Attached files
file | filename |
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EX-32 - EXHIBIT 32 - BELO CORP | c03877exv32.htm |
EX-31.2 - EXHIBIT 31.2 - BELO CORP | c03877exv31w2.htm |
EX-31.1 - EXHIBIT 31.1 - BELO CORP | c03877exv31w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: June 30, 2010
OR
o | 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 incorporation or organization) |
(I.R.S. employer identification no.) |
|
P. O. Box 655237 | ||
Dallas, Texas | 75265-5237 | |
(Address of principal executive offices) | (Zip code) |
Registrants telephone number, including area code: (214) 977-6606
Former name, former address and former fiscal year, if changed since last report.
None
None
Indicate by check mark whether 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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such
files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of
the Exchange Act:
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date.
Class | Outstanding at July 29, 2010 | |
Common Stock, $1.67 par value | 103,094,486* |
* | Consisting of 91,886,275 shares of Series A Common Stock and 11,208,211 shares of Series B Common Stock. |
BELO CORP.
FORM 10-Q
TABLE OF CONTENTS
FORM 10-Q
TABLE OF CONTENTS
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2 | ||||||||
15 | ||||||||
21 | ||||||||
21 | ||||||||
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21 | ||||||||
22 | ||||||||
22 | ||||||||
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27 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32 |
1
Table of Contents
PART I.
Item 1. Financial Statements
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Belo Corp. and Subsidiaries
Belo Corp. and Subsidiaries
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
In thousands, except per share amounts (unaudited) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Net Operating Revenues |
$ | 162,982 | $ | 144,770 | $ | 317,314 | $ | 278,306 | ||||||||
Operating Costs and Expenses |
||||||||||||||||
Station salaries, wages and employee benefits |
51,911 | 45,536 | 103,135 | 98,209 | ||||||||||||
Station programming and other operating costs |
47,015 | 49,219 | 92,646 | 97,584 | ||||||||||||
Corporate operating costs |
7,855 | 5,199 | 17,464 | 14,148 | ||||||||||||
Pension contribution reimbursement |
(4,200 | ) | | (8,272 | ) | | ||||||||||
Depreciation |
8,770 | 9,967 | 18,013 | 20,759 | ||||||||||||
Total operating costs and expenses |
111,351 | 109,921 | 222,986 | 230,700 | ||||||||||||
Earnings from operations |
51,631 | 34,849 | 94,328 | 47,606 | ||||||||||||
Other Income and (Expense) |
||||||||||||||||
Interest expense |
(19,815 | ) | (15,332 | ) | (39,703 | ) | (29,912 | ) | ||||||||
Other income (expense), net |
375 | (2,805 | ) | 108 | 13,564 | |||||||||||
Total other income and (expense) |
(19,440 | ) | (18,137 | ) | (39,595 | ) | (16,348 | ) | ||||||||
Earnings before income taxes |
32,191 | 16,712 | 54,733 | 31,258 | ||||||||||||
Income taxes |
12,666 | 6,417 | 21,666 | 12,052 | ||||||||||||
Net earnings |
$ | 19,525 | $ | 10,295 | $ | 33,067 | $ | 19,206 | ||||||||
Earnings Per Share |
||||||||||||||||
Basic |
$ | 0.19 | $ | 0.10 | $ | 0.32 | $ | 0.18 | ||||||||
Diluted |
$ | 0.19 | $ | 0.10 | $ | 0.31 | $ | 0.18 | ||||||||
Weighted Average Shares Outstanding |
||||||||||||||||
Basic |
103,027 | 102,497 | 102,919 | 102,438 | ||||||||||||
Diluted |
103,456 | 102,513 | 103,342 | 102,458 | ||||||||||||
Dividends declared per share |
$ | | $ | | $ | | $ | 0.075 |
See accompanying Notes to Consolidated Condensed Financial Statements.
2
Table of Contents
CONSOLIDATED CONDENSED BALANCE SHEETS
Belo Corp. and Subsidiaries
Belo Corp. and Subsidiaries
In thousands, except share and per share amounts | June 30, | December 31, | ||||||
(unaudited) | 2010 | 2009 | ||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and temporary cash investments |
$ | 6,883 | $ | 4,800 | ||||
Accounts receivable, net |
136,286 | 139,911 | ||||||
Other current assets |
27,976 | 31,413 | ||||||
Total current assets |
171,145 | 176,124 | ||||||
Property, plant and equipment, net |
172,809 | 177,475 | ||||||
Intangible assets, net |
725,399 | 725,399 | ||||||
Goodwill |
423,873 | 423,873 | ||||||
Other assets |
73,133 | 81,590 | ||||||
Total assets |
$ | 1,566,359 | $ | 1,584,461 | ||||
Liabilities and Shareholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 17,164 | $ | 20,736 | ||||
Accrued expenses |
44,658 | 41,922 | ||||||
Short-term pension obligation |
16,363 | 14,277 | ||||||
Accrued interest payable |
10,627 | 10,682 | ||||||
Income taxes payable |
4,044 | 12,052 | ||||||
Deferred revenue |
3,639 | 4,228 | ||||||
Total current liabilities |
96,495 | 103,897 | ||||||
Long-term debt |
989,669 | 1,028,219 | ||||||
Deferred income taxes |
183,501 | 169,888 | ||||||
Pension obligation |
168,826 | 182,065 | ||||||
Other liabilities |
20,387 | 28,561 | ||||||
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 91,883,375 shares at June 30, 2010
and 90,956,337 shares at December 31, 2009 |
153,445 | 151,897 | ||||||
Series B: Issued 11,211,111 shares at June 30, 2010
and 11,642,354 shares at December 31, 2009 |
18,723 | 19,443 | ||||||
Additional paid-in capital |
913,745 | 911,989 | ||||||
Accumulated deficit |
(838,847 | ) | (871,913 | ) | ||||
Accumulated other comprehensive loss |
(139,585 | ) | (139,585 | ) | ||||
Total shareholders equity |
107,481 | 71,831 | ||||||
Total liabilities and shareholders equity |
$ | 1,566,359 | $ | 1,584,461 | ||||
See accompanying Notes to Consolidated Condensed Financial Statements.
3
Table of Contents
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Belo Corp. and Subsidiaries
Belo Corp. and Subsidiaries
Six months ended June 30, | ||||||||
In thousands (unaudited) | 2010 | 2009 | ||||||
Operations |
||||||||
Net earnings |
$ | 33,067 | $ | 19,206 | ||||
Adjustments to reconcile net earnings
to net cash provided by operations: |
||||||||
Gain on repurchase of senior notes |
| (14,905 | ) | |||||
Depreciation |
18,013 | 20,759 | ||||||
Pension contribution |
(13,787 | ) | | |||||
Employee retirement expense |
2,516 | (147 | ) | |||||
Deferred income tax |
13,458 | 12,273 | ||||||
Share-based compensation |
1,281 | 1,278 | ||||||
Other non-cash expenses |
(6,238 | ) | (3,155 | ) | ||||
Equity income from partnerships |
(191 | ) | 169 | |||||
Other, net |
(1,983 | ) | (3,050 | ) | ||||
Net change in operating assets and liabilities: |
||||||||
Accounts receivable |
2,984 | 22,799 | ||||||
Other current assets |
7,401 | (1,094 | ) | |||||
Accounts payable |
(6,481 | ) | (3,800 | ) | ||||
Accrued expenses |
4,569 | (13,590 | ) | |||||
Accrued interest payable |
395 | (525 | ) | |||||
Income taxes payable |
(7,546 | ) | (16,859 | ) | ||||
Net cash provided by operations |
47,458 | 19,359 | ||||||
Investments |
||||||||
Capital expenditures |
(6,467 | ) | (2,805 | ) | ||||
Other investments |
23 | 3,246 | ||||||
Other, net |
| 2,142 | ||||||
Net cash provided by (used for) investments |
(6,444 | ) | 2,583 | |||||
Financing |
||||||||
Net proceeds from revolving debt |
38,000 | 83,100 | ||||||
Payments on revolving debt |
(77,000 | ) | (66,100 | ) | ||||
Purchase of senior notes |
| (25,260 | ) | |||||
Payment of dividends on common stock |
| (15,375 | ) | |||||
Net proceeds from exercise of stock options |
33 | | ||||||
Excess tax benefit from option exercises |
36 | | ||||||
Net cash used for financing |
(38,931 | ) | (23,635 | ) | ||||
Net increase (decrease) in cash and temporary cash investments |
2,083 | (1,693 | ) | |||||
Cash and temporary cash investments at beginning of period |
4,800 | 5,770 | ||||||
Cash and temporary cash investments at end of period |
$ | 6,883 | $ | 4,077 | ||||
See accompanying Notes to Consolidated Condensed Financial Statements.
4
Table of Contents
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Belo Corp. and Subsidiaries
(in thousands, except per share amounts)
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 Companys operating segments are defined as its television stations and cable news channels
within a given market. The Company has determined that all of its operating segments meet the
criteria for aggregation into one reportable segment under Accounting Standards Codification
(ASC) 280-10.
In the opinion of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating results for the
three and six month periods ended June 30, 2010, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2010. For further information, refer to
the consolidated financial statements and footnotes thereto included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2009.
All amounts are in thousands, except per share amounts, unless otherwise indicated.
(2) | On February 8, 2008, the Company completed the spin-off of its former newspaper businesses and related assets into A. H. Belo Corporation (A. H. Belo), which has its own management and board of directors. Except as noted below, the Company has no further ownership interest in A. H. Belo or in any newspaper businesses or related assets, and A. H. Belo has no ownership interest in the Company or any television station businesses or related assets. Belo has not recognized any revenues or costs generated by A. H. Belo that would have been included in its financial results were it not for the spin-off. Belos relationship with A. H. Belo is governed by a separation and distribution agreement, a services agreement, a tax matters agreement, an employee matters agreement, and certain other agreements between the two companies or their respective subsidiaries. Belo and A. H. Belo also co-own certain downtown Dallas, Texas, real estate through a limited liability company. Belo and A. H. Belo also co-own other investments in third party businesses and have some overlap in board members and shareholders. Although the services related to these agreements generate continuing cash flows between Belo and A. H. Belo, the amounts are not significant to the ongoing operations of the Company. In addition, the agreements and other relationships do not provide Belo with the ability to significantly influence the operating or financial policies of A. H. Belo and, therefore, do not constitute significant continuing involvement. Additionally, A. H. Belo is required to reimburse the Company for 60 percent of each contribution the Company makes to the Pension Plan. |
(3) | 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, 2010 and 2009. |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Earnings (Numerator) |
||||||||||||||||
Net earnings |
$ | 19,525 | $ | 10,295 | $ | 33,067 | $ | 19,206 | ||||||||
Less: Income to participating securities |
(303 | ) | (185 | ) | (522 | ) | (285 | ) | ||||||||
Income available to common stockholders |
19,222 | 10,110 | 32,545 | 18,921 | ||||||||||||
Shares (Denominator) |
||||||||||||||||
Weighted average shares outstanding (basic) |
103,027 | 102,497 | 102,919 | 102,438 | ||||||||||||
Dilutive effect of employee stock options |
429 | 16 | 423 | 20 | ||||||||||||
Dilutive effect of restricted stock units (RSU) |
| | | | ||||||||||||
Adjusted weighted average shares outstanding |
103,456 | 102,513 | 103,342 | 102,458 | ||||||||||||
Earnings per share: |
||||||||||||||||
Basic |
.19 | .10 | .32 | 0.18 | ||||||||||||
Diluted |
.19 | .10 | .31 | 0.18 |
5
Table of Contents
For the three months ended June 30, 2010, the Company excluded 10,606 options and 354 RSUs
because to include them would be anti-dilutive. For the six months ended June 30, 2010, the
Company excluded 10,615 options and 379 RSUs because to include them would be anti-dilutive.
For the three months ended June 30, 2009, the Company excluded 12,619 options and 1,020 RSUs
because to include them would be anti-dilutive. For the six months ended June 30, 2009, the
Company excluded 12,631 and 1,076 RSUs because to include them would be anti-dilutive.
(4) | On January 1, 2010, the Company adopted the amendment to ASC 820-10, which expands fair value disclosure requirements. These disclosures are effective for fiscal years beginning after December 15, 2009. This amendment affects disclosure requirements only and has no effect on the Companys financial position or results of operations. |
(5) | Goodwill and indefinite-lived intangible assets (FCC licenses) are required to be tested at least annually for impairment or between annual tests if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying amount. The Companys indefinite-lived intangible assets represent FCC licenses in markets (as defined by Nielsen Media Researchs Designated Market Area report) where the Companys stations operate. Goodwill is evaluated by reporting unit, with each reporting unit consisting of the television station(s) and cable news operations within a market. The Company measures the fair value of goodwill and indefinite-lived intangible assets annually as of December 31. |
Fair value estimates are inherently sensitive, particularly with respect to FCC licenses. For
goodwill, managements annual review process involved analyzing the key estimates and
assumptions used to determine the discounted cash flow calculations of estimated fair value for
Belo reporting units. Significant assumptions used in these estimates include projected
revenues and related growth rates over time and in perpetuity, forecasted operating margins,
estimated tax rates, capital expenditures, and required working capital needs, and an
appropriate risk-adjusted weighted-average cost of capital. For FCC licenses, managements
annual review process involved analyzing key estimates and assumptions used to determine the
discounted cash flow calculations of estimated fair value for Belos FCC licenses. Significant
assumptions include costs and time associated with start-up, initial capital investments, and
forecasts related to overall market performance over time. On a quarterly basis, management
reviews the fair value estimates and the inputs into those estimates for indicators of
impairment. Based on the Companys review, management believes that the fair values of its
reporting units and indefinite-lived intangible assets exceed their carrying amounts at June 30,
2010; therefore, no adjustment to goodwill or indefinite-lived intangible assets is necessary.
(6) | At June 30, 2010, Belo had $885,669 in fixed-rate debt securities as follows: $175,568 of 63/4% Senior Notes due 2013; $270,101 of 8% Senior Notes due 2016; $200,000 of 73/4% Senior Debentures due 2027; and $240,000 of 71/4% Senior Debentures due 2027. The weighted average effective interest rate for the fixed-rate debt instruments is 7.5%. |
At June 30, 2010, Belo also had variable-rate debt under a credit agreement (Amended 2009 Credit
Agreement). The Company is required to maintain certain leverage and interest ratios specified
in the agreement. The leverage ratio is generally defined as the ratio of total debt to cash
flow and the senior leverage ratio is generally defined as the ratio of the debt under the
credit facility to cash flow. The interest coverage ratio is generally defined as the ratio of
interest expense to cash flow. At June 30, 2010, the Companys leverage ratio was 4.7, its
interest coverage ratio was 2.9 and its senior leverage ratio was 0.5. As of June 30, 2010, the
balance outstanding under the Amended 2009 Credit Agreement was $104,000, the weighted average
interest rate was 3.6 percent, and all unused borrowings were available for borrowing. At June
30, 2010, the Company was in compliance with all debt covenant requirements.
6
Table of Contents
At June 30, 2010, the fair value of Belos 63/4% Senior Notes due May 30, 2013, 8% Senior Notes
due November 15, 2016, 73/4% Senior Debentures due June 1, 2027, and 71/4% Senior Debentures due
September 15, 2027, was estimated to be $177,244, $283,745, $162,400, and $210,600,
respectively. The fair value is estimated using quoted market prices and yields obtained
through independent pricing sources, taking into
consideration the underlying terms of the debt, such as the coupon rate and term to maturity
(Level 1 inputs). The Company believes the credit facility, as recorded, approximates fair
value as the interest rates are variable based on current market rates.
(7) | In November 2009, the Company issued Senior Notes that are fully and unconditionally guaranteed by each of the Companys 100%-owned subsidiaries as of the date of issuance. Accordingly, the following condensed consolidating financial statements present the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows of Belo as parent, the guarantor subsidiaries consisting of Belos current 100%-owned subsidiaries, and eliminations necessary to arrive at the Companys information on a consolidated basis. These statements are presented in accordance with the disclosure requirements under Securities and Exchange Commission Regulation S-X, Rule 3-10. |
Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 2010
(in thousands)(unaudited)
For the Three Months Ended June 30, 2010
(in thousands)(unaudited)
Guarantor | ||||||||||||||||
Parent | Subsidiaries | Eliminations | Total | |||||||||||||
Net Operating Revenues |
$ | | $ | 162,982 | $ | | $ | 162,982 | ||||||||
Operating Costs and Expenses |
||||||||||||||||
Station salaries, wages and employee benefits |
| 51,911 | | 51,911 | ||||||||||||
Station programming and other operating costs |
| 47,015 | | 47,015 | ||||||||||||
Corporate operating costs |
6,700 | 1,155 | | 7,855 | ||||||||||||
Pension contribution reimbursement |
(4,200 | ) | | | (4,200 | ) | ||||||||||
Depreciation |
460 | 8,310 | | 8,770 | ||||||||||||
Total operating costs and expenses |
2,960 | 108,391 | | 111,351 | ||||||||||||
Earnings (loss) from operations |
(2,960 | ) | 54,591 | | 51,631 | |||||||||||
Other Income and (Expense) |
||||||||||||||||
Interest expense |
(19,785 | ) | (30 | ) | | (19,815 | ) | |||||||||
Intercompany interest |
1,703 | (1,703 | ) | | | |||||||||||
Other income (expense), net |
(47 | ) | 422 | | 375 | |||||||||||
Total other income and (expense) |
(18,129 | ) | (1,311 | ) | | (19,440 | ) | |||||||||
Earnings (loss) before income taxes |
(21,089 | ) | 53,280 | | 32,191 | |||||||||||
Income tax benefit (expense) |
16,185 | (28,851 | ) | | (12,666 | ) | ||||||||||
Equity in earnings (loss) of subsidiaries |
24,429 | | (24,429 | ) | | |||||||||||
Net earnings (loss) |
$ | 19,525 | $ | 24,429 | $ | (24,429 | ) | $ | 19,525 | |||||||
7
Table of Contents
Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 2009
(in thousands)(unaudited)
For the Three Months Ended June 30, 2009
(in thousands)(unaudited)
Guarantor | ||||||||||||||||
Parent | Subsidiaries | Eliminations | Total | |||||||||||||
Net Operating Revenues |
$ | | $ | 144,770 | $ | | $ | 144,770 | ||||||||
Operating Costs and Expenses |
||||||||||||||||
Station salaries, wages and employee benefits |
| 45,536 | | 45,536 | ||||||||||||
Station programming and other operating costs |
| 49,219 | | 49,219 | ||||||||||||
Corporate operating costs |
4,907 | 292 | | 5,199 | ||||||||||||
Depreciation |
784 | 9,183 | | 9,967 | ||||||||||||
Total operating costs and expenses |
5,691 | 104,230 | | 109,921 | ||||||||||||
Earnings (loss) from operations |
(5,691 | ) | 40,540 | | 34,849 | |||||||||||
Other Income and (Expense) |
||||||||||||||||
Interest expense |
(15,296 | ) | (36 | ) | | (15,332 | ) | |||||||||
Intercompany interest |
1,704 | (1,704 | ) | | | |||||||||||
Other expense, net |
(685 | ) | (2,120 | ) | | (2,805 | ) | |||||||||
Total other income and (expense) |
(14,277 | ) | (3,860 | ) | | (18,137 | ) | |||||||||
Earnings (loss) before income taxes |
(19,968 | ) | 36,680 | | 16,712 | |||||||||||
Income tax benefit (expense) |
8,336 | (14,753 | ) | | (6,417 | ) | ||||||||||
Equity in earnings (loss) of subsidiaries |
21,927 | | (21,927 | ) | | |||||||||||
Net earnings (loss) |
$ | 10,295 | $ | 21,927 | $ | (21,927 | ) | $ | 10,295 | |||||||
8
Table of Contents
Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 2010
(in thousands)(unaudited)
For the Six Months Ended June 30, 2010
(in thousands)(unaudited)
Guarantor | ||||||||||||||||
Parent | Subsidiaries | Eliminations | Total | |||||||||||||
Net Operating Revenues |
$ | | $ | 317,314 | $ | | $ | 317,314 | ||||||||
Operating Costs and Expenses |
||||||||||||||||
Station salaries, wages and employee benefits |
| 103,135 | | 103,135 | ||||||||||||
Station programming and other operating costs |
| 92,646 | | 92,646 | ||||||||||||
Corporate operating costs |
15,484 | 1,980 | | 17,464 | ||||||||||||
Pension contribution reimbursement |
(8,272 | ) | | | (8,272 | ) | ||||||||||
Depreciation |
1,071 | 16,942 | | 18,013 | ||||||||||||
Total operating costs and expenses |
8,283 | 214,703 | | 222,986 | ||||||||||||
Earnings (loss) from operations |
(8,283 | ) | 102,611 | | 94,328 | |||||||||||
Other Income and (Expense) |
||||||||||||||||
Interest expense |
(39,640 | ) | (63 | ) | | (39,703 | ) | |||||||||
Intercompany interest |
3,406 | (3,406 | ) | | | |||||||||||
Other income (expense), net |
(214 | ) | 322 | | 108 | |||||||||||
Total other income and (expense) |
(36,448 | ) | (3,147 | ) | | (39,595 | ) | |||||||||
Earnings (loss) before income taxes |
(44,731 | ) | 99,464 | | 54,733 | |||||||||||
Income tax benefit (expense) |
26,305 | (47,971 | ) | | (21,666 | ) | ||||||||||
Equity in earnings (loss) of subsidiaries |
51,493 | | (51,493 | ) | | |||||||||||
Net earnings (loss) |
$ | 33,067 | $ | 51,493 | $ | (51,493 | ) | $ | 33,067 | |||||||
9
Table of Contents
Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 2009
(in thousands)(unaudited)
For the Six Months Ended June 30, 2009
(in thousands)(unaudited)
Guarantor | ||||||||||||||||
Parent | Subsidiaries | Eliminations | Total | |||||||||||||
Net Operating Revenues |
$ | | $ | 278,306 | $ | | $ | 278,306 | ||||||||
Operating Costs and Expenses |
||||||||||||||||
Station salaries, wages and employee benefits |
| 98,209 | | 98,209 | ||||||||||||
Station programming and other operating costs |
| 97,584 | | 97,584 | ||||||||||||
Corporate operating costs |
13,158 | 990 | | 14,148 | ||||||||||||
Depreciation |
2,126 | 18,633 | | 20,759 | ||||||||||||
Total operating costs and expenses |
15,284 | 215,416 | | 230,700 | ||||||||||||
Earnings (loss) from operations |
(15,284 | ) | 62,890 | | 47,606 | |||||||||||
Other Income and (Expense) |
||||||||||||||||
Interest expense |
(29,836 | ) | (76 | ) | | (29,912 | ) | |||||||||
Intercompany interest |
3,407 | (3,407 | ) | | | |||||||||||
Other income (expense), net |
13,957 | (393 | ) | | 13,564 | |||||||||||
Total other income and (expense) |
(12,472 | ) | (3,876 | ) | | (16,348 | ) | |||||||||
Earnings (loss) before income taxes |
(27,756 | ) | 59,014 | | 31,258 | |||||||||||
Income tax benefit (expense) |
12,014 | (24,066 | ) | | (12,052 | ) | ||||||||||
Equity in earnings (loss) of subsidiaries |
34,948 | | (34,948 | ) | | |||||||||||
Net earnings (loss) |
$ | 19,206 | $ | 34,948 | $ | (34,948 | ) | $ | 19,206 | |||||||
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Condensed Consolidating Balance Sheet
As of June 30, 2010
(in thousands)(unaudited)
As of June 30, 2010
(in thousands)(unaudited)
Guarantor | ||||||||||||||||
Parent | Subsidiaries | Eliminations | Total | |||||||||||||
Assets |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and temporary cash investments |
$ | 5,347 | $ | 1,536 | $ | | $ | 6,883 | ||||||||
Accounts receivable, net |
154 | 136,132 | | 136,286 | ||||||||||||
Other current assets |
8,949 | 19,027 | | 27,976 | ||||||||||||
Total current assets |
14,450 | 156,695 | | 171,145 | ||||||||||||
Property, plant and equipment, net |
3,953 | 168,856 | | 172,809 | ||||||||||||
Intangible assets, net |
| 725,399 | | 725,399 | ||||||||||||
Goodwill, net |
| 423,873 | | 423,873 | ||||||||||||
Deferred income taxes |
72,598 | | (72,598 | ) | | |||||||||||
Intercompany receivable |
294,214 | | (294,214 | ) | | |||||||||||
Investment in subsidiaries |
900,755 | | (900,755 | ) | | |||||||||||
Other assets |
45,427 | 27,706 | | 73,133 | ||||||||||||
Total assets |
$ | 1,331,397 | $ | 1,502,529 | $ | (1,267,567 | ) | $ | 1,566,359 | |||||||
Liabilities and Shareholders Equity |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Accounts payable |
$ | 7,874 | $ | 9,290 | $ | | $ | 17,164 | ||||||||
Accrued expenses |
16,355 | 28,303 | | 44,658 | ||||||||||||
Short-term pension obligation |
16,363 | | | 16,363 | ||||||||||||
Income taxes payable |
4,044 | | | 4,044 | ||||||||||||
Deferred revenue |
| 3,639 | | 3,639 | ||||||||||||
Accrued interest payable |
10,627 | | | 10,627 | ||||||||||||
Total current liabilities |
55,263 | 41,232 | | 96,495 | ||||||||||||
Long-term debt |
989,669 | | | 989,669 | ||||||||||||
Deferred income taxes |
| 256,099 | (72,598 | ) | 183,501 | |||||||||||
Pension obligation |
168,826 | | | 168,826 | ||||||||||||
Intercompany payable |
| 294,214 | (294,214 | ) | | |||||||||||
Other liabilities |
10,158 | 10,229 | | 20,387 | ||||||||||||
Total shareholders equity |
107,481 | 900,755 | (900,755 | ) | 107,481 | |||||||||||
Total liabilities and shareholders equity |
$ | 1,331,397 | $ | 1,502,529 | $ | (1,267,567 | ) | $ | 1,566,359 | |||||||
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Condensed Consolidating Balance Sheet
As of December 31, 2009
(in thousands)
As of December 31, 2009
(in thousands)
Guarantor | ||||||||||||||||
Parent | Subsidiaries | Eliminations | Total | |||||||||||||
Assets |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and temporary cash investments |
$ | 3,646 | $ | 1,154 | $ | | $ | 4,800 | ||||||||
Accounts receivable, net |
361 | 139,550 | | 139,911 | ||||||||||||
Other current assets |
11,193 | 20,220 | | 31,413 | ||||||||||||
Total current assets |
15,200 | 160,924 | | 176,124 | ||||||||||||
Property, plant and equipment, net |
4,655 | 172,820 | | 177,475 | ||||||||||||
Intangible assets, net |
| 725,399 | | 725,399 | ||||||||||||
Goodwill, net |
| 423,873 | | 423,873 | ||||||||||||
Deferred income taxes |
77,210 | | (77,210 | ) | | |||||||||||
Intercompany receivable |
431,275 | | (431,275 | ) | | |||||||||||
Investment in subsidiaries |
782,606 | | (782,606 | ) | | |||||||||||
Other assets |
51,594 | 29,996 | | 81,590 | ||||||||||||
Total assets |
$ | 1,362,540 | $ | 1,513,012 | $ | (1,291,091 | ) | $ | 1,584,461 | |||||||
Liabilities and Shareholders Equity |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Accounts payable |
$ | 10,882 | $ | 9,854 | $ | | $ | 20,736 | ||||||||
Accrued expenses |
17,181 | 24,741 | | 41,922 | ||||||||||||
Short-term pension obligation |
14,277 | | | 14,277 | ||||||||||||
Income taxes payable |
12,052 | | | 12,052 | ||||||||||||
Deferred revenue |
| 4,228 | | 4,228 | ||||||||||||
Accrued interest payable |
10,682 | | | 10,682 | ||||||||||||
Total current liabilities |
65,074 | 38,823 | | 103,897 | ||||||||||||
Long-term debt |
1,028,219 | | | 1,028,219 | ||||||||||||
Deferred income taxes |
| 247,098 | (77,210 | ) | 169,888 | |||||||||||
Pension obligation |
182,065 | | | 182,065 | ||||||||||||
Intercompany payable |
| 431,275 | (431,275 | ) | | |||||||||||
Other liabilities |
15,351 | 13,210 | | 28,561 | ||||||||||||
Total shareholders equity |
71,831 | 782,606 | (782,606 | ) | 71,831 | |||||||||||
Total liabilities and shareholders equity |
$ | 1,362,540 | $ | 1,513,012 | (1,291,091 | ) | $ | 1,584,461 | ||||||||
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Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2010
(in thousands)(unaudited)
For the Six Months Ended June 30, 2010
(in thousands)(unaudited)
Guarantor | ||||||||||||
Parent | Subsidiaries | Total | ||||||||||
Operations |
||||||||||||
Net cash provided by (used for) operations |
$ | (77,043 | ) | $ | 124,501 | $ | 47,458 | |||||
Investments |
||||||||||||
Capital expenditures |
(474 | ) | (5,993 | ) | (6,467 | ) | ||||||
Other, net |
| 23 | 23 | |||||||||
Net cash used for investments |
(474 | ) | (5,970 | ) | (6,444 | ) | ||||||
Financing |
||||||||||||
Net proceeds from revolving debt |
38,000 | | 38,000 | |||||||||
Payments on revolving debt |
(77,000 | ) | | (77,000 | ) | |||||||
Net proceeds from exercise of stock options |
33 | | 33 | |||||||||
Excess tax benefit from option exercises |
36 | | 36 | |||||||||
Intercompany activity |
118,149 | (118,149 | ) | | ||||||||
Net cash provided by (used for) financing activities |
79,218 | (118,149 | ) | (38,931 | ) | |||||||
Net increase in cash and temporary
cash investments |
1,701 | 382 | 2,083 | |||||||||
Cash and temporary cash investments at beginning
of period |
3,646 | 1,154 | 4,800 | |||||||||
Cash and temporary cash investments at end
of period |
$ | 5,347 | $ | 1,536 | $ | 6,883 | ||||||
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Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2009
(in thousands)(unaudited)
For the Six Months Ended June 30, 2009
(in thousands)(unaudited)
Guarantor | ||||||||||||
Parent | Subsidiaries | Total | ||||||||||
Operations |
||||||||||||
Net cash provided by (used for) operations |
$ | (49,826 | ) | $ | 69,185 | $ | 19,359 | |||||
Investments |
||||||||||||
Capital expenditures |
(240 | ) | (2,565 | ) | (2,805 | ) | ||||||
Other, net |
1,814 | 3,574 | 5,388 | |||||||||
Net cash provided by investments |
1,574 | 1,009 | 2,583 | |||||||||
Financing |
||||||||||||
Net proceeds from revolving debt |
83,100 | | 83,100 | |||||||||
Payments on revolving debt |
(66,100 | ) | | (66,100 | ) | |||||||
Purchase of senior notes |
(25,260 | ) | | (25,260 | ) | |||||||
Payment of dividends on common stock |
(15,375 | ) | | (15,375 | ) | |||||||
Intercompany activity |
70,366 | (70,366 | ) | | ||||||||
Net cash provided by (used for) financing activities |
46,731 | (70,366 | ) | (23,635 | ) | |||||||
Net decrease in cash and temporary cash investments |
(1,521 | ) | (172 | ) | (1,693 | ) | ||||||
Cash and temporary cash investments at beginning
of period |
4,592 | 1,178 | 5,770 | |||||||||
Cash and temporary cash investments at end
of period |
$ | 3,071 | $ | 1,006 | $ | 4,077 | ||||||
(8) | Belo has a long-term incentive plan under which awards may be granted to employees and outside directors in the form of non-qualified stock options, incentive stock options, restricted shares, restricted stock units (RSU), performance shares, performance units and stock appreciation rights. In addition, options may be accompanied by stock appreciation rights and limited stock appreciation rights. Rights and limited rights may also be issued without accompanying options. Cash-based bonus awards are also available under the plan. |
Share-based compensation cost for awards to Belos employees and non-employee directors was $667 and $3,599, for the three and six months ended June 30, 2010. Share-based compensation cost for awards to Belos employees and non-employee directors was $1,060 and $1,733 for the three and six months ended June 30, 2009. No compensation cost is recognized related to options issued by Belo but held by employees and non-employee directors of A. H. Belo. |
(9) | The net periodic pension cost (benefit) for the three and six months ended June 30, 2010 and 2009, includes the following components: |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Interest cost on projected benefit obligation |
$ | 8,163 | $ | 8,304 | $ | 16,326 | $ | 16,608 | ||||||||
Expected return on assets |
(7,945 | ) | (8,673 | ) | (15,890 | ) | (17,328 | ) | ||||||||
Amortization of net loss |
1,099 | (619 | ) | 2,198 | 732 | |||||||||||
Net periodic pension cost (benefit) |
$ | 1,317 | $ | (988 | ) | $ | 2,634 | $ | 12 | |||||||
Belos current funding policy is to contribute annually to the Pension Plan amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws, but not in excess of the maximum tax-deductible contribution. The Company expects to make contributions totaling $14,277 to the Pension Plan in 2010. A. H. Belo is required to reimburse the Company for 60 percent of each contribution the Company makes to the Pension Plan. Assuming contributions of $14,277 are made to the Pension Plan in 2010, the amount of reimbursement the Company will receive from A. H. Belo will be $8,566. For the three and six months ended June 30, 2010, the Company made Pension Plan contributions of $7,000 and $13,787, respectively, and received reimbursements from A. H. Belo of $4,200 and $8,272, respectively. Pension contribution reimbursements received are classified as a credit to operating costs and expenses in the consolidated statement of operations. The Company made no contributions to the Pension Plan during 2009. No plan assets are expected to be returned to the Company during the fiscal year ending December 31, 2010. |
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(10) | Under the terms of the separation and distribution agreement between the Company and A. H. Belo, A. H. Belo has agreed to indemnify the Company for any liability arising out of the lawsuits described in the following two paragraphs. |
On October 24, 2006, 18 former employees of The Dallas Morning News filed a lawsuit against The Dallas Morning News, the Company, and others in the United States District Court for the Northern District of Texas. The plaintiffs lawsuit mainly consists of claims of unlawful discrimination and ERISA violations. In June 2007, the court issued a memorandum order granting in part and denying in part defendants motion to dismiss. In August 2007 and March 2009, the court dismissed certain additional claims. A trial date is set for March or April 2011. The Company believes the lawsuit is without merit and is vigorously defending against it. |
On April 13, 2009, four former independent contractor newspaper carriers of The Press-Enterprise, on behalf of themselves and other similarly situated individuals, filed a purported class-action lawsuit against A. H. Belo, Belo, Press Enterprise Company, and as yet unidentified defendants in the Superior Court of the State of California, County of Riverside. The complaint alleges that the defendants violated California laws by allegedly improperly categorizing the plaintiffs and the purported class members as independent contractors rather than employees, and in doing so, allegedly failed to pay minimum, hourly and overtime wages to the purported class members and allegedly failed to comply with other laws and regulations applicable to an employer-employee relationship. Plaintiffs and purported class members are seeking minimum wages, unpaid regular and overtime wages, unpaid rest break and meal period compensation, reimbursement of expenses and losses incurred by them in discharging their duties, payment of minimum wage to all employees who failed to receive minimum wage for all hours worked in each payroll period, penalties, injunctive and other equitable relief, and reasonable attorneys fees and costs. On May 5, 2010, A. H. Belo and the other parties to the lawsuit reached a preliminary agreement to settle the lawsuit, subject to Court approval. The parties have agreed to cooperate and take all steps necessary and appropriate to obtain preliminary and final approval of the settlement, to effectuate its terms, and to record the satisfaction of judgment with the Court. As previously noted, A. H. Belo has agreed to indemnify the Company for any liability arising out of this lawsuit; no payment is required of the Company. |
In addition to the proceedings disclosed above, a number of other legal proceedings are pending against the Company, including several actions for alleged libel and/or defamation. In the opinion of management, liabilities, if any, arising from these other legal proceedings would not have a material adverse effect on the consolidated results of operations, liquidity or financial position of the Company. |
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands, except per share amounts) |
The following information should be read in conjunction with the Companys Consolidated
Condensed Financial Statements and related Notes filed as part of this report.
Overview
Belo Corp. (Belo or the Company), a Delaware corporation, began as a Texas newspaper company in
1842 and today is one of the nations largest publicly-traded pure-play television companies. The
Company owns 20 television stations (nine in the top 25 U.S. markets) that reach 14 percent of U.S.
television households, including ABC, CBS, NBC, FOX and CW affiliates, and their associated Web
sites, in 15 highly-attractive markets across the United States. The Company owns two local and
two regional cable news channels and holds ownership interests in two others. At December 31,
2009, the Company managed one television station through a local marketing agreement (LMA) which
expired on April 24, 2010.
The Company believes the success of its media franchises is built upon providing the highest
quality local and regional news, entertainment programming and service to the communities in which
they operate. These principles have built relationships with viewers, readers, advertisers and
online users and have guided Belos success.
15
Table of Contents
The following table sets forth the Companys major media assets as of June 30, 2010:
Number of | Station | |||||||||||||||||||||||||||||||
Station/ | Year Belo | Commercial | Station | Audience | ||||||||||||||||||||||||||||
Market | News | Acquired/ | Network | Stations in | Rank in | Share in | ||||||||||||||||||||||||||
Market | Rank(1) | Channel | Started | Affiliation | Channel | Market(2) | Market(3) | Market(4) | ||||||||||||||||||||||||
Dallas/Fort Worth |
5 | WFAA | 1950 | ABC | 8 | 16 | 1 | 7 | ||||||||||||||||||||||||
Dallas/Fort Worth |
5 | TXCN | 1999 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
Houston |
10 | KHOU | 1984 | CBS | 11 | 15 | 2 | 8 | ||||||||||||||||||||||||
Phoenix |
12 | KTVK | 1999 | IND | 3 | 13 | 5 | * | 4 | |||||||||||||||||||||||
Phoenix |
12 | KASW | 2000 | CW | 61 | 13 | 7 | * | 2 | |||||||||||||||||||||||
Seattle/Tacoma |
13 | KING | 1997 | NBC | 5 | 13 | 1 | * | 9 | |||||||||||||||||||||||
Seattle/Tacoma |
13 | KONG | 2000 | IND | 16 | 13 | 5 | * | 2 | |||||||||||||||||||||||
Seattle/Tacoma |
13 | NWCN | 1997 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
St. Louis |
21 | KMOV | 1997 | CBS | 4 | 8 | 2 | 10 | ||||||||||||||||||||||||
Portland(5) |
22 | KGW | 1997 | NBC | 8 | 8 | 2 | 8 | ||||||||||||||||||||||||
Charlotte |
24 | WCNC | 1997 | NBC | 36 | 8 | 3 | 6 | ||||||||||||||||||||||||
San Antonio |
37 | KENS | 1997 | CBS | 5 | 10 | 2 | 7 | ||||||||||||||||||||||||
Hampton/Norfolk |
43 | WVEC | 1984 | ABC | 13 | 8 | 1 | 10 | ||||||||||||||||||||||||
Austin |
48 | KVUE | 1999 | ABC | 24 | 7 | 1 | 9 | ||||||||||||||||||||||||
Louisville |
49 | WHAS | 1997 | ABC | 11 | 7 | 1 | * | 10 | |||||||||||||||||||||||
New Orleans(6) |
51 | WWL | 1994 | CBS | 4 | 8 | 1 | 14 | ||||||||||||||||||||||||
New Orleans(7) |
51 | WUPL | 2007 | IND | 54 | 9 | 6 | 1 | ||||||||||||||||||||||||
Tucson |
66 | KMSB | 1997 | FOX | 11 | 9 | 4 | 4 | ||||||||||||||||||||||||
Tucson |
66 | KTTU | 2002 | IND | 18 | 9 | 6 | 2 | ||||||||||||||||||||||||
Spokane |
75 | KREM | 1997 | CBS | 2 | 7 | 1 | 13 | ||||||||||||||||||||||||
Spokane |
75 | KSKN | 2001 | CW | 22 | 7 | 5 | 2 | ||||||||||||||||||||||||
Boise(8)(9) |
112 | KTVB | 1997 | NBC | 7 | 5 | 1 | 19 |
(1) | Market rank is based on the relative size of the television market Designated Market Area (DMA), among the 210 DMAs generally recognized in the United States, based on the September 2009 Nielsen Media Research report. | |
(2) | Represents the number of commercial television stations (both VHF and UHF) broadcasting in the market, excluding public stations, low power broadcast stations and cable channels. | |
(3) | Station rank is derived from the stations rating, which is based on the May 2010 Nielsen Media Research report of the number of television households tuned to the Companys station for the Sunday-Saturday 5:00 a.m. to 2:00 a.m. period (sign-on/sign-off) as a percentage of the number of television households in the market. | |
(4) | Station audience share is based on the May 2010 Nielsen Media Research report of the number of television households tuned to the station as a percentage of the number of television households with sets in use in the market for the sign-on/sign-off period. | |
(5) | The Company also owns KGWZ-LD, a low power television station in Portland, Oregon. | |
(6) | WWL also produces NewsWatch on Channel 15, a 24-hour daily local news and weather cable channel. | |
(7) | The Company also owns WBXN-CA, a Class A television station in New Orleans, Louisiana. | |
(8) | The Company also owns KTFT-LD (NBC), a low power television station in Twin Falls, Idaho. | |
(9) | Using its digital multicast capabilities, KTVB operates 24/7 Local News Channel, a 24-hour daily local news and weather channel. | |
* | Tied with one or more other stations in the market. |
The Company intends for the discussion of its financial condition and results of operations
that follows to provide information that will assist in understanding the Companys financial
statements, the changes in certain key items in those statements from period to period and the
primary factors that accounted for those changes, as well as how certain accounting principles,
policies and estimates affect the Companys financial statements.
The Company has network affiliation agreements with ABC, CBS, NBC, FOX, and CW. The Companys
affiliation agreement with ABC initially expired at the end of 2009, has been extended pursuant to
short-term extensions and is currently under renegotiation. In addition, the Company has begun
negotiations for the renewal of the CBS affiliation agreement in San Antonio; that agreement
expires in September 2010. The Company expects modifications to the existing agreements and such
modifications to include cash payments by the Company.
Generally, a substantial majority of the Companys revenues are generated from the sale of local,
regional and national advertising. Advertisers generally reduce their advertising spending during
economic downturns, which was seen throughout the prior year. Advertising conditions improved late
in 2009 and have strengthened further through the second quarter of 2010. The Olympics, the Super
Bowl, increased political revenues and improved advertising conditions across a number of
categories, particularly automotive, combined to contribute to better pricing and higher margins in
the first half of 2010 as compared to the first half of 2009. Additional discussion regarding the
Companys results of operations for the three and six months ended June 30, 2010 as compared to the
three and six months ended June 30, 2009 is provided below.
16
Table of Contents
Results of Operations
(Dollars in thousands)
(Dollars in thousands)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
Percentage | Percentage | |||||||||||||||||||||||
2010 | Change | 2009 | 2010 | Change | 2009 | |||||||||||||||||||
Net operating revenues |
$ | 162,982 | 12.6 | % | $ | 144,770 | $ | 317,314 | 14.0 | % | $ | 278,306 | ||||||||||||
Operating costs and expenses |
111,351 | 1.3 | % | 109,921 | 222,986 | (3.3 | %) | 230,700 | ||||||||||||||||
Earnings from operations |
51,631 | 48.2 | % | 34,849 | 94,328 | 98.1 | % | 47,606 | ||||||||||||||||
Other income (expense) |
(19,440 | ) | 7.2 | % | (18,137 | ) | (39,595 | ) | 142.2 | % | (16,348 | ) | ||||||||||||
Earnings from operations
before income taxes |
32,191 | 92.6 | % | 16,712 | 54,733 | 75.1 | % | 31,258 | ||||||||||||||||
Income taxes |
(12,666 | ) | 97.4 | % | (6,417 | ) | (21,666 | ) | 79.8 | % | (12,052 | ) | ||||||||||||
Net earnings |
$ | 19,525 | 89.7 | % | $ | 10,295 | $ | 33,067 | 72.2 | % | $ | 19,206 | ||||||||||||
Net Operating Revenues
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
Percentage | Percentage | |||||||||||||||||||||||
2010 | Change | 2009 | 2010 | Change | 2009 | |||||||||||||||||||
Non-political advertising |
$ | 143,232 | 13.7 | % | $ | 125,937 | $ | 274,765 | 12.7 | % | $ | 243,723 | ||||||||||||
Political advertising |
2,529 | 34.9 | % | 1,875 | 8,783 | 248.5 | % | 2,520 | ||||||||||||||||
Other |
17,221 | 1.6 | % | 16,958 | 33,766 | 5.3 | % | 32,063 | ||||||||||||||||
Net operating revenues |
$ | 162,982 | 12.6 | % | $ | 144,770 | $ | 317,314 | 14.0 | % | $ | 278,306 | ||||||||||||
Non-political advertising revenues increased $17,295, or 13.7 percent, in the three months ended
June 30, 2010, compared to the three months ended June 30, 2009. This increase is primarily due to
a $16,612, or 14.3 percent, increase in local and national spot revenue. Spot revenue increased
primarily in the automotive, retail, grocery, healthcare and home improvement categories. Internet
advertising revenues increased $968, or 13.6 percent. Political advertising revenues increased
$654 in the second quarter 2010 as compared with the second quarter 2009. Political revenues are
generally higher in even-numbered years than in odd-numbered years due to elections for various
state and national offices. Other revenues increased primarily due to increases in retransmission
revenues.
Non-political advertising revenues increased $31,042, or 12.7 percent, in the six months ended June
30, 2010, compared to the six months ended June 30, 2009. This increase is primarily due to a
$29,850, or 13.3 percent, increase in local and national spot revenue. Spot revenue increased
primarily in the automotive, grocery, retail, financial services and healthcare categories.
Internet advertising revenues increased $1,617, or 11.9 percent. Political advertising revenues
increased $6,263 in the six months ended June 30, 2010, compared with the six months ended June 30,
2009. Political revenues are generally higher in even-numbered years than in odd-numbered years
due to elections for various state and national offices.
Operating Costs and Expenses
Station salaries, wages and employee benefits increased $6,375, or 14.0 percent, in the three
months ended June 30, 2010, compared to the three months ended June 30, 2009. This increase is
primarily due to a 2009 credit for vacation accruals of $3,007 due to the Companys decision to
convert to a paid-time-off (PTO) vacation policy in the second quarter 2009, bonus accruals of
$1,528 in the second quarter 2010 compared to virtually no bonus expense in 2009, and increases in
pension and pension transition expenses of $1,571. Station programming and other operating costs
decreased $2,205, or 4.5 percent, in the three months ended June 30, 2010, compared to the three
months ended June 30, 2009, primarily related to a non-cash
expense reduction of $2,360 relating to
a 2005 Federal Communications Commission (FCC) decision that allowed a major wireless provider to
finance the replacement of analog newsgathering equipment with digital equipment in exchange for
stations vacating the analog spectrum earlier than required. Two Belo markets converted to this
digital equipment in the second quarter 2010 and only one Belo market converted in the second
quarter 2009. Corporate operating costs increased $2,657 in the second quarter 2010, primarily
related to an increase of $1,589 in pension and pension transition expenses and an increase of
$1,092 in bonus expense. Decreases in other corporate operating costs offset a $1,635 insurance
reimbursement recognized in the second quarter of 2009.
17
Table of Contents
Station salaries, wages and employee benefits increased $4,926, or 5.0 percent, in the six months
ended June 30, 2010, compared to the six months ended June 30, 2009. This increase is primarily
due to increases in bonus accruals of $3,339, a 2009 credit for vacation accruals of $2,979 due to
the second quarter 2009 decision to convert to a PTO vacation policy, a 2009 credit of $2,110 for self-insured medical costs, and increases in pension
and pension transition expenses of $2,482. These increases were partially offset by decreases in
severance costs of $2,517, 401(k) plan expense of $1,896 and salary expense of $1,566. Station
programming and other operating costs decreased $4,938 or 5.1 percent, primarily due to a non-cash
expense reduction of $4,381, relating to a 2005 Federal Communications Commission (FCC) decision
that allowed a major wireless provider to finance the replacement of analog newsgathering equipment
with digital equipment in exchange for stations vacating the analog spectrum earlier than required.
Six Belo markets converted to this digital equipment in the first half of 2010 and only two Belo
markets converted in the first half of 2009. Corporate operating costs increased $3,316 in the six
months ended June 30, 2010, primarily related to increases in bonus expense of $2,463, pension and
pension transition expenses of $1,848, and share-based compensation expense of $1,299. These
increases were partially offset by a decrease in technology related expenses of $2,149.
Belos current funding policy is to contribute annually to the Pension Plan amounts sufficient to
meet minimum funding requirements as set forth in employee benefit and tax laws, but not in excess
of the maximum tax-deductible contribution. A. H. Belo is required to reimburse the Company for 60
percent of each contribution the Company makes to the Pension Plan. For the three and six months
ended June 30, 2010, the Company made Pension Plan contributions of $7,000 and $13,787,
respectively, and received reimbursements from A. H. Belo of $4,200 and $8,272, respectively.
Pension contribution reimbursements received from A. H. Belo are classified as a credit to
operating costs and expenses in the consolidated statement of operations.
Other Income and (Expense)
Interest expense increased $4,483 and $9,791 in the three and six months ended June 30, 2010,
respectively, primarily due to increased interest costs associated with the issuance of $275,000 in
8% Senior Notes in November 2009, and the amortization of the discount and refinancing costs
associated with the note offering. These borrowings were previously included in the Companys
lower-rate revolving credit facility. Other income (expense), net increased $3,180 in the second
quarter 2010 compared to the second quarter 2009, due primarily to costs recognized in the second
quarter 2009 of $947 related to the relocation of the Companys bureau in Washington, DC, and a
$500 increase in an investment reserve. Other income (expense), net decreased $13,456 in the six
months ended June 30, 2010, primarily due to a $14,905 gain related to the Companys first quarter
2009 purchase of debt securities. The debt securities were purchased on the open market at a
discount. Additionally, in the first quarter 2009, the Company sold its interest in a Web site
joint venture for a gain of $1,616.
Income taxes increased $6,249, or 97.4 percent, for the three months ended June 30, 2010, compared
with the three months ended June 30, 2009, primarily due to higher taxable income in 2010 compared
to 2009. Income taxes increased $9,614, or 79.8 percent, for the six months ended June 30, 2010,
compared with the six months ended June 30, 2009, primarily due to higher taxable income in 2010
compared to 2009. For the six months ended June 30, 2010 and 2009, the Companys effective tax
rate was 39.6 percent and 38.6 percent, respectively.
Station EBITDA
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
Percentage | Percentage | |||||||||||||||||||||||
2010 | Change | 2009 | 2010 | Change | 2009 | |||||||||||||||||||
Station EBITDA |
$ | 64,056 | 28.1 | % | 50,015 | 121,533 | 47.3 | % | 82,513 | |||||||||||||||
Corporate operating costs and expenses |
(7,855 | ) | 51.1 | % | (5,199 | ) | (17,464 | ) | 23.4 | % | (14,148 | ) | ||||||||||||
Depreciation |
(8,770 | ) | (12.0 | %) | (9,967 | ) | (18,013 | ) | (13.2 | %) | (20,759 | ) | ||||||||||||
Pension contribution reimbursement |
4,200 | N/A | | 8,272 | N/A | | ||||||||||||||||||
Net earnings from operations |
$ | 51,631 | 48.2 | % | $ | 34,849 | $ | 94,328 | 98.1 | % | $ | 47,606 | ||||||||||||
18
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Belos 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 Companys earnings from operations before interest expense, income
taxes, depreciation, amortization, impairment charges, pension contribution reimbursement and
corporate operating costs and expenses. 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). Station
EBITDA is a common alternative measure of performance used by investors, financial analysts and
rating agencies to evaluate financial performance.
For the three months ended June 30, 2010, Station EBITDA increased $14,042, or 28.1 percent,
compared with the three months ended June 30, 2009. For the six months ended June 30, 2010,
Station EBITDA increased $39,020, or 47.3 percent, compared with the six months ended June 30,
2009. These increases were due to the revenue increases and expense reductions discussed above.
Liquidity and Capital Resources
Net cash provided by operating activities, bank borrowings and long-term debt are Belos primary
sources of liquidity.
Operating Cash Flows
Net cash provided by operations was $47,458 in the six months ended June 30, 2010, compared with
$19,359 in the six months ended June 30, 2009. The 2010 operating cash flows were primarily
provided by net earnings adjusted for non-cash charges and routine changes in working capital. The
2009 operating cash flows were primarily provided by net earnings adjusted for non-cash charges and
a decrease in accounts receivable, partially offset by cash used for routine changes in other
working capital items.
The Company made $13,787 in contributions to its Pension Plan during the six months ended June 30,
2010, and expects to make a total of $14,277 in contributions to its Pension Plan during the year
ended December 31, 2010. No pension contributions were made or required to be made in 2009. As
previously discussed, A. H. Belo is obligated to reimburse the Company for 60 percent of any
contributions the Company makes to its Pension Plan. Such reimbursements totaled $8,272 during the
six months ended June 30, 2010.
Investing Cash Flows
Net cash flows used for investing activities were $6,444 in the six months ended June 30, 2010,
compared to $2,583 provided by investing activities in the six months ended June 30, 2009. The
2010 investing cash flows were primarily used for capital expenditures and the 2009 cash flows were
primarily provided by the Companys sale of its interest in a Web site joint venture for a gain of
$1,616.
Capital Expenditures
Total capital expenditures were $6,467 in the first six months of 2010 compared with $2,805 in the
first six months of 2009.
Financing Cash Flows
Net cash flows used for financing activities were $38,931 in the six months ended June 30, 2010
compared with $23,635 in the six months ended June 30, 2009. The 2010 financing activity cash
flows consisted primarily of borrowings and repayments under the Companys revolving credit
facility. The 2009 financing activity cash flows consisted primarily of borrowings and repayments
under the Companys revolving credit facility, purchase of debt securities and dividends on common
stock.
19
Table of Contents
Long-Term Debt
At June 30, 2010, Belo had $885,669 in fixed-rate debt securities as follows: $175,568 of 63/4%
Senior Notes due 2013; $270,101 of 8% Senior Notes due 2016; $200,000 of 73/4% Senior Debentures due
2027; and $240,000 of 71/4% Senior Debentures due 2027. The weighted average effective interest rate
for the fixed-rate debt instruments is 7.5%.
At June 30, 2010, Belo also had variable-rate debt under a credit agreement (Amended 2009 Credit
Agreement). The Company is required to maintain certain leverage and interest ratios specified in
the agreement. The leverage ratio is generally defined as the ratio of total debt to cash flow and
the senior leverage ratio is generally defined as the ratio of the debt under the credit facility
to cash flow. The interest coverage ratio is generally defined as the ratio of interest expense to
cash flow. At June 30, 2010, the Companys leverage ratio was 4.7, its interest coverage ratio was
2.9 and its senior leverage ratio was 0.5. As of June 30, 2010, the balance outstanding under the
Amended 2009 Credit Agreement was $104,000, the weighted average interest rate was 3.6 percent, and all unused
borrowings were available for borrowing. At June 30, 2010, the Company was in compliance with all
debt covenant requirements.
Share Repurchase Program
The Company has a stock repurchase program pursuant to authorization from Belos Board of Directors
in December 2005. There is no expiration date for this repurchase program. The remaining
authorization for the repurchase of shares as of June 30, 2010, under this authority was 13,030,716
shares. During the first half of 2010, no shares were repurchased under this program. The Amended
2009 Credit Agreement, which became effective November 15, 2009, does not permit share repurchases.
Other
The Company has various sources available to meet its 2010 capital and operating commitments,
including cash on hand, short-term investments, internally-generated funds and a $460,750 revolving
credit facility.
Commitments under the credit facility reduce to $205,000 on June 7, 2011, unless voluntarily
reduced earlier by the Company with the consent of the lenders. The Company believes its resources are adequate to meet its foreseeable needs.
Recent Accounting Pronouncements
On January 1, 2010, the Company adopted the amendment to ASC 820-10, which expands fair value
disclosure requirements. These disclosures are effective for fiscal years beginning after December
15, 2009. This amendment affects disclosure requirements only and has no effect on the Companys
financial position or results of operations.
Forward-Looking Statements
Statements in this Form 10-Q concerning Belos 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 Companys spin-off
distribution of its newspaper businesses and related assets to A. H. Belo and the associated
agreements between the Company and A. H. Belo relating to various matters; changes in capital
market conditions and prospects, and other factors such as changes in advertising demand, interest
rates and programming and production costs; changes in viewership patterns and demography, and
actions by Nielsen; changes in the network-affiliate business model for broadcast television;
technological changes, and the development of new systems to distribute 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 Belos other public disclosures and filings with the Securities and Exchange Commission
(SEC), including the Annual Report on Form 10-K.
20
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Other than as disclosed, there have been no material changes in the Companys exposure to market
risk from the disclosure included in the Annual Report on Form 10-K for the fiscal year ended
December 31, 2009.
Item 4. Controls and Procedures
During the quarter ended June 30, 2010, there were no changes in the Companys internal control
over financial reporting that have materially affected, or are reasonably likely to materially
affect, Belos internal control over financial reporting.
The Company carried out an evaluation under the supervision and with the participation of the
Companys management, including the Companys president and Chief Executive Officer and senior vice
president/Chief Financial Officer, of the effectiveness of the Companys disclosure controls and
procedures, as of the end of the period covered by this report. Based upon that evaluation, the
president and Chief Executive Officer and senior vice president/Chief Financial Officer concluded
that, as of the end of the period covered by this report, the Companys disclosure controls and
procedures were effective such that information relating to the Company (including its consolidated
subsidiaries) required to be disclosed in the Companys SEC reports (i) is recorded, processed,
summarized and reported within the time periods specified in the SEC rules and forms and (ii) is
accumulated and communicated to the Companys management, including the president and Chief
Executive Officer and senior vice president/Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.
PART II.
Item 1. Legal Proceedings
In addition to the disclosure below and proceedings previously disclosed (see Note 10 to the
Consolidated Condensed Financial Statements in Part I, Item 1) for which there are no material
developments to report, a number of other legal proceedings are pending against the Company,
including several actions for alleged libel and/or defamation. In the opinion of management,
liabilities, if any, arising from these other legal proceedings would not have a material adverse
effect on the results of operations, liquidity or financial position of the Company.
Under the terms of the separation and distribution agreement between the Company and A. H. Belo, A.
H. Belo has agreed to indemnify the Company for any liability arising out of the lawsuit described
in the following paragraph.
On April 13, 2009, four former independent contractor newspaper carriers of The Press-Enterprise,
on behalf of themselves and other similarly situated individuals, filed a purported class-action
lawsuit against A. H. Belo, Belo, Press Enterprise Company, and as yet unidentified defendants in
the Superior Court of the State of California, County of Riverside. The complaint alleges that the
defendants violated California laws by allegedly improperly categorizing the plaintiffs and the
purported class members as independent contractors rather than employees, and in doing so,
allegedly failed to pay minimum, hourly and overtime wages to the purported class members and
allegedly failed to comply with other laws and regulations applicable to an employer-employee
relationship. Plaintiffs and purported class members are seeking minimum wages, unpaid regular and
overtime wages, unpaid rest break and meal period compensation, reimbursement of expenses and
losses incurred by them in discharging their duties, payment of minimum wage to all employees who
failed to receive minimum wage for all hours worked in each payroll period, penalties, injunctive
and other equitable relief, and reasonable attorneys fees and costs. On May 5, 2010, A. H. Belo
and the other parties to the lawsuit reached a preliminary agreement to settle the lawsuit, subject
to Court approval. The parties have agreed to cooperate and take all steps necessary and
appropriate to obtain preliminary and final approval of the settlement, to effectuate its terms,
and to record the satisfaction of judgment with the Court. As previously noted, A. H. Belo has
agreed to indemnify the Company for any liability arising out of this lawsuit; no payment is
required of the Company.
Item 1A. Risk Factors
There have been no material changes in the Companys risk factors from the disclosure included in
the Companys Annual Report on Form-10-K for the fiscal year ended December 31, 2009.
21
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There have been no unregistered sales of equity securities in the last three years.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Removed and Reserved |
Item 5. Other Information |
None.
Item 6. 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. All other documents are filed with this report. Exhibits marked with a tilde (~) are management contracts, compensatory plan contracts or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. |
Exhibit | ||||||||||
Number | Description | |||||||||
2.1 | * | Separation and Distribution Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of February 8, 2008 (Exhibit 2.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on February 12, 2008 (Securities and Exchange Commission File No. 001-08598)(the February 12, 2008 Form 8-K)) | ||||||||
3.1 | * | Certificate of Incorporation of the Company (Exhibit 3.1 to the Companys Annual Report on Form 10-K dated March 15, 2000 (Securities and Exchange Commission File No. 001-08598) (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 Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (Securities and Exchange Commission File No. 002-74702)(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 the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2000 (Securities and Exchange Commission File No. 001-08598)) |
22
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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 March 9, 2009 (Exhibit 3.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2009 (Securities and Exchange Commission File No. 001-08598)(the March 11, 2009 Form 8-K)) | ||||||||
4.1 | Certain rights of the holders of the Companys Common Stock are set forth in Exhibits 3.1-3.10 above | |||||||||
4.2 | * | Specimen Form of Certificate representing shares of the Companys Series A Common Stock (Exhibit 4.2 to the Companys Annual Report on Form 10-K dated March 13, 2001 (Securities and Exchange Commission File No. 001-08598)(the 2000 Form 10-K)) | ||||||||
4.3 | * | Specimen Form of Certificate representing shares of the Companys Series B Common Stock (Exhibit 4.3 to the 2000 Form 10-K) | ||||||||
4.4 | Instruments defining rights of debt securities: | |||||||||
(1) | * | Indenture dated as of June 1, 1997 between the Company and The Chase Manhattan Bank, as Trustee (the Indenture)(Exhibit 4.6(1) to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (Securities and Exchange Commission File No. 002-74702)(the 2nd Quarter 1997 Form 10-Q)) | ||||||||
(2) | * | $200 million 7-3/4% Senior Debenture due 2027 (Exhibit 4.6(4) to the 2nd Quarter 1997 Form 10-Q) | ||||||||
(3) | * | 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) | ||||||||
(4) | * | (a) | $200 million 7-1/4% Senior Debenture due 2027 (Exhibit
4.6(6)(a) to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 (Securities and Exchange Commission File No. 002-74702)(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) |
||||||||
(5) | * | 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) | ||||||||
(6) | * | Form of Belo Corp. 6-3/4% Senior Notes due 2013 (Exhibit 4.3 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on May 26, 2006 (Securities and Exchange Commission File No. 001-08598)(the May 26, 2006 Form 8-K)) | ||||||||
(7) | * | Officers Certificate dated May 26, 2006 establishing terms of debt securities pursuant to Section 3.1 of the Indenture (Exhibit 4.2 to the May 26, 2006 Form 8-K) | ||||||||
(8) | * | Underwriting Agreement Standard Provisions (Debt Securities), dated May 24, 2006 (Exhibit 1.1 to the May 26, 2006 Form 8-K) | ||||||||
(9) | * | Underwriting Agreement, dated May 24, 2006, between the Company, Banc of America Securities LLC and JPMorgan Securities, Inc. (Exhibit 1.2 to the May 26, 2006 Form 8-K) | ||||||||
(10) | * | Form of Belo Corp. 8% Senior Notes due 2016 (Exhibit 4.2 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on November 16, 2009 (Securities and Exchange Commission File No. 001-08598)(the November 16, 2009 Form 8-K)) | ||||||||
(11) | * | Supplemental Indenture, dated November 16, 2009 among the Company, the Guarantors of the Notes and The Bank of New York Mellon Trust Company, N.A., as Trustee (Exhibit 4.1 to the November 16, 2009 Form 8-K) |
23
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Exhibit | ||||||||||
Number | Description | |||||||||
(12) | * | Underwriting Agreement, dated November 10, 2009, between the Company, the Guarantors of the Notes and JPMorgan Securities, Inc. (Exhibit 1.1 to the November 16, 2009 Form 8-K) | ||||||||
10.1 | Financing agreements: | |||||||||
(1) | * | Amended and Restated Five-Year Competitive Advance and Revolving Credit Facility Agreement dated as of June 7, 2006 among the Company, as Borrower; JPMorgan Chase Bank, N.A., as Administrative Agent; J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers and Joint Bookrunners; Bank of America, N.A., as Syndication Agent; and SunTrust Bank, The Bank of New York, and BNP Paribas, as Documentation Agents; and Mizuho Corporate Bank, Ltd., as Co-Documentation Agent (Exhibit 10.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2006 (Securities and Exchange Commission File No. 001-08598)) | ||||||||
(2) | * | First Amendment dated as of February 4, 2008 to the Amended and Restated Five-Year Competitive Advance and Revolving Credit Facility Agreement dated as of June 7, 2006 among the Company and the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (Exhibit 99.1 to the Companys Current Report on Form 8-K filed with the Securities and Exchange Commission on February 5, 2008 (Securities and Exchange Commission File No. 001-08598)) | ||||||||
(3) | * | Second Amendment dated as of February 26, 2009 to the Amended and Restated Five-Year Competitive Advance and Revolving Credit Facility Agreement dated as of June 7, 2006 among the Company and the Lenders party thereto and JPMorgan Chase Bank, N.A. as Administrative Agent (Exhibit 10.1(3) to the Companys Annual Report on Form 10-K dated March 2, 2009 (Securities and Exchange Commission File No. 001-08598)(the 2008 Form 10-K)) | ||||||||
(4) | * | Guarantee Agreement dated as of February 26, 2009, among Belo Corp., the Subsidiaries of Belo Corp. identified therein and JPMorgan Chase Bank, N.A. (Exhibit 10.1(4) to the 2008 Form 10-K) | ||||||||
(5) | * | Amendment and Restatement Agreement, dated as of November 16, 2009 to Amended and Restated Five-Year Competitive Advance and Revolving Credit Facility Agreement, dated as of February 26, 2009, among the Company, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other parties thereto (Exhibit 10.1 to the November 16, 2009 Form 8-K) | ||||||||
(6) | * | Form of Supplement, dated as of November 16, 2009, to the Guarantee Agreement dated as of February 26, 2009, among the Company, the Subsidiaries of the Company from time to time part thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (Exhibit 10.2 to the November 16, 2009 Form 8-K) | ||||||||
10.2 | Compensatory plans: | |||||||||
~(1) | Belo Savings Plan: | |||||||||
* | (a) | Belo Savings Plan Amended and Restated effective
January 1, 2008 (Exhibit 99.1 to the Companys Current Report on Form 8-K
filed with the Securities and Exchange Commission on December 11, 2007
(Securities and Exchange Commission File No. 001-08598)(the December 11,
2007 Form 8-K)) |
||||||||
* | (b) | First Amendment to the Amended and Restated Belo
Savings Plan effective as of January 1, 2008 (Exhibit 10.2(1)(b) to the
Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2008
(Securities and Exchange Commission File No. 001-08598)) |
||||||||
* | (c) | Second Amendment to the Amended and Restated Belo
Savings Plan effective as of January 1, 2009 (Exhibit 10.2(1)(c) to the 2008
Form 10-K) |
||||||||
* | (d) | Third Amendment to the Amended and Restated Belo
Savings Plan effective as of April 12, 2009 (Exhibit 10.1 to the March 11,
2009 Form 8-K) |
||||||||
* | (e) | Fourth Amendment to the Amended and Restated Belo
Savings Plan effective as of September 10, 2009 (Exhibit 10.1 to the
Companys Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 10, 2009 (Securities and Exchange Commission File No
001-08598)) |
24
Table of Contents
Exhibit | ||||||||||
Number | Description | |||||||||
~(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 Companys Annual Report on Form 10-K dated March 10, 1997 (Securities
and Exchange Commission File No. 001-08598)(the 1996 Form 10-K)) |
||||||||
* | (b) | Amendment No. 6 to 1986 Long-Term Incentive Plan,
dated May 6, 1992 (Exhibit 10.3(2)(b) to the Companys Annual Report on
Form 10-K dated March 19, 1998 (Securities and Exchange Commission File No.
002-74702)(the 1997 Form 10-K)) |
||||||||
* | (c) | Amendment No. 7 to 1986 Long-Term Incentive Plan,
dated October 25, 1995 (Exhibit 10.2(2)(c) to the 1999 Form 10-K) |
||||||||
* | (d) | Amendment No. 8 to 1986 Long-Term Incentive Plan,
dated July 21, 1998 (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 10.2(3)(a) to the 2nd Quarter 1998
Form 10-Q) |
||||||||
* | (b) | Amendment to 1995 Executive Compensation Plan,
dated December 16, 1999 (Exhibit 10.2(3)(b) to the 1999 Form 10-K) |
||||||||
* | (c) | Amendment to 1995 Executive Compensation Plan,
dated December 5, 2003 (Exhibit 10.3(3)(c) to the Companys Annual Report
on Form 10-K dated March 4, 2004 (Securities and Exchange Commission File
No. 001-08598)(the 2003 Form 10-K)) |
||||||||
* | (d) | Form of Belo Executive Compensation Plan Award
Notification for Employee Awards (Exhibit 10.2(3)(d) to the Companys
Annual Report on Form 10-K dated March 6, 2006 (Securities and Exchange
Commission File No. 001-08598)(the 2005 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, 2004 (Exhibit 10.2(5)(a) to the
2003 Form 10-K) |
||||||||
* | (b) | Belo Supplemental Executive Retirement Plan As
Amended and Restated Effective January 1, 2007 (Exhibit 99.6 to the
December 11, 2007 Form 8-K) |
||||||||
* | (c) | Belo Supplemental Executive Retirement Plan As
Amended and Restated Effective January 1, 2008 (Exhibit 10.2(5)(c) to the
2008 Form 10-K) |
||||||||
~(6) | * | Belo Pension Transition Supplement Restoration Plan effective April 1, 2007 (Exhibit 99.5 to the December 11, 2007 Form 8-K) | ||||||||
* | (a) | First Amendment to the Belo Pension Transition
Supplement Restoration Plan, dated May 12, 2009 (Exhibit 10.1 to the
Companys Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 14, 2009 (Securities and Exchange Commission File No.
001-08598)) |
||||||||
* | (b) | Second Amendment to the Belo Pension Transition
Supplement Restoration Plan, dated March 5, 2010 (Exhibit 10.1 to the
Companys Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 8, 2010 (Securities and Exchange Commission file No.
001-08598)) |
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Exhibit | ||||||||||
Number | Description | |||||||||
~(7) | * | Belo 2000 Executive Compensation Plan (Exhibit 4.15 to the Companys Registration Statement on Form S-8 filed with the Securities and Exchange Commission on August 4, 2000 (Securities and Exchange Commission File No. 333-43056)) | ||||||||
* | (a) | First Amendment to Belo 2000 Executive Compensation
Plan effective as of December 31, 2000 (Exhibit 10.2(6)(a) to the Companys
Annual Report on Form 10-K dated March 12, 2003 (Securities and Exchange
Commission File No. 001-08598 (the 2002 Form 10-K)) |
||||||||
* | (b) | Second Amendment to Belo 2000 Executive
Compensation Plan dated December 5, 2002 (Exhibit 10.2(6)(b) to the 2002
Form 10-K) |
||||||||
* | (c) | Third Amendment to Belo 2000 Executive Compensation
Plan dated December 5, 2003 (Exhibit 10.2(6)(c) to the 2003 Form 10-K) |
||||||||
* | (d) | Form of Belo Executive Compensation Plan Award
Notification for Employee Awards (Exhibit 10.2(6)(d) to the 2005 Form 10-K) |
||||||||
~(8) | * | Belo Amended and Restated 2004 Executive Compensation Plan (Exhibit 10.2(8) to the Companys Annual Report on Form 10-K dated March 12, 2010(Securities and Exchange Commission File No. 001-08598)(the 2009 Form 10-K)) | ||||||||
* | (a) | Form of Belo 2004 Executive Compensation Plan Award
Notification for Executive Time-Based Restricted Stock Unit Awards (Exhibit
10.1 to the Companys Current Report on Form 8-K filed with the Securities
and Exchange Commission on March 2, 2006 (Securities and Exchange
Commission File No. 001-08598) (the March 2, 2006 Form 8-K)) |
||||||||
* | (b) | Form of Belo 2004 Executive Compensation Plan Award
Notification for Employee Awards (Exhibit 10.2 to the March 2, 2006 Form
8-K) |
||||||||
* | (c) | Form of Award Notification under the Belo 2004
Executive Compensation Plan for Non-Employee Director Awards (Exhibit 10.2
to the Companys Current Report on Form 8-K filed with the Securities and
Exchange Commission on December 12, 2005 (Securities and Exchange
Commission File No. 001-08598)) |
||||||||
~(9) | * | Summary of Non-Employee Director Compensation (Exhibit 10.2(9) to the 2009 Form 10-K) | ||||||||
~(10) | * | Belo Corp. Change In Control Severance Plan (Exhibit 10.2(10) to the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (Securities and Exchange Commission File No. 001-08598)) | ||||||||
10.3 | Agreements relating to the spin-off distribution of A. H. Belo: | |||||||||
(1) | * | Tax Matters Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of February 8, 2008 (Exhibit 10.1 to the February 12, 2008 Form 8-K) | ||||||||
* | (a) | First Amendment to Tax Matters Agreement by and
between Belo Corp. and A. H. Belo Corporation dated as of September 14,
2009 (Exhibit 10.1 to the Companys Current Report on Form 8-K filed with
the Securities and Exchange Commission on September 15, 2009 (Securities
and Exchange Commission File No. 001-08598)) |
||||||||
(2) | * | Employee Matters Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of February 8, 2008 (Exhibit 10.2 to the February 12, 2008 Form 8-K) | ||||||||
(3) | * | Services Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of February 8, 2008 (Exhibit 10.3 to the February 12, 2008 Form 8-K) | ||||||||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||||
32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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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. |
||||
July 30, 2010 | By: | /s/ Carey P. Hendrickson | ||
Carey P. Hendrickson | ||||
Senior Vice President/Chief Financial Officer (Principal Financial and Accounting Officer) |
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