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

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

DALLAS, Nov. 3, 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 third quarter of 2011 of $0.13 compared to GAAP net earnings per share of $0.13 in the third quarter of 2010. The third quarter of 2011 includes a previously disclosed credit of $0.02 per share related to the satisfactory resolution of a tax matter.

Dunia A. Shive, Belo's president and Chief Executive Officer, said, "Belo reported solid earnings for the third quarter of 2011, while cycling against more than $11 million of political revenue in the third quarter of 2010. Excluding political, Belo's third quarter 2011 core spot revenue was down 2 percent from the prior year, with July being the softest month of the quarter and both August and September showing sequential improvement in year-to-year revenue comparisons. The automotive category in the third quarter of 2011 was flat when compared with the third quarter of 2010, with a 7 percent increase in the month of September and continued momentum into the fourth quarter. The Company reduced its combined station and corporate operating costs by 3.7 percent from the third quarter of 2010."

Third Quarter in Review

Operating Results

Total revenue decreased 7 percent in the third quarter of 2011 versus the third quarter of 2010. Total spot revenue, excluding political, was down 2 percent with local spot revenue flat and national spot revenue down 5 percent. Political revenue in the third quarter of 2011 was $2.1 million compared to $11.2 million in the third quarter of 2010. Total spot revenue, including political, was down 9 percent in the third quarter of 2011 compared to the third quarter of 2010.

Other revenue, which includes barter and trade advertising, network compensation, Internet advertising and retransmission revenue, was flat in the third quarter of 2011 compared to the third quarter of 2010 as a double-digit percentage increase in combined retransmission and Internet revenue was offset by declines in network compensation and miscellaneous revenue.

Station salaries, wages and employee benefits decreased $0.8 million, or 1.5 percent, during the third quarter of 2011 versus the third quarter of 2010 due primarily to lower accrued bonus expense. Station programming and other operating costs were essentially flat in the third quarter of 2011 compared to the third quarter of 2010.

Corporate

Corporate operating costs of $5.1 million in the third quarter of 2011 were $3.6 million lower than the third quarter of 2010 due primarily to lower expenses for pension, accrued bonuses and technology support costs.

Combined station and corporate operating costs were down 3.7 percent in the third quarter of 2011 compared to the third quarter of 2010.

Other Items

Belo's depreciation expense totaled $7.6 million in the third quarter of 2011, down from $8.4 million in the third quarter of 2010.

The Company's interest expense decreased $2.3 million in the third quarter of 2011 compared to the third quarter of 2010 due primarily to lower borrowings on its revolving credit facility and lower ongoing fees resulting from the Company's election in 2010 to reduce the commitment amount under that facility.

Income tax expense decreased $3.6 million in the third quarter of 2011 compared to the third quarter of 2010 due primarily to lower pre-tax earnings and a previously disclosed $2.5 million benefit related to the satisfactory resolution of a tax matter.

Total debt at September 30, 2011, was $887 million, which consists entirely of fixed-rate public debt. The Company had nothing drawn on its credit facility and $45 million in cash and marketable securities at September 30, 2011. The Company's total leverage ratio, as defined in the Company's credit facility, was 3.8 times at September 30, 2011. Belo invested $3.5 million in capital expenditures in the third 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 earnings from 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 fourth quarter, Shive said, "With the automotive category continuing to show improvement, we are currently estimating spot revenue without political to be up 3 to 4 percent in the fourth quarter of 2011 compared to the fourth quarter of 2010. Our stations generated $35.7 million of political revenue in the fourth quarter of 2010, which we will cycle against in the fourth quarter of 2011. As a result, we are currently estimating fourth quarter total revenue to be down in the low teens versus the prior year's fourth quarter.

"Combined station and corporate operating costs are currently estimated to be down about 3 percent in the fourth quarter of 2011 compared to the fourth quarter of 2010."

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 1-888-423-3276. A replay line will be open from 3:00 p.m. CDT on November 3 until 11:59 p.m. CST November 17. To access the replay, dial 800-475-6701 or 320-365-3844. The access code for the replay is 220997.

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, including changes regarding spectrum; 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 Nine months ended
September 30, September 30,
------------- -------------
In thousands, except per share
amounts 2011 2010 2011 2010
------------------------------ ---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)

Net Operating Revenues $151,999 $163,853 $469,848 $481,167

Operating Costs and Expenses
Station salaries, wages and
employee benefits 52,467 53,273 160,828 156,408
Station programming and other
operating costs 51,788 51,573 154,549 144,219
Corporate operating costs 5,112 8,738 18,103 26,202
Pension settlement charge and contribution
reimbursements - (300) 20,466 (8,572)
Depreciation 7,614 8,449 23,245 26,462
Total operating costs and
expenses 116,981 121,733 377,191 344,719

Earnings from operations 35,018 42,120 92,657 136,448

Other Income and (Expense)
Interest
expense (17,771) (20,037) (53,804) (59,740)
Other income,
net 986 21 1,815 129
Total other income and
(expense) (16,785) (20,016) (51,989) (59,611)

Earnings before income taxes 18,233 22,104 40,668 76,837
Income tax expense 4,520 8,159 13,182 29,825
----- ----- ------ ------

Net earnings $13,713 $13,945 $27,486 $47,012
======= ======= ======= =======

Net earnings per share - Basic $0.13 $0.13 $0.26 $0.45
===== ===== ===== =====

Net earnings per share - Diluted $0.13 $0.13 $0.26 $0.45
===== ===== ===== =====

Weighted average shares
outstanding
Basic 103,681 103,107 103,570 102,982
Diluted 104,039 103,502 103,959 103,397

Dividends declared per share $0.05 $ - $0.10 $ -
===== === ===== ===

Belo Corp.
Consolidated Condensed Balance Sheets

September
30, December 31,
In thousands 2011 2010
------------ ---- ----
(unaudited)
Assets
Current
assets
Cash and temporary cash
investments $45,422 $8,309
Accounts receivable, net 130,272 144,992
Income tax receivable 32,812 37,921
Other current assets 18,669 19,574
------ ------
Total current assets 227,175 210,796

Property, plant and equipment,
net 145,295 164,439
Intangible assets, net 725,399 725,399
Goodwill 423,873 423,873
Other assets 65,597 65,883

Total assets $1,587,339 $1,590,390
========== ==========

Liabilities and Shareholders' Equity
Current
liabilities
Accounts payable $15,280 $20,744
Accrued expenses 36,331 52,274
Short-term pension
obligation 17,830 36,571
Accrued interest payable 18,372 10,405
Income taxes payable 3,471 13,701
Dividends payable 5,184 -
Deferred revenue 4,236 3,505
----- -----
Total current liabilities 100,704 137,200

Long-term
debt 886,778 897,111
Deferred income taxes 254,920 206,765
Pension
obligation 51,581 155,510
Other
liabilities 17,259 23,162
Total shareholders' equity 276,097 170,642

Total liabilities and shareholders'
equity $1,587,339 $1,590,390
========== ==========

Belo Corp.
Non-GAAP to GAAP Reconciliations

Station Adjusted EBITDA
Three months ended Nine months ended
September 30, September 30,
------------- -------------
In thousands (unaudited) 2011 2010 2011 2010
------------------------ ---- ---- ---- ----

Station Adjusted EBITDA (1) $47,744 $59,007 $154,471 $180,540
Corporate operating costs (5,112) (8,738) (18,103) (26,202)
Depreciation (7,614) (8,449) (23,245) (26,462)
Pension settlement charge and contribution
reimbursements - 300 (20,466) 8,572
Earnings from operations $35,018 $42,120 $92,657 $136,448
======= ======= ======= ========

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
Note 1: (losses) from investments in partnerships and joint ventures and other non-operating income (expense).

Pro Forma Net Earnings
In thousands, except per share amounts
(unaudited)
Three months ended Three months ended
September 30, 2011 September 30, 2010
------------------ ------------------

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

Net earnings $13,713 $0.13 $13,945 $0.13

Pension contribution reimbursement, net of
tax - - (183) (0.00)

Pro forma net earnings $13,713 $0.13 $13,762 $0.13
======= =======

Nine months ended Nine months ended
September 30, 2011 September 30, 2010
------------------ ------------------

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

Net earnings $27,486 $0.26 $47,012 $0.45

Pension settlement charge and contribution
reimbursements, net of tax 13,323 0.13 (5,229) (0.05)
------ ------
Pro forma net earnings $40,809 $0.39 $41,783 $0.40
======= =======

SOURCE Belo Corp.

Belo Corp.

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

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