Attached files

file filename
EX-32 - EXHIBIT 32 - BELO CORPc03877exv32.htm
EX-31.2 - EXHIBIT 31.2 - BELO CORPc03877exv31w2.htm
EX-31.1 - EXHIBIT 31.1 - BELO CORPc03877exv31w1.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)
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 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 issuer’s 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
         
    Page  
 
       
 
       
    2  
 
       
    15  
 
       
    21  
 
       
    21  
 
       
       
 
       
    21  
 
       
    21  
 
       
    22  
 
       
    22  
 
       
    22  
 
       
    22  
 
       
    22  
 
       
    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
                                 
    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
                 
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
                 
    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)
(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 Company’s 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 Company’s 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. Belo’s 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 Company’s 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 Company’s indefinite-lived intangible assets represent FCC licenses in markets (as defined by Nielsen Media Research’s Designated Market Area report) where the Company’s 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, management’s 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, management’s annual review process involved analyzing key estimates and assumptions used to determine the discounted cash flow calculations of estimated fair value for Belo’s 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 Company’s 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 Company’s 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 Belo’s 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 Company’s 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 Belo’s current 100%-owned subsidiaries, and eliminations necessary to arrive at the Company’s 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)
                                 
            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)
                                 
            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)
                                 
            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)
                                 
            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  
 
                       

 

10


Table of Contents

Condensed Consolidating Balance Sheet
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  
 
                       

 

11


Table of Contents

Condensed Consolidating Balance Sheet
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  
 
                       

 

12


Table of Contents

Condensed Consolidating Statement of Cash Flows
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  
 
                 

 

13


Table of Contents

Condensed Consolidating Statement of Cash Flows
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 Belo’s 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 Belo’s 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  
 
                       
    Belo’s 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.

 

14


Table of Contents

(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.   Management’s 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 Company’s 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 nation’s 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 Belo’s success.

 

15


Table of Contents

The following table sets forth the Company’s 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 station’s rating, which is based on the May 2010 Nielsen Media Research report of the number of television households tuned to the Company’s 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 Company’s 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 Company’s financial statements.
The Company has network affiliation agreements with ABC, CBS, NBC, FOX, and CW. The Company’s 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 Company’s 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 Company’s 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)
                                                 
    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 Company’s 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.
Belo’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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


Table of Contents

Belo’s management uses Station EBITDA as the primary measure of profitability to evaluate operating performance and to allocate capital resources and bonuses to eligible operating company employees. Station EBITDA represents the Company’s earnings from operations before interest expense, income taxes, depreciation, amortization, 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 Belo’s 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 Company’s 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 Company’s revolving credit facility. The 2009 financing activity cash flows consisted primarily of borrowings and repayments under the Company’s 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 Company’s 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 Belo’s 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 Company’s financial position or results of operations.
Forward-Looking Statements
Statements in this Form 10-Q concerning Belo’s business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, investments, future financings, impairments, pension matters, and other financial and non-financial items that are not historical facts, are “forward-looking statements” as the term is defined under applicable federal securities laws. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements.
Such risks, uncertainties and factors include, but are not limited to, uncertainties regarding the costs, consequences (including tax consequences) and other effects of the Company’s spin-off distribution of its newspaper businesses and related assets to A. H. Belo 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 Belo’s other public disclosures and filings with the Securities and Exchange Commission (“SEC”), including the Annual Report on Form 10-K.

 

20


Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Other than as disclosed, there have been no material changes in the Company’s 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 Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Belo’s internal control over financial reporting.
The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s president and Chief Executive Officer and senior vice president/Chief Financial Officer, of the effectiveness of the Company’s 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 Company’s disclosure controls and procedures were effective such that information relating to the Company (including its consolidated subsidiaries) required to be disclosed in the Company’s 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 Company’s 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 Company’s risk factors from the disclosure included in the Company’s Annual Report on Form-10-K for the fiscal year ended December 31, 2009.

 

21


Table of Contents

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 Company’s 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 Company’s 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 Company’s 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 Company’s 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


Table of Contents

                     
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 Company’s 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 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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


Table of Contents

                     
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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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))

 

25


Table of Contents

                     
Exhibit        
Number     Description
                   
 
          ~(7) *   Belo 2000 Executive Compensation Plan (Exhibit 4.15 to the Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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

 

26


Table of Contents

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) 
 

 

27