DALLAS, Oct. 20 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC)
today reported net earnings per share of $0.20 for the third
quarter of 2005 compared to net earnings per share of $0.10 in the
third quarter of 2004. The Company estimates the impact of
Hurricane Katrina on its CBS affiliate in New Orleans, WWL-TV, and,
to a lesser extent, Hurricane Rita on its CBS affiliate in Houston,
KHOU-TV, to be $0.04 for the third quarter of 2005, with lost
revenues of approximately $3.0 million and incremental expense of
approximately $4.1 million. The third quarter of 2004 included
three special charges totaling $0.22 per share: a charge related to
the circulation overstatement at The Dallas Morning News of $0.13;
a charge related to discontinuing the Belo/Time Warner cable news
joint ventures of $0.06, and a charge for severance costs resulting
from the Company-wide reduction-in-force of $0.03. Belo's
consolidated revenue for the third quarter increased 4.4 percent
and operating expenses increased 3.4 percent versus the third
quarter of the prior year. Consolidated EBITDA increased 28 percent
and operating earnings improved 10.6 percent compared to the third
quarter of 2004. In the third quarter of 2005, had Belo expensed
stock options, pro forma net earnings per share would have been
$0.18 compared to the $0.20 reported today. Pro forma net earnings
per share in the third quarter of 2004 would have been $0.08
compared to the reported net earnings per share of $0.10. The
Company currently plans to begin expensing stock options in
accordance with the new accounting rules in the first quarter of
2006. Third Quarter in Review Robert W. Decherd, Belo's chairman,
president, and chief executive officer, said, "Belo finished with a
solid financial performance despite the unanticipated challenges of
the third quarter. Our progress is made possible by the quality of
content we continue to create across all of Belo's operating
companies. The Newspaper Group had strong advertising revenue
increases at both The Providence Journal and The Press-Enterprise,
complemented by an increase at The Dallas Morning News, and the
Television Group performed well relative to its peers." Television
Group revenue decreased 6.6 percent in the third quarter, which
included a $3.5 million increase in network compensation due to an
adjustment of previously deferred revenues and the $3.0 million in
lost revenue related to the hurricanes. Spot revenue decreased 9.2
percent while spot revenues before political and Olympics revenues
increased 4.3 percent. Local revenue was down 3.9 percent and
national revenue was up slightly. Political revenues were $1.5
million in the third quarter of 2005 compared to more than $22
million of combined political and Olympics revenue in the third
quarter of 2004. Advertising revenues from Belo's Television Group
Web sites were $3.2 million in the third quarter of 2005, a 42
percent increase versus the prior year. Television Group operating
expenses increased 3.9 percent in the third quarter, including
incremental expense related to the hurricanes. Programming expense
decreased almost six percent in the third quarter. The Company has
insurance coverage, including business interruption insurance,
which is expected to mitigate near-term financial impacts related
to the hurricanes, and is working aggressively with its insurance
broker on the claim. Segment EBITDA for the Television Group
decreased 21 percent in the third quarter and earnings from
operations decreased 25 percent. Third quarter total revenue
comparisons for the Newspaper Group were affected by a $19.6
million reduction of revenue in the third quarter of 2004 related
to the circulation overstatement at The Dallas Morning News and by
approximately $3.8 million of incremental revenue in the third
quarter of 2005 associated with implementing the Circulation Review
Team ("CRT") initiatives at The Morning News. The implementation of
the CRT's initiatives results in an increase in circulation revenue
and operating expenses primarily related to the move from a
buy-sell arrangement with independent contractors to a fee-
for-delivery distribution system. Advertising revenue comparisons
were not affected by these items. Newspaper Group total revenues
increased 16 percent in the third quarter of 2005. Advertising
revenues increased four percent compared to the third quarter of
2004 with a two percent increase at The Dallas Morning News, a nine
percent increase at The Providence Journal and a 5.4 percent
increase at The Press-Enterprise. Excluding classified automotive,
which was down 13 percent, advertising revenues would have
increased about six percent. Advertising revenues associated with
the Newspaper Group's Web sites were $7.8 million in the third
quarter of 2005, an increase of 55 percent versus the prior year.
Retail increased one percent and general revenues increased 14
percent in the third quarter. Retail was up in Dallas and
Providence but soft at The Press-Enterprise. The growth in general
revenues was led by a 20 percent increase in Dallas. Classified
revenues were up 4.7 percent in the third quarter with a 14 percent
increase in classified real estate revenue and an 11 percent
increase in classified employment revenue. The Newspaper Group's
new products, principally Quick and al dia at The Dallas Morning
News and the d at The Press-Enterprise in Riverside, grew
impressively in the third quarter, generating $4.2 million of
revenue, a 41 percent increase over revenue of $2.9 million in the
third quarter of 2004. Expenses associated with the new products
increased from $4.3 million in the third quarter of 2004 to $4.5
million in the third quarter of 2005. Loss from operations related
to these new products was $345,000 in the third quarter of 2005
versus a $1.4 million loss in the third quarter of 2004. Newspaper
Group operating expenses increased 6.9 percent versus the third
quarter of 2004 including $5.1 million in planned incremental
expenses related to the previously noted CRT initiatives
implemented at The Dallas Morning News and $2.9 million related to
advertising and promotion initiatives, primarily at The Dallas
Morning News. Excluding these incremental expenses, Newspaper Group
operating costs would have increased about 2.1 percent. Newsprint
expense increased 11 percent with a like increase in net cost per
ton and flat consumption. Newspaper Group segment EBITDA and
earnings from operations increased 77 percent and 155 percent,
respectively, in the third quarter. Revenues in Belo's Other
segment, consisting primarily of NorthWest Cable News and Texas
Cable News ("TXCN"), decreased 24 percent and expenses decreased 31
percent in the third quarter of 2005 due to the refinement of
TXCN's operations and programming. TXCN's contribution to Other
segment EBITDA improved by $476,000 in the third quarter of 2005.
Total Other segment EBITDA increased to $785,000 in the third
quarter of 2005 from $382,000 in the third quarter of 2004.
Earnings from operations for this segment also improved
significantly in the third quarter to $194,000 compared with a loss
of $248,000 in the third quarter of last year. Corporate operating
expenses decreased 19 percent as compared to the third quarter of
2004 which included expenses related to the special charges
previously noted. Excluding the expenses related to special
charges, corporate operating expense increased 5.3 percent in the
third quarter due primarily to the allocation to the Corporate
segment of interactive media expenses previously included in the
Interactive Media segment. Belo's total depreciation and
amortization expense increased 1.4 percent in the third quarter of
2005 compared with the third quarter of 2004. Other income
(expense), net improved significantly in the third quarter of 2005
due to the discontinuation in July 2004 of the cable news joint
ventures with Time Warner in Charlotte, Houston and San Antonio,
including the associated special charge. Long-term debt at
September 30, 2005, was $1.18 billion, up $8 million from December
31, 2004. Capital spending in the third quarter was $11.8 million.
The Company repurchased 2.3 million shares in the third quarter for
a total of $56 million. Through September 30, the Company has
repurchased 4.6 million shares, 3.8 million shares more than stock
options exercised. For 2005 as a whole, the Company expects to
repurchase five to six million more shares than the number of
options exercised for a total of six to seven million shares.
Interest expense increased $984,000, or 4.4 percent, in the third
quarter. Belo's leverage ratio, as defined in the Company's bank
agreement, was 2.7 times at September 30, 2005. Non-GAAP Financial
Measures A reconciliation of Consolidated EBITDA to net earnings is
set forth in an exhibit to this release. Circulation Update For the
six months ended September 30, 2005, The Dallas Morning News
expects to be at or near its circulation goal announced at the
Mid-Year Media Review of down approximately three percent daily and
approximately two percent Sunday versus the March 2005 circulation
figures, primarily reflecting normal seasonal trends from March to
September. Versus September 2004, the decline should be about seven
percent both daily and Sunday. As noted at the Mid-Year Media
Review, the decline from September 2004 to September 2005 is
principally a result of the significant disruption to circulation
processes at The Morning News since September 2004 as The News
implements a best practices circulation system. When the audit of
these September 2005 figures is completed and released by the Audit
Bureau of Circulations, it will provide the second and final
benchmark for circulation at The Morning News. We will gauge the
newspaper's future circulation performance from these two
benchmarks - the March 2005 and September 2005 audits. To build
circulation and advertising revenues, The Dallas Morning News
launched major changes to the newspaper's content and format in the
third quarter, and began promoting The Morning News heavily through
one of the most aggressive and broad-based marketing campaigns in
the newspaper's history. The dual goals are to achieve circulation
sales momentum and increase the appeal of the newspaper to younger
audiences. At The Providence Journal, circulation is expected to be
approximately two percent lower daily and Sunday for the September
2005 reporting period versus the year-earlier period. At The
Press-Enterprise, circulation for the September 2005 reporting
period is expected to be down less than three percent daily and
about four percent Sunday as compared to the September 2004
reporting period. Fourth Quarter 2005 Outlook Regarding Belo's
outlook for the fourth quarter of 2005, Dennis Williamson, senior
corporate vice president and chief financial officer, said, "Our
market-leading television stations are well-positioned to attract a
disproportionate share of revenue in their markets in the fourth
quarter despite tough comparisons due to very strong political
revenue in the fourth quarter of 2004. And, advertising trends at
all three of our major newspapers, including The Dallas Morning
News, are encouraging. "Belo's Television Group generated more than
$28 million of political revenue in the fourth quarter of 2004. We
currently expect only about $2.3 million of political revenue in
the fourth quarter of 2005. Including WWL, fourth quarter
Television Group spot revenues are expected to be down in the
low-double digits, with spot revenue, excluding political, up
mid-single digits versus last year. Excluding WWL, spot revenues
are expected to be down mid-to-high single digits with spot
revenues excluding political up mid-to- high single digits versus
last year. In addition, revenues associated with the Television
Group's Web sites should increase from $2.9 million in the fourth
quarter of 2004 to approximately $3.6 million this year. "We
currently estimate fourth quarter revenues at WWL to be in the
range of $2 million to $3 million versus WWL's fourth quarter 2005
plan of almost $11 million, which equates to an expected decline in
earnings of $0.04 to $0.05 per share. Most of the incremental
expenses associated with maintaining WWL's operations during and
after the hurricane have ceased. As we have previously stated, our
expense structure at WWL-TV will remain close to the pre-hurricane
level for the foreseeable future. We expect WWL's operating costs
in the fourth quarter of 2005 to be similar to the fourth quarter
of 2004, or about $6.5 million. "Total revenue comparisons for the
Newspaper Group in the fourth quarter will be affected by adding
approximately $6.0 million of incremental revenue associated with
implementing Morning News CRT initiatives. Advertising revenue
comparisons are not affected by this item. Fourth quarter
advertising revenue comparisons at The Morning News include $6.9
million of credit bank usage in the fourth quarter of 2004
associated with The Morning News' advertiser plan. "We currently
expect Newspaper Group advertising revenues to increase in the
mid-single digits in the fourth quarter with advertising revenues
up mid- single digits at The Dallas Morning News and mid-to-high
single digits at The Providence Journal and The Press-Enterprise.
"The Company expects to report an increase of about five to six
percent in operating costs and expenses in the fourth quarter of
2005, including $6.3 million in incremental expense related to the
implementation of Dallas Morning News CRT initiatives. Similar to
the third quarter, advertising and promotion expense should be
significantly higher in the fourth quarter to support the
incremental marketing initiatives in key Belo markets. Other
sales-related costs, including direct marketing for newspaper
subscription sales and television advertiser incentive costs,
should also be higher. Newsprint expense is expected to increase
about 15 percent with an increase of approximately 10 percent in
the cost per ton coupled with a mid-single digit increase in
consumption compared to the fourth quarter of 2004. Television
programming expense should decrease about six percent in the fourth
quarter. "Belo will make a $15 million pension contribution in the
fourth quarter in anticipation of new legislation funding
requirements expected to be implemented in 2006. This voluntary
contribution will allow us to manage cash more effectively by
smoothing out pension contributions over the next few years. Belo's
defined benefit pension plan was closed to new participants in 2000
in favor of a defined contribution plan. "Belo's total depreciation
and amortization expense in the fourth quarter is expected to be
about two percent higher than last year. Interest expense should
increase two to three percent. The effective tax rate for the
fourth quarter should be about 38 percent. "We currently expect
capital expenditures to be under $100 million in 2005, less than
our previous estimate of $120 million. The new facility planned for
WWL has been postponed while a design and engineering review of the
new building is conducted in light of Katrina. We accelerated a
number of important projects into 2005 to even out capital
expenditures over the next few years. Capital expenditures are
still expected to be $120 million in 2006 as projects in Riverside
and at The Dallas Morning News move from the design to construction
phase. "Based on the assumptions noted today, we currently expect
our EPS for the fourth quarter of 2005 to be in the range of $0.33
to $0.36 per share, with full-year EPS in the range of $1.10 to
$1.13. The reduction in our full-year EPS estimates from the
previous range of $1.17 to $1.24 is primarily related to the effect
of the hurricanes on New Orleans and Houston, which we currently
estimate to be approximately $0.08 to $0.09 for the full-year."
Belo will continue to provide information on operating trends in
its monthly statistical reports. A conference call to discuss this
earnings release and other matters of interest to shareholders and
analysts will follow at 1:00 p.m. CDT this afternoon. The
conference call will be simultaneously Webcast on the Company's Web
site (http://www.belo.com/invest). Following the conclusion of the
Webcast, a replay of the conference call will be archived on Belo's
Web site. To access the listen-only conference lines, dial
1-800-230-1059. A replay line will be open from 4:30 p.m. CDT on
October 20 until 11:30 p.m. CDT on October 27. To access the
replay, dial 800-475-6701 or 320-365-3844. The access code for the
replay is 799282. About Belo Belo Corp. is one of the nation's
largest media companies with a diversified group of market-leading
television, newspaper, cable and interactive media assets. A
Fortune 1000 company with 7,600 employees and $1.5 billion in
annual revenues, Belo operates in some of America's most dynamic
markets in Texas, the Northwest, the Southwest, Rhode Island, and
the Mid- Atlantic. Belo owns 19 television stations, six of which
are in the 15 largest U.S. broadcast markets. The Company also owns
or operates seven cable news channels and manages one television
station through a local marketing agreement. Belo's daily
newspapers are The Dallas Morning News, The Providence Journal, The
Press-Enterprise (Riverside, CA) and the Denton Record-Chronicle
(Denton, TX). The Company also publishes specialty publications
targeting young adults, affluent populations and the fast-growing
Hispanic market, including Quick and al dia in Dallas/Fort Worth,
and the d, El D and La Prensa in Riverside. Belo operates more than
30 Web sites associated with its operating companies. Additional
information is available at http://www.belo.com/ or by contacting
Carey Hendrickson, vice president/Investor Relations &
Corporate Communications, at 214-977-6626. Statements in this
communication concerning Belo's business outlook or future economic
performance, anticipated profitability, revenues, expenses, capital
expenditures, investments, future financings or 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,
changes in capital market conditions and prospects, and other
factors such as changes in advertising demand, interest rates and
newsprint prices; newspaper circulation matters, including changes
in readership, and audits and related actions (including the
censure of The Dallas Morning News) by the Audit Bureau of
Circulations; technological changes, including the transition to
digital television and the development of new systems to distribute
television and other audio-visual content; development of Internet
commerce; industry cycles; changes in pricing or other actions by
competitors and suppliers; regulatory 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 and dispositions; the effects of Hurricane Katrina;
general economic conditions; and significant armed conflict, as
well as other risks detailed in Belo's other public disclosures,
and filings with the Securities and Exchange Commission ("SEC")
including the Annual Report on Form 10-K. Consolidated Statements
of Earnings BELO Three months ended Nine months ended September 30,
September 30, In thousands, except 2005 2004 2005 2004 per share
amounts (unaudited) Net Operating Revenues $372,300 $356,457
$1,110,485 $1,101,650 Operating Costs and Expenses Salaries, wages
and employee benefits 137,358 141,235 409,564 418,096 Other
production, distribution and operating costs 115,085 104,303
316,405 294,671 Newsprint, ink and other supplies 37,149 34,198
104,107 101,573 Depreciation 21,612 21,244 65,858 67,655
Amortization 2,087 2,119 6,293 6,357 Total operating costs and
expenses 313,291 303,099 902,227 888,352 Earnings from operations
59,009 53,358 208,258 213,298 Other income and expense Interest
expense (23,536) (22,552) (68,048) (67,764) Other income (expense),
net (1) 524 (11,812) 1,365 (16,630) Total other income and expense
(23,012) (34,364) (66,683) (84,394) Earnings Earnings before income
taxes 35,997 18,994 141,575 128,904 Income taxes 13,856 7,823
53,813 49,902 Net earnings $22,141 $11,171 $87,762 $79,002 Net
earnings per share Basic $.20 $.10 $.78 $.69 Diluted $.20 $.10 $.77
$.67 Average shares outstanding Basic 111,784 114,818 113,081
115,130 Diluted 113,323 116,343 114,677 117,516 Cash dividends
declared per share $.20 $.19 $.40 $.38 Certain amounts have been
reclassified to conform to the current presentation. Note 1: Other
income (expense), net consists primarily of equity earnings
(losses) from partnerships and joint ventures and other
non-operating income (expense). Consolidated Condensed Balance
Sheets BELO September 30, December 31, In thousands 2005 2004
Assets Current assets Cash and temporary cash investments $33,262
$28,610 Accounts receivable, net 233,185 245,077 Other current
assets 72,815 68,806 Total current assets 339,262 342,493 Property,
plant and equipment, net 498,364 536,321 Intangible assets, net
2,584,653 2,597,026 Other assets 111,923 112,160 Total assets
$3,534,202 $3,588,000 Liabilities and Shareholders' Equity Current
liabilities Accounts payable $58,840 $75,860 Accrued expenses
98,618 100,686 Other current liabilities 69,025 62,065 Total
current liabilities 226,483 238,611 Long-term debt 1,177,850
1,170,150 Deferred income taxes 443,763 451,658 Other liabilities
101,415 97,929 Total shareholders' equity 1,584,691 1,629,652 Total
liabilities and shareholders' equity $3,534,202 $3,588,000 Industry
Segment Information BELO In thousands (unaudited) Three months
ended September 30, 2005 EBITDA(1) Net Operating Operating Earnings
Depreciation Revenues Costs and (Loss) from and Expenses Operations
Amortization Television Group $ 57,484 $ 163,477 $ 116,604 $ 46,873
$ 10,611 Newspaper Group 38,901 204,800 176,433 28,367 10,534 Other
785 4,023 3,829 194 591 Corporate (14,462) - 16,425 (16,425) 1,963
$ 372,300 $ 313,291 $ 59,009 $ 23,699 Three months ended September
30, 2004 EBITDA(1) Net Operating Operating Earnings Depreciation
Revenues Costs and (Loss) from and Expenses Operations Amortization
Television Group $72,864 $174,992 $112,183 $62,809 $10,055
Newspaper Group 21,944 176,143 165,026 11,117 10,827 Other 382
5,322 5,570 (248) 630 Corporate (18,469) - 20,320 (20,320) 1,851
$356,457 $303,099 $53,358 $23,363 Certain amounts have been
reclassified to conform to the current presentation. Note 1: Belo's
management uses segment EBITDA as the primary measure of
profitability to evaluate operating performance and to allocate
capital resources and bonuses to eligible operating company
employees. Segment EBITDA represents a segment's earnings before
interest expense, income taxes, depreciation and amortization.
Other income (expense), net is not allocated to the Company's
operating segments because it consists primarily of equity earnings
(losses) from investments in partnerships and joint ventures and
other non-operating income (expense). Industry Segment Information
BELO In thousands (unaudited) Nine months ended September 30, 2005
EBITDA(1) Net Operating Operating Earnings Depreciation Revenues
Costs and (Loss) from and Expenses Operations Amortization
Television Group $190,613 $499,992 $341,192 $158,800 $31,813
Newspaper Group 132,306 598,697 498,815 99,882 32,424 Other 2,093
11,796 11,523 273 1,820 Corporate (44,603) - 50,697 (50,697) 6,094
$1,110,485 $902,227 $208,258 $72,151 Nine months ended September
30, 2004 EBITDA(1) Net Operating Operating Earnings Depreciation
Revenues Costs and (Loss) from and Expenses Operations Amortization
Television Group $215,590 $520,936 $337,481 $183,455 $32,135
Newspaper Group 115,535 565,715 484,234 81,481 34,054 Other 621
14,999 16,416 (1,417) 2,038 Corporate (44,436) - 50,221 (50,221)
5,785 $1,101,650 $888,352 $213,298 $74,012 Certain amounts have
been reclassified to conform to the current presentation. Note 1:
Belo's management uses segment EBITDA as the primary measure of
profitability to evaluate operating performance and to allocate
capital resources and bonuses to eligible operating company
employees. Segment EBITDA represents a segment's earnings before
interest expense, income taxes, depreciation and amortization.
Other income (expense), net is not allocated to the Company's
operating segments because it consists primarily of equity earnings
(losses) from investments in partnerships and joint ventures and
other non-operating income (expense). Reconciliation of
Consolidated EBITDA BELO In thousands (unaudited) Three months
ended September 30, 2005 2004 Consolidated EBITDA (1) $83,232
$64,909 Depreciation and Amortization (23,699) (23,363) Interest
Expense (23,536) (22,552) Income Taxes (13,856) (7,823) Net
Earnings $22,141 $11,171 Nine months ended September 30, 2005 2004
Consolidated EBITDA (1) $281,774 $270,680 Depreciation and
Amortization (72,151) (74,012) Interest Expense (68,048) (67,764)
Income Taxes (53,813) (49,902) Net Earnings $87,762 $79,002 Note 1:
The Company defines EBITDA as net earnings before interest expense,
income taxes, depreciation and amortization. EBITDA is not a
measure of financial performance under accounting principles
generally accepted in the United States ("GAAP"). Management uses
Consolidated EBITDA in internal analyses as a supplemental measure
of the financial performance of the Company to assist it with
determining consolidated performance targets, senior management
bonus and performance comparisons against our peer group of
companies, as well as capital spending and other investing
decisions. EBITDA is also a common alternative measure of
performance used by investors, financial analysts, and rating
agencies to evaluate financial performance. Belo Corp. Guidance as
of 10/20/05 Item Guidance FOURTH QUARTER 2005 Newspaper Group
Newspaper Group advertising revenue Expected to increase in the
mid- single digits The Dallas Morning News advertising Expected to
increase in the revenue mid-single digits The Providence Journal
advertising Expected to increase in the mid- revenue to-high single
digits The Press-Enterprise advertising Expected to increase in the
mid- revenue to-high single digits Television Group Television
Group spot revenue Expected to decrease in the low- double digits
Spot revenue excluding political Expected to be up mid-single
digits Political revenue Approximately $2.3 million Other Items
Total operating costs and expenses Expected to increase about five
to six percent Depreciation and amortization Expected to be about
two percent expense higher Interest expense Expected to increase
two to three percent Effective tax rate Expected to be about 38
percent Earnings per share Expected to be in the range of $0.33 to
$0.36 FULL-YEAR 2005 Earnings per share Expected to be in the range
of $1.10 to $1.13 DATASOURCE: Belo Corp. CONTACT: Carey
Hendrickson, vice president-Investor Relations & Corporate
Communications of Belo Corp., +1-214-977-6626 Web site:
http://www.belo.com/
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