EX-99.1 2 d66181exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
     
 
  FOR IMMEDIATE RELEASE
 
  Thursday, February 5, 2009
 
  7:30 a.m. CST
TELEVISION COMPANY, BELO CORP. (BLC), REPORTS RESULTS FOR
FOURTH QUARTER AND FULL YEAR 2008
     DALLAS — Belo Corp. (NYSE: BLC), one of the nation’s largest pure-play, publicly-traded television companies, announced fourth quarter and full year 2008 pro forma earnings per share from continuing operations of $0.28 and $0.78, respectively, compared to $0.32 and $0.88, respectively, for the fourth quarter and full year 2007. Pro forma earnings per share from continuing operations exclude non-cash impairment charges to goodwill and other intangible assets, spin-off related charges and a gain on the purchase and retirement of Company bonds in 2008.
     Including the non-cash impairment charges to goodwill and other intangible assets, spin-off related charges and the gain on the purchase and retirement of Company bonds in 2008, the GAAP net loss per share from continuing operations for the fourth quarter and full year 2008 was ($3.50) and ($3.21), respectively, compared to net earnings per share from continuing operations of $0.06 and $0.59, respectively, for the fourth quarter and full year 2007.
2008 in Review
     Commenting on the Company’s operating performance in 2008, Dunia A. Shive, Belo Corp.’s president and Chief Executive Officer, said, “Total revenue declined 5.6 percent as strong political revenues and double-digit increases in retransmission and Internet revenues were not enough to offset the overall soft advertising conditions Belo experienced during the year. The Company responded with a number of expense reduction initiatives in 2008 including the freezing of open positions Company-wide, staff reductions in certain markets and other cost-saving measures. These expense initiatives led to a 4.1 percent reduction in combined station and corporate operating costs in 2008. Excluding spin-off related charges and a gain on the purchase and retirement of Company bonds, the Company generated $255 million in pro forma consolidated EBITDA in 2008 with a pro forma consolidated EBITDA margin of 35 percent, only slightly below the 2007 pro forma consolidated EBITDA margin of 36 percent. The station EBITDA margin for the fourth quarter of 2008 was 41.2 percent, and 38.7 percent for full year
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Belo Announces Fourth Quarter and Full Year Results
February 5, 2009
Page Two
2008. In addition, the Company reduced its debt $45 million in the fourth quarter of 2008 and $75 million for the year.”
     Fourth quarter and full year results for 2008 and 2007 include non-cash impairment charges of $465 million and $22 million, respectively. These charges were determined through Belo’s annual impairment testing of goodwill and other intangible assets using the methodology prescribed by Statement of Financial Accounting Standards No. 142. “It is important to point out, however, that these impairments are non-cash charges to earnings and will not affect Belo’s liquidity, cash flows from operating activities or debt covenants, or have an impact on the Company’s future operations,” Shive said.
     For 2008, $351 million of the impairment charge related to goodwill and $114 million related to FCC licenses. In 2007, all of the impairment charge related to goodwill. The $465 million impairment charge in 2008 represents a 23 percent reduction in the Company’s total intangible assets.
     Spin-off related charges, which include transaction and financing costs and a one-time tax charge associated with the spin-off of the Company’s newspaper businesses and related assets on February 8, 2008, totaled $0.22 per share and $0.08 per share, respectively, for the full year 2008 and 2007. The fourth quarters of 2008 and 2007 include spin-off related charges totaling $0.01 and $0.05 per share, respectively.
     In the fourth quarter of 2008, the Company purchased at a discount and retired $43.6 million of bonds maturing in 2013 and 2027 at a cost of $27.2 million. As a result, fourth quarter and full year 2008 results include a gain, net of taxes, of $10 million, or $0.10 per share, associated with these bond transactions.
Operating Results
     Total revenues decreased 8.8 percent in the fourth quarter of 2008 versus the fourth quarter of 2007 as declines in Belo’s core local and national spot business were greater than incremental gains from political revenues. Fourth quarter total spot revenue, including political, was down 11 percent with 26 percent decreases in both local and national spot. Total revenues
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Belo Announces Fourth Quarter and Full Year Results
February 5, 2009
Page Three
decreased 5.6 percent for the full year 2008. Full year 2008 spot revenue, including political, was down 7.9 percent with 13 percent and 17 percent decreases in local and national spot, respectively.
     The spot revenue declines in the fourth quarter and full year 2008 were primarily due to a weak advertising environment, particularly in the automotive category which was down 37 percent and 21 percent, respectively. Fourth quarter and full year 2008 included political revenues of $35.9 million and $56.2 million, respectively.
     Advertising revenue associated with Belo’s Web sites increased 5.1 percent in the fourth quarter and 14 percent for the full year 2008. Internet revenues surpassed $30 million for the year and represent over 4 percent of the Company’s total revenue. Retransmission revenues increased 30 percent in the fourth quarter and 41 percent for full year 2008. Retransmission revenues for 2008 totaled $33.1 million and represent 4.5 percent of Belo’s total revenue.
     Station expenses decreased 4.2 percent and 2.7 percent, respectively, for fourth quarter and full year 2008.
Corporate
     Corporate operating costs were $10.6 million in the fourth quarter of 2008, as compared to $11.5 million in the fourth quarter of 2007, a decrease of 7.8 percent. For full year 2008, corporate operating costs totaled $32.2 million versus $40.5 million in 2007, a decrease of 20 percent. The decreases for both fourth quarter and full year were due to lower share-based compensation, lower bonus expense and other cost-saving measures.
     Combined station and corporate operating costs declined 4.5 percent and 4.1 percent for the fourth quarter and full year 2008, respectively.
     Excluding impairment charges and spin-off related costs, the Company’s earnings from operations decreased 17 percent and 9 percent, respectively, for the fourth quarter and full year 2008.
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Belo Announces Fourth Quarter and Full Year Results
February 5, 2009
Page Four
Other Items
     Belo’s depreciation and amortization expense totaled $10.7 million in the fourth quarter of 2008, 2.8 percent lower than the fourth quarter of 2007. Full year 2008 depreciation and amortization expense totaled $42.9 million, a decrease of 5.2 percent when compared to 2007.
     The Company’s interest expense totaled $17.7 million in fourth quarter 2008, a decrease of 21 percent from fourth quarter 2007. Full year 2008 interest expense totaled $83.1 million, a 12 percent decrease from full year 2007.
     Other income, net, increased $18.6 million in the fourth quarter and $13.6 million for the full year 2008 due primarily to a $16.4 million gain on the retirement of $43.6 million of bonds due in 2013 and 2027 that were purchased at a cost of $27.2 million. The bond transactions were funded through the Company’s revolving credit facility.
     Income tax expense decreased $61.5 million in the fourth quarter of 2008 compared to the fourth quarter of 2007 due primarily to a $68.4 million tax benefit associated with the impairment charge. Full year 2008 tax expense decreased $44.6 million due primarily to the $68.4 million tax benefit associated with the impairment charge, partially offset by a one-time $18.8 million tax charge related to the transfer of certain intangible assets in connection with the spin-off and the incremental tax related to the gain on the Company’s purchase of its bonds at a discount.
     Total debt at December 31, 2008 was $1.093 billion. The Company’s leverage ratio, as defined in the Company’s credit facility, was 4.4 times at December 31, 2008. The Company did not repurchase shares of common stock in the last nine months of the year, but did repurchase 191,000 shares in the first quarter of 2008 for a total of $2.2 million. Belo invested $5.8 million in capital expenditures in the fourth quarter and $25.4 million for the full year.
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Belo Announces Fourth Quarter and Full Year Results
February 5, 2009
Page Five
Discontinued Operations
     On February 8, 2008, Belo completed the spin-off of its newspaper businesses and related assets into a separate publicly-traded company, A. H. Belo Corporation (NYSE: AHC). The results of operations of the Newspaper Group and related corporate expenses are classified as discontinued operations for all periods prior to the spin-off.
Non-GAAP Financial Measures
     A reconciliation of pro forma consolidated EBITDA and pro forma earnings from operations to earnings from operations, and a reconciliation of net earnings from continuing operations to pro forma net earnings from continuing operations are set forth in an exhibit to this release.
2009 Outlook
     In looking to 2009, Shive said, “Given the continued weak economic environment, it is extremely difficult to project where advertising revenues will finish for the first quarter. Currently, first quarter local and national spot pacing trends are similar to our experience in the fourth quarter of 2008.
     “For full year 2009, we expect retransmission and Internet revenues to continue to grow double digits. Combined station and corporate operating expenses are projected to be lower in 2009. Capital expenditures for 2009 are projected to not exceed $12 million, which is down from $25.4 million in 2008. We expect the Company’s tax rate to be approximately 39 percent in 2009.
     “The Company will continue to stay focused on debt paydown and will continue to seek to reduce its long-term debt through opportunistic purchases and retirements of bonds. Like many companies, the weak revenue environment is expected to result in an increase in our leverage ratio. While we’re in compliance with all terms of our current bank facility which expires in June 2011, we are seeking an amendment to the facility to adjust the leverage covenant amid the current economic slowdown. We expect to have an amended facility in place
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Belo Announces Fourth Quarter and Full Year Results
February 5, 2009
Page Six
by the end of the first quarter.”
     A conference call to discuss this release and other matters of interest to shareholders and analysts will follow at 1:00 p.m. CST this afternoon. The conference call will be simultaneously Webcast on Belo Corp.’s Web site (www.belo.com/invest). Following the conclusion of the Webcast, a replay of the conference call will be archived on Belo’s Web site. To access the listen-only conference lines, dial 1-800-288-8960. A replay line will be open from 3:00 p.m. CST on February 5 until 11:59 p.m. CST February 12. To access the replay, dial 800-475-6701 or 320-365-3844. The access code for the replay is 980652.
About Belo Corp.
     Belo Corp. (BLC) is one of the nation’s largest pure-play, publicly-traded television companies, with 2008 annual revenue of $733 million. The Company owns and operates 20 television stations (nine in the top 25 markets) and their associated Web sites. Belo stations, which include affiliations with ABC, CBS, NBC, FOX, CW and MyNetwork TV, reach more than 14 percent of U.S. television households in 15 highly-attractive markets. Nearly all Belo stations rank first or second in their local market. Additional information is available at www.belo.com or by contacting Paul Fry, vice president/Investor Relations & Corporate Communications, at 214-977-6835.
     Statements in this communication concerning Belo’s business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends, capital expenditures, investments, future financings, and other financial and non-financial items that are not historical facts, are “forward-looking statements” as the term is defined under applicable federal securities laws. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements.
     Such risks, uncertainties and factors include, but are not limited to, uncertainties regarding the costs, consequences (including tax consequences) and other effects of the distribution of the newspaper businesses and related assets of Belo; changes in capital market conditions and prospects, and other factors such as changes in advertising demand, interest rates and programming and production costs; changes in viewership patterns and demography, and actions by Nielsen; changes in the network-affiliate business model for broadcast television; technological changes, including the transition to digital television and the development of new systems to distribute television and other audio-visual content; changes in the ability to secure, and in the terms of, carriage of Belo programming on cable, satellite, telecommunications and other program distribution methods; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; Federal Communications Commission and other regulatory, tax and legal changes; adoption of new accounting standards or changes in existing accounting standards by the Financial Accounting Standards Board or other accounting standard-setting bodies or authorities; the effects of Company acquisitions, dispositions and co-owned ventures; general economic conditions; and significant armed conflict, as well as other risks detailed in Belo’s other public disclosures and filings with the SEC including Belo’s Annual Report on Form 10-K.

 

 

Belo Corp.
Consolidated Statements of Operations
                                 
    Three months ended     Twelve months ended  
    December 31,     December 31,  
In thousands, except per share amounts   2008     2007     2008     2007  
    (unaudited)     (unaudited)     (unaudited)          
Net Operating Revenues
   $ 198,851     $ 217,976     $ 733,470     $ 776,956  
 
                                
Operating Costs and Expenses
                                
Station salaries, wages and employee benefits
     55,405       61,593       231,256       240,362  
Station programming and other operating costs
     61,582       60,527       218,241       221,396  
Corporate operating costs
     10,573       11,464       32,235       40,466  
Spin-off related costs
     —       6,462       4,659       9,267  
Depreciation
     10,660       10,966       42,893       44,804  
Amortization
     —       —       —       442  
Impairment charge
     464,760       22,137       464,760       22,137  
 
                        
Total operating costs and expenses
     602,980       173,149       994,044       578,874  
 
                                
Earnings (loss) from operations
     (404,129 )     44,827       (260,574 )     198,082  
 
Other income and expense
                                
Interest expense
     (17,666 )     (22,487 )     (83,093 )     (94,494 )
Other income (expense), net
     18,230       (328 )     19,846       6,266  
 
                        
Total other income and expense
     564       (22,815 )     (63,247 )     (88,228 )
 
                                
Earnings (loss) from continuing operations before income taxes
     (403,565 )     22,012       (323,821 )     109,854  
Income taxes
     (45,276 )     16,209       4,532       49,157  
 
                        
 
                                
Net earnings (loss) from continuing operations
     (358,289 )     5,803       (328,353 )     60,697  
 
                                
Discontinued operations, net of tax
     (497 )     (339,247 )     (4,996 )     (323,510 )
 
                        
 
                                
Net loss
   $ (358,786 )   $ (333,444 )   $ (333,349 )   $ (262,813 )
 
                        
 
                                
Net earnings (loss) per share — Basic
                                
Earnings (loss) per share from continuing operations
   $ (3.50 )   $ 0.06     $ (3.21 )   $ 0.59  
Loss per share from discontinued operations
     (0.01 )     (3.32 )     (0.05 )     (3.16 )
 
                        
Net loss per share — Basic
   $ (3.51 )   $ (3.26 )   $ (3.26 )   $ (2.57 )
 
                        
 
                                
Net earnings (loss) per share — Diluted
                                
Earnings (loss) per share from continuing operations
   $ (3.50 )   $ 0.06     $ (3.21 )   $ 0.59  
Loss per share from discontinued operations
     (0.01 )     (3.28 )     (0.05 )     (3.14 )
 
                        
Net earnings (loss) per share — Diluted
   $ (3.51 )   $ (3.23 )   $ (3.26 )   $ (2.55 )
 
                        
 
                                
Average shares outstanding
                                
Basic
     102,204       102,262       102,219       102,245  
Diluted(1)
     102,204       103,367       102,219       103,128  
 
                                
Cash dividends declared per share
   $ 0.075     $ 0.125     $ 0.30     $ 0.50  
 
                        
Note 1:   Potential dilutive common shares were antidilutive as a result of the Company’s net loss from continuing operations for the three months and twelve months ended December 31, 2008. As a result, basic and diluted average shares outstanding were the same for these periods.

 

 

Belo Corp.
Consolidated Condensed Balance Sheets
                 
    December 31,  
In thousands   2008     2007  
    (unaudited)          
Assets
                
Current assets
                
Cash and temporary cash investments
   $ 5,770     $ 11,190  
Accounts receivable, net
     138,638       181,700  
Other current assets
     22,276       24,789  
Current assets of discontinued operations
     —       126,710  
 
            
Total current assets
     166,684       344,389  
 
                
Property, plant and equipment, net
     209,988       226,040  
Intangible assets, net
     1,581,032       2,045,793  
Other assets
     81,092       51,650  
Long-term assets of discontinued operations
     —       511,188  
 
            
 
                
Total assets
   $ 2,038,796     $ 3,179,060  
 
            
 
                
Liabilities and Shareholders’ Equity
                
Current liabilities
                
Accounts payable
   $ 19,385     $ 31,153  
Accrued expenses
     51,399       65,575  
Other current liabilities
     39,027       46,667  
Current liabilities of discontinued operations
     —       106,055  
 
            
Total current liabilities
     109,811       249,450  
 
                
Long-term debt
     1,092,765       1,168,140  
Deferred income taxes
     311,053       425,652  
Other liabilities
     225,248       37,183  
Long-term liabilities of discontinued operations
     —       46,927  
Total shareholders’ equity
     299,919       1,251,708  
 
            
 
Total liabilities and shareholders’ equity
   $ 2,038,796     $ 3,179,060  
 
            

 

 

Belo Corp.
Non-GAAP to GAAP Reconciliations
Pro Forma Consolidated EBITDA and
Earnings from Operations
In thousands (unaudited)
                                                                                 
    Twelve months ended December 31, 2008     Twelve months ended December 31, 2007  
            Gain from             Non-cash                     Gain from             Non-cash        
            extinguishment     Spin-related     Impairment                     extinguishment     Spin-related     Impairment        
    As Reported     of bonds     costs     charge     Pro Forma     As Reported     of bonds     costs     charge     Pro Forma  
Consolidated EBITDA(1)
   $ 266,925     $ (16,407 )   $ 4,659     $       $ 255,177     $ 271,731     $ —     $ 9,267     $       $ 280,998  
 
                                                                                
Impairment charge
     (464,760 )                     464,760       —       (22,137 )                     22,137       —  
Depreciation and amortization
     (42,893 )                             (42,893 )     (45,246 )                             (45,246 )
Other income (expense), net
     (19,846 )     16,407                       (3,439 )     (6,266 )     —                       (6,266 )
 
                                                            
Earnings (loss) from operations
   $ (260,574 )   $ —     $ 4,659     $ 464,760     $ 208,845     $ 198,082     $ —     $ 9,267     $ 22,137     $ 229,486  
 
                                                            
                                                                                 
    Three months ended December 31, 2008     Three months ended December 31, 2007  
            Gain from             Non-cash                     Gain from             Non-cash        
            extinguishment     Spin-related     Impairment                     extinguishment     Spin-related     Impairment        
    As Reported     of bonds     costs     charge     Pro Forma     As Reported     of bonds     costs     charge     Pro Forma  
Consolidated EBITDA(1)
   $ 89,521     $ (16,407 )   $ —     $       $ 73,114     $ 77,602     $ —     $ 6,462     $       $ 84,064  
 
                                                                                
Impairment charge
     (464,760 )                     464,760       —       (22,137 )                     22,137       —  
Depreciation and amortization
     (10,660 )                             (10,660 )     (10,966 )                             (10,966 )
Other income (expense), net
     (18,230 )     16,407                       (1,823 )     328       —                       328  
 
                                                            
Earnings (loss) from operations
   $ (404,129 )   $ —     $ —     $ 464,760     $ 60,631     $ 44,827     $ —     $ 6,462     $ 22,137     $ 73,426  
 
                                                            
Note 1:   The Company defines Consolidated EBITDA as net earnings before interest expense, income taxes, depreciation, amortization and impairment. Consolidated EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States. Management uses Consolidated EBITDA in internal analyses as a supplemental measure of the financial performance of the Company to assist it with determining performance comparisons against its peer group of companies, as well as capital spending and other investing decisions. Consolidated EBITDA is also a common alternative measure of performance used by investors, financial analysts, and rating agencies to evaluate financial performance. Consolidated EBITDA should not be considered in isolation or as a substitute for net earnings, operating income, cash flows provided by operating activities or other income or cash flow data prepared in accordance with U.S. GAAP, and this non-GAAP measure may not be comparable to similarly titled measures of other companies.

 

 

Belo Corp.
Non-GAAP to GAAP Reconciliations
(continued)
Pro Forma Net Earnings From Continuing Operations
In thousands (unaudited)
                                                 
    Twelve months ended December 31, 2008     Twelve months ended December 31, 2007  
    Earnings     EPS     Shares(1)     Earnings     EPS     Shares  
Net earnings (loss) from continuing operations
   $ (328,353 )   $ (3.21 )     102,219     $ 60,697     $ 0.59       103,128  
Spin-off related operating and financing costs, net of tax
     3,861     $ 0.04       103,835       8,011     $ 0.08       103,128  
Impairment charge, net of tax
     396,362     $ 3.88       102,219       22,137     $ 0.21       103,128  
Gain from extinguishment of debt, net of tax
     (10,012 )   $ (0.10 )     103,835       —     $ —       103,128  
Spin-off related tax charge
     18,756     $ 0.18       103,835       —     $ —       103,128  
 
                                            
Pro forma net earnings from continuing operations
   $ 80,614     $ 0.78       103,835     $ 90,845     $ 0.88       103,128  
 
                                            
                                                 
    Three months ended December 31, 2008     Three months ended December 31, 2007  
    Earnings     EPS     Shares(1)     Earnings     EPS     Shares  
Net earnings (loss) from continuing operations
   $ (358,289 )   $ (3.50 )     102,204     $ 5,803     $ 0.06       103,367  
Spin-off related operating and financing costs, net of tax
     —     $ —       103,484       5,586     $ 0.05       103,367  
Impairment charge, net of tax
     396,362     $ 3.88       102,204       22,137     $ 0.21       103,367  
Gain from extinguishment of debt, net of tax
     (10,012 )   $ (0.10 )     103,484       —     $ —       103,367  
Spin-off related tax charge
     521     $ 0.01       103,484       —     $ —       103,367  
 
                                            
Pro forma net earnings from continuing operations
   $ 28,582     $ 0.28       103,484     $ 33,526     $ 0.32       103,367  
 
                                            
Note 1:   Potential dilutive common shares were antidilutive as a result of the Company’s net loss from continuing operations for the three months and twelve months ended December 31, 2008. As a result, basic weighted average shares were used in the calculations of net loss from continuing operations per share and the per share effect of the goodwill impairment for these periods. In the absence of the net loss from continuing operations, potential dilutive common shares were added to the weighted average common shares outstanding in the calculation of net earnings per share excluding goodwill impairment.