DALLAS, Oct. 28 /PRNewswire-FirstCall/ -- Belo Corp.
(NYSE: BLC), one of the nation's largest pure-play, publicly-traded
television companies, today reported net earnings per share of
$0.13 in the third quarter of 2010
compared to a net loss per share of ($1.47) in the third quarter of 2009. The
third quarter of 2009 included a non-cash impairment charge to
intangible assets of $1.51 per
share.
Dunia A. Shive, Belo's president
and Chief Executive Officer, said, "Belo's total revenue grew 17
percent in the third quarter of 2010 making it the best quarter of
the year in terms of year-over-year revenue growth. The
strong revenue performance was due primarily to continued recovery
in our core spot advertising business and $11.2 million in political revenue. The
majority of our political revenue came from our television stations
in Washington, Missouri and
Texas. Core spot advertising
revenue, which excludes political, increased 10 percent in the
third quarter of 2010 compared to the third quarter of 2009.
The Company's station adjusted EBITDA was $59 million in the third quarter of 2010, a 35
percent increase over the third quarter of 2009, and the station
adjusted EBITDA margin in the third quarter of 2010 was 36 percent.
The Company reduced its debt by $41
million in the third quarter of 2010 and has reduced its
debt by $79 million since
December 31, 2009."
Third Quarter in Review
Operating Results
Total revenue increased 17 percent in the third quarter of 2010
versus the third quarter of 2009. Total spot revenue,
including political, was up 17.5 percent, with increases of 5
percent and 20 percent in local and national spot, respectively.
The third quarter 2010 revenue increases resulted from an
improved advertising environment led by the automotive category,
which was up 30 percent, and political revenue. Political
revenue in the third quarter of 2010 was $11.2 million compared to $2.1 million in the third quarter of 2009.
The Company also experienced double-digit increases in
several large revenue categories including financial services,
telecommunications, retail and travel.
Revenue associated with Belo's Web sites increased 23 percent to
$9 million in the third quarter of
2010 versus $7.4 million in the third
quarter of 2009. Retransmission revenue totaled $11.8 million in the third quarter of 2010.
Station salaries, wages and employee benefits increased
$6.3 million in the third quarter of
2010 versus the third quarter of 2009 due primarily to a
$2.1 million increase in accrued
bonus expense, a non-cash credit of $1.4
million in the third quarter of 2009 related to the
conversion to a paid time off vacation policy, and a $1.2 million increase in pension expense
including the effect of reinstating the pension transition
supplement benefit that was suspended last year. Station
programming and other operating costs were up 3.2 percent in the
third quarter of 2010 versus the third quarter of 2009.
Station adjusted EBITDA of $59
million for the third quarter of 2010 was up 35 percent
compared to the third quarter of 2009. The station adjusted
EBITDA margin for the third quarter of 2010 was 36 percent compared
to 31 percent in the third quarter of 2009.
Corporate
Corporate operating costs of $8.7
million in the third quarter of 2010 were $1 million greater than the third quarter of 2009
due primarily to higher pension expense of $1.1 million. An increase in accrued bonus
expense was offset by savings in share-based compensation and
technology costs.
In the Company's second quarter earnings release dated
July 30, 2010, three factors were
noted that would affect combined station and corporate operating
costs for the third quarter. Below is a list of those factors
together with their actual effect on third quarter expenses:
- a $1.6 million non-cash credit in
the third quarter of 2009 related to the Company's conversion to a
paid time off vacation policy;
- a $2.3 million increase in
pension expense in the third quarter of 2010, which included the
reinstatement of the pension transition supplement that was
suspended last year; and,
- a $2.9 million increase in bonus
expense in the third quarter of 2010 compared to virtually no bonus
expense last year.
In Belo's second quarter earnings release, the Company projected
that, on a reported basis, third quarter combined station and
corporate operating costs would be up approximately 10 percent; and
that excluding the above items, third quarter combined station and
corporate operating costs would be up in the low-to-mid single
digits. On a reported basis, third quarter combined station
and corporate operating costs were up 8.5 percent compared to the
third quarter of 2009. Excluding the above items, third
quarter combined station and corporate operating costs were up 1.9
percent compared to the third quarter of 2009.
Other Items
The Company recorded a reduction in operating expenses of
$0.3 million in the third quarter of
2010 related to pension contribution reimbursements received from
A. H. Belo Corporation ("A. H.
Belo"). The reimbursements relate to A. H. Belo's contractual obligation to reimburse
Belo for 60 percent of any pension contributions Belo makes to The
G. B. Dealey Retirement Pension Plan. This $0.3 million credit is shown as a separate
component of total operating costs and expenses on Belo's
Consolidated Statements of Operations. The Company has made
its minimum required pension contributions for calendar year 2010
and, therefore, does not expect to receive a pension contribution
reimbursement in the fourth quarter of 2010.
Belo's depreciation expense totaled $8.4
million in the third quarter of 2010, down from $11.5 million in the third quarter of 2009.
The Company's interest expense increased $4.4 million compared to the third quarter of
2009 due primarily to increased interest costs associated with the
Company's $275 million senior note
offering completed in the fourth quarter of 2009 and the
amortization of the discount and refinancing costs associated with
the note offering and concurrent amendment of the Company's credit
facility. The debt incurred in the note offering was
previously included in the Company's lower-rate revolving credit
facility.
Other income, net, increased $0.7
million in the third quarter of 2010 compared to the third
quarter of 2009 due primarily to the impact of a loss on the sale
of certain non-operating assets in the third quarter of 2009.
Income tax expense increased $92
million in the third quarter of 2010 compared to the third
quarter of 2009 due primarily to an $87
million tax benefit in the third quarter of 2009 associated
with the impairment charge noted above.
Total debt at September 30, 2010
was $949 million, down $79 million from December
31, 2009. The Company's total leverage ratio, as
defined in the Company's revolving credit facility, was 4.3 times
at September 30, 2010, down from 4.7
times at June 30, 2010 and 5.9 times
at December 31, 2009. Belo
invested $4.1 million in capital
expenditures in the third quarter of 2010 and currently expects
full year capital expenditures to be approximately $15 million.
Other Matters
In Belo Corp.'s press release dated October 7, 2010, the Company announced an
agreement with A. H. Belo to split
The G. B. Dealey Retirement Pension Plan ("Pension Plan" or "Plan")
into separately-sponsored plans. Under the agreement, Belo
Corp. and A. H. Belo will each be
solely responsible for contributions made to their respective plans
for plan years starting on or after January
1, 2011.
For Belo Corp., the pension split transaction will be accounted
for as a settlement of a portion of the Pension Plan liability.
Under settlement accounting, the split of the Plan is
expected to result in a significant reduction to Belo Corp.'s net
unfunded pension liability, with an associated reduction in
pension-related deferred tax assets and a significant increase in
the Company's total shareholders' equity. In addition, Belo
Corp.'s future annual pension expense is expected to be
significantly less.
Belo Corp. currently expects to report a non-cash loss
associated with the split of the Pension Plan in the first quarter
of 2011 of approximately $19 million to $23
million with an associated tax benefit of approximately
$5 million to $7 million; however,
the actual amount of the non-cash loss and associated tax benefit
is subject to change and may be more or less than these ranges
depending on several factors, including differences in the
Company's current estimates related to Plan asset performance, the
discount rate, contributions and benefit payments. The
non-cash loss, before taxes, will be shown on a separate line
within operating costs and expenses on the Company's Statements of
Operations.
Non-GAAP Financial Measures
A reconciliation of station adjusted EBITDA to earnings (loss)
from operations and a reconciliation of net earnings (loss) to pro
forma net earnings are set forth in an exhibit to this release.
2010 Outlook
Regarding Belo's outlook for the remainder of the year, Shive
said, "We currently expect political advertising for the full year
to finish in a range of $54 million to $55
million. Based on current pacing trends, total spot
advertising revenue could increase 20 percent in the fourth quarter
of 2010 compared to the fourth quarter of 2009."
Combined station and corporate operating costs will be up in the
fourth quarter of 2010 compared to the fourth quarter of 2009 due
to the same factors noted in the second and third quarters:
- The Company had a $3.2 million
non-cash credit in the fourth quarter of 2009 related to its
conversion to a paid time off vacation policy.
- Pension expense is estimated to be $2.4
million higher in the fourth quarter of 2010 compared to
2009's fourth quarter, including the effect of reinstating the
pension transition supplement benefit that was suspended last
year.
- Accrued bonus expenses, including revenue-based bonuses, are
currently estimated to be $4.6
million higher in the fourth quarter of 2010 compared to the
fourth quarter of 2009.
Excluding the above items, fourth quarter combined station and
corporate operating costs are currently expected to be up less than
5 percent when compared to the fourth quarter of 2009. On a
reported basis, fourth quarter combined station and corporate
operating costs are currently expected to be up approximately 12 to
13 percent versus the fourth quarter of 2009.
A conference call to discuss this release and other matters of
interest to shareholders and analysts will follow at 12:00 p.m. (noon) CDT this afternoon. The
conference call will be simultaneously Webcast on Belo Corp.'s Web
site (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
1-800-230-1766. A replay line will be open from 3:00 p.m. CDT on October
28 until 11:59 p.m. CST
November 11. To access the
replay, dial 800-475-6701 or 320-365-3844. The access code
for the replay is 174949.
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 Web sites. 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 214-977-6835.
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 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
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
In thousands, except per share
amounts
|
|
2010
|
|
|
2009
|
|
2010
|
|
|
2009
|
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Operating Revenues
|
$
|
163,853
|
|
$
|
140,617
|
$
|
481,167
|
|
$
|
418,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Station salaries, wages and
employee benefits
|
|
53,273
|
|
|
47,002
|
|
156,408
|
|
|
145,211
|
|
|
Station programming and other
operating costs
|
|
51,573
|
|
|
49,972
|
|
144,219
|
|
|
147,556
|
|
|
Corporate operating
costs
|
|
8,738
|
|
|
7,743
|
|
26,202
|
|
|
21,891
|
|
|
Pension contribution
reimbursement
|
|
(300)
|
|
|
-
|
|
(8,572)
|
|
|
-
|
|
|
Depreciation
|
|
8,449
|
|
|
11,520
|
|
26,462
|
|
|
32,279
|
|
|
Impairment charge
|
|
-
|
|
|
242,144
|
|
-
|
|
|
242,144
|
|
|
|
Total operating costs and
expenses
|
|
121,733
|
|
|
358,381
|
|
344,719
|
|
|
589,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
operations
|
|
42,120
|
|
|
(217,764)
|
|
136,448
|
|
|
(170,158)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income and
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
(20,037)
|
|
|
(15,654)
|
|
(59,740)
|
|
|
(45,566)
|
|
|
Other income (expense),
net
|
|
21
|
|
|
(657)
|
|
129
|
|
|
12,907
|
|
|
|
Total other income and
(expense)
|
|
(20,016)
|
|
|
(16,311)
|
|
(59,611)
|
|
|
(32,659)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income
taxes
|
|
22,104
|
|
|
(234,075)
|
|
76,837
|
|
|
(202,817)
|
|
Income tax expense
(benefit)
|
|
8,159
|
|
|
(83,554)
|
|
29,825
|
|
|
(71,502)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
$
|
13,945
|
|
$
|
(150,521)
|
$
|
47,012
|
|
$
|
(131,315)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share -
Basic
|
$
|
0.13
|
|
$
|
(1.47)
|
$
|
0.45
|
|
$
|
(1.28)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share -
Diluted
|
$
|
0.13
|
|
$
|
(1.47)
|
$
|
0.45
|
|
$
|
(1.28)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
103,107
|
|
|
102,536
|
|
102,982
|
|
|
102,471
|
|
|
Diluted
|
|
103,502
|
|
|
102,536
|
|
103,397
|
|
|
102,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share
|
$
|
-
|
|
$
|
-
|
$
|
-
|
|
$
|
0.075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Belo Corp.
|
|
Consolidated Condensed Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December 31,
|
|
In thousands
|
2010
|
|
|
2009
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and temporary cash
investments
|
$
|
11,827
|
|
$
|
4,800
|
|
|
|
Accounts receivable,
net
|
|
133,846
|
|
|
139,911
|
|
|
|
Other current assets
|
|
21,908
|
|
|
31,413
|
|
|
Total current assets
|
|
167,581
|
|
|
176,124
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
|
168,393
|
|
|
177,475
|
|
|
Intangible assets,
net
|
|
1,149,272
|
|
|
1,149,272
|
|
|
Other assets
|
|
74,009
|
|
|
81,590
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
1,559,255
|
|
$
|
1,584,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders'
Equity
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
17,768
|
|
$
|
20,736
|
|
|
|
Accrued expenses
|
|
77,491
|
|
|
56,199
|
|
|
|
Other current
liabilities
|
|
31,668
|
|
|
26,962
|
|
|
Total current
liabilities
|
|
126,927
|
|
|
103,897
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
948,899
|
|
|
1,028,219
|
|
|
Deferred income taxes
|
|
180,174
|
|
|
169,888
|
|
|
Other liabilities
|
|
181,185
|
|
|
210,626
|
|
|
Total shareholders'
equity
|
|
122,070
|
|
|
71,831
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
1,559,255
|
|
$
|
1,584,461
|
|
|
|
|
|
|
|
|
|
Belo Corp.
|
|
Non-GAAP to GAAP
Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Station Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
Nine months
ended
|
|
|
|
|
September
30,
|
|
|
September
30,
|
|
In thousands
(unaudited)
|
|
2010
|
|
|
2009
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Station Adjusted EBITDA
(1)
|
$
|
59,007
|
|
$
|
43,643
|
|
|
|
$
|
180,540
|
|
$
|
126,156
|
|
|
Corporate operating
costs
|
|
(8,738)
|
|
|
(7,743)
|
|
|
|
|
(26,202)
|
|
|
(21,891)
|
|
|
Depreciation
|
|
(8,449)
|
|
|
(11,520)
|
|
|
|
|
(26,462)
|
|
|
(32,279)
|
|
|
Pension contribution
reimbursement
|
|
300
|
|
|
-
|
|
|
|
|
8,572
|
|
|
-
|
|
|
Impairment charge
|
|
-
|
|
|
(242,144)
|
|
|
|
|
-
|
|
|
(242,144)
|
|
|
Earnings (loss) from
operations
|
$
|
42,120
|
|
$
|
(217,764)
|
|
|
|
$
|
136,448
|
|
$
|
(170,158)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1:
|
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 contribution reimbursements and
corporate expense. Other income (expense), net is not
allocated to television station earnings from operations because it
consists primarily of equity in earnings (losses) from investments
in partnerships and joint ventures and other non-operating income
(expense).
|
|
|
|
Pro Forma Net
Earnings
|
|
In thousands
(unaudited)
|
|
|
|
|
Three months
ended
|
|
|
Three months
ended
|
|
|
|
|
September
30, 2010
|
|
|
September
30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
EPS
|
|
|
Earnings
|
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
$
|
13,945
|
|
$
|
0.13
|
|
$
|
(150,521)
|
|
$
|
(1.47)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension contribution
reimbursement, net of tax
|
|
(183)
|
|
|
(0.00)
|
|
|
-
|
|
|
|
|
|
Impairment charge, net of
tax
|
|
-
|
|
|
|
|
|
155,420
|
|
|
1.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net
earnings
|
$
|
13,762
|
|
$
|
0.13
|
|
$
|
4,899
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
|
Nine months
ended
|
|
|
|
|
September
30, 2010
|
|
|
September
30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
EPS
|
|
|
Earnings
|
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
$
|
47,012
|
|
$
|
0.45
|
|
$
|
(131,315)
|
|
$
|
(1.28)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension contribution
reimbursement, net of tax
|
|
(5,229)
|
|
|
(0.05)
|
|
|
-
|
|
|
|
|
|
Gain from extinguishment of
debt,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of tax
|
|
-
|
|
|
|
|
|
(9,131)
|
|
|
(0.09)
|
|
|
Impairment charge, net of
tax
|
|
-
|
|
|
|
|
|
155,420
|
|
|
1.52
|
|
|
Pro forma net
earnings
|
$
|
41,783
|
|
$
|
0.40
|
|
$
|
14,974
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Belo Corp.
Copyright . 28 PR Newswire