -- Belo Corp. (NYSE: BLC), one of the nation's largest pure-play, publicly-traded television companies, today reported GAAP net earnings per share in the second quarter of 2011 of $0.17 compared to GAAP net earnings per share of $0.19 in the second quarter of 2010. The second quarter of 2010 included a credit of $2.6 million, net of taxes, from pension contribution reimbursements received from A. H. Belo Corporation ("A. H. Belo") related to its then-existing obligation to reimburse Belo for 60 percent of any contributions Belo made to The G. B. Dealey Retirement Pension Plan (the "Pension Plan"). Excluding the credit, pro forma earnings per share in the second quarter of 2010 were $0.16 per share.

Dunia A. Shive, Belo's president and Chief Executive Officer, said, "Belo's spot revenue excluding political was up 2.4 percent in the second quarter of 2011 compared to the second quarter of 2010 despite disruption in the automotive category related to events in Japan. Automotive cancellations were within our initial expectations for the quarter, and we experienced strong performance in other key categories such as retail, healthcare and telecommunications. Excluding automotive revenue, our core spot revenue was up 5 percent in the second quarter of 2011 compared to the second quarter of 2010."

Second Quarter in Review

Operating Results

Total revenue increased 2.1 percent in the second quarter of 2011 versus the second quarter of 2010. Total spot revenue, excluding political, was up 2.4 percent with a 2 percent increase in local spot revenue and a 3.2 percent increase in national spot revenue. Core local and national spot revenue was affected by a 6.6 percent decrease in automotive revenue due to the disruption in auto supply related to events in Japan. Total spot revenue, including political, was up 1.4 percent in the second quarter of 2011 compared to the second quarter of 2010. Political revenue in the second quarter of 2011 was $1.4 million lower than the second quarter of 2010.

Other revenue, which includes barter and trade advertising, network compensation, Internet advertising and retransmission revenue, was up 5.6 percent in the second quarter of 2011 compared to 2010 due to double-digit percentage increases in Internet and retransmission revenue, which were partially offset by a decrease in network compensation.

Station salaries, wages and employee benefits increased $2.6 million, or 5 percent, during the second quarter of 2011 versus the second quarter of 2010 due primarily to employee merit increases, partial reinstatement of the Company's 401(k) plan matching contribution which was suspended in 2009, and higher station pension expense.

Station programming and other operating costs were up $5.6 million in the second quarter of 2011 compared to second quarter 2010 due primarily to a $3.1 million non-cash expense reduction related to third-party funding of certain newsgathering equipment in the second quarter of 2010, and increases in programming, advertising and promotion, and technology costs.

Corporate

Corporate operating costs of $6.7 million in the second quarter of 2011 were $1.2 million lower than the second quarter of 2010 due primarily to lower expenses for pension, accrued bonuses and technology support.

Excluding the $3.1 million non-cash expense reduction in the second quarter of 2010 discussed above, combined station and corporate operating costs were up 3.5 percent in the second quarter of 2011 compared to the second quarter of 2010. On a reported basis, the Company's combined station and corporate operating costs were up 6.6 percent in the second quarter of 2011 compared to the second quarter of 2010.

Other Items

The Company recorded a reduction in operating expenses of $4.2 million in the second quarter of 2010 related to pension contribution reimbursements received from A. H. Belo pursuant to its then-existing obligation to reimburse Belo for 60 percent of any pension contributions Belo made prior to the split of the Pension Plan on January 1, 2011.

Belo's depreciation expense totaled $7.7 million in the second quarter of 2011, down from $8.8 million in the second quarter of 2010.

The Company's interest expense decreased $1.8 million in the second quarter of 2011 compared to the second quarter of 2010 due primarily to lower borrowings on its revolving credit facility and lower ongoing fees resulting from the Company's election to reduce the commitment amount under its facility in 2010.

Income tax expense decreased $3.3 million in the second quarter of 2011 compared to the second quarter of 2010 due primarily to lower pre-tax earnings and the satisfactory resolution of various pending tax matters.

Total debt at June 30, 2011, was $887 million, which consisted entirely of fixed-rate public debt. The Company's total leverage ratio, as defined in the Company's credit facility, was 3.7 times at June 30, 2011. Belo invested $3.7 million in capital expenditures in the second quarter of 2011 and currently expects full year capital expenditures to be approximately $16 million.

Non-GAAP Financial Measures

A reconciliation of station adjusted EBITDA to earningsfrom operations and a reconciliation of net earnings to pro forma net earnings are set forth in an exhibit to this release.

Outlook

Looking to the third quarter, Shive said, "We expect automotive spending to stabilize late in the third quarter with continued improvement in the fourth quarter. We are currently estimating spot revenue excluding political to be flat in the third quarter of 2011 compared to the third quarter of 2010. Our stations generated $11.2 million of political revenue in the third quarter of 2010 which we will cycle against in the third quarter of 2011. As a result, we are currently estimating third quarter total revenue to be down mid-single digits versus the prior year.

"Combined station and corporate operating costs are currently estimated to be up about 2 percent in the third quarter of 2011 compared to the third quarter of 2010. Also, in July 2011, the Company received satisfactory resolution of another pending tax matter, which will result in a tax benefit of approximately $2.4 million in the third quarter of 2011. The Company's effective tax rate for full year 2011 is now expected to be approximately 36 percent."

A conference call to discuss this release and other matters of interest to shareholders and analysts will follow at 10:00 a.m. CDT this morning. The conference call will be simultaneously webcast on Belo Corp.'s website (www.belo.com/invest). Following the conclusion of the webcast, a replay of the conference call will be archived on Belo's website. To access the listen-only conference lines, dial 1-800-288-8960. A replay line will be open from 12:00 p.m. CDT on August 4 until 11:59 p.m. CDT August 18. To access the replay, dial 800-475-6701 or 320-365-3844. The access code for the replay is 210868.

About Belo Corp.

Belo Corp. (BLC), one of the nation's largest pure-play, publicly-traded television companies, owns and operates 20 television stations (nine in the top 25 markets) and their associated websites. Belo stations, which include affiliations with ABC, CBS, NBC, FOX, and the CW, reach more than 14 percent of U.S. television households in 15 highly-attractive markets. Belo stations rank first or second in nearly all of their local markets. Additional information is available at www.belo.com or by contacting Paul Fry, vice president/Investor Relations & Treasury Operations, at 214-977-4465.

Statements in this communication concerning Belo's business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, investments, future financings, impairments, pension matters, and other financial and non-financial items that are not historical facts, are "forward-looking statements" as the term is defined under applicable federal securities laws. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements.

Such risks, uncertainties and factors include, but are not limited to, uncertainties regarding the costs, consequences (including tax consequences) and other effects of the Company's spin-off distribution of its newspaper businesses and related assets to A. H. Belo Corporation and the associated agreements between the Company and A. H. Belo relating to various matters; changes in capital market conditions and prospects, and other factors such as changes in advertising demand, interest rates and programming and production costs; changes in viewership patterns and demography, and actions by Nielsen; changes in the network-affiliate business model for broadcast television; technological changes, and the development of new systems and devices to distribute and consume television and other audio-visual content; changes in the ability to secure, and in the terms of, carriage of Belo programming on cable, satellite, telecommunications and other program distribution methods; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; Federal Communications Commission and other regulatory, tax and legal changes; adoption of new accounting standards or changes in existing accounting standards by the Financial Accounting Standards Board or other accounting standard-setting bodies or authorities; the effects of Company acquisitions, dispositions, co-owned ventures, and investments; pension plan matters; general economic conditions; and significant armed conflict, as well as other risks detailed in Belo's other public disclosures and filings with the SEC including Belo's Annual Report on Form 10-K.

Belo Corp.
Consolidated Statements of Operations

Three months ended
June 30,
--------
In thousands, except per share
amounts 2011 2010
------------------------------ ---- ----
(unaudited) (unaudited)

Net Operating Revenues $166,379 $162,982

Operating Costs and Expenses
Station salaries, wages and
employee benefits 54,525 51,911
Station programming and other
operating costs 52,565 47,015
Corporate operating costs 6,692 7,855
Pension settlement charge and
contribution reimbursements - (4,200)
Depreciation 7,707 8,770
----- -----
Total operating costs and expenses 121,489 111,351

Earnings from operations 44,890 51,631

Other Income and (Expense)
Interest expense (18,050) (19,815)
Other income, net 649 375
--- ---
Total other income and (expense) (17,401) (19,440)

Earnings before income taxes 27,489 32,191
Income tax expense 9,402 12,666
----- ------

Net earnings $18,087 $19,525
======= =======

Net earnings per share - Basic $0.17 $0.19
===== =====

Net earnings per share - Diluted $0.17 $0.19
===== =====

Weighted average shares
outstanding
Basic 103,626 103,027
Diluted 104,022 103,456

Dividends declared per share $0.05 $ -
===== ===

Six months ended
June 30,
--------
In thousands, except per share
amounts 2011 2010
------------------------------ ---- ----
(unaudited) (unaudited)

Net Operating Revenues $317,849 $317,314

Operating Costs and Expenses
Station salaries, wages and
employee benefits 108,361 103,135
Station programming and other
operating costs 102,761 92,646
Corporate operating costs 12,991 17,464
Pension settlement charge and
contribution reimbursements 20,466 (8,272)
Depreciation 15,631 18,013
------ ------
Total operating costs and expenses 260,210 222,986

Earnings from operations 57,639 94,328

Other Income and (Expense)
Interest expense (36,033) (39,703)
Other income, net 829 108
--- ---
Total other income and (expense) (35,204) (39,595)

Earnings before income taxes 22,435 54,733
Income tax expense 8,662 21,666
----- ------

Net earnings $13,773 $33,067
======= =======

Net earnings per share - Basic $0.13 $0.32
===== =====

Net earnings per share - Diluted $0.13 $0.31
===== =====

Weighted average shares
outstanding
Basic 103,515 102,919
Diluted 103,917 103,342

Dividends declared per share $0.05 $ -
===== ===

Belo Corp.
Consolidated Condensed Balance Sheets

December
June 30, 31,
In thousands 2011 2010
------------ ---- ----
(unaudited)
Assets
Current assets
Cash and temporary cash
investments $16,061 $8,309
Accounts receivable, net 141,271 144,992
Other current assets 53,714 57,495
------ ------
Total current assets 211,046 210,796

Property, plant and equipment,
net 149,638 164,439
Intangible assets, net 1,149,272 1,149,272
Other assets 63,795 65,883
------ ------

Total assets $1,573,751 $1,590,390
========== ==========

Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable $18,449 $20,744
Accrued expenses 53,345 88,845
Other current liabilities 23,718 27,611
------ ------
Total current liabilities 95,512 137,200

Long-term debt 886,553 897,111
Deferred income taxes 250,675 206,765
Other liabilities 74,106 178,672
Total shareholders' equity 266,905 170,642
------- -------

Total liabilities and
shareholders' equity $1,573,751 $1,590,390
========== ==========
- -

Belo Corp.
Non-GAAP to GAAP Reconciliations

Station Adjusted EBITDA

Three months ended Six months ended
June 30, June 30,
-------- --------
In thousands
(unaudited) 2011 2010 2011 2010
------------ ---- ---- ---- ----

Station Adjusted
EBITDA (1) $59,289 $64,056 $106,727 $121,533
Corporate operating
costs (6,692) (7,855) (12,991) (17,464)
Depreciation (7,707) (8,770) (15,631) (18,013)
Pension settlement
charge and
contribution
reimbursements - 4,200 (20,466) 8,272
Earnings from
operations $44,890 $51,631 $57,639 $94,328
======= ======= ======= =======

Belo's management uses Station Adjusted EBITDA as the primary
measure of profitability to evaluate operating performance and
to allocate capital resources and bonuses to eligible operating
company employees. Station Adjusted EBITDA represents the
Company's earnings from operations before interest expense,
income taxes, depreciation, amortization, impairment charges,
pension settlement charge and contribution reimbursements, and
corporate operating costs. Other income (expense), net is not
allocated to television station earnings from operations
because it consists primarily of equity in earnings (losses)
Note from investments in partnerships and joint ventures and other
1: non-operating income (expense).

Pro Forma Net Earnings
In thousands (unaudited)

Three months ended
June 30, 2011
-------------

Earnings EPS
-------- ---

Net earnings $18,087 $0.17

Pension settlement charge and
contribution reimbursements,
net of tax - -

Pro forma net earnings $18,087 $0.17
=======

Six months ended
June 30, 2011
-------------

Earnings EPS
-------- ---

Net earnings $13,773 $0.13

Pension settlement charge and
contribution reimbursements,
net of tax 13,323 0.13
------
Pro forma net earnings $27,096 $0.26
=======

Three months ended
June 30, 2010
-------------

Earnings EPS
-------- ---

Net earnings $19,525 $0.19

Pension settlement charge and
contribution reimbursements,
net of tax (2,562) (0.02)

Pro forma net earnings $16,963 $0.16
=======

Six months ended
June 30, 2010
-------------

Earnings EPS
-------- ---

Net earnings $33,067 $0.31

Pension settlement charge and
contribution reimbursements,
net of tax (5,046) (0.05)
------
Pro forma net earnings $28,021 $0.27
=======

SOURCE Belo Corp.

Belo Corp.

Web Site: http://www.belo.com

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