DALLAS, July 28 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC)
today reported net earnings per share of $0.41 for the second
quarter of 2006, including one-time benefits totaling $0.08 per
share (a tax benefit of $3.8 million related to Texas state tax
reforms and a previously disclosed $7.5 million gain related to a
payment associated with a change-in-control provision in one of
Belo's vendor contracts). Second quarter 2006 earnings include an
expense of $3.7 million for stock-based compensation, or $0.02 per
share on an after-tax basis, all of which is incremental to the
prior year. In the second quarter of 2005, Belo reported net
earnings per share of $0.36. Robert W. Decherd, Belo's chairman,
president, and chief executive officer, said, "We made significant
progress during the second quarter in transforming Belo's
businesses to compete effectively in an increasingly
Internet-centric marketplace. We made important announcements
regarding the reallocation of human, financial and capital
resources and experienced strong growth in new products launched
throughout the Company as well as significant increases in Internet
revenues. We're very positive about the progress being made on many
fronts and I'm convinced that the steps we are taking in 2006 will
create significant shareholder value over the intermediate to
long-term." Second Quarter in Review Decherd said, "Second quarter
EPS finished $0.07 above the high end of our June 20 guidance with
$0.03 due to better-than-expected results from operations, more
specifically as a result of stronger than anticipated television
revenues and lower expenses, and $0.04 due to the one-time tax
benefit associated with Texas state tax reforms." Consolidated
Belo's consolidated revenue for the second quarter increased 3.1
percent with Television Group revenue up 5.6 percent and Newspaper
Group revenue up one percent. Total operating costs and expenses
increased 7.5 percent, less than the Company's previous projection
of a 10 percent increase, with decreases in consolidated EBITDA and
earnings from operations of 1.8 percent and 12 percent,
respectively. Belo's second quarter results included an estimated
$7.9 million in incremental circulation revenue and an estimated
$6.6 million in incremental circulation expense associated with the
change from a buy-sell arrangement with contractors to a
fee-for-delivery system at The Dallas Morning News. As noted
previously, the second quarter also included $3.7 million in
incremental stock-based compensation expense. Television Group
Television Group revenue increased 5.6 percent in the second
quarter versus the prior year including a 4.3 percent increase in
spot revenues. Local and national revenues increased three percent
and 1.3 percent, respectively. Political revenues were $5.1 million
in the second quarter of 2006 compared with $1.9 million in the
second quarter of 2005. Spot revenue growth rates accelerated each
month in the second quarter, with June spot revenues up almost nine
percent, including a 4.9 percent increase in local, a 9.3 percent
increase in national and political revenue of $1.5 million.
Advertising revenues associated with our television station Web
sites continue to grow at a high rate, increasing more than 60
percent in the second quarter to $4.7 million, up from $2.9 million
in the second quarter of 2005. Television Group segment costs and
expenses increased 2.7 percent in the second quarter with about one
percentage point of the variance attributable to the incremental
stock-based compensation expense. Programming expense decreased 7.1
percent in the second quarter versus the second quarter of the
previous year. Second quarter segment EBITDA for the Television
Group increased 9.6 percent. Newspaper Group Newspaper Group total
revenues increased one percent in the second quarter of 2006,
including the estimated increase in circulation revenue related to
the change in distribution methods at The Dallas Morning News of
$7.9 million. Advertising revenue comparisons were not affected by
this item. Advertising revenues for the Newspaper Group decreased
less than one percent in the second quarter versus last year.
Newspaper Group classified revenues decreased less than two percent
in the second quarter, general advertising was down 2.8 percent and
retail was down 7.3 percent. Interactive revenues increased 53
percent and part-run advertising increased 14 percent, related to
new products launched at The Dallas Morning News. Newspaper Group
segment costs and expenses increased six percent versus the second
quarter of 2005, two to three percentage points less than previous
projections, due to tight expense controls on discretionary costs.
The six percent increase includes the aforementioned $6.6 million
in estimated circulation distribution expense at The Dallas Morning
News, incremental expenses related to new products launched at The
Morning News in the third quarter of 2005 and incremental
stock-based compensation expense. Excluding these items, Newspaper
Group segment expenses decreased about one percent in the second
quarter. Newspaper Group segment EBITDA decreased 14 percent in the
second quarter. Corporate Corporate segment costs and expenses were
$25.5 million in the second quarter of 2006 as compared to $15
million in the second quarter of 2005, mostly due to one-time
expenses associated with transformational initiatives. Incremental
expenses include $2.2 million attributable to stock-based
compensation expense and $6 million in one-time transition costs
associated with the technology and business process initiatives the
Company has undertaken. Belo's total depreciation and amortization
expense increased slightly in the second quarter of 2006. Total
debt at June 30, 2006, was $1.35 billion, with $1.05 billion in
long-term debt and $300 million in short-term debt related to notes
due in June 2007. In addition to the normal balance of cash on hand
to fund current operations, the Company also had $48 million in
invested cash at June 30, 2006 as a result of the Company's May
2006 issuance of $250 million in senior notes, a majority of the
proceeds of which were used to pay down the outstanding balance
under the Company's senior credit facility. Capital spending in the
second quarter was $25 million. The Company repurchased 2.1 million
shares in the second quarter for a total of $37 million. Interest
expense increased $2.2 million, or 10 percent, in the second
quarter. Belo's leverage ratio, as defined in the Company's credit
facility, was 3.5 times at June 30, 2006. Non-GAAP Financial
Measures A reconciliation of Consolidated EBITDA to net earnings is
set forth in an exhibit to this release. Third Quarter 2006 Outlook
Regarding Belo's outlook for the third quarter of 2006, Decherd
said, "We expect the revenue momentum experienced by Belo's
television stations in the second quarter to carry over into the
third quarter. Belo's Television Group expects to benefit
significantly from political revenues in the third quarter as
political races and issues heat up. In July, we expect Television
Group spot revenue to finish up 7 to 8 percent versus the prior
year with strength in non-political core advertising, which should
be up 6 to 7 percent. For the third quarter overall, spot revenues,
including political, are expected to increase high-single digits.
We expect revenues associated with the Television Group's Web sites
to increase 45 to 50 percent versus the prior year. "For the
Newspaper Group, we expect total revenue to be up slightly in the
third quarter with ad revenue flat versus the prior year, including
a low-to- mid single digit ad revenue increase at The
Press-Enterprise, flat to slightly down ad revenues at The Dallas
Morning News and a low-single digit decrease at The Providence
Journal. These projections include a revenue increase of 45 to 50
percent for the Newspaper Group's Web sites. "The impact of the
change in circulation distribution methods at The Dallas Morning
News on circulation revenues and expenses will moderate in the
third quarter. Incremental revenues are estimated at $5 million
with estimated incremental expenses of $4 million. The third
quarter will be the heaviest period for one-time transition costs
related to the Company's technology and business process
initiatives, which are currently estimated at $8 to $9 million,
including severance. Also, costs related to the voluntary severance
plan at The Dallas Morning News are expected in the third quarter;
however, it is too early to provide an estimate as The Morning News
is still sizing the potential impacts. We expect to provide more
information about the voluntary plan and its impacts as the details
are finalized. In addition, the third quarter will reflect
approximately $3 million in incremental stock-based compensation.
"Excluding these incremental expenses, third quarter consolidated
operating costs and expenses are expected to increase in the
low-single digits. On a reported basis, operating costs and
expenses are expected to increase in the mid-to-high single digits
for the third quarter. "The previously noted tax benefit related to
Texas state tax reforms resulted in an effective tax rate of
approximately 33 percent for the second quarter and is expected to
result in an effective tax rate of about 34.5 percent for full-year
2006. In 2007 and future years, the Company's effective tax rate is
expected to increase moderately as a result of these reforms from
our previous effective tax rate of just less than 39 percent. "We
consider the current price at which BLC is trading to be an
excellent buying opportunity for the Company. I noted in May that
we have a target to reach 100 million shares outstanding over the
next couple of years; with recent repurchases, we are making good
progress toward that goal." The Company 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
1-800-553-0329. A replay line will be open from 4:30 p.m. CDT on
July 28 until 11:59 p.m. CDT on August 4. To access the replay,
dial 800-475-6701 or 320-365-3844. The access code for the replay
is 834751. 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 7,700 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, and the fast-growing Hispanic market,
including Quick and Al Dia in Dallas/Fort Worth, and 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, dividends, 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 recovery of the New Orleans
market (where the Company owns and operates market-leading
television station WWL-TV, the CBS affiliate) from 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 Three months ended Six months
ended June 30, June 30, In thousands, except per share amounts
(unaudited) 2006 2005 2006 2005 Net Operating Revenues $403,557
$391,263 $775,280 $740,414 Operating Costs and Expenses Salaries,
wages and employee benefits 142,472 136,748 290,838 272,206 Other
production, distribution and operating costs 123,596 106,025
235,426 203,549 Newsprint, ink and other supplies 34,227 34,853
70,905 66,958 Depreciation 22,272 22,214 44,088 44,246 Amortization
2,087 2,087 4,174 4,206 Total operating costs and expenses 324,654
301,927 645,431 591,165 Earnings from operations 78,903 89,336
129,849 149,249 Other income and expense Interest expense (24,430)
(22,219) (48,092) (44,512) Other income (expense), net(1) 8,852 485
9,700 841 Total other income and expense (15,578) (21,734) (38,392)
(43,671) Earnings Earnings before income taxes 63,325 67,602 91,457
105,578 Income taxes 20,666 25,682 31,498 39,957 Net earnings
$42,659 $41,920 $59,959 $65,621 Net earnings per share Basic $.41
$.37 $.57 $.58 Diluted $.41 $.36 $.57 $.57 Average shares
outstanding Basic 104,307 113,308 105,219 113,740 Diluted 104,474
114,915 105,523 115,365 Cash dividends declared per share $--- $---
$0.10 $0.10 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 miscellaneous income (expense). Belo Corp.
Consolidated Condensed Balance Sheets June 30, December 31, In
thousands 2006 2005 Assets Current assets Cash and temporary cash
investments $77,993 $33,243 Accounts receivable, net 259,595
262,240 Other current assets 65,160 60,794 Total current assets
402,748 356,277 Property, plant and equipment, net 523,561 534,112
Intangible assets, net 2,578,392 2,582,566 Other assets 115,916
116,258 Total assets $3,620,617 $3,589,213 Liabilities and
Shareholders' Equity Current liabilities Short-term portion of
long- term debt $300,000 $--- Accounts payable 59,510 91,210
Accrued expenses 91,701 97,142 Other current liabilities 60,787
59,077 Total current liabilities 511,998 247,429 Long-term debt
1,048,893 1,244,875 Deferred income taxes 442,751 445,730 Other
liabilities 119,625 117,698 Total shareholders' equity 1,497,350
1,533,481 Total liabilities and shareholders' equity $3,620,617
$3,589,213 Note: Certain amounts have been reclassified to conform
to the current presentation. Belo Corp. Segment Information Three
months ended Six months ended June 30 June 30 In thousands
(unaudited) 2006 2005 2006 2005 Television Group Net operating
revenues $193,326 $183,142 $368,018 $344,288 Segment costs and
expenses 109,815 106,935 217,860 209,851 Segment EBITDA $83,511
$76,207 $150,158 $134,437 Newspaper Group Net operating revenues
$210,231 $208,121 $407,262 $396,126 Segment costs and expenses
164,992 155,687 334,447 302,720 Segment EBITDA $45,239 $52,434
$72,815 $93,406 Corporate Segment costs and expenses $25,487
$15,004 $44,861 $30,142 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). Belo Corp. Consolidated EBITDA Three months ended Six
months ended June 30, June 30, In thousands (unaudited) 2006 2005
2006 2005 Consolidated EBITDA (1) $112,114 $114,122 $187,811
$198,542 Depreciation and Amortization (24,359) (24,301) (48,262)
(48,452) Interest Expense (24,430) (22,219) (48,092) (44,512)
Income Taxes (20,666) (25,682) (31,498) (39,957) Net Earnings
$42,659 $41,920 $59,959 $65,621 Note (1): The Company defines
EBITDA as net earnings before interest expense, income taxes,
depreciation and amoritzation. 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. Third Quarter 2006 Guidance As of 7/28/06
Item Guidance Newspaper Group Total revenue Expected to be up
slightly Advertising revenue Expected to be flat Television Group
Spot revenue Expected to increase high-single digits Other Items
Incremental stock-based compensation Expected to be approximately
$3 million Transition costs related to the Company's technology
initiatives Expected to be about $8 to $9 million Total operating
costs and expenses Expected to increase mid-to-high single digits
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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