DALLAS, Feb. 5 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE:BLC), one
of the nation's largest pure-play, publicly-traded television
companies, announced fourth quarter and full year 2008 pro forma
earnings per share from continuing operations of $0.28 and $0.78,
respectively, compared to $0.32 and $0.88, respectively, for the
fourth quarter and full year 2007. Pro forma earnings per share
from continuing operations exclude non-cash impairment charges to
goodwill and other intangible assets, spin-off related charges and
a gain on the purchase and retirement of Company bonds in 2008.
Including the non-cash impairment charges to goodwill and other
intangible assets, spin-off related charges and the gain on the
purchase and retirement of Company bonds in 2008, the GAAP net loss
per share from continuing operations for the fourth quarter and
full year 2008 was ($3.50) and ($3.21), respectively, compared to
net earnings per share from continuing operations of $0.06 and
$0.59, respectively, for the fourth quarter and full year 2007.
2008 in Review Commenting on the Company's operating performance in
2008, Dunia A. Shive, Belo Corp.'s president and Chief Executive
Officer, said, "Total revenue declined 5.6 percent as strong
political revenues and double-digit increases in retransmission and
Internet revenues were not enough to offset the overall soft
advertising conditions Belo experienced during the year. The
Company responded with a number of expense reduction initiatives in
2008 including the freezing of open positions Company-wide, staff
reductions in certain markets and other cost-saving measures. These
expense initiatives led to a 4.1 percent reduction in combined
station and corporate operating costs in 2008. Excluding spin-off
related charges and a gain on the purchase and retirement of
Company bonds, the Company generated $255 million in pro forma
consolidated EBITDA in 2008 with a pro forma consolidated EBITDA
margin of 35 percent, only slightly below the 2007 pro forma
consolidated EBITDA margin of 36 percent. The station EBITDA margin
for the fourth quarter of 2008 was 41.2 percent, and 38.7 percent
for full year 2008. In addition, the Company reduced its debt $45
million in the fourth quarter of 2008 and $75 million for the
year." Fourth quarter and full year results for 2008 and 2007
include non-cash impairment charges of $465 million and $22
million, respectively. These charges were determined through Belo's
annual impairment testing of goodwill and other intangible assets
using the methodology prescribed by Statement of Financial
Accounting Standards No. 142. "It is important to point out,
however, that these impairments are non-cash charges to earnings
and will not affect Belo's liquidity, cash flows from operating
activities or debt covenants, or have an impact on the Company's
future operations," Shive said. For 2008, $351 million of the
impairment charge related to goodwill and $114 million related to
FCC licenses. In 2007, all of the impairment charge related to
goodwill. The $465 million impairment charge in 2008 represents a
23 percent reduction in the Company's total intangible assets.
Spin-off related charges, which include transaction and financing
costs and a one-time tax charge associated with the spin-off of the
Company's newspaper businesses and related assets on February 8,
2008, totaled $0.22 per share and $0.08 per share, respectively,
for the full year 2008 and 2007. The fourth quarters of 2008 and
2007 include spin-off related charges totaling $0.01 and $0.05 per
share, respectively. In the fourth quarter of 2008, the Company
purchased at a discount and retired $43.6 million of bonds maturing
in 2013 and 2027 at a cost of $27.2 million. As a result, fourth
quarter and full year 2008 results include a gain, net of taxes, of
$10 million, or $0.10 per share, associated with these bond
transactions. Operating Results Total revenues decreased 8.8
percent in the fourth quarter of 2008 versus the fourth quarter of
2007 as declines in Belo's core local and national spot business
were greater than incremental gains from political revenues. Fourth
quarter total spot revenue, including political, was down 11
percent with 26 percent decreases in both local and national spot.
Total revenues decreased 5.6 percent for the full year 2008. Full
year 2008 spot revenue, including political, was down 7.9 percent
with 13 percent and 17 percent decreases in local and national
spot, respectively. The spot revenue declines in the fourth quarter
and full year 2008 were primarily due to a weak advertising
environment, particularly in the automotive category which was down
37 percent and 21 percent, respectively. Fourth quarter and full
year 2008 included political revenues of $35.9 million and $56.2
million, respectively. Advertising revenue associated with Belo's
Web sites increased 5.1 percent in the fourth quarter and 14
percent for the full year 2008. Internet revenues surpassed $30
million for the year and represent over 4 percent of the Company's
total revenue. Retransmission revenues increased 30 percent in the
fourth quarter and 41 percent for full year 2008. Retransmission
revenues for 2008 totaled $33.1 million and represent 4.5 percent
of Belo's total revenue. Station expenses decreased 4.2 percent and
2.7 percent, respectively, for fourth quarter and full year 2008.
Corporate Corporate operating costs were $10.6 million in the
fourth quarter of 2008, as compared to $11.5 million in the fourth
quarter of 2007, a decrease of 7.8 percent. For full year 2008,
corporate operating costs totaled $32.2 million versus $40.5
million in 2007, a decrease of 20 percent. The decreases for both
fourth quarter and full year were due to lower share-based
compensation, lower bonus expense and other cost-saving measures.
Combined station and corporate operating costs declined 4.5 percent
and 4.1 percent for the fourth quarter and full year 2008,
respectively. Excluding impairment charges and spin-off related
costs, the Company's earnings from operations decreased 17 percent
and 9 percent, respectively, for the fourth quarter and full year
2008. Other Items Belo's depreciation and amortization expense
totaled $10.7 million in the fourth quarter of 2008, 2.8 percent
lower than the fourth quarter of 2007. Full year 2008 depreciation
and amortization expense totaled $42.9 million, a decrease of 5.2
percent when compared to 2007. The Company's interest expense
totaled $17.7 million in fourth quarter 2008, a decrease of 21
percent from fourth quarter 2007. Full year 2008 interest expense
totaled $83.1 million, a 12 percent decrease from full year 2007.
Other income, net, increased $18.6 million in the fourth quarter
and $13.6 million for the full year 2008 due primarily to a $16.4
million gain on the retirement of $43.6 million of bonds due in
2013 and 2027 that were purchased at a cost of $27.2 million. The
bond transactions were funded through the Company's revolving
credit facility. Income tax expense decreased $61.5 million in the
fourth quarter of 2008 compared to the fourth quarter of 2007 due
primarily to a $68.4 million tax benefit associated with the
impairment charge. Full year 2008 tax expense decreased $44.6
million due primarily to the $68.4 million tax benefit associated
with the impairment charge, partially offset by a one-time $18.8
million tax charge related to the transfer of certain intangible
assets in connection with the spin-off and the incremental tax
related to the gain on the Company's purchase of its bonds at a
discount. Total debt at December 31, 2008 was $1.093 billion. The
Company's leverage ratio, as defined in the Company's credit
facility, was 4.4 times at December 31, 2008. The Company did not
repurchase shares of common stock in the last nine months of the
year, but did repurchase 191,000 shares in the first quarter of
2008 for a total of $2.2 million. Belo invested $5.8 million in
capital expenditures in the fourth quarter and $25.4 million for
the full year. Discontinued Operations On February 8, 2008, Belo
completed the spin-off of its newspaper businesses and related
assets into a separate publicly-traded company, A. H. Belo
Corporation (NYSE:AHC). The results of operations of the Newspaper
Group and related corporate expenses are classified as discontinued
operations for all periods prior to the spin-off. Non-GAAP
Financial Measures A reconciliation of pro forma consolidated
EBITDA and pro forma earnings from operations to earnings from
operations, and a reconciliation of net earnings from continuing
operations to pro forma net earnings from continuing operations are
set forth in an exhibit to this release. 2009 Outlook In looking to
2009, Shive said, "Given the continued weak economic environment,
it is extremely difficult to project where advertising revenues
will finish for the first quarter. Currently, first quarter local
and national spot pacing trends are similar to our experience in
the fourth quarter of 2008. "For full year 2009, we expect
retransmission and Internet revenues to continue to grow double
digits. Combined station and corporate operating expenses are
projected to be lower in 2009. Capital expenditures for 2009 are
projected to not exceed $12 million, which is down from $25.4
million in 2008. We expect the Company's tax rate to be
approximately 39 percent in 2009. "The Company will continue to
stay focused on debt paydown and will continue to seek to reduce
its long-term debt through opportunistic purchases and retirements
of bonds. Like many companies, the weak revenue environment is
expected to result in an increase in our leverage ratio. While
we're in compliance with all terms of our current bank facility
which expires in June 2011, we are seeking an amendment to the
facility to adjust the leverage covenant amid the current economic
slowdown. We expect to have an amended facility in place by the end
of the first quarter." A conference call to discuss this release
and other matters of interest to shareholders and analysts will
follow at 1:00 p.m. CST this afternoon. The conference call will be
simultaneously Webcast on Belo Corp.'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
1-800-288-8960. A replay line will be open from 3:00 p.m. CST on
February 5 until 11:59 p.m. CST February 12. To access the replay,
dial 800-475-6701 or 320-365-3844. The access code for the replay
is 980652. About Belo Corp. Belo Corp. (BLC) is one of the nation's
largest pure-play, publicly-traded television companies, with 2008
annual revenue of $733 million. The Company owns and operates 20
television stations (nine in the top 25 markets) and their
associated Web sites. Belo stations, which include affiliations
with ABC, CBS, NBC, FOX, CW and MyNetwork TV, reach more than 14
percent of U.S. television households in 15 highly-attractive
markets. Nearly all Belo stations rank first or second in their
local market. Additional information is available at
http://www.belo.com/ or by contacting Paul Fry, vice
president/Investor Relations & Corporate Communications, at
214-977-6835. Statements in this communication concerning Belo's
business outlook or future economic performance, anticipated
profitability, revenues, expenses, dividends, capital expenditures,
investments, future financings, 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 distribution of the
newspaper businesses and related assets of Belo; 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, including
the transition to digital television and the development of new
systems to distribute 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 and co-owned ventures; 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 Twelve
months ended December 31, December 31, ------------ ------------ In
thousands, except per share amounts 2008 2007 2008 2007 ---- ----
---- ---- (unaudited) (unaudited) (unaudited) Net Operating
Revenues $198,851 $217,976 $733,470 $776,956 Operating Costs and
Expenses Station salaries, wages and employee benefits 55,405
61,593 231,256 240,362 Station programming and other operating
costs 61,582 60,527 218,241 221,396 Corporate operating costs
10,573 11,464 32,235 40,466 Spin-off related costs - 6,462 4,659
9,267 Depreciation 10,660 10,966 42,893 44,804 Amortization - - -
442 Impairment charge 464,760 22,137 464,760 22,137 ------- ------
------- ------ Total operating costs and expenses 602,980 173,149
994,044 578,874 Earnings (loss) from operations (404,129) 44,827
(260,574) 198,082 Other income and expense Interest expense
(17,666) (22,487) (83,093) (94,494) Other income (expense), net
18,230 (328) 19,846 6,266 ------ ---- ------ ----- Total other
income and expense 564 (22,815) (63,247) (88,228) Earnings (loss)
from continuing operations before income taxes (403,565) 22,012
(323,821) 109,854 Income taxes (45,276) 16,209 4,532 49,157 -------
------ ----- ------ Net earnings (loss) from continuing operations
(358,289) 5,803 (328,353) 60,697 Discontinued operations, net of
tax (497) (339,247) (4,996) (323,510) ---- -------- ------ --------
Net loss $(358,786) $(333,444) $(333,349) $(262,813) ==========
========== ========== ========== Net earnings (loss) per share -
Basic Earnings (loss) per share from continuing operations $(3.50)
$0.06 $(3.21) $0.59 Loss per share from discontinued operations
(0.01) (3.32) (0.05) (3.16) ----- ----- ----- ----- Net loss per
share - Basic $(3.51) $(3.26) $(3.26) $(2.57) ====== ====== ======
====== Net earnings (loss) per share - Diluted Earnings (loss) per
share from continuing operations $(3.50) $0.06 $(3.21) $0.59 Loss
per share from discontinued operations (0.01) (3.28) (0.05) (3.14)
----- ----- ----- ----- Net earnings (loss) per share - Diluted
$(3.51) $(3.23) $(3.26) $(2.55) ====== ====== ====== ====== Average
shares outstanding Basic 102,204 102,262 102,219 102,245 Diluted(1)
102,204 103,367 102,219 103,128 Cash dividends declared per share
$0.075 $0.125 $0.30 $0.50 ====== ====== ===== ===== Note 1:
Potential dilutive common shares were antidilutive as a result of
the Company's net loss from continuing operations for the three
months and twelve months ended December 31, 2008. As a result,
basic and diluted average shares outstanding were the same for
these periods. Belo Corp. Consolidated Condensed Balance Sheets
----------- December 31, ------------ In thousands 2008 2007
------------- ---- ---- (unaudited) Assets Current assets Cash and
temporary cash investments $5,770 $11,190 Accounts receivable, net
138,638 181,700 Other current assets 22,276 24,789 Current assets
of discontinued operations - 126,710 ------- ------- Total current
assets 166,684 344,389 Property, plant and equipment, net 209,988
226,040 Intangible assets, net 1,581,032 2,045,793 Other assets
81,092 51,650 Long-term assets of discontinued operations - 511,188
-------- -------- Total assets $2,038,796 $3,179,060 ==========
========== Liabilities and Shareholders' Equity Current liabilities
Accounts payable $19,385 $31,153 Accrued expenses 51,399 65,575
Other current liabilities 39,027 46,667 Current liabilities of
discontinued operations - 106,055 ------- ------- Total current
liabilities 109,811 249,450 Long-term debt 1,092,765 1,168,140
Deferred income taxes 311,053 425,652 Other liabilities 225,248
37,183 Long-term liabilities of discontinued operations - 46,927
Total shareholders' equity 299,919 1,251,708 ------- ---------
Total liabilities and shareholders' equity $2,038,796 $3,179,060
========== ========== Belo Corp. Non-GAAP to GAAP Reconciliations
Pro Forma Consolidated EBITDA and Earnings from Operations In
thousands (unaudited) Twelve months ended December 31, 2008
------------------------------------- Gain from Spin- Non-cash As
extinguishment related Impairment Pro Reported of bonds costs
charge Forma -------- --------------- -------- ----------- -----
Consolidated EBITDA(1) $266,925 $(16,407) $4,659 $ $255,177
Impairment charge (464,760) 464,760 - Depreciation and amortization
(42,893) (42,893) Other income (expense), net (19,846) 16,407
(3,439) -------- ------- ------ ------- ------- Earnings (loss)
from operations $(260,574) - $4,659 $464,760 $208,845 =========
======= ====== ======== ======== Twelve months ended December 31,
2007 ------------------------------------- Gain from Spin- Non-cash
As extinguishment related Impairment Pro Reported of bonds costs
charge Forma --------- ------------- -------- --------- ------
Consolidated EBITDA(1) $271,731 $- $9,267 $ $280,998 Impairment
charge (22,137) 22,137 - Depreciation and amortization (45,246)
(45,246) Other income (expense), net (6,266) - (6,266) --------
------ ------ ------- ------- Earnings (loss) from operations
$198,082 $- $9,267 $22,137 $229,486 ======== ======= ====== =======
======== Three months ended December 31, 2008
------------------------------------ Gain from Spin- Non-cash As
extinguishment related Impairment Pro Reported of bonds costs
charge Forma ------- ------------- -------- ----------- ------
Consolidated EBITDA(1) $89,521 $(16,407) $- $ $73,114 Impairment
charge (464,760) 464,760 - Depreciation and amortization (10,660)
(10,660) Other income (expense), net (18,230) 16,407 (1,823)
------- ------ ------- ------- ------ Earnings (loss) from
operations $(404,129) $- $- 464,760 $60,631 ========= =======
======= ======= ======= Three months ended December 31, 2007
------------------------------------ Gain from Spin- Non-cash As
extinguishment related Impairment Pro Reported of bonds costs
charge Forma --------- -------------- -------- ---------- ------
Consolidated EBITDA(1) $77,602 $- $6,462 $ $84,064 Impairment
charge (22,137) 22,137 - Depreciation and amortization (10,966)
(10,966) Other income (expense), net 328 - 328 ------ ------ ------
------ --- Earnings (loss) from operations $44,827 $- $6,462
$22,137 $73,426 ======= ====== ====== ======= ======= Note 1: The
Company defines Consolidated EBITDA as net earnings before interest
expense, income taxes, depreciation, amortization and impairment.
Consolidated EBITDA is not a measure of financial performance under
accounting principles generally accepted in the United States.
Management uses Consolidated EBITDA in internal analyses as a
supplemental measure of the financial performance of the Company to
assist it with determining performance comparisons against its peer
group of companies, as well as capital spending and other investing
decisions. Consolidated EBITDA is also a common alternative measure
of performance used by investors, financial analysts, and rating
agencies to evaluate financial performance. Consolidated EBITDA
should not be considered in isolation or as a substitute for net
earnings, operating income, cash flows provided by operating
activities or other income or cash flow data prepared in accordance
with U.S. GAAP, and this non-GAAP measure may not be comparable to
similarly titled measures of other companies. Belo Corp. Non-GAAP
to GAAP Reconciliations (continued) Pro Forma Net Earnings From
Continuing Operations In thousands (unaudited) Twelve months ended
Twelve months ended December 31, 2008 December 31, 2007
------------------------- --------------------- Earnings EPS
Shares(1) Earnings EPS Shares -------- --- -------- -------- ---
------- Net earnings (loss) from continuing operations $(328,353)
$(3.21) 102,219 $60,697 $0.59 103,128 Spin-off related operating
and financing costs, net of tax 3,861 $0.04 103,835 8,011 $0.08
103,128 Impairment charge, net of tax 396,362 $3.88 102,219 22,137
$0.21 103,128 Gain from extinguishment of debt, net of tax (10,012)
$(0.10) 103,835 - $- 103,128 Spin-off related tax charge 18,756
$0.18 103,835 - $- 103,128 ------ ------- Pro forma net earnings
from continuing operations $80,614 $0.78 103,835 $90,845 $0.88
103,128 ======= ======= Three months ended Three months ended
December 31, 2008 December 31, 2007 -------------------------
--------------------- Earnings EPS Shares(1) Earnings EPS Shares
-------- --- -------- -------- --- ------- Net earnings (loss) from
continuing operations $(358,289) $(3.50) 102,204 $5,803 $0.06
103,367 Spin-off related operating and financing costs, net of tax
- $- 103,484 5,586 $0.05 103,367 Impairment charge, net of tax
396,362 $3.88 102,204 22,137 $0.21 103,367 Gain from extinguishment
of debt, net of tax (10,012) $(0.10) 103,484 - $- 103,367 Spin-off
related tax charge 521 $0.01 103,484 - $- 103,367 ------ -------
Pro forma net earnings from continuing operations $28,582 $0.28
103,484 $33,526 $0.32 103,367 ======= ======= Note 1: Potential
dilutive common shares were antidilutive as a result of the
Company's net loss from continuing operations for the three months
and twelve months ended December 31, 2008. As a result, basic
weighted average shares were used in the calculations of net loss
from continuing operations per share and the per share effect of
the goodwill impairment for these periods. In the absence of the
net loss from continuing operations, potential dilutive common
shares were added to the weighted average common shares outstanding
in the calculation of net earnings per share excluding goodwill
impairment. DATASOURCE: Belo Corp. CONTACT: Paul Fry, vice
president/Investor Relations & Corporate Communications of Belo
Corp., +1-214-977-6835 Web Site: http://www.belo.com/
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