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August 04, 2011 at 08:30 AM EDT
Television Company Belo Corp. (BLC) Reports Results for Second Quarter 2011

DALLAS, Aug. 4, 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 second quarter of 2011 of $0.17 compared to GAAP net earnings per share of $0.19 in the second quarter of 2010.  The second quarter of 2010 included a credit of $2.6 million, net of taxes, from pension contribution reimbursements received from A. H. Belo Corporation ("A. H. Belo") related to its then-existing obligation to reimburse Belo for 60 percent of any contributions Belo made to The G. B. Dealey Retirement Pension Plan (the "Pension Plan").  Excluding the credit, pro forma earnings per share in the second quarter of 2010 were $0.16 per share.  

Dunia A. Shive, Belo's president and Chief Executive Officer, said, "Belo's spot revenue excluding political was up 2.4 percent in the second quarter of 2011 compared to the second quarter of 2010 despite disruption in the automotive category related to events in Japan.  Automotive cancellations were within our initial expectations for the quarter, and we experienced strong performance in other key categories such as retail, healthcare and telecommunications.  Excluding automotive revenue, our core spot revenue was up 5 percent in the second quarter of 2011 compared to the second quarter of 2010."    

Second Quarter in Review

Operating Results

Total revenue increased 2.1 percent in the second quarter of 2011 versus the second quarter of 2010.  Total spot revenue, excluding political, was up 2.4 percent with a 2 percent increase in local spot revenue and a 3.2 percent increase in national spot revenue.  Core local and national spot revenue was affected by a 6.6 percent decrease in automotive revenue due to the disruption in auto supply related to events in Japan.  Total spot revenue, including political, was up 1.4 percent in the second quarter of 2011 compared to the second quarter of 2010.  Political revenue in the second quarter of 2011 was $1.4 million lower than the second quarter of 2010.  

Other revenue, which includes barter and trade advertising, network compensation, Internet advertising and retransmission revenue, was up 5.6 percent in the second quarter of 2011 compared to 2010 due to double-digit percentage increases in Internet and retransmission revenue, which were partially offset by a decrease in network compensation.

Station salaries, wages and employee benefits increased $2.6 million, or 5 percent, during the second quarter of 2011 versus the second quarter of 2010 due primarily to employee merit increases, partial reinstatement of the Company's 401(k) plan matching contribution which was suspended in 2009, and higher station pension expense.

Station programming and other operating costs were up $5.6 million in the second quarter of 2011 compared to second quarter 2010 due primarily to a $3.1 million non-cash expense reduction related to third-party funding of certain newsgathering equipment in the second quarter of 2010, and increases in programming, advertising and promotion, and technology costs.

Corporate

Corporate operating costs of $6.7 million in the second quarter of 2011 were $1.2 million lower than the second quarter of 2010 due primarily to lower expenses for pension, accrued bonuses and technology support.

Excluding the $3.1 million non-cash expense reduction in the second quarter of 2010 discussed above, combined station and corporate operating costs were up 3.5 percent in the second quarter of 2011 compared to the second quarter of 2010.  On a reported basis, the Company's combined station and corporate operating costs were up 6.6 percent in the second quarter of 2011 compared to the second quarter of 2010.

Other Items

The Company recorded a reduction in operating expenses of $4.2 million in the second quarter of 2010 related to pension contribution reimbursements received from A. H. Belo pursuant to its then-existing obligation to reimburse Belo for 60 percent of any pension contributions Belo made prior to the split of the Pension Plan on January 1, 2011.

Belo's depreciation expense totaled $7.7 million in the second quarter of 2011, down from $8.8 million in the second quarter of 2010.

The Company's interest expense decreased $1.8 million in the second quarter of 2011 compared to the second quarter of 2010 due primarily to lower borrowings on its revolving credit facility and lower ongoing fees resulting from the Company's election to reduce the commitment amount under its facility in 2010.

Income tax expense decreased $3.3 million in the second quarter of 2011 compared to the second quarter of 2010 due primarily to lower pre-tax earnings and the satisfactory resolution of various pending tax matters.  

Total debt at June 30, 2011, was $887 million, which consisted entirely of fixed-rate public debt.  The Company's total leverage ratio, as defined in the Company's credit facility, was 3.7 times at June 30, 2011.  Belo invested $3.7 million in capital expenditures in the second 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 third quarter, Shive said, "We expect automotive spending to stabilize late in the third quarter with continued improvement in the fourth quarter.  We are currently estimating spot revenue excluding political to be flat in the third quarter of 2011 compared to the third quarter of 2010.  Our stations generated $11.2 million of political revenue in the third quarter of 2010 which we will cycle against in the third quarter of 2011.  As a result, we are currently estimating third quarter total revenue to be down mid-single digits versus the prior year.  

"Combined station and corporate operating costs are currently estimated to be up about 2 percent in the third quarter of 2011 compared to the third quarter of 2010.  Also, in July 2011, the Company received satisfactory resolution of another pending tax matter, which will result in a tax benefit of approximately $2.4 million in the third quarter of 2011.  The Company's effective tax rate for full year 2011 is now expected to be approximately 36 percent."    

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 1-800-288-8960.  A replay line will be open from 12:00 p.m. CDT on August 4 until 11:59 p.m. CDT August 18.  To access the replay, dial 800-475-6701 or 320-365-3844.  The access code for the replay is 210868.

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; 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



Six months ended





June 30,



June 30,

In thousands, except per share amounts


2011



2010



2011



2010





(unaudited)



(unaudited)



(unaudited)



(unaudited)















Net Operating Revenues      

$

166,379


$

162,982


$

317,849


$

317,314















Operating Costs and Expenses













Station salaries, wages and employee benefits


54,525



51,911



108,361



103,135


Station programming and other operating costs


52,565



47,015



102,761



92,646


Corporate operating costs


6,692



7,855



12,991



17,464


Pension settlement charge and contribution reimbursements


-



(4,200)



20,466



(8,272)


Depreciation


7,707



8,770



15,631



18,013



Total operating costs and expenses


121,489



111,351



260,210



222,986

















Earnings from operations


44,890



51,631



57,639



94,328















Other Income and (Expense)













Interest expense


(18,050)



(19,815)



(36,033)



(39,703)


Other income, net


649



375



829



108



Total other income and (expense)


(17,401)



(19,440)



(35,204)



(39,595)















Earnings before income taxes


27,489



32,191



22,435



54,733

Income tax expense


9,402



12,666



8,662



21,666































Net earnings

$

18,087


$

19,525


$

13,773


$

33,067





























Net earnings per share - Basic

$

0.17


$

0.19


$

0.13


$

0.32















Net earnings per share - Diluted

$

0.17


$

0.19


$

0.13


$

0.31















Weighted average shares outstanding













Basic


103,626



103,027



103,515



102,919


Diluted


104,022



103,456



103,917



103,342















Dividends declared per share

$

0.05


$

-


$

0.05


$

-











































































Belo Corp.

Consolidated Condensed Balance Sheets





















June 30,



December 31,

In thousands


2011



2010





(unaudited)




Assets







Current assets








Cash and temporary cash investments

$

16,061


$

8,309



Accounts receivable, net


141,271



144,992



Other current assets


53,714



57,495


Total current assets


211,046



210,796










Property, plant and equipment, net


149,638



164,439


Intangible assets, net


1,149,272



1,149,272


Other assets


63,795



65,883









Total assets

$

1,573,751


$

1,590,390

















Liabilities and Shareholders' Equity







Current liabilities








Accounts payable

$

18,449


$

20,744



Accrued expenses


53,345



88,845



Other current liabilities


23,718



27,611


Total current liabilities


95,512



137,200










Long-term debt


886,553



897,111


Deferred income taxes


250,675



206,765


Other liabilities


74,106



178,672


Total shareholders' equity


266,905



170,642









Total liabilities and shareholders' equity

$

1,573,751


$

1,590,390





-



-



Belo Corp.

Non-GAAP to GAAP Reconciliations





























Station Adjusted EBITDA
















Three months ended


Six months ended




June 30,


June 30,

In thousands (unaudited)



2011



2010




2011



2010































Station Adjusted EBITDA (1)


$

59,289


$

64,056



$

106,727


$

121,533


Corporate operating costs



(6,692)



(7,855)




(12,991)



(17,464)


Depreciation



(7,707)



(8,770)




(15,631)



(18,013)


Pension settlement charge and contribution reimbursements



-



4,200




(20,466)



8,272


 Earnings from operations


$

44,890


$

51,631



$

57,639


$

94,328


















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 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 (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




June 30, 2011


June 30, 2010




















Earnings



EPS




Earnings



EPS
















Net earnings


$

18,087


$

0.17



$

19,525


$

0.19

















Pension settlement charge and contribution reimbursements, net of tax



-



-




(2,562)



(0.02)

















  Pro forma net earnings


$

18,087


$

0.17



$

16,963


$

0.16

















































Six months ended



Six months ended




June 30, 2011



June 30, 2010




















Earnings



EPS




Earnings



EPS
















Net earnings


$

13,773


$

0.13



$

33,067


$

0.31

















Pension settlement charge and contribution reimbursements, net of tax



13,323



0.13




(5,046)



(0.05)


  Pro forma net earnings


$

27,096


$

0.26



$

28,021


$

0.27



SOURCE Belo Corp.

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