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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-8598
BELO CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 75-0135890
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P. O. BOX 655237
DALLAS, TEXAS 75265-5237
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (214) 977-6606
Former name, former address and former fiscal year, if changed since
last report.
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JULY 31, 2002
----- ----------------------------
Common Stock, $1.67 par value 112,188,621*
* Consisting of 95,425,413 shares of Series A Common Stock and 16,763,208
shares of Series B Common Stock.
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BELO CORP.
FORM 10-Q
TABLE OF CONTENTS
PAGE
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements........................................................... 1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations............................... 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings.............................................................. 12
Item 2. Changes in Securities and Use of Proceeds...................................... 12
Item 3. Defaults Upon Senior Securities................................................ 12
Item 4. Submission of Matters to a Vote of Security Holders............................ 13
Item 5. Other Information.............................................................. 13
Item 6. Exhibits and Reports on Form 8-K............................................... 13
i
PART I.
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Belo Corp. and Subsidiaries
Three months ended Six months ended
June 30, June 30,
-------------------------- --------------------------
In thousands, except per share amounts (unaudited) 2002 2001 2002 2001
- -------------------------------------------------- ---------- ---------- ---------- ----------
NET OPERATING REVENUES $ 366,239 $ 361,848 $ 686,096 $ 693,395
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits 124,889 127,589 247,994 253,771
Other production, distribution and operating costs 96,675 93,120 185,594 182,598
Newsprint, ink and other supplies 28,025 38,536 56,894 76,969
Depreciation 24,450 25,232 48,769 50,599
Amortization 2,484 20,227 4,126 40,478
---------- ---------- ---------- ----------
Total operating costs and expenses 276,523 304,704 543,377 604,415
---------- ---------- ---------- ----------
Earnings from operations 89,716 57,144 142,719 88,980
OTHER INCOME AND EXPENSE
Interest expense (27,126) (28,205) (55,419) (59,114)
Other, net 4,259 (29,047) 6,461 (28,795)
---------- ---------- ---------- ----------
Total other income and expense (22,867) (57,252) (48,958) (87,909)
EARNINGS (LOSS)
Earnings (loss) before income taxes 66,849 (108) 93,761 1,071
Income taxes 26,332 207 36,480 763
---------- ---------- ---------- ----------
Net earnings (loss) $ 40,517 $ (315) $ 57,281 $ 308
========== ========== ========== ==========
NET EARNINGS PER SHARE
Basic $ .36 $ .00 $ .51 $ .00
Diluted $ .36 $ .00 $ .51 $ .00
AVERAGE SHARES OUTSTANDING
Basic 111,849 109,656 111,330 109,601
Diluted 114,032 109,656 113,167 110,135
CASH DIVIDENDS DECLARED PER SHARE $ .075 $ .075 $ .15 $ .15
See accompanying Notes to Consolidated Condensed Financial Statements.
1
CONSOLIDATED CONDENSED BALANCE SHEETS
Belo Corp. and Subsidiaries
In thousands, except share and per share amounts June 30, December 31,
(Current year unaudited) 2002 2001
- ------------------------------------------------ ------------ ------------
ASSETS
Current assets:
Cash and temporary cash investments $ 34,148 $ 35,913
Accounts receivable, net 228,418 231,673
Other current assets 53,061 64,593
------------ ------------
Total current assets 315,627 332,179
Property, plant and equipment, net 574,309 597,106
Intangible assets, net 1,375,405 1,368,385
Goodwill, net 1,255,262 1,255,262
Other assets 88,113 119,293
------------ ------------
Total assets $ 3,608,716 $ 3,672,225
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 54,967 $ 60,347
Accrued expenses 83,528 85,911
Other current liabilities 53,482 39,142
------------ ------------
Total current liabilities 191,977 185,400
Long-term debt 1,551,450 1,696,900
Deferred income taxes 418,090 416,500
Other liabilities 54,785 52,680
Shareholders' equity:
Preferred stock, $1.00 par value. Authorized
5,000,000 shares; none issued
Common stock, $1.67 par value. Authorized
450,000,000 shares:
Series A: Issued 95,170,571 shares at June 30, 2002
and 91,800,402 shares at December 31, 2001 158,935 153,307
Series B: Issued 16,961,070 shares at June 30, 2002
and 18,582,538 shares at December 31, 2001 28,325 31,033
Additional paid-in capital 865,657 837,515
Retained earnings 339,497 298,890
------------ ------------
Total shareholders' equity 1,392,414 1,320,745
------------ ------------
Total liabilities and shareholders' equity $ 3,608,716 $ 3,672,225
============ ============
See accompanying Notes to Consolidated Condensed Financial Statements.
2
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Belo Corp. and Subsidiaries
Six months ended June 30,
--------------------------
In thousands (unaudited) 2002 2001
- ------------------------ ---------- ----------
OPERATIONS
Net earnings $ 57,281 $ 308
Adjustments to reconcile net earnings
to net cash provided by operations:
Net gain on sale of investments (1,841) --
Depreciation and amortization 52,895 91,077
Deferred income taxes 5,842 (8,412)
Non-cash charge for write-down of Internet investments -- 28,785
Non-cash expenses 6,000 3,995
Other, net 757 2,548
Net change in current assets and liabilities:
Accounts receivable 3,502 30,479
Other current assets 1,782 3,103
Accounts payable (5,432) (29,214)
Accrued expenses 8,206 (18,424)
Other current liabilities 21,941 (53,230)
---------- ----------
Net cash provided by operations 150,933 51,015
INVESTING
Capital expenditures (16,885) (31,015)
Acquisitions (18,000) --
Proceeds from sale of investments 27,000 --
Other investments (8,925) (1,493)
Other, net (220) 1,235
---------- ----------
Net cash used for investments (17,030) (31,273)
FINANCING
Borrowings of debt 611,700 415,350
Repayment of debt (757,250) (466,455)
Purchase of treasury shares -- (12,621)
Payment of dividends on stock (16,674) (16,430)
Net proceeds from exercise of stock options 26,556 5,947
---------- ----------
Net cash used for financing (135,668) (74,209)
Net decrease in cash and temporary cash investments (1,765) (54,467)
Cash and temporary cash investments at beginning of period 35,913 87,680
---------- ----------
Cash and temporary cash investments at end of period $ 34,148 $ 33,213
========== ==========
SUPPLEMENTAL DISCLOSURES
Interest paid, net of amounts capitalized $ 56,273 $ 63,479
Income taxes paid, net of refunds $ (88) $ 54,534
See accompanying Notes to Consolidated Condensed Financial Statements.
3
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Belo Corp. and Subsidiaries
(in thousands, except per share amounts)
(1) The accompanying unaudited consolidated condensed financial statements
of Belo Corp. and subsidiaries (the "Company" or "Belo") have been
prepared in accordance with generally accepted accounting principles
for interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. The balance sheet at December 31, 2001 has been
derived from the audited consolidated financial statements at that date
but does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six-month periods
ended June 30, 2002 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2002. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001.
Certain amounts for the prior periods have been reclassified to conform
to the current year presentation.
(2) The following table sets forth the reconciliation between weighted
average shares used for calculating basic and diluted earnings per
share for the three and six months ended June 30, 2002 and 2001:
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2002 2001 2002 2001
-------- -------- -------- --------
Weighted average shares for basic earnings
per share 111,849 109,656 111,330 109,601
Effect of employee stock options 2,183 -- 1,837 534
-------- -------- -------- --------
Weighted average shares for diluted earnings
per share 114,032 109,656 113,167 110,135
======== ======== ======== ========
(3) Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets." Under the provisions of SFAS No. 142, goodwill and certain
other intangibles with indefinite lives, namely Federal Communications
Commission ("FCC") licenses, are no longer amortized, but are instead
reviewed at least annually for impairment at the reporting unit level
and written down (expensed against earnings) when the implied fair
value of a reporting unit, including goodwill and other related
intangibles, is less than its carrying amount. Separable intangible
assets that have finite useful lives will continue to be amortized over
their useful lives. For Belo's Television Group, a reporting unit is
defined as an operating cluster of television stations and for Belo's
Newspaper Group, a reporting unit is defined as the newspaper
operations in each individual market.
During the second quarter of 2002, the Company's review for impairment
of goodwill and other intangible assets indicated no impairment of
these assets as of January 1, 2002. The Company must make assumptions
regarding estimated future cash flows and other factors to determine
the fair value of the respective assets in assessing the recoverability
of its goodwill and other intangibles. If these estimates or the
related assumptions change, the Company may be required to record
impairment charges for these assets in the future.
4
Prior to the adoption of SFAS No. 142, amortization expense was
recorded for goodwill and other intangibles with indefinite lives. The
following table sets forth a reconciliation of net earnings and net
earnings per share information for the three and six months ended June
30, 2002 and 2001 as though SFAS No. 142 had been in effect at the
beginning of fiscal 2001:
Three months ended Six months ended
June 30, June 30,
------------------------- -------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net earnings (loss), as reported $ 40,517 $ (315) $ 57,281 $ 308
Add back: Goodwill and FCC license
amortization, net of tax -- 10,797 -- 22,282
---------- ---------- ---------- ----------
Net earnings, pro forma $ 40,517 $ 10,482 $ 57,281 $ 22,590
========== ========== ========== ==========
Per share amounts:
Basic net earnings per share, as reported $ .36 $ .00 $ .51 $ .00
Add back: Goodwill and FCC license
amortization, net of tax -- .10 -- .21
---------- ---------- ---------- ----------
Basic net earnings per share, pro forma $ .36 $ .10 $ .51 $ .21
========== ========== ========== ==========
Diluted net earnings per share, as reported $ .36 $ .00 $ .51 $ .00
Add back: Goodwill and FCC license
amortization, net of tax -- .10 -- .21
---------- ---------- ---------- ----------
Diluted net earnings per share, pro forma $ .36 $ .10 $ .51 $ .21
========== ========== ========== ==========
The reported effective tax rates for the second quarter and first six
months of 2002 were 39.4 percent and 38.9 percent, respectively,
compared to a rate exceeding 100 percent for the second quarter of 2001
and a rate of 71.2 percent for the first six months of 2001 primarily
due to the elimination of non-deductible goodwill amortization upon
adoption of SFAS No. 142. The pro forma effective tax rates would have
been 43.2 percent and 40.9 percent for the second quarter and first six
months of 2001, respectively, if SFAS No. 142 had been in effect at the
beginning of 2001.
The following table is as of June 30, 2002 and sets out the
identifiable intangible assets that continue to be subject to
amortization and the identifiable intangible assets that are no longer
subject to amortization beginning January 1, 2002:
Weighted
Average
Gross Carrying Accumulated Amortization
Amount Amortization Period
-------------- ------------ ------------
Amortized intangible assets:
Television Group:
Market alliance $ 8,832 $ 442(1) 5 years
Newspaper Group:
Subscriber lists 115,963 39,420 18 years
Unamortized intangible assets:
Television Group:
FCC licenses 1,464,184 173,712
-------------- ------------
Total identifiable intangible assets $ 1,588,979 $ 213,574
(1) Acquired March 12, 2002.
Amortization expense for intangible assets subject to amortization was
$2,484 and $4,126 for the three and six months ended June 30, 2002,
respectively. The annual amortization expense for intangible assets
subject to amortization is estimated to be approximately $8,500 for
each of the next five fiscal years.
The total carrying amount of goodwill as of January 1, 2002 and June
30, 2002 is $1,255,262, of which amount $779,987, $470,043 and $5,232
is associated with the Television Group, Newspaper Group and Other,
respectively.
5
(4) Net operating revenues, earnings from operations, depreciation and
amortization, operating cash flow by industry segment and consolidated
cash flow information are shown below. Operating cash flow is defined
as earnings from operations plus depreciation and amortization.
Operating cash flow is used in the broadcasting and publishing
industries to analyze and compare companies on the basis of operating
performance and liquidity. Operating cash flow should not be considered
as a measure of financial performance or liquidity under generally
accepted accounting principles and should not be considered in
isolation or as an alternative to net income, cash flows generated by
operating, investing or financing activities or financial statement
data presented in the consolidated condensed financial statements.
Because operating cash flow is not a measurement determined in
accordance with generally accepted accounting principles and is thus
susceptible to varying calculations, operating cash flow as presented
may not be comparable to other similarly titled measures of other
companies.
Three months ended Six months ended
June 30, June 30,
-------------------------- --------------------------
In thousands 2002 2001 2002 2001
- ------------ ---------- ---------- ---------- ----------
NET OPERATING REVENUES
Television Group $ 171,087 $ 164,663 $ 311,698 $ 308,094
Newspaper Group 185,734 189,650 357,193 370,963
Interactive Media 4,847 3,369 8,841 6,267
Other 4,571 4,166 8,364 8,071
---------- ---------- ---------- ----------
Total net operating revenues $ 366,239 $ 361,848 $ 686,096 $ 693,395
========== ========== ========== ==========
EARNINGS FROM OPERATIONS
Television Group $ 65,783 $ 46,174 $ 105,661 $ 72,020
Newspaper Group 41,026 33,644 70,618 57,661
Interactive Media (3,440) (5,869) (7,248) (11,055)
Other (867) (1,008) (2,108) (2,180)
Corporate expenses (12,786) (15,797) (24,204) (27,466)
---------- ---------- ---------- ----------
Total earnings from operations $ 89,716 $ 57,144 $ 142,719 $ 88,980
========== ========== ========== ==========
DEPRECIATION AND AMORTIZATION
Television Group $ 12,018 $ 27,678 $ 23,761 $ 55,493
Newspaper Group 12,477 15,381 24,360 30,640
Interactive Media 863 663 1,722 1,402
Other 605 687 1,177 1,340
Corporate 971 1,050 1,875 2,202
---------- ---------- ---------- ----------
Total depreciation and amortization $ 26,934 $ 45,459 $ 52,895 $ 91,077
========== ========== ========== ==========
OPERATING CASH FLOW (SEE DEFINITION ABOVE)
Television Group $ 77,801 $ 73,852 $ 129,422 $ 127,513
Newspaper Group 53,503 49,025 94,978 88,301
Interactive Media (2,577) (5,206) (5,526) (9,653)
Other (262) (321) (931) (840)
Corporate (11,815) (14,747) (22,329) (25,264)
---------- ---------- ---------- ----------
Total operating cash flow $ 116,650 $ 102,603 $ 195,614 $ 180,057
========== ========== ========== ==========
CONSOLIDATED CASH FLOW INFORMATION(a)
Net cash provided by operations $ 150,933 $ 51,015
Net cash used for investments $ (17,030) $ (31,273)
Net cash used for financing $ (135,668) $ (74,209)
(a) Cash flow information is provided on a consolidated basis and is as
presented in the Consolidated Condensed Statements of Cash Flows included
herein.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The Company is an owner and operator of 19 television stations and publisher of
four daily newspapers. The following table sets forth the Company's major media
assets by segment as of June 30, 2002:
Television Group
- ----------------
Network
Market Market Rank(a) Station Affiliation(b) Status Acquired
------ -------------- ------- -------------- ------ --------
Dallas/Fort Worth 7 WFAA ABC Owned March 1950
Houston 11 KHOU CBS Owned February 1984
Seattle/Tacoma 12 KING NBC Owned February 1997
Seattle/Tacoma 12 KONG IND Owned March 2000
Phoenix 16 KTVK IND Owned November 1999
Phoenix 16 KASW WB Owned March 2000
St. Louis 22 KMOV CBS Owned June 1997
Portland 23 KGW NBC Owned February 1997
Charlotte 27 WCNC NBC Owned February 1997
San Antonio 37 KENS CBS Owned October 1997
San Antonio 37 KBEJ UPN LMA (c)
Hampton/Norfolk 42 WVEC ABC Owned February 1984
New Orleans 43 WWL CBS Owned June 1994
Louisville 50 WHAS ABC Owned February 1997
Austin 54 KVUE ABC Owned June 1999
Tucson 73 KMSB FOX Owned February 1997
Tucson 73 KTTU UPN Owned March 2002(d)
Spokane 78 KREM CBS Owned February 1997
Spokane 78 KSKN UPN/WB(e) Owned October 2001(f)
Boise(g) 121 KTVB NBC Owned February 1997
Newspaper Group
- ---------------
Daily Sunday
Newspaper Location Acquired Circulation(i) Circulation(i)
--------- -------- -------- -------------- --------------
The Dallas Morning News ("DMN") Dallas, TX (h) 529,617 776,868
The Providence Journal ("PJ") Providence, RI February 1997 164,065 232,040
The Press-Enterprise ("PE") Riverside, CA July 1997 184,562 189,095
Denton Record-Chronicle Denton, TX June 1999 14,783 19,098
Interactive Media
Belo Interactive, Inc. Includes the Web site operations of Belo's operating companies, interactive
alliances and Internet-based products and services.(j)
Other
Northwest Cable News ("NWCN") Cable news channel distributed to over 2.3 million homes in the Pacific Northwest.
Texas Cable News ("TXCN") Cable news channel distributed to over 1.3 million homes in Texas.
(a) Market rank is based on the relative size of the television market, or
Designated Market Area ("DMA"), among the 210 generally recognized DMAs in
the United States, based on May 2002 Nielsen estimates.
(b) Substantially all the revenue of the Company's television stations is
derived from advertising. Less than 4 percent of Television Group revenue
is provided by compensation paid by networks to the television stations for
broadcasting network programming.
(c) Belo entered into an agreement to operate KBEJ under a local marketing
agreement ("LMA") in May 1999; the station's on-air date was August 3,
2000.
(d) Belo acquired KTTU, previously operated under an LMA, on March 12, 2002.
(e) The primary affiliation is with UPN. The WB network is currently a
secondary affiliation.
(f) Belo acquired KSKN, previously operated under an LMA, on October 1, 2001.
(g) The Company also owns KTFT-LP (NBC), a low power television station in Twin
Falls, Idaho.
(h) The first issue of DMN was published by Belo on October 1, 1885.
(i) Average paid circulation data is for the six months ended March 31, 2002 as
filed in the Audit Bureau of Circulation's FAS-FAX report, except for the
Denton Record-Chronicle, for which circulation data is taken from the
Certified Audit of Circulations Report for the twelve-month period ended
December 31, 2001.
(j) The majority of Belo Interactive's Web sites are associated with the
Company's television stations and newspapers and primarily provide news and
information.
7
RESULTS OF OPERATIONS
Consolidated Results of Operations
Three Months Ended June 30, 2002 and 2001
Total net operating revenues increased $4,391, or 1.2 percent, for the second
quarter of 2002 as compared to the same period in 2001 primarily due to a $6,975
increase in spot revenues for the Television Group, a $3,013 increase in
preprints and Total Market Coverage ("TMC") revenues for the Newspaper Group and
a $1,481 increase in Interactive Media advertising revenues, offset somewhat by
a decrease of $6,876 in classified advertising revenues in the Newspaper Group.
Salaries, wages and employee benefits expense decreased $2,700, or 2.1 percent,
for the second quarter of 2002 as compared to the year earlier period due to a
decrease in the number of employees in 2002 resulting primarily from a
Company-wide reduction in force and an early retirement program at The
Providence Journal in the fourth quarter of 2001, which amounts were offset by
higher accruals in 2002 for performance-based bonuses and higher medical
insurance expense. Salaries, wages and employee benefits expense in the second
quarter of 2001 included a charge of $4,461 for early retirement costs and
corporate staff reductions.
Other production, distribution and operating costs increased $3,555, or 3.8
percent, in the second quarter of 2002 as compared to the second quarter of 2001
primarily due to increases in outside services ($1,772), outside solicitation
($1,187), cash programming ($1,060), distribution ($989) and insurance ($616)
expenses, partially offset by a $1,905 decrease in bad debt expense.
Newsprint, ink and other supplies decreased $10,511, or 27.3 percent, in the
second quarter of 2002 as compared to the year earlier period primarily due to a
decrease in the average cost per metric ton of newsprint. The average cost per
metric ton of newsprint decreased 29.1 percent in the second quarter of 2002 as
compared to the year earlier period. Newsprint consumption increased
approximately 1 percent in the second quarter of 2002 as compared to the year
earlier period.
Depreciation expense decreased $782 in the second quarter of 2002, from $25,232
in the second quarter of 2001 to $24,450 in the second quarter of 2002.
Amortization expense decreased from $20,227 in second quarter of 2001 to $2,484
in the second quarter of 2002 due to the Company's adoption of SFAS No. 142
effective January 1, 2002. See Note 3 of Notes to the Consolidated Condensed
Financial Statements.
Interest expense for the second quarter of 2002 of $27,126 was 3.8 percent lower
than second quarter 2001 expense of $28,205, reflecting lower average debt
levels.
Other, net increased from expense of $29,047 in the second quarter of 2001 to
income of $4,259 in the second quarter of 2002 primarily due to a charge of
$28,785 in 2001 related to the write-down of the Company's investments in
certain Internet-related companies and a credit of $4,787 in 2002 related to the
favorable resolution of certain contingencies associated with the Company's
sales of KOTV in Tulsa, Oklahoma, the Messenger-Inquirer in Owensboro, Kentucky,
The Gleaner in Henderson, Kentucky and The Eagle in Bryan/College Station, Texas
in the fourth quarter of 2000.
The effective tax rate for the second quarter of 2002 was 39.4 percent. The
Company recorded tax expense of $207 for the second quarter of 2001 on a loss
before income taxes of $108. The second quarter 2001 tax provision was due to a
71.2 percent projected annual effective tax rate, resulting from non-deductible
goodwill amortization (which was eliminated in 2002 upon adoption of SFAS No.
142) and lower projected annual pretax earnings. The effective tax rate would
have been 43.2 percent for the second quarter of 2001 if SFAS No. 142 had been
in effect at the beginning of 2001.
As a result of the factors discussed above, net earnings of $40,517 (36 cents
per share) were reported for the three months ended June 30, 2002, compared with
a net loss of $315 (0 cents per share) for the same period in 2001.
8
Net earnings for the three months ended June 30, 2001 would have been $10,482
(10 cents per share) if SFAS No. 142 had been in effect at the beginning of
2001.
Six Months Ended June 30, 2002 and 2001
Total net operating revenues declined $7,299, or 1.1 percent, for the six months
ended June 30, 2002 as compared to the same period in 2001 primarily due to a
decrease in classified advertising revenues ($18,326) for the Newspaper Group,
partially offset by increases in Newspaper Group preprints and TMC revenues
($4,424), Television Group spot revenues ($4,104) and Interactive Media
advertising revenues ($2,577).
Salaries, wages and employee benefits expense declined $5,777, or 2.3 percent,
for the six months ended June 30, 2002 as compared to the year earlier period
due to a decrease in the number of employees in 2002 resulting primarily from a
Company-wide reduction in force and an early retirement program at The
Providence Journal in the fourth quarter of 2001, which amounts were partially
offset by higher accruals in 2002 for performance-based bonuses and higher
medical insurance expense. Salaries, wages and employee benefits expense in 2001
included a charge of $4,461 for early retirement costs and corporate staff
reductions.
Other production, distribution and operating costs increased $2,996, or 1.6
percent, in the first six months of 2002 as compared to the first six months of
2001, primarily due to increases in cash programming ($1,556), distribution
($1,432), outside services ($1,372) and outside solicitation ($1,370) expenses,
partially offset by a $2,235 decrease in bad debt expense.
Newsprint, ink and other supplies decreased $20,075, or 26.1 percent, in the six
months ended June 30, 2002 as compared to the year earlier period. The average
cost per metric ton of newsprint decreased 25.2 percent in the first six months
of 2002 as compared to the year earlier period. Newsprint consumption decreased
3.5 percent as compared to the year earlier period.
Depreciation expense decreased $1,830, from $50,599 in the first six months of
2001 to $48,769 in the first six months of 2002.
Amortization expense decreased from $40,478 in the six months ended June 30,
2001 to $4,126 in the six months ended June 30, 2002 due to the Company's
adoption of SFAS No. 142 effective January 1, 2002. See Note 3 of Notes to the
Consolidated Condensed Financial Statements.
Interest expense for the six months ended June 30, 2002 was $55,419, or 6.3
percent, lower than the year earlier period expense of $59,114, due primarily to
lower average debt levels.
Other, net increased from expense of $28,795 for the six month period ended June
30, 2001 to income of $6,461 in the first six months of 2002 primarily due to a
charge of $28,785 in 2001 related to the write-down of the Company's investments
in certain Internet-related companies, a credit of $4,787 in 2002 related to the
favorable resolution of certain contingencies associated with the Company's
sales in the fourth quarter of 2000 of KOTV in Tulsa, Oklahoma, the
Messenger-Inquirer in Owensboro, Kentucky, The Gleaner in Henderson, Kentucky
and The Eagle in Bryan/College Station, Texas and a gain of $2,375 in the first
quarter of 2002 on the sale of Belo's interest in the Dallas Mavericks and the
American Airlines Center.
The provision for income taxes is computed utilizing the Company's expected
annual effective income tax rate. The effective tax rate for the six months
ended June 30, 2002 was 38.9 percent. The effective tax rate for the six months
ended June 30, 2001 was 71.2 percent. The lower rate in 2002 is due to the
elimination of non-deductible goodwill amortization upon adoption of SFAS No.
142 and higher estimated pretax earnings. The effective tax rate would have been
40.9 percent for the first six months of 2001 if SFAS No. 142 had been in effect
at the beginning of 2001.
As a result of the factors discussed above, net earnings for the six months
ended June 30, 2002 were $57,281 (51 cents per share) as compared to $308 (0
cents per share) for the six months ended June 30, 2001. Net earnings for the
six months ended June 30, 2001 would have been $22,590 (21 cents per share) if
SFAS No. 142 had been in effect at the beginning of 2001.
9
Segment Results of Operations
Television Group
Television Group revenues for the second quarter of 2002 were $171,087, a 3.9
percent increase compared with second quarter 2001 revenues of $164,663. In the
first six months, Television Group revenues increased 1.2 percent, from $308,094
in 2001 to $311,698 in 2002. Total spot revenues including political revenue
increased 4.5 percent and 1.4 percent for the quarter and six-month periods
ended June 30, 2002, respectively, as compared to the prior year periods. Local
spot advertising revenues were up 1.0 percent for the second quarter of 2002 and
down 1.8 percent for the first six months of the year. National advertising
revenues increased 4.7 percent in the second quarter of 2002 as compared to the
second quarter of 2001 and were flat for the year-to-date period comparisons.
Political advertising revenues increased $3,413 in the second quarter and $7,190
in the first six months of 2002 versus the same periods in 2001. Revenues for
the first six months of 2002 included approximately $9,000 of advertising
revenues generated by the Company's NBC affiliates from their broadcast of the
Winter Olympics in February 2002. The most significant revenue increases for the
quarter and six month periods ended June 30, 2002 were reported in the Dallas,
Houston and Phoenix markets with strength in the automotive, movies and health
and beauty categories. The largest revenue decrease for these periods was
reported in the Seattle market due to difficult economic conditions in the
Pacific Northwest.
Television Group cash operating expenses for the quarter and six months ended
June 30, 2002 increased $2,475, or 2.7 percent, and $1,695, or 0.9 percent,
respectively, as a result of increases in accruals for performance-based
bonuses, programming costs and insurance expenses. Television Group operating
cash flow for the quarter and six months ended June 30, 2002 increased $3,949,
or 5.3 percent, and $1,909, or 1.5 percent, respectively, from the comparable
periods in 2001. Television Group operating cash flow margins improved from 44.9
percent in the second quarter of 2001 to 45.5 percent in the second quarter of
2002 but were relatively unchanged (approximately 41.5 percent) between the
six-month periods.
Newspaper Group
Newspaper Group revenues decreased $3,916, or 2.1 percent, and $13,770, or 3.7
percent, for the quarter and six months ended June 30, 2002, respectively, as
compared to the prior year periods. In the first six months of 2002 there was
one more Sunday than in the first six months of 2001. After adjusting for the
effects of the additional Sunday, Newspaper Group revenues decreased 5.1 percent
for the year-to-date period.
DMN reported revenue decreases of 3.3 percent and 5.7 percent for the second
quarter and first six months of 2002 as compared to the year earlier periods.
Classified advertising revenues declined 13.7 percent in the second quarter and
17.8 percent in the first six months of 2002 as compared to the year earlier
periods, due to decreases in classified employment volume. General advertising
revenues declined 4.8 percent and 7.0 percent for the quarter and six months
ended June 30, 2002. The decrease in the second quarter of 2002 was due to a
decline in volume, primarily in the packaged goods category, while the decrease
for the year-to-date period was primarily due to a decline in volume in the
financial category. Retail advertising revenues were down 1.7 percent and up 0.7
percent for the second quarter and first six months of 2002, respectively, as
compared to the year earlier periods. Other advertising revenues improved for
the quarter and year-to-date periods due to increases in preprints and TMC
revenues.
Total revenues for PJ and PE were flat for the second quarter and first six
months of 2002 when compared to the same periods in 2001. The declines in
classified advertising revenues at both papers were offset by gains in retail,
general and other advertising revenues at PJ and improvements in general and
other advertising revenue at PE.
Newspaper Group cash operating expenses decreased 6.0 percent and 7.2 percent
for the second quarter and six-month period ended June 30, 2002, respectively,
as compared to the prior year periods, primarily due to lower newsprint expense.
Newsprint expense decreased 28.6 percent and 27.7 percent for the quarter and
year-to-date periods in 2002, respectively, from the comparable periods in 2001.
Newspaper Group operating cash flow for the second quarter of 2002 was $53,503,
an increase of 9.1 percent over second quarter 2001 operating cash flow of
$49,025. For the year-to-date period, 2002 operating cash flow was $94,978, or
7.6 percent higher than 2001. Newspaper Group operating cash flow margins were
28.8 percent and 26.6 percent for the quarter and six-month periods ended June
30, 2002, respectively, as compared to 25.9 percent and 23.8 percent for the
comparable 2001 periods.
10
Interactive Media
Interactive Media revenues, which are principally derived from advertising,
increased 43.9 percent, from $3,369 in the second quarter of 2001 to $4,847 in
the second quarter of 2002. For the first six months of 2002, Interactive Media
revenues increased 41.1 percent over the year earlier period, from $6,267 to
$8,841. Interactive Media cash expenses decreased 13.4 percent and 9.8 percent
for the quarter and six-month periods ended June 30, 2002, respectively,
primarily as a result of lower outside services and expense reduction
initiatives beginning in the third quarter of 2001 in response to the softening
economy. As a result, Interactive Media's operating cash flow deficits improved
from $5,206 in the second quarter of 2001 to $2,577 in the same period of 2002,
and from $9,653 in the first six months of 2001 to $5,526 in the 2002 comparable
period.
Other
Other revenues consist primarily of Belo's regional cable news operations, NWCN
and TXCN. Other revenues increased 9.7 percent, from $4,166 in the second
quarter of 2001 to $4,571 in the second quarter of 2002. For the six-month
periods, Other revenues increased 3.6 percent, from $8,071 in 2001 to $8,364 in
2002. Cash expenses increased 7.7 percent and 4.3 percent during the second
quarter and first six months of 2002, respectively, as compared to prior year
periods. The operating cash flow deficit decreased from $321 for the second
quarter of 2001 to $262 for the second quarter of 2002 and increased from $840
for the first six months of 2001 to $931 for the 2002 comparable period.
Operating cash flow decreased at NWCN for the quarter and year-to-date periods,
while TXCN reported a decrease in its cash flow deficit.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations, bank borrowings and term debt are the Company's
primary sources of liquidity. During the first six months of 2002, net cash
provided by operations was $150,933, compared with $51,015 for the same period
in 2001. Higher net earnings and lower working capital requirements for taxes,
bonus payments and interest in the first six months of 2002 as compared to the
year earlier period, contributed to the increase in cash provided by operations.
Total debt decreased $145,550 from December 31, 2001 to June 30, 2002.
On June 3, 2002, the Company repaid $250,000 of Senior Notes due 2002 utilizing
borrowings under its existing credit facility. At June 30, 2002, the Company had
$1,100,000 in fixed-rate debt securities as follows: $300,000 of 7-1/8 percent
Senior Notes due 2007; $350,000 of 8 percent Senior Notes due 2008; $200,000 of
7-3/4 percent Senior Debentures due 2027; and $250,000 of 7-1/4 percent Senior
Debentures due 2027. The weighted average effective interest rate for the
fixed-rate debt instruments is 7.5 percent.
At June 30, 2002, the Company had borrowings of $422,000 under a $720,000
variable-rate revolving credit facility. Borrowings under the credit facility
mature upon expiration of the agreement on November 29, 2006. In addition, the
Company had $23,050 of short-term unsecured notes outstanding at June 30, 2002.
These borrowings may be converted at the Company's option to revolving debt.
Accordingly, such borrowings are classified as long-term in the Company's
financial statements.
The Company is required to maintain certain ratios as of the end of each
quarter, as defined in its revolving credit agreement. As of June 30, 2002, the
Company was in compliance with all debt covenant requirements.
The Company also has $150,000 of additional debt securities available for
issuance under a shelf registration statement filed in April of 1997. Future
issuances of fixed-rate debt may be used to refinance variable-rate debt in
whole or in part or for other corporate needs as determined by management.
On January 30, 2002, the Company sold its interest in the Dallas Mavericks and
the American Airlines Center for $27,000 which resulted in a pretax gain of
approximately $2,375.
On March 12, 2002, Belo completed the purchase of KTTU, the UPN affiliate in the
Tucson, Arizona television market, for $18,000 in cash. Belo had previously
operated KTTU under a local marketing agreement.
11
In the first six months of 2002, the Company paid dividends of $16,674, or 15
cents per share, on Series A and Series B common stock outstanding, compared
with $16,430, or 15 cents per share, in the first six months of 2001.
Capital spending for 2002 is expected to be approximately $65,000. Capital
expenditures in the first six months of 2002 were $16,885. Expenditures were
primarily for Television Group equipment purchases, including those for
equipment to be used in the transmission of digital television, and Newspaper
Group equipment purchases.
During 2000 and 2001, Belo announced the formation of a series of cable news
partnerships with Time Warner Cable ("Time Warner"). The Time Warner agreements
call for the creation of 24-hour cable news channels in Houston and San Antonio,
Texas and Charlotte, North Carolina. As of June 30, 2002, investments totaling
$24,250 ($10,000 of which was invested in the first six months of 2002) had been
made related to the Time Warner partnerships which will be used to fund capital
expenditures and operating costs. The on-air date of the news channel in
Charlotte, North Carolina was June 14, 2002. The projected on-air dates of the
news channels in Houston and San Antonio, Texas are late 2002 and early 2003,
respectively.
Forward-Looking Statements
Statements in this Form 10-Q concerning the Company's business outlook or future
economic performance, anticipated profitability, revenues, expenses, capital
expenditures, investments, future financings or 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, changes
in capital market conditions and prospects, and other factors such as changes in
advertising demand, interest rates and newsprint prices; technological changes;
development of Internet commerce; industry cycles; changes in pricing or other
actions by competitors and suppliers; regulatory 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 and dispositions; and
general economic conditions, as well as other risks detailed in the Company's
filings with the Securities and Exchange Commission, including the Annual Report
on Form 10-K and in the Company's periodic press releases.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No disclosure required.
PART II.
ITEM 1. LEGAL PROCEEDINGS
A number of legal proceedings are pending against the Company, including several
actions for alleged libel. In the opinion of management, liabilities, if any,
arising from these actions would not have a material adverse effect on the
results of operations, liquidity or financial position of the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Company's shareholders was held on May 8, 2002. All
nominees standing for election as directors were elected. The following chart
indicates the number of votes cast with respect to each nominee for director:
Withheld
Nominee For Authority
------- --- ---------
John W. Bassett, Jr. 254,455,620 1,676,202
Robert W. Decherd 254,073,995 2,057,827
Laurence E. Hirsch 254,512,259 1,619,563
J. McDonald Williams 254,424,130 1,707,692
In addition to those directors elected at the Annual Meeting, the following
directors continue in office: Henry P. Becton, Jr., Louis E. Caldera, Judith L.
Craven, M.D., M.P.H., Roger A. Enrico, Stephen Hamblett, Dealey D. Herndon,
Arturo Madrid, Ph.D., William T. Solomon and Lloyd D. Ward.
No other matters were submitted to a vote of security holders at the Annual
Meeting.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by the Company with the Securities and
Exchange Commission, as indicated. Exhibits marked with a tilde (~) are
management contracts or compensatory plan contracts or arrangements
filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. All other
documents are filed with this report.
3.1 * Certificate of Incorporation of the Company (Exhibit 3.1 to
the Company's Annual Report on Form 10-K dated March 15, 2000
(the "1999 Form 10-K"))
3.2 * Certificate of Correction to Certificate of Incorporation
dated May 13, 1987 (Exhibit 3.2 to the 1999 Form 10-K)
3.3 * Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated April 16, 1987 (Exhibit
3.3 to the 1999 Form 10-K)
3.4 * Certificate of Amendment of Certificate of Incorporation of
the Company dated May 4, 1988 (Exhibit 3.4 to the 1999 Form
10-K)
3.5 * Certificate of Amendment of Certificate of Incorporation of
the Company dated May 3, 1995 (Exhibit 3.5 to the 1999 Form
10-K)
3.6 * Certificate of Amendment of Certificate of Incorporation of
the Company dated May 13, 1998 (Exhibit 3.6 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1998 (the "2nd Quarter 1998 Form 10-Q"))
3.7 * Certificate of Ownership and Merger, dated December 20, 2000,
but effective as of 11:59 p.m. on December 31, 2000 (Exhibit
99.2 to Belo's Current Report on Form 8-K filed with the
Commission on December 29, 2000)
13
EXHIBIT
NUMBER DESCRIPTION
3.8 * Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4, 1988
(Exhibit 3.7 to the 1999 Form 10-K)
3.9 * Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988 (Exhibit 3.8 to the 1999 Form 10-K)
3.10 * Amended and Restated Bylaws of the Company, effective December
31, 2000 (Exhibit 3.10 to the Company's Annual Report on Form
10-K dated March 13, 2001 (the "2000 Form 10-K"))
4.1 Certain rights of the holders of the Company's Common Stock
are set forth in Exhibits 3.1-3.10 above
4.2 * Specimen Form of Certificate representing shares of the
Company's Series A Common Stock (Exhibit 4.2 to the 2000 Form
10-K)
4.3 * Specimen Form of Certificate representing shares of the
Company's Series B Common Stock (Exhibit 4.3 to the 2000 Form
10-K)
4.4 * Amended and Restated Form of Rights Agreement as of February
28, 1996 between the Company and Chemical Mellon Shareholder
Services, L.L.C., a New York banking corporation (Exhibit 4.4
to the 1999 Form 10-K)
4.5 * Supplement No. 1 to Amended and Restated Rights Agreement
between the Company and The First National Bank of Boston
dated as of November 11, 1996 (Exhibit 4.5 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996)
4.6 * Supplement No. 2 to Amended and Restated Rights Agreement
between the Company and The First National Bank of Boston
dated as of June 5, 1998 (Exhibit 4.6 to the 2000 Form 10-K)
4.7 Instruments defining rights of debt securities:
(1) * Indenture dated as of June 1, 1997 between the
Company and The Chase Manhattan Bank, as Trustee
(Exhibit 4.6(1) to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30,
1997 (the "2nd Quarter 1997 Form 10-Q"))
(2) * (a) $200 million 6-7/8% Senior Note due 2002 (Exhibit
4.6(2)(a) to the 2nd Quarter 1997 Form 10-Q)
* (b) $50 million 6-7/8% Senior Note due 2002 (Exhibit
4.6(2)(b) to the 2nd Quarter 1997 Form 10-Q)
(3) * (a) $200 million 7-1/8% Senior Note due 2007 (Exhibit
4.6(3)(a) to the 2nd Quarter 1997 Form 10-Q)
* (b) $100 million 7-1/8% Senior Note due 2007 (Exhibit
4.6(3)(b) to the 2nd Quarter 1997 Form 10-Q)
(4) * $200 million 7-3/4% Senior Debenture due 2027
(Exhibit 4.6(4) to the 2nd Quarter 1997 Form 10-Q)
(5) * Officers' Certificate dated June 13, 1997
establishing terms of debt securities pursuant to
Section 3.1 of the Indenture (Exhibit 4.6(5) to the
2nd Quarter 1997 Form 10-Q)
(6) * (a) $200 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6(6)(a) to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ended September 30, 1997 (the "3rd Quarter 1997
Form 10-Q"))
14
EXHIBIT
NUMBER DESCRIPTION
* (b) $50 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6(6)(b) to the 3rd Quarter 1997 Form
10-Q)
(7) * Officers' Certificate dated September 26, 1997
establishing terms of debt securities pursuant to
Section 3.1 of the Indenture (Exhibit 4.6(7) to the
3rd Quarter 1997 Form 10-Q)
(8) * $350 million 8.00% Senior Note due 2008 (Exhibit
4.6(8) to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2001
(the "3rd Quarter 2001 Form 10-Q"))
(9) * Officers' Certificate dated November 1, 2001
establishing terms of debt securities pursuant to
Section 3.1 of the Indenture (Exhibit 4.6(9) to the
3rd Quarter 2001 Form 10-Q)
10.1 Financing agreements:
(1) * Five-year Credit Agreement dated as of November 29,
2001 among the Company, as Borrower; J.P. Morgan
Chase Bank, as Administrative Agent and as
Competitive Advance Facility Agent; J.P. Morgan
Securities Inc. and Banc of America Securities LLC,
as Co-Advisors, Co-Arrangers and Joint Bookrunners;
Bank of America, N.A., Fleet National Bank and the
Bank of New York, as Co-Syndication Agents; BNP
Paribas, as Documentation Agent; and the Fuji Bank
Limited and SunTrust Bank, as Senior Managing Agents
(Exhibit 10.1(1) to the Company's Annual Report on
Form 10-K dated March 15, 2002)
10.2 Compensatory plans:
-(1) Belo Savings Plan:
* (a) Belo Savings Plan Amended and Restated July 1,
2000 (Exhibit 10.2(1) to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ended June 30, 2000 (the "2nd Quarter 2000 Form
10-Q"))
* (b) First Amendment to the Belo Savings Plan
effective December 31, 2000 (Exhibit 10.2(1)(b)
to the 2000 Form 10-K)
* (c) Second Amendment to Belo Savings Plan effective
as of January 1, 2002 (Exhibit 4.16(c) to the
Company's Registration Statement on Form S-8 (No.
333-88030) filed with the Securities and Exchange
Commission on May 10, 2002)
* (d) Third Amendment to Belo Savings Plan effective as
of May 7, 2002 (Exhibit 4.16(d) to the Company's
Registration Statement on Form S-8 (No.
333-88030) filed with the Securities and Exchange
Commission on May 10, 2002)
-(2) Belo 1986 Long-Term Incentive Plan:
* (a) Belo Corp. 1986 Long-Term Incentive Plan
(Effective May 3, 1989, as amended by Amendments
1, 2, 3, 4 and 5) (Exhibit 10.3(2) to the
Company's Annual Report on Form 10-K dated March
10, 1997 (the "1996 Form 10-K"))
* (b) Amendment No. 6 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(2)(b) to the Company's Annual
Report on Form 10-K dated March 19, 1998 (the
"1997 Form 10-K"))
* (c) Amendment No. 7 to 1986 Long-Term Incentive Plan
(Exhibit 10.2(2)(c) to the 1999 Form 10-K)
* (d) Amendment No. 8 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(2)(d) to the 2nd Quarter 1998 Form
10-Q)
15
EXHIBIT
NUMBER DESCRIPTION
-(3) * Belo 1995 Executive Compensation Plan, as restated to
incorporate amendments through December 4, 1997
(Exhibit 10.3(3) to the 1997 Form 10-K)
* (a) Amendment to 1995 Executive Compensation Plan,
dated July 21, 1998 (Exhibit 10.3(3)(a) to the
2nd Quarter 1998 Form 10-Q)
* (b) Amendment to 1995 Executive Compensation Plan,
dated December 16, 1999 (Exhibit 10.3(3)(b) to
the 1999 Form 10-K)
-(4) * Management Security Plan (Exhibit 10.3(1) to the 1996
Form 10-K)
* (a) Amendment to Management Security Plan of Belo
Corp. and Affiliated Companies (as Restated
Effective January 1, 1982) (Exhibit 10.2(4)(a) to
the 1999 Form 10-K)
-(5) Belo Supplemental Executive Retirement Plan
* (a) Belo Supplemental Executive Retirement Plan As
Amended and Restated Effective January 1, 2000
(Exhibit 10.2(5)(a) to the 1999 Form 10-K)
* (b) First Amendment to Belo Supplemental Executive
Retirement Plan as Amended and Restated Effective
January 1, 2000, dated July 27, 2000 (Exhibit
10.2(5) to the 2nd Quarter 2000 Form 10-Q)
-(6) * Belo 2000 Executive Compensation Plan (Exhibit 4.15
to the Company's Registration Statement on Form S-8
(No. 333-43056) filed with the Securities and
Exchange Commission on August 4, 2000)
-(7) * Retirement Agreement between the Company and Burl
Osborne, dated June 27, 2001 (Exhibit 10.2(8) to
Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2001)
-(8) * Retirement Agreement between the Company and Michael
J. McCarthy, dated March 15, 2002 (Exhibit 10.2(8) to
Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2002)
12 Ratio of Earnings to Fixed Charges
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K.
During the quarter covered by this report, there were no reports on
Form 8-K filed.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BELO CORP.
August 9, 2002 By: /s/ Dunia Shive
--------------------------------------
Dunia A. Shive
Executive Vice President/
Chief Financial Officer
(Authorized Officer and Principal
Financial and Accounting Officer)
17
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 * Certificate of Incorporation of the Company (Exhibit 3.1 to
the Company's Annual Report on Form 10-K dated March 15, 2000
(the "1999 Form 10-K"))
3.2 * Certificate of Correction to Certificate of Incorporation
dated May 13, 1987 (Exhibit 3.2 to the 1999 Form 10-K)
3.3 * Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated April 16, 1987 (Exhibit
3.3 to the 1999 Form 10-K)
3.4 * Certificate of Amendment of Certificate of Incorporation of
the Company dated May 4, 1988 (Exhibit 3.4 to the 1999 Form
10-K)
3.5 * Certificate of Amendment of Certificate of Incorporation of
the Company dated May 3, 1995 (Exhibit 3.5 to the 1999 Form
10-K)
3.6 * Certificate of Amendment of Certificate of Incorporation of
the Company dated May 13, 1998 (Exhibit 3.6 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1998 (the "2nd Quarter 1998 Form 10-Q"))
3.7 * Certificate of Ownership and Merger, dated December 20, 2000,
but effective as of 11:59 p.m. on December 31, 2000 (Exhibit
99.2 to Belo's Current Report on Form 8-K filed with the
Commission on December 29, 2000)
3.8 * Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4, 1988
(Exhibit 3.7 to the 1999 Form 10-K)
3.9 * Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988 (Exhibit 3.8 to the 1999 Form 10-K)
3.10 * Amended and Restated Bylaws of the Company, effective December
31, 2000 (Exhibit 3.10 to the Company's Annual Report on Form
10-K dated March 13, 2001 (the "2000 Form 10-K"))
4.1 Certain rights of the holders of the Company's Common Stock
are set forth in Exhibits 3.1-3.10 above
4.2 * Specimen Form of Certificate representing shares of the
Company's Series A Common Stock (Exhibit 4.2 to the 2000 Form
10-K)
4.3 * Specimen Form of Certificate representing shares of the
Company's Series B Common Stock (Exhibit 4.3 to the 2000 Form
10-K)
4.4 * Amended and Restated Form of Rights Agreement as of February
28, 1996 between the Company and Chemical Mellon Shareholder
Services, L.L.C., a New York banking corporation (Exhibit 4.4
to the 1999 Form 10-K)
4.5 * Supplement No. 1 to Amended and Restated Rights Agreement
between the Company and The First National Bank of Boston
dated as of November 11, 1996 (Exhibit 4.5 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996)
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.6 * Supplement No. 2 to Amended and Restated Rights Agreement
between the Company and The First National Bank of Boston
dated as of June 5, 1998 (Exhibit 4.6 to the 2000 Form 10-K)
4.7 Instruments defining rights of debt securities:
(1) * Indenture dated as of June 1, 1997 between the
Company and The Chase Manhattan Bank, as Trustee
(Exhibit 4.6(1) to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30,
1997 (the "2nd Quarter 1997 Form 10-Q"))
(2) * (a) $200 million 6-7/8% Senior Note due 2002 (Exhibit
4.6(2)(a) to the 2nd Quarter 1997 Form 10-Q)
* (b) $50 million 6-7/8% Senior Note due 2002 (Exhibit
4.6(2)(b) to the 2nd Quarter 1997 Form 10-Q)
(3) * (a) $200 million 7-1/8% Senior Note due 2007 (Exhibit
4.6(3)(a) to the 2nd Quarter 1997 Form 10-Q)
* (b) $100 million 7-1/8% Senior Note due 2007 (Exhibit
4.6(3)(b) to the 2nd Quarter 1997 Form 10-Q)
(4) * $200 million 7-3/4% Senior Debenture due 2027
(Exhibit 4.6(4) to the 2nd Quarter 1997 Form 10-Q)
(5) * Officers' Certificate dated June 13, 1997
establishing terms of debt securities pursuant to
Section 3.1 of the Indenture (Exhibit 4.6(5) to the
2nd Quarter 1997 Form 10-Q)
(6) * (a) $200 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6(6)(a) to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ended September 30, 1997 (the "3rd Quarter 1997
Form 10-Q"))
* (b) $50 million 7-1/4% Senior Debenture due 2027
(Exhibit 4.6(6)(b) to the 3rd Quarter 1997 Form
10-Q)
(7) * Officers' Certificate dated September 26, 1997
establishing terms of debt securities pursuant to
Section 3.1 of the Indenture (Exhibit 4.6(7) to the
3rd Quarter 1997 Form 10-Q)
(8) * $350 million 8.00% Senior Note due 2008 (Exhibit
4.6(8) to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2001
(the "3rd Quarter 2001 Form 10-Q"))
(9) * Officers' Certificate dated November 1, 2001
establishing terms of debt securities pursuant to
Section 3.1 of the Indenture (Exhibit 4.6(9) to the
3rd Quarter 2001 Form 10-Q)
10.1 Financing agreements:
(1) * Five-year Credit Agreement dated as of November 29,
2001 among the Company, as Borrower; J.P. Morgan
Chase Bank, as Administrative Agent and as
Competitive Advance Facility Agent; J.P. Morgan
Securities Inc. and Banc of America Securities LLC,
as Co-Advisors, Co-Arrangers and Joint Bookrunners;
Bank of America, N.A., Fleet National Bank and the
Bank of New York, as Co-Syndication Agents; BNP
Paribas, as Documentation Agent; and the Fuji Bank
Limited and SunTrust Bank, as Senior Managing Agents
(Exhibit 10.1(1) to the Company's Annual Report on
Form 10-K dated March 15, 2002)
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.2 Compensatory plans:
-(1) Belo Savings Plan:
* (a) Belo Savings Plan Amended and Restated July 1,
2000 (Exhibit 10.2(1) to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ended June 30, 2000 (the "2nd Quarter 2000 Form
10-Q"))
* (b) First Amendment to the Belo Savings Plan
effective December 31, 2000 (Exhibit 10.2(1)(b)
to the 2000 Form 10-K)
* (c) Second Amendment to Belo Savings Plan effective
as of January 1, 2002 (Exhibit 4.16(c) to the
Company's Registration Statement on Form S-8 (No.
333-88030) filed with the Securities and Exchange
Commission on May 10, 2002)
* (d) Third Amendment to Belo Savings Plan effective as
of May 7, 2002 (Exhibit 4.16(d) to the Company's
Registration Statement on Form S-8 (No.
333-88030) filed with the Securities and Exchange
Commission on May 10, 2002)
-(2) Belo 1986 Long-Term Incentive Plan:
* (a) Belo Corp. 1986 Long-Term Incentive Plan
(Effective May 3, 1989, as amended by Amendments
1, 2, 3, 4 and 5) (Exhibit 10.3(2) to the
Company's Annual Report on Form 10-K dated March
10, 1997 (the "1996 Form 10-K"))
* (b) Amendment No. 6 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(2)(b) to the Company's Annual
Report on Form 10-K dated March 19, 1998 (the
"1997 Form 10-K"))
* (c) Amendment No. 7 to 1986 Long-Term Incentive Plan
(Exhibit 10.2(2)(c) to the 1999 Form 10-K)
* (d) Amendment No. 8 to 1986 Long-Term Incentive Plan
(Exhibit 10.3(2)(d) to the 2nd Quarter 1998 Form
10-Q)
-(3) * Belo 1995 Executive Compensation Plan, as restated to
incorporate amendments through December 4, 1997
(Exhibit 10.3(3) to the 1997 Form 10-K)
* (a) Amendment to 1995 Executive Compensation Plan,
dated July 21, 1998 (Exhibit 10.3(3)(a) to the
2nd Quarter 1998 Form 10-Q)
* (b) Amendment to 1995 Executive Compensation Plan,
dated December 16, 1999 (Exhibit 10.3(3)(b) to
the 1999 Form 10-K)
-(4) * Management Security Plan (Exhibit 10.3(1) to the 1996
Form 10-K)
* (a) Amendment to Management Security Plan of Belo
Corp. and Affiliated Companies (as Restated
Effective January 1, 1982) (Exhibit 10.2(4)(a) to
the 1999 Form 10-K)
-(5) Belo Supplemental Executive Retirement Plan
* (a) Belo Supplemental Executive Retirement Plan As
Amended and Restated Effective January 1, 2000
(Exhibit 10.2(5)(a) to the 1999 Form 10-K)
* (b) First Amendment to Belo Supplemental Executive
Retirement Plan as Amended and Restated Effective
January 1, 2000, dated July 27, 2000 (Exhibit
10.2(5) to the 2nd Quarter 2000 Form 10-Q)
-(6) * Belo 2000 Executive Compensation Plan (Exhibit 4.15
to the Company's Registration Statement on Form S-8
(No. 333-43056) filed with the Securities and
Exchange Commission on August 4, 2000)
-(7) * Retirement Agreement between the Company and Burl
Osborne, dated June 27, 2001 (Exhibit 10.2(8) to
Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2001)
EXHIBIT
NUMBER DESCRIPTION
------- -----------
-(8) * Retirement Agreement between the Company and Michael
J. McCarthy, dated March 15, 2002 (Exhibit 10.2(8) to
Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2002)
12 Ratio of Earnings to Fixed Charges
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002