BELO CORP 
By DALLAS, July 30, 2013 /PRNewswire/ -- Television company Belo Corp. (NYSE: BLC) today reported net earnings per share of $0.21 in the second quarter of 2013 compared to net earnings per share of $0.24 in the second quarter of 2012. The second quarter of 2013 includes costs, net of tax, associated with the Company's previously announced and pending merger with Gannett Co., Inc. of $2.7 million, or $0.03 per share, including an increase in share-based compensation expense related to the increase in the Company's stock price after the merger announcement.
Second Quarter in Review
Operating Results
Total revenue of $174 million in the second quarter of 2013 was $4.1 million, or 2.3 percent, lower than the second quarter of 2012 as the Company cycled against political revenue, which was $8.3 million less than the second quarter of 2012. Total revenue excluding political in the second quarter of 2013 was 2.5 percent higher than the second quarter of 2012.
Core spot revenue was up 1.6 percent with increases of approximately 4 percent in national spot revenue and 1 percent in local spot revenue. Core spot revenue growth came primarily from strength in the telecommunications and automotive categories which were up 68 percent and 9 percent, respectively, partially offset by lower spending in the healthcare, restaurant and retail categories which were down 18 percent, 7 percent and 5 percent, respectively. Political revenue in the second quarter of 2013 totaled $1.2 million, compared to $9.5 million in the second quarter of 2012. Total spot revenue, including political, was down 4 percent in the second quarter of 2013 compared to the second quarter of 2012.
Other revenue, which is comprised primarily of Internet advertising, retransmission revenue, and barter and trade advertising, was up about 6 percent in the second quarter of 2013 compared to the second quarter of 2012, including a 21 percent increase in Internet advertising revenue and a 10 percent increase in retransmission revenue. Other revenue in the second quarter of 2012 included $1.7 million in royalty payments from cable copyright fees.
Station salaries, wages and employee benefits were flat in the second quarter of 2013 compared to the second quarter of 2012. Station programming and other operating costs in the second quarter of 2013 were also basically flat compared to the second quarter of 2012, with higher sales-related costs associated with the Company's increase in Internet revenue and higher reverse compensation expense mostly offset by decreases in other expense categories, including outside services and advertising and promotion. The Company's station-adjusted EBITDA margin for the second quarter of 2013 was 40 percent.
Corporate
Corporate operating costs were $4.1 million higher in the second quarter of 2013 compared to the second quarter of 2012. The increase is primarily due to costs related to the pending merger with Gannett, including higher share-based compensation expense associated with the increase in the Company's stock price following the merger announcement.
Combined station and corporate operating costs were $4.3 million, or 4 percent, higher in the second quarter of 2013 than the second quarter of 2012. Excluding costs associated with the Company's pending merger with Gannett of approximately $4.3 million, combined station and corporate operating costs were basically flat.
Other Items
Belo's depreciation expense totaled $7.1 million in the second quarter of 2013, which was down about 5 percent when compared with the second quarter of 2012.
The Company's interest expense of $14.6 million in the second quarter of 2013 was $3.2 million lower than the second quarter of 2012 due primarily to lower debt levels associated with the early redemption of the Company's May 2013 notes in November of 2012.
Other income, net, was $1.3 million lower in the second quarter of 2013 compared to the second quarter of 2012 due primarily to adjustments to investments.
Income tax expense decreased $2.3 million in the second quarter of 2013 compared to the second quarter of 2012 due primarily to lower pre-tax earnings.
Total debt at June 30, 2013 was $715 million. The Company had $2.9 million drawn on its credit facility and $7.5 million in cash and temporary cash investments at June 30, 2013. The Company's total leverage ratio, as defined in the Company's credit facility, was 2.7 times at June 30, 2013. Belo invested $6.4 million in capital expenditures and made pension contributions totaling $5.7 million in the second quarter of 2013.
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.
About Belo Corp.
Television company Belo Corp. (NYSE: BLC) 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 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 & Assistant Treasurer, at 214-977-4465.
Statements in this communication concerning Belo's business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, dividends, 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 predicted in any such forward-looking statement. Belo undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
Such risks, uncertainties and other factors include, but are not limited to, uncertainties regarding the 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 viewership measurement services; 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, including changes regarding spectrum; 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; the ability to meet the conditions to closing the transactions with Gannett, including receipt of shareholder and regulatory approvals and clearances, within the time frame contemplated or at all; the effect of transaction-related costs and expenses; the effect of the transactions on the ability of Belo to retain employees and maintain business relationships may be difficult; 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 2013 2012 2013 2012
-------------------------------------- ---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)
Net Operating Revenues $173,507 $177,619 $333,845 $333,517
Operating Costs and Expenses
Station salaries,
wages and employee
benefits 56,444 56,437 112,078 112,136
Station programming
and other operating
costs 48,273 48,074 96,920 93,391
Corporate
operating costs 12,677 8,550 21,557 16,282
Depreciation 7,127 7,472 14,103 14,934
Total
operating
costs and
expenses 124,521 120,533 244,658 236,743
Earnings
from
operations 48,986 57,086 89,187 96,774
Other Income and (Expense)
Interest expense (14,564) (17,714) (29,177) (35,376)
Other income, net 47 1,378 729 1,879
Total other
income and
(expense) (14,517) (16,336) (28,448) (33,497)
Earnings before income taxes 34,469 40,750 60,739 63,277
Income tax expense 12,597 14,917 22,200 23,152
Net earnings 21,872 25,833 38,539 40,125
Less: Net (loss) attributable to noncontrolling interests 5 (98) - (98)
--- --- --- ---
Net earnings attributable to Belo Corp. $21,867 $25,931 $38,539 $40,223
======= ======= ======= =======
Net earnings per share - Basic $0.21 $0.24 $0.37 $0.38
===== ===== ===== =====
Net earnings per share - Diluted $0.21 $0.24 $0.37 $0.38
===== ===== ===== =====
Weighted average shares outstanding
Basic 103,822 103,774 103,695 103,854
Diluted 104,583 104,068 104,367 104,163
Dividends declared per share $ - $ - $0.08 $0.08
=== === ===== =====
Belo Corp.
Consolidated Condensed Balance Sheets
June 30, December 31,
In thousands 2013 2012
------------ ---- ----
(unaudited)
Assets
Current
assets
Cash and
temporary
cash
investments $7,460 $9,437
Accounts
receivable,
net 139,765 140,605
Other
current
assets 16,272 17,757
Total current
assets 163,497 167,799
Property, plant
and equipment,
net 143,967 146,522
Intangible
assets, net 725,399 725,399
Goodwill 423,873 423,873
Other
assets 34,757 35,999
Total assets $1,491,493 $1,499,592
========== ==========
Liabilities and Shareholders' Equity
Current
liabilities
Accounts
payable $15,654 $20,348
Accrued
expenses 39,256 42,057
Short-term
pension
obligation 20,000 20,000
Accrued
interest
payable 9,118 9,123
Income
taxes
payable 2,348 9,043
Dividends
payable - 8,331
Deferred
revenue 2,628 2,911
Total current
liabilities 89,004 111,813
Long-term debt 715,305 733,025
Deferred income
taxes 266,031 257,864
Pension
obligation 74,769 86,590
Other
liabilities 10,463 10,576
Total
shareholders'
equity 335,921 299,724
Total liabilities and shareholders' equity $1,491,493 $1,499,592
========== ==========
Belo Corp.
Non-GAAP to GAAP Reconciliations
Station-Adjusted EBITDA
Three months ended Six months ended
June 30, June 30,
-------- --------
In thousands (unaudited) 2013 2012 2013 2012
----------------------- ---- ---- ---- ----
Station-Adjusted EBITDA (1) $68,790 $73,108 $124,847 $127,990
Corporate
operating costs (12,677) (8,550) (21,557) (16,282)
Depreciation (7,127) (7,472) (14,103) (14,934)
Earnings from
operations $48,986 $57,086 $89,187 $96,774
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 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 (2)
In thousands, except
per share amounts
(unaudited)
Three months ended Three months ended
June 30, 2013 June 30, 2012
------------- -------------
Earnings EPS Earnings EPS
-------- --- -------- ---
Net earnings
attributable to Belo
Corp. $21,867 $0.21 $25,931 $0.24
Adjustment for costs
associated with
Merger Agreement,
net of tax 2,740 0.03 - -
Pro forma net
earnings
attributable to Belo
Corp. $24,607 $0.24 $25,931 $0.24
======= =======
Six months ended Six months ended
June 30, 2013 June 30, 2012
------------- -------------
Earnings EPS Earnings EPS
-------- --- -------- ---
Net earnings
attributable to Belo
Corp. $38,539 $0.37 $40,223 $0.38
Adjustment for costs
associated with
Merger Agreement,
net of tax 2,740 0.03 - -
Pro forma net
earnings
attributable to Belo
Corp. $41,279 $0.40 $40,223 $0.38
======= =======
Note 2: There were no pro forma adjustments for
the three or six months ended June 30,
2012.
SOURCE Belo Corp.
