Television Company's Net Earnings Per Share Total $0.26DALLAS, July 25, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Belo Corp. (NYSE: BLC) today
reported earnings per share from continuing operations of $0.26 in the second
quarter of 2008 compared to $0.23 in the second quarter of 2007.
Earnings per share from continuing operations for the second quarter of
2007 exclude the results of Belo's newspaper businesses and related assets,
which were spun off on February 8, 2008. Those results are included in
discontinued operations and total $0.12 per share. The second quarter of 2008
included a non-cash expense reduction of $4.7 million, or $0.03 per share, as
a result of third party funding of certain newsgathering equipment more fully
described below.
Dunia A. Shive, Belo's president and Chief Executive Officer, said,
"Belo's second quarter results were highlighted by excellent expense
management as soft advertising conditions reflected a continuing weak economic
environment. Combined local and national spot revenue declines in the second
quarter improved marginally when compared to the first quarter of this year.
We cannot predict the duration of the current economic downturn and are
continuing to focus on cost reductions while considering the overall quality
and competitive positions of our operating companies."
Second Quarter in Review
Operating Results
Total revenues decreased 4.7 percent in the second quarter of 2008 versus
the second quarter of 2007. Total spot revenue, including political, was down
6.4 percent with 5.9 percent and 10 percent decreases in local and national
spot, respectively. Second quarter 2008 revenues were affected by a weak
advertising environment, particularly in the automotive category which was
down 10 percent.
Second quarter 2008 political revenues of $3.6 million were up $1.4
million versus the second quarter of 2007. Advertising revenue associated
with Belo's Web sites increased 7.3 percent to $7.5 million in the second
quarter 2008, representing 4 percent of Belo's total revenues. Second quarter
Internet revenue growth was impacted by a significant non-returning promotion
in the second quarter of 2007. Importantly, third quarter Internet revenues
are currently pacing at growth levels comparable to the first quarter of this
year.
Retransmission revenues totaled $7.6 million in the second quarter of
2008, a 36 percent increase compared to the second quarter of 2007. The
Company expects to generate approximately $30 million in retransmission
revenue for full year 2008, which is slightly higher than the previous
guidance of $28 to $29 million.
Total station expenses decreased 7.4 percent in the second quarter of 2008
versus the same period last year due primarily to the freezing of open
positions company wide, staff reductions in certain markets, the
aforementioned non-cash expense reduction and other cost-saving measures.
The $4.7 million non-cash expense reduction relates to a 2005 FCC decision
that allowed a major wireless provider to finance the replacement of analog
newsgathering equipment with digital equipment at television stations across
the country in exchange for those stations vacating the analog spectrum
earlier than required. Five Belo markets received such new digital
newsgathering equipment in the second quarter. As future Belo stations are
converted, further expense reductions will be realized. Excluding the
non-cash expense reduction, station expenses decreased 3.3 percent in the
second quarter of 2008. As of June 30, 2008, the number of full-time
equivalent employees at our television stations was 3 percent lower than the
number of full-time equivalents at the end of 2007.
Station EBITDA for the second quarter of 2008 was down 0.8 percent versus
the second quarter of 2007, and down 6.5 percent when excluding the effects of
the non-cash expense reduction.
Corporate
Corporate operating costs were $6.6 million in the second quarter of 2008
as compared to $10.1 million in the second quarter of 2007, a decrease of 34
percent. The decrease was primarily due to lower share-based compensation,
lower bonus expense and other cost-saving measures.
Second quarter combined station and corporate operating costs declined 9.6
percent, or 5.8 percent when excluding the effects of the non-cash expense
reduction.
Other Items
Belo's depreciation and amortization expense totaled $10.3 million in the
second quarter of 2008, a 6.4 percent decrease from the second quarter of
2007.
Interest expense decreased $2.8 million, or 11 percent, in the second
quarter of 2008.
Income tax expense increased $4.1 million in the second quarter of 2008
compared to the second quarter of 2007 due primarily to higher 2008 pre-tax
earnings and a credit related to Texas state tax reforms in 2007.
Total debt at June 30, 2008 was $1.180 billion. The Company invested $9.8
million in capital expenditures in the second quarter and expects to spend a
total of $25 million for the year, down from the previous guidance of $30
million.
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. 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 station EBITDA to earnings from operations and a
reconciliation of earnings per share from continuing operations to earnings
per share from continuing operations, before spin-off related charges, are set
forth in an exhibit to this release.
Third Quarter Outlook
In looking to the third quarter, Shive said, "Current economic conditions
make it extremely difficult to provide specific guidance for the third quarter
or the balance of the year at this time. Third quarter total revenue
comparisons should improve from second quarter year-over-year comparisons due
to political revenues and Olympic revenues in August at our four
NBC-affiliated stations.
"While we will continue to manage expenses aggressively, third quarter
station expense comparisons to the prior year are not expected to be as
favorable as second quarter comparisons due primarily to a $1.7 million credit
in the third quarter of 2007 related to the conversion of an operating lease
to a capital lease and increased programming costs at our Phoenix stations in
the third quarter of 2008. Because of significant reductions in share-based
compensation, bonus expense, and other cost-saving measures, full year
corporate operating costs, exclusive of spin-off charges, are projected to be
under $36 million, down from our previous full year guidance of $40 million."
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 1-877-777-1973. A
replay line will be open from 3:00 p.m. CDT on July 25 until 11:59 p.m. CDT on
August 1, 2008. To access the replay, dial 800-475-6701 or 320-365-3844. The
access code for the replay is 951969.
About Belo Corp.
Belo Corp. is one of the nation's largest pure-play publicly-traded
television companies, with annual revenue of approximately $775 million. The
Company owns and operates 20 television stations reaching more than 14 percent
of U.S. television households, including ABC, CBS, NBC, FOX, CW and MyNetwork
TV affiliates, and their associated Web sites, in 15 highly-attractive markets
across the United States. Belo stations consistently deliver distinguished
journalism for which they have received significant industry recognition
including nine Alfred I. duPont-Columbia University Silver Baton Awards; nine
George Foster Peabody Awards; and 23 national Edward R. Murrow Awards -- all
since 2000, and in each case more than any other commercial station group in
the nation. Nearly all Belo stations rank first or second in their local
market. Belo owns stations in seven of the top 25 markets in the nation, with
six stations located in the fast-growing, top-14 markets of Dallas/Fort Worth,
Houston, Seattle/Tacoma and Phoenix. Additionally, the Company has created
regional cable news channels in Texas and the Northwest increasing its impact
in those regions. 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
In thousands, except Three months ended Six months ended
per share amounts June 30, June 30,
(unaudited) 2008 2007 2008 2007
Net Operating
Revenues 188,969 $198,229 $363,796 $376,571
Operating Costs
and Expenses
Station salaries,
wages and
employee benefits 57,179 60,083 119,328 119,581
Station programming
and other operating
costs 50,154 55,865 104,092 108,231
Corporate operating
costs 6,618 10,051 15,708 20,601
Spin-off related
costs 410 - 4,659 -
Depreciation 10,324 11,032 21,208 21,640
Amortization - - - 442
Total operating
costs and
expenses 124,685 137,031 264,995 270,495
Earnings from
operations 64,284 61,198 98,801 106,076
Other income and
expense
Interest expense (21,495) (24,248) (44,239) (48,399)
Other income,
net (2) 804 320 1,073 5,407
Total other income
and expense (20,691) (23,928) (43,166) (42,992)
Earnings from
continuing
operations before
income taxes 43,593 37,270 55,635 63,084
Income taxes 17,214 13,106 40,136 23,144
Net earnings from
continuing operations 26,379 24,164 15,499 39,940
Discontinued operations,
net of tax - 12,257 (4,499) 11,933
Net earnings $26,379 $36,421 $11,000 $51,873
Net earnings per share
-- Basic
Earnings per share
from continuing
operations $0.26 $0.24 $0.15 $0.39
Earnings (loss)
per share from
discontinued
operations - 0.12 (0.04) 0.12
Net earnings per
share -- Basic $0.26 $0.36 $0.11 $0.51
Net earnings per share
-- Diluted
Earnings per share
from continuing
operations $0.26 $0.23 $0.15 $0.38
Earnings (loss)
per share from
discontinued
operations - 0.12 (0.04) 0.12
Net earnings per
share -- Diluted $0.26 $0.35 $0.11 $0.50
Average shares
outstanding
Basic 102,202 102,222 102,235 102,246
Diluted 103,337 103,178 103,349 103,035
Cash dividends declared
per share $- $- $0.075 $0.125
Note 1: Certain prior period amounts have been reclassified to conform to
current year presentation and to reflect discontinued operations.
Note 2: Other income (expense), net consists primarily of equity earnings
(losses) from partnerships and joint ventures and other
miscellaneous income (expense). In 2007, other income (expense)
includes $4,000 related to an insurance settlement for losses
suffered from Hurricane Katrina.
Belo Corp.
Consolidated Condensed Balance Sheets
June 30, December 31,
In thousands 2008 2007
(unaudited) (unaudited)
Assets
Current assets
Cash and temporary cash investments $6,362 $11,190
Accounts receivable, net 164,345 181,700
Other current assets 23,479 24,789
Current assets of discontinued operations - 126,710
Total current assets 194,186 344,389
Property, plant and equipment, net 229,507 226,040
Intangible assets, net 2,045,793 2,045,793
Other assets 62,342 51,650
Long-term assets of discontinued operations - 511,188
Total assets $2,531,828 $3,179,060
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $19,031 $31,153
Accrued expenses 50,887 65,575
Other current liabilities 37,013 46,667
Current liabilities of discontinued
operations - 106,055
Total current liabilities 106,931 249,450
Long-term debt 1,180,361 1,168,140
Deferred income taxes 430,597 425,652
Other liabilities 28,146 37,183
Long-term liabilities of discontinued
operations - 46,927
Total shareholders' equity 785,793 1,251,708
Total liabilities and shareholders' equity $2,531,828 $3,179,060
Note: Certain prior period amounts have been reclassified to conform to
current period presentation and to reflect discontinued operations.
Certain immaterial refinements to the classification of assets or
liabilities between continuing and discontinued operations have been
made to the December 31, 2007 Consolidated Condensed Balance Sheet
as presented in the Company's Form 10-Q for the quarterly period
ended March 31, 2008, based on additional information and
evaluation. The reclassification does not affect total assets or
total liabilities and shareholders' equity as previously presented.
Belo Corp.
Non-GAAP to GAAP Reconciliations
Station EBITDA
Three months ended Six months ended
June 30, June 30,
In thousands (unaudited) 2008 2007 2008 2007
Station EBITDA (1) $81,636 $82,281 $140,376 $148,759
Corporate operating
costs 6,618 10,051 15,708 20,601
Spin-off related
costs 410 - 4,659 -
Depreciation 10,324 11,032 21,208 21,640
Amortization - - - 442
Earnings from
operations $64,284 $61,198 $98,801 $106,076
Note 1: Belo's management uses Station EBITDA as the primary measure of
profitability to evaluate operating performance and to allocate
capital resources and bonuses to eligible operating company
employees. Station EBITDA represents the Company's earnings from
operations before interest expense, income taxes, depreciation,
amortization, corporate expense and spin-off related 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).
Earnings From Continuing Operations Before Spin-Off Related Charges
In thousands (unaudited)
Six Months ended Six Months ended
June 30, 2008 June 30, 2007
Earnings EPS Shares Earnings EPS Shares
Net earnings
from continuing
operations $15,499 $0.15 103,349 $39,940 $0.38 103,035
Spin-off
related
operating
and financing
costs, net of
tax 3,502 0.03 103,349 -
Spin-off
related tax
charge 18,235 0.18 103,349 -
Net earnings
from
continuing
operations
before
spin-off
related
charges $37,236 $0.36 103,349 $39,940 $0.38 103,035
Three Months ended Three Months ended
June 30, 2008 June 30, 2007
Earnings EPS Shares Earnings EPS Shares
Net earnings
from continuing
operations $26,379 $0.26 103,337 $24,164 $0.23 103,178
Spin-off
related
operating
and financing
costs, net of
tax 351 0.00 103,337 -
Net earnings
from continuing
operations
before spin-off
related charges $26,730 $0.26 103,337 $24,164 $0.23 103,178
SOURCE Belo Corp.
http://www.belo.com
