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Television Company Belo Corp. (BLC) Reports Earnings For Fourth Quarter And Full Year 2012

February 8, 2013

DALLAS, Feb. 8, 2013 /PRNewswire/ — Television Company Belo Corp. (NYSE: BLC) today reported fourth quarter and full year 2012 net earnings per share of $0.34 and $0.95, respectively, compared to $0.29 and $0.55, respectively, for fourth quarter and full year 2011.

The Company redeemed its 6.75 percent May 2013 Senior Notes in a net present value positive transaction on November 30, 2012. The premium paid for the early redemption of the notes, partially offset by the related interest savings in December, resulted in a reduction to net earnings of $3.1 million, or $0.03 per share, in the fourth quarter of 2012 when compared to the fourth quarter of 2011. The fourth quarter of 2011 included a non-cash gain, net of taxes, of $2.9 million, or $0.03 per share, related to the division of assets of Belo Investment, LLC (“Belo Investment”), a real estate investment company in which Belo Corp. and A. H. Belo Corporation (“A. H. Belo”) each previously held a 50 percent interest. Full year 2011 included a net non-cash charge, after taxes, of $13.3 million, or $0.13 per share, related to the split of The G. B. Dealey Retirement Pension Plan with A. H. Belo.

Commenting on the Company’s operating performance, Dunia A. Shive, Belo Corp.’s president and Chief Executive Officer, said, “The Company’s fourth quarter performance was driven by $26.5 million in incremental political revenue and continued strength in the automotive category, leading to a total spot revenue increase of 15 percent compared to the fourth quarter of 2011.

“Our financial performance for the full year was highlighted by record political revenue, which surpassed $60 million for the first time in the Company’s history, and significant growth in our largest advertising category, automotive, which increased 16 percent over full year 2011. The Company’s total revenue grew 10 percent in 2012 compared to 2011, while the Company’s combined station and corporate operating costs grew just 2 percent for the same period. The Company’s station-adjusted EBITDA margin was 46 percent for the fourth quarter of 2012 and 41 percent for the full year.

“The Company’s significant cash flow generation in 2012 enabled us to pay a special dividend of $0.25 in the fourth quarter in addition to increasing our regular quarterly dividend by 60 percent, to $0.08 per share, earlier in the year.”

Fourth Quarter 2012 Operating Results

The Company generated total revenue of $205 million in the fourth quarter of 2012, which was $25 million, or 14 percent, higher than the fourth quarter of 2011. Combined station and corporate operating costs were up 8 percent in the fourth quarter of 2012 compared to the fourth quarter of 2011.

Political revenue totaled $32.4 million in the fourth quarter of 2012, which was $26.5 million higher than the fourth quarter of 2011. Total spot revenue, including political, was up 15 percent in the fourth quarter of 2012 versus the fourth quarter of 2011. Due mostly to crowd-out from political revenue, spot revenue, excluding political, was down 3 percent with a 4 percent decrease in local spot revenue and a 1 percent decrease in national spot revenue. Other revenue, which is comprised primarily of Internet advertising, retransmission revenue, and barter and trade advertising, was up 8 percent in the fourth quarter of 2012 compared to the fourth quarter of 2011 and included double-digit percentage increases in both retransmission and Internet revenue. Other revenue in the fourth quarter of 2011 included network compensation.

Station salaries, wages and employee benefits in the fourth quarter of 2012 were up 6 percent versus the fourth quarter of 2011 due to higher accrued performance-based bonuses and modest increases in salaries and sales commissions. Station programming and other operating costs in the fourth quarter of 2012 were up 7 percent versus the fourth quarter of 2011 due primarily to higher national representation fees associated with higher political revenue and higher programming expense.

Station-adjusted EBITDA totaled $94 million in the fourth quarter of 2012, an increase of 23 percent over the fourth quarter of 2011.

Full Year 2012 Operating Results

For full year 2012, total revenue was $715 million, an increase of $65 million, or 10 percent, versus full year 2011. Combined station and corporate operating costs were up 2 percent in 2012 compared to 2011.

Political revenue totaled $61.2 million in 2012, $51.6 million higher than 2011. Full year 2012 spot revenue, including political, was up 10 percent versus 2011. Total spot revenue, excluding political, was up 0.4 percent for full year 2012 with a 1.5 percent increase in local spot revenue and a 1.5 percent decrease in national spot revenue when compared to 2011. Other revenue, which is comprised primarily of Internet advertising, retransmission revenue, and barter and trade advertising, was up 9 percent in 2012 versus 2011 and included double-digit percentage increases in both Internet and retransmission revenue. Other revenue in 2011 included network compensation.

For full year 2012, station salaries, wages and employee benefits increased 4 percent when compared to 2011 due primarily to higher accrued performance-based bonuses and modest increases in salaries and sales commissions. Station programming and other operating costs were 3.5 percent lower in 2012 compared to 2011 due primarily to lower syndicated programming expense.

Station-adjusted EBITDA totaled $293 million for the full year 2012, a 27 percent increase over full year 2011.

Corporate

Corporate operating costs were $2.4 million and $8.1 million higher in the fourth quarter of 2012 and full year 2012, respectively, compared to the fourth quarter of 2011 and full year 2011. These increases were due primarily to higher accrued performance-based bonuses, higher share-based compensation expense, and investments in new content and digital business initiatives. The fourth quarter of 2011 also included a non-cash credit related to the favorable settlement of a property tax issue.

Other Items

Belo’s depreciation expense totaled $7.6 million in the fourth quarter of 2012, slightly higher than the fourth quarter of 2011. Full year 2012 depreciation expense totaled $30.1 million, down from $30.8 million in 2011.

The Company’s interest expense decreased $1.9 million and $2.7 million, respectively, in the fourth quarter of 2012 and full year 2012 compared to the fourth quarter of 2011 and full year 2011 due to lower debt levels, including the early redemption of the Company’s May 2013 notes on November 30, 2012.

Other expense, net, was higher in the fourth quarter of 2012 and full year 2012 by $9.8 million and $9.3 million, respectively, compared to the fourth quarter of 2011 and full year 2011. The fourth quarter of 2012 included a $5.5 million pre-tax charge for the premium paid on the early redemption of the Company’s May 2013 notes, which is one component of the net charge previously noted. The fourth quarter of 2011 included a $4.5 million non-cash gain related to the division of Belo Investment’s assets.

Income tax expense increased $2.9 million and $27 million, respectively, for the fourth quarter of 2012 and full year 2012 due primarily to higher pre-tax earnings.

Total debt at December 31, 2012 was $733 million, $154 million lower than the Company’s debt balance at the end of 2011. The Company had $21 million drawn on its credit facility and $9.4 million in cash and temporary cash investments at December 31, 2012. The Company’s total leverage ratio, as defined in the Company’s credit facility, was 2.8 times at December 31, 2012 compared to 4.1 times at December 31, 2011. Belo invested $5.8 million in capital expenditures in the fourth quarter of 2012 and $21.3 million for the full year 2012.

Non-GAAP Financial Measures

A reconciliation of station-adjusted EBITDA to earnings from operations and a reconciliation of net earnings to pro forma net earnings are set forth in an exhibit to this release.

2013 Outlook

Looking at the first quarter of 2013, Shive said, “Based on recent pacings, we currently estimate total revenue to be up 2 to 2.5 percent versus the first quarter of 2012, with increases in core spot, retransmission and Internet revenue partially offset by lower political revenue. Due to the timing of upcoming renewals with MVPDs, the growth rate in retransmission revenue is expected to be higher in the second half of the year than in the first half of the year.

“Our combined station and corporate operating costs are currently expected to be up 3.5 to 4 percent in the first quarter of 2013 compared to the first quarter of 2012 due primarily to higher programming expense, sales-related costs, and continued investments in new digital and content initiatives. Interest expense in the first quarter of 2013 should be about $3 million lower than the first quarter of 2012, a result of the early redemption of our May 2013 notes.”

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 website (www.belo.com/invest). Following the conclusion of the webcast, a replay of the conference call will be archived on Belo’s website. To access the listen-only conference lines, dial 1-877-260-8896. A replay line will be open from 3:00 p.m CST on February 8 until 11:59 p.m. CST February 22. To access the replay, dial 1-800-475-6701 or 320-365-3844. The access code for the replay is 279474.

About Belo Corp.

Belo Corp. (BLC), one of the nation’s largest pure-play, publicly-traded television companies, owns and operates 20 television stations (nine in the top 25 markets) and their associated websites. Belo stations, which include affiliations with ABC, CBS, NBC, FOX, and the CW, reach more than 14 percent of U.S. television households in 15 highly-attractive markets. Belo stations rank first or second in nearly all of their local markets. Additional information is available at www.belo.com or by contacting Paul Fry, vice president/Investor Relations & Assistant Treasurer, at 214-977-4465.

Statements in this communication 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 predicted in any such forward-looking statement. Belo undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Such risks, uncertainties and other factors include, but are not limited to, uncertainties regarding the 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 and devices to distribute and consume 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, including changes regarding spectrum; 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 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                                                                               2012                                                    2011                                                 2012                                             2011
    --------------------------------------                                                                               ----                                                    ----                                                 ----                                             ----
                                                                                                        (unaudited)                                             (unaudited)                                           (unaudited)

    Net Operating Revenues                                                                                           $204,929                                                $180,294                                             $714,719                                         $650,142

    Operating Costs and Expenses
                              Station
                              salaries, wages
                              and employee
                              benefits                                                57,436                                                  54,033                                               224,348                                                214,861
                              Station
                              programming and
                              other operating
                              costs                                                   53,884                                                  50,424                                               197,795                                                204,973
                              Corporate
                              operating costs                                          9,610                                                   7,235                                                33,393                                                 25,338
                              Pension
                              settlement
                              charge and
                              contribution
                              reimbursements
                                                                                          -                                                       -                                                     -                                                 20,466
                             Depreciation                                              7,641                                                   7,551                                                30,103                                                 30,796
                              Total
                              operating
                              costs and
                              expenses                                               128,571                                                 119,243                                               485,639                                                496,434

                              Earnings
                              from
                              operations                                              76,358                                                  61,051                                               229,080                                                153,708

    Other Income and (Expense)
                             Interest expense                                        (16,646)                                                (18,589)                                              (69,705)                                               (72,393)
                              Other income
                              (expense), net                                          (5,092)                                                  4,726                                                (2,716)                                                 6,541
                              Total other
                              income and
                              (expense)                                              (21,738)                                                (13,863)                                              (72,421)                                               (65,852)

    Earnings before income taxes                                                                                       54,620                                                  47,188                                              156,659                                           87,856
    Income tax expense                                                                                                 19,629                                                  16,716                                               56,929                                           29,898

    Net earnings                                                                                                       34,991                                                  30,472                                               99,730                                           57,958

    Less:  Net (loss) attributable to noncontrolling interests                                                           (139)                                                      -                                                 (440)                                               -
                                                                                                                         ----                                                     ---                                                 ----                                              ---

    Net earnings attributable to Belo Corp.                                                                           $35,130                                                 $30,472                                             $100,170                                          $57,958
                                                                                                                      =======                                                 =======                                             ========                                          =======

    Net earnings per share - Basic                                                                                      $0.34                                                   $0.29                                                $0.96                                            $0.55
                                                                                                                        =====                                                   =====                                                =====                                            =====

    Net earnings per share - Diluted                                                                                    $0.34                                                   $0.29                                                $0.95                                            $0.55
                                                                                                                        =====                                                   =====                                                =====                                            =====

    Weighted average shares outstanding
                             Basic                                                   103,199                                                 103,714                                               103,507                                                103,606
                             Diluted                                                 103,805                                                 104,053                                               104,012                                                103,980

    Dividends declared per share                                                                                        $0.33                                                   $0.05                                                $0.57                                            $0.15
                                                                                                                        =====                                                   =====                                                =====                                            =====

    Belo Corp.
    Consolidated Condensed Balance Sheets

                                            December 31,         December 31,
    In thousands                                    2012                 2011
    ------------                                    ----                 ----
                                            (unaudited)
    Assets
                           Current assets
                            Cash and
                            temporary
                            cash
                            investments                   $9,437              $61,118
                            Accounts
                            receivable,
                            net                          140,605              149,584
                            Income tax
                            receivable                         -               31,629
                            Other
                            current
                            assets                        17,757               16,692
                            Total current
                            assets                       167,799              259,023

                            Property, plant
                            and equipment,
                            net                          146,522              157,115
                            Intangible
                            assets, net                  725,399              725,399
                           Goodwill                      423,873              423,873
                           Other assets                   35,999               46,195

    Total assets                              $1,499,592           $1,611,605
                                              ==========           ==========

    Liabilities and
     Shareholders' Equity
                            Current
                            liabilities
                            Accounts
                            payable                      $20,348              $19,677
                            Accrued
                            expenses                      42,057               34,961
                            Short-term
                            pension
                            obligation                    20,000               19,300
                            Accrued
                            interest
                            payable                        9,123               10,378
                            Income taxes
                            payable                        9,043               12,922
                            Dividends
                            payable                        8,331                5,189
                            Deferred
                            revenue                        2,911                3,435
                            Total current
                            liabilities                  111,813              105,862

                           Long-term debt                733,025              887,003
                            Deferred income
                            taxes                        257,864              244,361
                            Pension
                            obligation                    86,590               93,012
                            Other
                            liabilities                   10,576               14,164
                            Total
                            shareholders'
                            equity                       299,724              267,203

    Total liabilities and
     shareholders' equity                     $1,499,592           $1,611,605
                                              ==========           ==========

    Belo Corp.
    Non-GAAP to GAAP Reconciliations

    Station Adjusted EBITDA
                                                                                              Three months ended                     Twelve months ended
                                                                                                 December 31,                            December 31,
                                                                                                 ------------                            ------------
    In thousands (unaudited)                                                                                      2012                                                   2011                                                      2012                                             2011
    -----------------------                                                                                       ----                                                   ----                                                      ----                                             ----

    Station Adjusted EBITDA (1)                                                                                $93,609                                                $75,837                                                  $292,576                                         $230,308
                                     Corporate
                                     operating costs                                     (9,610)                                                (7,235)                                               (33,393)                                         (25,338)
                                    Depreciation                                         (7,641)                                                (7,551)                                               (30,103)                                         (30,796)
                                     Pension settlement
                                     charge and
                                     contribution
                                     reimbursements                                           -                                                      -                                                      -                                          (20,466)
                                      Earnings from
                                       operations                                       $76,358                                                $61,051                                               $229,080                                         $153,708
    Note 1:                    Belo's management uses Station Adjusted
                             EBITDA as the primary measure of
                             profitability to evaluate operating
                             performance and to allocate capital
                             resources and bonuses to eligible
                             operating company employees.  Station
                             Adjusted EBITDA represents the Company's
                             earnings from operations before interest
                             expense, income taxes, depreciation,
                             amortization, impairment charges, pension
                             settlement charge and contribution
                             reimbursements, and corporate operating
                             costs.  Other income (expense), net is
                             not allocated to television station
                             earnings from operations because it
                             consists primarily of equity in earnings
                             (losses) from investments in partnerships
                             and joint ventures and other non-
                             operating income (expense).

    Pro Forma Net Earnings
    In thousands, except per share amounts (unaudited)
                                                                      Three months ended                               Three months ended
                                                                       December 31, 2012                               December 31, 2011
                                                                       -----------------                               -----------------

                                                                                                   Earnings                                      EPS                                                Earnings                                       EPS
                                                                                                   --------                                      ---                                                --------                                       ---

    Net earnings attributable to Belo Corp.                                                                 $35,130                                  $0.34                                                   $30,472                                    $0.29

    Adjustments to net earnings attributable to
     Belo Corp., net of tax:
                             Loss on early
                             redemption of
                             bonds(2)                                               3,706                                           0.04                                                 -                                              -
                             Gain on
                             division of
                             Belo
                             Investment,
                             LLC assets                                                 -                                              -                                            (2,948)                                         (0.03)

    Pro forma net earnings attributable to Belo
     Corp.                                                                                                  $38,836                                  $0.37                                                   $27,524                                    $0.26
                                                                                                            =======                                                                                          =======

                                                                      Twelve months ended                            Twelve months ended
                                                                       December 31, 2012                             December 31, 2011
                                                                       -----------------                             -----------------

                                                                                                   Earnings                                      EPS                                                Earnings                                       EPS
                                                                                                   --------                                      ---                                                --------                                       ---

    Net earnings attributable to Belo Corp.                                                                $100,170                                  $0.95                                                   $57,958                                    $0.55

    Adjustments to net earnings attributable to
     Belo Corp., net of tax:
                             Loss on early
                             redemption of
                             bonds(2)                                               3,706                                           0.04                                                 -                                              -
                             Pension
                             settlement
                             charge and
                             contribution
                             reimbursements                                             -                                              -                                            13,323                                           0.13
                             Gain on
                             division of
                             Belo
                             Investment,
                             LLC assets                                                 -                                              -                                            (2,948)                                         (0.03)

    Pro forma net earnings attributable to Belo
     Corp.                                                                                                 $103,876                                  $0.99                                                   $68,333                                    $0.66
                                                                                                           ========                                                                                          =======
    Note 2:                    Regarding the early redemption of bonds,
                             the Company's 2012 interest savings was
                             $990, or $644, net of tax.  The
                             adjustment to net earnings, including
                             these interest savings, was $3,062, or
                             $0.03 per share, for the three and twelve
                             months ended December 31, 2012.

SOURCE Belo Corp.


Source: PR Newswire