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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

 

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2013

OR

 

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-8598

Belo Corp.

(Exact name of registrant as specified in its charter)

 

Delaware		75-0135890
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)
400 South Record Street Dallas, Texas		75202-4841
(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  x    No  ¨

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  x    No  ¨

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		¨		Accelerated filer		x
Non-accelerated filer		¨		Smaller reporting company		¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

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 October 28, 2013
Common Stock, $0.01 par value		104,120,990*

 

*	Consisting of 95,866,339 shares of Series A Common Stock and 8,254,651 shares of Series B Common Stock.

 

 

 

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BELO CORP.

FORM 10-Q

TABLE OF CONTENTS

 

				Page
PART I		FINANCIAL INFORMATION
Item 1.		Financial Statements			2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3.		Quantitative and Qualitative Disclosures about Market Risk			23
Item 4.		Controls and Procedures			24
PART II		OTHER INFORMATION
Item 1.		Legal Proceedings			24
Item 1A.		Risk Factors			24
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			25
Item 3.		Defaults Upon Senior Securities			25
Item 4.		Mine Safety Disclosures			25
Item 5.		Other Information			25
Item 6.		Exhibits			25
		Signatures			30

 

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PART I.

 

Item 1.

Financial Statements

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

Belo Corp. and Subsidiaries

 

		Three months ended September 30,								Nine months ended September 30,
In thousands, except per share amounts (unaudited)		2013				2012				2013				2012
Net Operating Revenues		$	166,192			$	176,273			$	500,037			$	509,790
Operating Costs and Expenses
Station salaries, wages and employee benefits			55,084				54,776				167,162				166,912
Station programming and other operating costs			50,695				50,520				147,615				143,911
Corporate operating costs			10,920				7,501				32,477				23,783
Depreciation			7,129				7,528				21,232				22,462
Total operating costs and expenses			123,828				120,325				368,486				357,068
Earnings from operations			42,364				55,948				131,551				152,722
Other Income and (Expense)
Interest expense			(14,538	)			(17,683	)			(43,715	)			(53,059	)
Other income, net			989				497				1,718				2,376
Total other income and (expense)			(13,549	)			(17,186	)			(41,997	)			(50,683	)
Earnings before income taxes			28,815				38,762				89,554				102,039
Income tax expense			9,720				14,148				31,920				37,300
Net earnings			19,095				24,614				57,634				64,739
Less: Net (loss) attributable to non-controlling interests			—				(203	)			—				(301	)
Net earnings attributable to Belo Corp.		$	19,095			$	24,817			$	57,634			$	65,040
Earnings Per Share
Basic		$	0.18			$	0.24			$	0.55			$	0.62
Diluted		$	0.18			$	0.24			$	0.55			$	0.62
Weighted Average Shares Outstanding
Basic			104,019				103,120				103,804				103,607
Diluted			104,899				103,420				104,566				103,914
Dividends declared per share		$	0.16			$	0.16			$	0.24			$	0.24

See accompanying Notes to Consolidated Condensed Financial Statements.

 

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CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Belo Corp. and Subsidiaries

 

		Three months ended September 30,								Nine months ended September 30,
In thousands (unaudited)		2013				2012				2013				2012
Net earnings		$	19,095			$	24,614			$	57,634			$	64,739
Other comprehensive income:
Amortization of net actuarial loss, net of tax			771				624				2,313				1,872
Comprehensive income			19,866				25,238				59,947				66,611
Less: comprehensive (loss) attributable to non-controlling interests			—				(203	)			—				(301	)
Comprehensive income attributable to Belo Corp.		$	19,866			$	25,441			$	59,947			$	66,912

See accompanying Notes to Consolidated Condensed Financial Statements.

 

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CONSOLIDATED CONDENSED BALANCE SHEETS

Belo Corp. and Subsidiaries

 

In thousands, except per share amounts (unaudited)		September 30, 2013				December 31, 2012
Assets
Current assets:
Cash and temporary cash investments		$	28,196			$	9,437
Accounts receivable, net			137,166				140,605
Other current assets			15,476				17,757
Total current assets			180,838				167,799
Property, plant and equipment, net			146,314				146,522
Intangible assets, net			725,399				725,399
Goodwill			423,873				423,873
Other assets			36,682				35,999
Total assets		$	1,513,106			$	1,499,592
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	16,099			$	20,348
Accrued expenses			48,920				42,057
Short-term pension obligation			8,200				20,000
Accrued interest payable			14,142				9,123
Income taxes payable			3,607				9,043
Dividends payable			8,390				8,331
Deferred revenue			3,874				2,911
Total current liabilities			103,232				111,813
Long-term debt			712,599				733,025
Deferred income taxes			266,938				257,864
Pension obligation			75,659				86,590
Other liabilities			11,725				10,576
Shareholders’ equity:
Preferred stock, $0.01 par value. Authorized 5,000 shares; none issued
Common stock, $0.01 par value. Authorized 450,000 shares
Series A: Issued 95,866 shares at September 30, 2013 and 95,036 shares at December 31, 2012			958				950
Series B: Issued 8,255 shares at September 30, 2013 and 8,282 shares at December 31, 2012			83				83
Additional paid-in capital			1,097,752				1,089,764
Accumulated deficit			(663,789	)			(696,269	)
Accumulated other comprehensive loss			(92,051	)			(94,364	)
Total Belo Corp. shareholders’ equity			342,953				300,164
Noncontrolling interests			—				(440	)
Total shareholders’ equity			342,953				299,724
Total liabilities and shareholders’ equity		$	1,513,106			$	1,499,592

See accompanying Notes to Consolidated Condensed Financial Statements.

 

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Belo Corp. and Subsidiaries

 

		Nine months ended September 30,
In thousands (unaudited)		2013				2012
Operations
Net earnings		$	57,634			$	64,739
Adjustments to reconcile net earnings to net cash provided by operations:
Depreciation			21,232				22,462
Loss on dissolution of non-controlling interest			440				—
Pension contributions			(20,000	)			(14,926	)
Deferred income taxes			8,087				14,086
Employee retirement benefit expense			804				1,992
Share-based compensation			8,929				4,094
Other non-cash items			1,637				1,684
Equity income from partnerships			(2,052	)			(1,444	)
Other, net			642				1,720
Net change in operating assets and liabilities:
Accounts receivable, net			2,680				13,871
Income tax receivable			—				31,615
Other current assets and other assets			1,188				2,561
Accounts payable			(4,249	)			(3,291	)
Accrued expenses			4,981				10,349
Accrued interest payable			5,018				7,722
Income taxes payable			(5,435	)			(8,668	)
Net cash provided by operations			81,536				148,566
Investments
Capital expenditures			(20,578	)			(15,483	)
Other investments, net			85				(795	)
Net cash used for investments			(20,493	)			(16,278	)
Financing
Net proceeds from revolving debt			73,400				—
Payments on revolving debt			(94,400	)			—
Dividends paid on common stock			(25,096	)			(21,780	)
Common stock repurchased			—				(5,964	)
Net proceeds from exercise of stock options			3,096				124
Excess tax benefit from option exercises			716				117
Net cash used for financing			(42,284	)			(27,503	)
Net increase in cash and temporary cash investments			18,759				104,785
Cash and temporary cash investments at beginning of period			9,437				61,118
Cash and temporary cash investments at end of period		$	28,196			$	165,903

See accompanying Notes to Consolidated Condensed Financial Statements.

 

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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) include equity investments, in which Belo owns a greater than 50% interest. The consolidated condensed financial statements 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.

Belo considers all highly liquid instruments purchased with a remaining maturity of three months or less to be temporary cash investments. Such temporary cash investments are carried at fair value on a recurring basis using Level 1 inputs.

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 under Accounting Standards Codification (ASC) 280-10 to be aggregated into one reporting segment.

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 nine month periods ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. 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, 2012.

All amounts are in thousands, except per share amounts, unless otherwise indicated.

 

(2)

On June 12, 2013, the Company entered into an Agreement and Plan of Merger (Merger Agreement) with Gannett Co., Inc., (Gannett), and Delta Acquisition Corp., a wholly-owned subsidiary of Gannett (Merger Sub). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (Merger), with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Gannett. The Merger Agreement also contemplates that simultaneous with the completion of the Merger, Gannett will undertake a restructuring whereby certain television stations owned by the Company will be transferred to qualified third-party purchasers under asset purchase and related agreements.

Subject to the terms and conditions in the Merger Agreement, which has been approved by the boards of directors of the Company, Gannett and Merger Sub, and by the Company’s shareholders, at the effective time of the Merger, each outstanding share of the Company’s Series A and Series B common stock, other than shares owned by a shareholder exercising appraisal rights and shares owned by the Company, any Company subsidiary, Gannett or Merger Sub, will be converted into the right to receive $13.75 in cash, without interest. The Merger Agreement also provides that at the effective time of the Merger, each outstanding stock option of the Company, whether vested or unvested, will be canceled and converted into the right to receive an amount in cash without interest equal to the product of the excess, if any, of the merger consideration over the applicable exercise price per share of such stock option multiplied by the number of shares of common stock for which such stock option may be exercised, and each outstanding restricted stock unit (RSU), whether vested or unvested, will be canceled and converted into the right to receive an amount in cash equal to the number of shares of common stock subject to such RSU multiplied by the merger consideration in respect of such share, plus any accrued but unpaid dividend equivalents.

The Merger Agreement contains customary representations and warranties from the Company, Gannett and Merger Sub, and each party has agreed to customary covenants, including, among others, covenants relating to the conduct of the Company’s business during the interim period between the execution of the Merger Agreement and the closing of the transactions contemplated by the Merger Agreement. The Merger Agreement provides certain termination rights for both the Company and Gannett.

 

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On July 24, 2013, certain media advocacy groups petitioned the FCC to not consent to the Merger. Also on July 24, 2013, a cable association and certain cable and satellite service providers petitioned the FCC to not consent to the Merger or in the alternative, condition the FCC’s consent. The Company believes the petitions are without merit and has opposed them.

On August 22, 2013, the Company and Gannett each received a request for additional information and documents (also known as “second requests”) from the U.S. Department of Justice (DOJ) pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the proposed merger with Gannett. Gannett and Belo are responding promptly to the second requests and continue working cooperatively with the DOJ as it conducts its review of the proposed Merger.

The Company received shareholder approval for the Merger on September 25, 2013. Completion of the Merger is subject to certain customary conditions, including (1) receipt of required regulatory approvals, including the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and FCC consent for the transactions, (2) completion of the restructuring, and (3) the absence of any order or injunction prohibiting the completion of the transactions. Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party and (ii) the performance in all material respects by the other party of its obligations under the Merger Agreement. The Merger is expected to close following the receipt of such required regulatory approvals and other closing conditions.

Certain contingent costs relating to the Merger are not reflected in the Company’s unaudited condensed consolidated financial statements as of September 30, 2013. These contingent costs include a $9,500 transaction fee due to RBC Capital Markets, LLC upon consummation of the Merger.

 

(3)

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires companies to report, in one place, information about reclassifications out of accumulated other comprehensive income (AOCI). Companies are also required to present reclassifications by component when reporting changes in AOCI balances. The new standard is effective for annual and interim periods beginning after December 15, 2012. This ASU affects presentation only and has no effect on the Company’s financial condition, results of operations or cash flows.

 

(4)

Belo and A. H. Belo Corporation (A. H. Belo), which have three common directors, are considered related parties under accounting rules. The Company has no ownership interest in A. H. Belo or in any of A. H. Belo’s newspaper businesses or related assets, and A. H. Belo has no ownership interest in the Company or any of the Company’s television station businesses or related assets. Subsequent to the Company’s 2008 spin-off of A. H. Belo, the Company’s relationship with A. H. Belo is governed by certain agreements between the two companies or their respective subsidiaries. Although the services provided pursuant to these agreements generated cash flows between Belo and A. H. Belo, the amounts were not significant to the ongoing operations of the Company. Under the services agreements, the Company and A. H. Belo (or their respective subsidiaries) provided each other various services and/or support, substantially all of which have ceased as of September 30, 2013. Belo and A. H. Belo co-own certain investments in third party businesses, which are recorded as either equity or cost method investments and are included in other assets. The amount of income from the third party investments included in the Company’s net earnings is immaterial.

 

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(5)	The following table sets forth the reconciliation between weighted average shares used for calculating basic and diluted earnings per share (EPS) for the three and nine months ended September 30, 2013 and 2012.

 

		Three months ended September 30,								Nine months ended September 30,
		2013				2012				2013				2012
Income (Numerator)
Net earnings attributable to Belo Corp.		$	19,095			$	24,817			$	57,634			$	65,040
Less: Income to participating securities			(140	)			(348	)			(560	)			(1,014	)
Income available to common shareholders plus assumed conversions		$	18,955			$	24,469			$	57,074			$	64,026
Shares (Denominator)
Weighted average shares outstanding (basic)			104,019				103,120				103,804				103,607
Dilutive effect of employee stock options and PBRSUs			880				300				762				307
Adjusted weighted average shares outstanding			104,899				103,420				104,566				103,914
Earnings per share:
Basic		$	0.18			$	0.24			$	0.55			$	0.62
Diluted		$	0.18			$	0.24			$	0.55			$	0.62

In calculating diluted EPS for the three and nine months ended September 30, 2013, the Company excluded common stock options for 3,806 shares and 3,956 shares, respectively, because to include them would be anti-dilutive. For the three and nine months ended September 30, 2013, the Company also excluded from the diluted EPS calculation 1,254 restricted stock units (RSUs) because they are participating securities. Additionally, for the three and nine months ended September 30, 2013, the Company excluded 433 performance-based RSUs (PBRSUs) because to include them would be anti-dilutive.

In calculating diluted EPS for the three and nine months ended September 30, 2012, the Company excluded common stock options for 6,674 shares and 6,677 shares, respectively, because to include them would be anti-dilutive. Additionally, for the three and nine months ended September 30, 2012, the Company excluded from the diluted EPS calculation 1,253 RSUs because they are participating securities.

 

(6)

At September 30, 2013, Belo had $712,599 in fixed-rate debt securities as follows: $272,599 of 8% Senior Notes due 2016; $200,000 of 7 3/4% Senior Debentures due 2027; and $240,000 of 7 1/4% Senior Debentures due 2027. The weighted average effective interest rate for the fixed-rate debt instruments is 7.7%.

At September 30, 2013, Belo had variable-rate debt capacity of $200,000 under a revolving credit agreement (Credit Agreement). The Company is required to maintain certain leverage and interest ratios specified in the Credit Agreement. The leverage ratio is generally defined as the ratio of 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 September 30, 2013, the Company’s leverage ratio was 2.8, its interest coverage ratio was 4.2 and its senior leverage ratio was 0.0. At September 30, 2013, there was no balance outstanding under the Credit Agreement, all funds were available for borrowing and the Company was in compliance with all debt covenant requirements.

At September 30, 2013, the fair value of Belo’s fixed-rate debt was estimated to be $737,350. The Company’s publicly held long-term debt is classified as Level 2 inputs, because the fair value for these instruments is determined using observable inputs in non-active markets.

 

(7)

The Company’s 8% Senior Notes 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 comprehensive income (loss) and consolidated statements of cash flows of Belo as parent, the guarantor subsidiaries consisting of Belo’s 100%-owned subsidiaries as of the date of issuance, non-guarantor subsidiaries consisting of subsidiaries subsequent to the date of issuance, 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.

 

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Condensed Consolidating Statement of Earnings

For the Three Months Ended September 30, 2013

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Net Operating Revenues		$	—			$	166,135			$	57			$	—			$	166,192
Operating Costs and Expenses
Station salaries, wages and employee benefits			—				54,830				254				—				55,084
Station programming and other operating costs			—				50,594				101				—				50,695
Corporate operating costs			9,654				843				423				—				10,920
Depreciation			257				6,651				221				—				7,129
Total operating costs and expenses			9,911				112,918				999				—				123,828
Earnings (loss) from operations			(9,911	)			53,217				(942	)			—				42,364
Other Income and (Expense)
Interest expense			(14,525	)			(13	)			—				—				(14,538	)
Intercompany interest			507				(507	)			—				—				—
Other income (expense), net			(121	)			1,110				—				—				989
Total other income and (expense)			(14,139	)			590				—				—				(13,549	)
Earnings (loss) before income taxes			(24,050	)			53,807				(942	)			—				28,815
Income tax benefit (expense)			8,307				(18,344	)			317				—				(9,720	)
Equity in earnings (loss) of subsidiaries			34,838				—				—				(34,838	)			—
Net earnings (loss)		$	19,095			$	35,463			$	(625	)		$	(34,838	)		$	19,095
Less: Net (loss) from non-controlling interests			—				—				—				—				—
Net earnings (loss) attributable To Belo Corp.		$	19,095			$	35,463			$	(625	)		$	(34,838	)		$	19,095

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2013

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Net earnings (loss)		$	19,095			$	35,463			$	(625	)		$	(34,838	)		$	19,095
Amortization of net actuarial loss, net of tax			771				—				—				—				771
Comprehensive income (loss)			19,866				35,463				(625	)			(34,838	)			19,866
Less: comprehensive (loss) attributable to noncontrolling interests			—				—				—				—				—
Comprehensive income (loss) attributable to Belo Corp.		$	19,866			$	35,463			$	(625	)		$	(34,838	)		$	19,866

 

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Condensed Consolidating Statement of Earnings

For the Three Months Ended September 30, 2012

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Net Operating Revenues		$	—			$	176,273			$	—			$	—			$	176,273
Operating Costs and Expenses
Station salaries, wages and employee benefits			—				54,755				21				—				54,776
Station programming and other operating costs			—				50,049				471				—				50,520
Corporate operating costs			5,906				1,204				391				—				7,501
Depreciation			319				6,998				211				—				7,528
Total operating costs and expenses			6,225				113,006				1,094				—				120,325
Earnings (loss) from operations			(6,225	)			63,267				(1,094	)			—				55,948
Other Income and (Expense)
Interest expense			(17,677	)			(6	)			—				—				(17,683	)
Intercompany interest			752				(752	)			—				—				—
Other income (expense), net			(60	)			557				—				—				497
Total other income and (expense)			(16,985	)			(201	)			—				—				(17,186	)
Earnings (loss) before income taxes			(23,210	)			63,066				(1,094	)			—				38,762
Income tax benefit (expense)			8,743				(23,290	)			399				—				(14,148	)
Equity in earnings (loss) of subsidiaries			39,284				—				—				(39,284	)			—
Net earnings (loss)			24,817				39,776				(695	)			(39,284	)			24,614
Less: Net (loss) from noncontrolling interests			—				—				(203	)			—				(203	)
Net earnings (loss) attributable to Belo Corp.		$	24,817			$	39,776			$	(492	)		$	(39,284	)		$	24,817

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2012

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Net earnings (loss)		$	24,817			$	39,776			$	(695	)		$	(39,284	)		$	24,614
Amortization of net actuarial loss, net of tax			624				—				—				—				624
Comprehensive income (loss)			25,441				39,776				(695	)			(39,284	)			25,238
Less: comprehensive (loss) attributable to noncontrolling interests			—				—				(203	)			—				(203	)
Comprehensive income (loss) attributable to Belo Corp.		$	25,441			$	39,776			$	(492	)		$	(39,284	)		$	25,441

 

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Condensed Consolidating Statement of Earnings

For the Nine Months Ended September 30, 2013

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Net Operating Revenues		$	—			$	499,980			$	57			$	—			$	500,037
Operating Costs and Expenses
Station salaries, wages and employee benefits			—				166,358				804				—				167,162
Station programming and other operating costs			—				147,210				405				—				147,615
Corporate operating costs			28,140				3,119				1,218				—				32,477
Depreciation			949				19,631				652				—				21,232
Total operating costs and expenses			29,089				336,318				3,079				—				368,486
Earnings (loss) from operations			(29,089	)			163,662				(3,022	)			—				131,551
Other Income and (Expense)
Interest expense			(43,686	)			(29	)			—				—				(43,715	)
Intercompany interest			1,988				(1,988	)			—				—				—
Other income (expense), net			(1,140	)			2,840				18				—				1,718
Total other income and (expense)			(42,838	)			823				18				—				(41,997	)
Earnings (loss) before income taxes			(71,927	)			164,485				(3,004	)			—				89,554
Income tax benefit (expense)			26,346				(59,337	)			1,071				—				(31,920	)
Equity in earnings (loss) of subsidiaries			103,215				—				—				(103,215	)			—
Net earnings (loss)		$	57,634			$	105,148			$	(1,933	)		$	(103,215	)		$	57,634
Less: Net (loss) from noncontrolling interests			—				—				—				—				—
Net earnings (loss) attributable To Belo Corp.		$	57,634			$	105,148			$	(1,933	)		$	(103,215	)		$	57,634

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2013

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Net earnings (loss)		$	57,634			$	105,148			$	(1,933	)		$	(103,215	)		$	57,634
Amortization of net actuarial loss, net of tax			2,313				—				—				—				2,313
Comprehensive income (loss)			59,947				105,148				(1,933	)			(103,215	)			59,947
Less: comprehensive (loss) attributable to noncontrolling interests			—				—				—				—				—
Comprehensive income (loss) attributable to Belo Corp.		$	59,947			$	105,148			$	(1,933	)		$	(103,215	)		$	59,947

 

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Condensed Consolidating Statement of Earnings

For the Nine Months Ended September 30, 2012

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Net Operating Revenues		$	—			$	509,790			$	—			$	—			$	509,790
Operating Costs and Expenses
Station salaries, wages and employee benefits			—				166,891				21				—				166,912
Station programming and other operating costs			—				143,240				671				—				143,911
Corporate operating costs			19,366				3,050				1,367				—				23,783
Depreciation			909				20,921				632				—				22,462
Total operating costs and expenses			20,275				334,102				2,691				—				357,068
Earnings (loss) from operations			(20,275	)			175,688				(2,691	)			—				152,722
Other Income and (Expense)
Interest expense			(53,030	)			(29	)			—				—				(53,059	)
Intercompany interest			2,241				(2,241	)			—				—				—
Other income, net			2				2,374				—				—				2,376
Total other income and (expense)			(50,787	)			104				—				—				(50,683	)
Earnings (loss) before income taxes			(71,062	)			175,792				(2,691	)			—				102,039
Income tax benefit (expense)			26,796				(65,080	)			984				—				(37,300	)
Equity in earnings (loss) of subsidiaries			109,306				—				—				(109,306	)			—
Net earnings (loss)			65,040				110,712				(1,707	)			(109,306	)			64,739
Less: Net loss from noncontrolling interests			—				—				(301	)			—				(301	)
Net earnings (loss) attributable to Belo Corp.		$	65,040			$	110,712			$	(1,406	)		$	(109,306	)		$	65,040

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2012

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Net earnings (loss)		$	65,040			$	110,712			$	(1,707	)		$	(109,306	)		$	64,739
Amortization of net actuarial loss, net of tax			1,872				—				—				—				1,872
Comprehensive income (loss)			66,912				110,712				(1,707	)			(109,306	)			66,611
Less: comprehensive (loss) attributable to noncontrolling interests			—				—				(301	)			—				(301	)
Comprehensive income (loss) attributable to Belo Corp.		$	66,912			$	110,712			$	(1,406	)		$	(109,306	)		$	66,912

 

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Condensed Consolidating Balance Sheet

As of September 30, 2013

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Assets
Current assets:
Cash and temporary cash investments		$	24,923			$	3,273			$	—			$	—			$	28,196
Accounts receivable, net			57				137,071				38				—				137,166
Other current assets			4,697				10,752				27				—				15,476
Total current assets			29,677				151,096				65				—				180,838
Property, plant and equipment, net			2,398				130,105				13,811				—				146,314
Intangible assets, net			—				725,399				—				—				725,399
Goodwill			—				423,873				—				—				423,873
Deferred income taxes			36,536				—				—				(36,536	)			—
Intercompany receivable			524,035				—				—				(524,035	)			—
Investment in subsidiaries			586,396				—				—				(586,396	)			—
Other assets			16,101				20,540				41				—				36,682
Total assets		$	1,195,143			$	1,451,013			$	13,917			$	(1,146,967	)		$	1,513,106
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	7,522			$	8,485			$	92			$	—			$	16,099
Accrued expenses			17,042				31,563				315				—				48,920
Short-term pension obligation			8,200				—				—				—				8,200
Income taxes payable			3,607				—				—				—				3,607
Deferred revenue			—				3,874				—				—				3,874
Dividends payable			8,390				—				—				—				8,390
Accrued interest payable			14,142				—				—				—				14,142
Total current liabilities			58,903				43,922				407				—				103,232
Long-term debt			712,599				—				—				—				712,599
Deferred income taxes			—				302,959				515				(36,536	)			266,938
Pension obligation			75,659				—				—				—				75,659
Intercompany payable			—				518,192				5,843				(524,035	)			—
Other liabilities			5,029				6,696				—				—				11,725
Total shareholders’ equity			342,953				579,244				7,152				(586,396	)			342,953
Total liabilities and shareholders’ equity		$	1,195,143			$	1,451,013			$	13,917			$	(1,146,967	)		$	1,513,106

 

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Condensed Consolidating Balance Sheet

As of December 31, 2012

 

		Parent				Guarantors				Non- Guarantors				Eliminations				Total
Assets
Current assets:
Cash and temporary cash investments		$	6,833			$	2,500			$	104			$	—			$	9,437
Accounts receivable, net			487				140,107				11				—				140,605
Other current assets			4,017				13,674				66				—				17,757
Total current assets			11,337				156,281				181				—				167,799
Property, plant and equipment, net			2,865				129,262				14,395				—				146,522
Intangible assets, net			—				725,399				—				—				725,399
Goodwill			—				423,873				—				—				423,873
Deferred income taxes			42,528				—				—				(42,528	)			—
Intercompany receivable			636,455				—				—				(636,455	)			—
Investment in subsidiaries			483,181				—				—				(483,181	)			—
Other assets			18,297				17,635				67				—				35,999
Total assets		$	1,194,663			$	1,452,450			$	14,643			$	(1,162,164	)		$	1,499,592
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	8,154			$	11,812			$	382			$	—			$	20,348
Accrued expenses			16,202				25,432				423				—				42,057
Short-term pension obligation			20,000				—				—				—				20,000
Income taxes payable			9,043				—				—				—				9,043
Deferred revenue			—				2,911				—				—				2,911
Dividends payable			8,331				—				—				—				8,331
Accrued interest payable			9,123				—				—				—				9,123
Total current liabilities			70,853				40,155				805				—				111,813
Long-term debt			733,025				—				—				—				733,025
Deferred income taxes			—				299,552				840				(42,528	)			257,864
Pension obligation			86,590				—				—				—				86,590
Intercompany payable			—				632,543				3,912				(636,455	)			—
Other liabilities			4,471				6,105				—				—				10,576
Total shareholders’ equity			299,724				474,095				9,086				(483,181	)			299,724
Total liabilities and shareholders’ equity		$	1,194,663			$	1,452,450			$	14,643			$	(1,162,164	)		$	1,499,592

 

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Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2013

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Total
Operations
Net cash provided by (used for) operations		$	(42,226	)		$	125,730			$	(1,968	)		$	81,536
Investments
Capital expenditures			(474	)			(20,035	)			(69	)			(20,578	)
Other investments, net			(141	)			226				—				85
Net cash used for investments			(615	)			(19,809	)			(69	)			(20,493	)
Financing
Net proceeds from revolving debt			73,400				—				—				73,400
Payments on revolving debt			(94,400	)			—				—				(94,400	)
Dividends paid on common stock			(25,096	)			—				—				(25,096	)
Net proceeds from exercise of stock options			3,096				—				—				3,096
Excess tax benefit from option exercises			716				—				—				716
Intercompany activity			103,215				(105,148	)			1,933				—
Net cash provided by (used for) financing activities			60,931				(105,148	)			1,933				(42,284	)
Net increase (decrease) in cash and temporary cash investments			18,090				773				(104	)			18,759
Cash and temporary cash investments at beginning of period			6,833				2,500				104				9,437
Cash and temporary cash investments at end of period		$	24,923			$	3,273			$	—			$	28,196

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2012

(unaudited)

 

		Parent				Guarantors				Non- Guarantors				Total
Operations
Net cash provided by (used for) operations		$	26,643			$	123,054			$	(1,131	)		$	148,566
Investments
Capital expenditures			(4,721	)			(10,598	)			(164	)			(15,483	)
Other investments, net			(795	)			—				—				(795	)
Net cash used for investments			(5,516	)			(10,598	)			(164	)			(16,278	)
Financing
Dividends paid			(21,780	)			—				—				(21,780	)
Common stock repurchased			(5,964	)			—				—				(5,964	)
Net proceeds from exercise of stock options			124				—				—				124
Excess tax benefit from option exercises			117				—				—				117
Intercompany activity			109,306				(110,712	)			1,406				—
Net cash provided by (used for) financing activities			81,803				(110,712	)			1,406				(27,503	)
Net increase in cash and temporary cash investments			102,930				1,744				111				104,785
Cash and temporary cash investments at beginning of period			59,339				1,755				24				61,118
Cash and temporary cash investments at end of period		$	162,269			$	3,499			$	135			$	165,903

 

(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, 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.

 

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Share-based compensation expense for awards to Belo’s employees and non-employee directors was $2,633 and $11,314, for the three and nine months ended September 30, 2013. Share-based compensation expense for awards to Belo’s employees and non-employee directors was $1,980 and $5,893, for the three and nine months ended September 30, 2012.

 

(9)	Net periodic pension cost includes the following components for the three and nine months ended September 30, 2013 and 2012:

 

		Three months ended September 30,								Nine months ended September 30,
		2013				2012				2013				2012
Interest cost on projected benefit obligation		$	2,985			$	3,115			$	8,956			$	9,345
Expected return on assets			(3,895	)			(3,393	)			(11,687	)			(10,178	)
Amortization of net loss			1,186				960				3,559				2,880
Net periodic pension cost		$	276			$	682			$	828			$	2,047

 

(10)	Effective January 1, 2013, the Company discontinued its ownership in a majority-owned subsidiary. The following table sets forth allocation of equity between controlling and noncontrolling interests as of September 30, 2013:

 

		Belo Corp.				Noncontrolling
		Shareholders’				Interests				Total
		Equity				Equity				Equity
Balance at December 31, 2012		$	300,164			$	(440	)		$	299,724
Net earnings (loss)			57,634				—				57,634
Dividends declared			(25,154	)			—				(25,154	)
Share-based compensation			4,184				—				4,184
Exercise of stock options			3,096				—				3,096
Excess tax benefit from long-term incentive plan			716				—				716
Other comprehensive income			2,313				—				2,313
Other			—				440				440
Balance at September 30, 2013		$	342,953			$	—			$	342,953

The following table sets forth the changes in Accumulated Other Comprehensive Loss by component for the nine months ended September 30, 2013:

 

		Defined Benefit Plan
Balance at December 31, 2012		$	(94,364	)
Amounts reclassified from AOCL, net of tax			2,313
Balance at September 30, 2013		$	(92,051	)

The following tables set forth the reclassifications out of Accumulated Other Comprehensive Loss for the three and nine months ended September 30, 2013:

 

		Amount reclassified				Affected line item in
Details about accumulated other		from accumulated other				the statement where
comprehensive loss components		comprehensive loss				net earnings is presented
Three months ended September 30, 2013:
Amortization of defined benefit pension items:
Actuarial losses, total before tax		$	1,186			Included in net periodic pension costs (Note 9)
			(415	)		Deferred tax expense
		$	771			Net of tax

 

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		Amount reclassified				Affected line item in
Details about accumulated other		from accumulated other				the statement where
comprehensive loss components		comprehensive loss				net earnings is presented
Nine months ended September 30, 2013:
Amortization of defined benefit pension items:
Actuarial losses, total before tax		$	3,559			Included in net periodic pension costs (Note 9)
			(1,246	)		Deferred tax expense
		$	2,313			Net of tax

 

(11)

On June 14, 2013, a purported class action lawsuit was filed by a purported individual shareholder of the Company in the 68th Judicial District Court of Dallas County, Texas, against the Company, Gannett Co., Inc., and members of the Company’s board of directors. On June 17, 2013, June 24, 2013, and July 16, 2013, respectively, three similar lawsuits were filed by other purported shareholders of the Company in the Chancery Court of the State of Delaware against the Company, members of the Belo board, Gannett Co., Inc. and Gannett’s merger subsidiary. All four lawsuits arise out of the Company’s Merger Agreement with Gannett Co., Inc., announced on June 13, 2013. The four lawsuits challenge the Merger, asserting claims of breach of fiduciary duty against the individual defendants and aiding and abetting breach of this duty against the corporate defendants. The Delaware Court of Chancery ordered the consolidation of the three Delaware actions, and on July 11, 2013, Delaware plaintiffs filed an amended, consolidated complaint. On September 30, 2013, the Delaware plaintiffs voluntarily dismissed the Delaware action without prejudice, which dismissal the Delaware Court of Chancery approved. The plaintiff in the Texas action has indicated that he intends to file an amended petition and has agreed that the defendants are not required to answer or otherwise respond to the current petition. The Company believes the lawsuits are without merit and intends to vigorously defend against them.

In addition to the proceedings disclosed above, 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 and comprehensive income (loss), 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 share and 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.

Proposed Merger with Gannett Co., Inc.

On June 12, 2013, the Company entered into an Agreement and Plan of Merger (Merger Agreement) with Gannett Co., Inc., (Gannett), and Delta Acquisition Corp., a wholly-owned subsidiary of Gannett (Merger Sub). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (Merger), with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Gannett. The Merger Agreement also contemplates that simultaneous with the completion of the Merger, Gannett will undertake a restructuring whereby certain television stations owned by the Company will be transferred to qualified third-party purchasers under asset purchase and related agreements.

Subject to the terms and conditions in the Merger Agreement, which has been approved by the boards of directors of the Company, Gannett and Merger Sub, and by the Company’s shareholders, at the effective time of the Merger, each outstanding share of the Company’s Series A and Series B common stock, other than shares owned by a shareholder exercising appraisal rights and shares owned by the Company, any Company subsidiary, Gannett or Merger Sub, will be converted into the right to receive $13.75 in cash, without interest. The Merger Agreement also provides that at the effective time of the Merger, each outstanding stock option of the Company, whether vested or unvested, will be canceled and converted into the right to receive an amount in cash without interest equal to the product of the excess, if any, of the merger consideration over the applicable exercise price per share of such stock option multiplied by the number of shares of common stock for which such stock option may be exercised, and each

 

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outstanding restricted stock unit (RSU), whether vested or unvested, will be canceled and converted into the right to receive an amount in cash equal to the number of shares of common stock subject to such RSU multiplied by the merger consideration in respect of such share, plus any accrued but unpaid dividend equivalents.

The Merger Agreement contains customary representations and warranties from the Company, Gannett and Merger Sub, and each party has agreed to customary covenants, including, among others, covenants relating to the conduct of the Company’s business during the interim period between the execution of the Merger Agreement and the closing of the transactions contemplated by the Merger Agreement. The Merger Agreement provides certain termination rights for both the Company and Gannett.

On July 24, 2013, certain media advocacy groups petitioned the FCC to not consent to the Merger. Also on July 24, 2013, a cable association and certain cable and satellite service providers petitioned the FCC to not consent to the Merger or in the alternative, condition the FCC’s consent. The Company believes the petitions are without merit and has opposed them.

On August 22, 2013, the Company and Gannett each received a request for additional information and documents (also known as “second requests”) from the U.S. Department of Justice (DOJ) pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the proposed merger with Gannett. Gannett and Belo are responding promptly to the second requests and continue working cooperatively with the DOJ as it conducts its review of the proposed Merger.

The Company received shareholder approval for the Merger on September 25, 2013. Completion of the Merger is subject to certain customary conditions, including (1) receipt of required regulatory approvals, including the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and FCC consent for the transactions, (2) completion of the restructuring, and (3) the absence of any order or injunction prohibiting the completion of the transactions. Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party and (ii) the performance in all material respects by the other party of its obligations under the Merger Agreement. The Merger is expected to close following the receipt of such required regulatory approvals and other closing conditions.

Certain contingent costs relating to the Merger are not reflected in the Company’s unaudited condensed consolidated financial statements as of September 30, 2013. These contingent costs include a $9,500 transaction fee due to RBC Capital Markets, LLC upon consummation of the Merger.

Overview

Belo Corp. (Belo or the Company), a Delaware corporation, began as a Texas newspaper company in 1842 and today is a publicly-traded pure-play television company. The Company owns 20 television stations (nine in the top 25 U.S. markets) that reach more than 14 percent of U.S. television households, including ABC, CBS, NBC, FOX, CW and MyNetwork TV (MNTV) affiliates, and their associated Web sites, in 15 highly-attractive markets across the United States. The Company also has three local and two regional news channels.

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.

 

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The following table sets forth the Company’s major media assets as of September 30, 2013:

 

Market		Market Rank(1)				Station/ News Channel		Year Belo Acquired/ Started		Network Affiliation		Number of Commercial Stations in Market(2)
Dallas/Fort Worth			5			WFAA		1950		ABC			16
Dallas/Fort Worth			5			TXCN		1999		N/A			N/A
Houston			10			KHOU		1984		CBS			15
Phoenix(3)			12			KTVK		1999		IND			13
Phoenix			12			KASW		2000		CW			13
Seattle/Tacoma			13			KING		1997		NBC			13
Seattle/Tacoma			13			KONG		2000		IND			13
Seattle/Tacoma			13			NWCN		1997		N/A			N/A
St. Louis			21			KMOV		1997		CBS			8
Portland(4)			22			KGW		1997		NBC			8
Charlotte			25			WCNC		1997		NBC			8
San Antonio			36			KENS		1997		CBS			10
Austin			40			KVUE		1999		ABC			7
Hampton/Norfolk			45			WVEC		1984		ABC			8
Louisville			49			WHAS		1997		ABC			7
New Orleans(5)			51			WWL		1994		CBS			8
New Orleans(6)			51			WUPL		2007		MNTV			8
Tucson			71			KMSB		1997		FOX			9
Tucson			71			KTTU		2002		MNTV			9
Spokane			73			KREM		1997		CBS			7
Spokane			73			KSKN		2001		CW			7
Boise(7)(8)			110			KTVB		1997		NBC			5

 

(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 2013 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)	KTVK also produces “3TV 24/7,” a 24-hour daily local news and weather channel.

(4)	The Company also owns KGWZ-LD, a low power television station in Portland, Oregon.

(5)	WWL also produces “NewsWatch on Channel 15,” a 24-hour daily local news and weather channel.

(6)	The Company also owns WBXN-CA, a Class A television station in New Orleans, Louisiana.

(7)	The Company also owns KTFT-LD (NBC), a low power television station in Twin Falls, Idaho.

(8)	KTVB also produces “24/7 Newschannel,” a 24-hour daily local news and weather channel.

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, CW and MNTV. The Company’s network affiliation agreements generally provide the station with the exclusive right to broadcast over the air in its local service area all programs transmitted by the network with which the station is affiliated. As part of these agreements, the network has the right to sell most of the advertising time during such broadcasts. As affiliation agreements renew, cash payments are made by the Company to the networks for compensation related to programming provided by such networks. Most of the Company’s current affiliation agreements provided for payments to the respective network in 2012 and effective January 1, 2013, one additional network began receiving compensation payments from the Company. Cash payments to networks under the affiliation agreements are included in programming expense.

 

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The principal source of the Company’s revenue is from the sale of local, regional and national advertising. In even numbered years, the Company’s revenue also includes significant revenue from political advertising. Additional discussion regarding the Company’s results of operations for the three and nine months ended September 30, 2013, as compared to the three and nine months ended September 30, 2012, is provided below.

Results of Operations

(Dollars in thousands)

 

		Three months ended September 30,												Nine months ended September 30,
		2013				Percentage Change				2012				2013				Percentage Change				2012
Net operating revenues		$	166,192				(5.7	%)		$	176,273			$	500,037				(1.9	%)		$	509,790
Operating costs and expenses			123,828				2.9	%			120,325				368,486				3.2	%			357,068
Earnings from operations			42,364				(24.3	%)			55,948				131,551				(13.9	%)			152,722
Other income and (expense)			(13,549	)			(21.2	%)			(17,186	)			(41,997	)			(17.1	%)			(50,683	)
Earnings from operations before income taxes			28,815				(25.7	%)			38,762				89,554				(12.2	%)			102,039
Income tax expense			(9,720	)			(31.3	%)			(14,148	)			(31,920	)			(14.4	%)			(37,300	)
Net earnings			19,095				(22.4	%)			24,614				57,634				(11.0	%)			64,739
Less: Net earnings (loss) attributable to non-controlling interests			—				NM				(203	)			—				NM				(301	)
Net earnings attributable to Belo Corp.		$	19,095				(23.1	%)		$	24,817			$	57,634				(11.4	%)		$	65,040

NM is not meaningful

Net Operating Revenues

 

		Three months ended September 30,												Nine months ended September 30,
		2013				Percentage Change				2012				2013				Percentage Change				2012
Spot advertising revenue		$	128,162				(11.5	%)		$	144,846			$	393,067				(5.2	%)		$	414,780
Other			38,030				21.0	%			31,427				106,970				12.6	%			95,010
Net operating revenues		$	166,192				(5.7	%)		$	176,273			$	500,037				(1.9	%)		$	509,790

Spot advertising revenue decreased $16,684, or 11.5 percent, in the three months ended September 30, 2013, as compared to the three months ended September 30, 2012. This decrease is mostly due to a $15,067 decrease in political advertising revenue. The 2012 third quarter also had $13,412 in Olympics revenue. Political revenues are generally higher in even-numbered years than in odd-numbered years due to elections for various state and national offices. Core spot advertising decreased $1,617, or 1.3 percent with decreases in the retail, restaurant and grocery categories. These decreases were mostly offset by increases in the automotive, furniture and travel and tourism categories. Other revenue increased during the quarter, primarily due to a 19.6 percent increase in Internet revenue and a 28.3 percent increase in retransmission revenue.

Spot advertising revenue decreased $21,713, or 5.2 percent, in the nine months ended September 30, 2013, as compared to the nine months ended September 30, 2012. This decrease is primarily due to a $24,353 decrease in political advertising revenue. The decrease from political revenue was partially offset by an increase of $2,640 or 0.7 percent, in core spot advertising. Increases in the automotive, telecommunications, general services and furniture categories were partially offset by decreases in the healthcare, retail, restaurant and education categories. The increase in other revenue was primarily due to a 20.7 percent increase in Internet revenue and a 15.4 percent increase in retransmission revenue.

Operating Costs and Expenses

Station salaries, wages and employee benefits and station programming and other operating costs for the three months ended September 30, 2013, were consistent with those costs for the three months ended September 30, 2012. Increases in compensation and sales commissions were offset by decreases in pension-related expenses. Increases in network-related programming expense and spending for interactive services associated with the Company’s increase in Internet revenue were partially offset by decreases in repairs and maintenance expenses, advertising and promotion expenses and lower national representation fees related to the decrease in political revenues.

Station salaries, wages and employee benefits for the nine months ended September 30, 2013, were consistent with those costs for the nine months ended September 30, 2012. Increases in equity-based compensation, resulting from

 

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the increase in the Company’s share price during the quarter on previously awarded long-term incentives, and increases in sales commissions were offset by decreases in pension-related expenses. Station programming and other operating costs increased $3,704, or 2.6 percent, in the nine months ended September 30, 2013, compared to the nine months ended September 30, 2012, primarily related to programming payments to the networks.

Corporate operating costs increased $3,419, or 45.6 percent, in the three months ended September 30, 2013, compared to the three months ended September 30, 2012, primarily due to costs associated with the merger.

Corporate operating costs increased $8,694, or 36.6 percent, in the nine months ended September 30, 2013, compared to the nine months ended September 30, 2012, primarily due to increases in equity-based compensation, resulting from the increase in the Company’s share price during the quarter on previously awarded long-term incentives, and other costs associated with the merger.

Other Income (Expense)

Interest expense decreased $3,145 and $9,344 in the three and nine months ended September 30, 2013, respectively, due primarily to the early redemption in November 2012 of the Company’s Senior Notes originally due May 2013. Other income, net, increased in the three months ended September 30, 2013, primarily due to the write-off of certain investments in the third quarter 2012. Other income, net, decreased in the nine months ended September 30, 2013, primarily due to the write-off of certain Company investments in 2013.

Income Tax Expense

Income taxes decreased $4,428 and $5,380 for the three and nine months ended September 30, 2013, respectively, primarily due to lower pre-tax earnings.

Noncontrolling Interest

The Company decided during the second quarter of 2013 to discontinue its interest and write-off the investment in a majority-owned subsidiary that resulted in noncontrolling interest disclosures in 2012.

Station-Adjusted EBITDA

 

		Three months ended September 30,												Nine months ended September 30,
		2013				Percentage Change				2012				2013				Percentage Change				2012
Station-Adjusted EBITDA		$	60,413				(14.9	%)		$	70,977			$	185,260				(6.9	%)		$	198,967
Corporate operating costs and expenses			(10,920	)			45.6	%			(7,501	)			(32,477	)			36.6	%			(23,783	)
Depreciation			(7,129	)			(5.3	%)			(7,528	)			(21,232	)			(5.5	%)			(22,462	)
Earnings from operations		$	42,364				(24.3	%)		$	55,948			$	131,551				(13.9	%)		$	152,722

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 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). Station-Adjusted EBITDA is a common alternative measure of performance in the broadcast television industry used by investors, financial analysts and rating agencies to evaluate financial performance.

For the three months ended September 30, 2013, Station-Adjusted EBITDA decreased $10,564, or 14.9 percent, compared with the three months ended September 30, 2012. For the nine months ended September 30, 2013, Station-Adjusted EBITDA decreased $13,707, or 6.9 percent, compared with the nine months ended September 30, 2012. As discussed above, this decrease was primarily due to decreases in political spot revenue and Olympics revenue and increases in programming costs.

 

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Liquidity and Capital Resources

Net cash provided by operations, bank borrowings and long-term debt are Belo’s primary sources of liquidity.

Operating Cash Flows

Net cash provided by operations was $81,536 in the nine months ended September 30, 2013, compared with $148,566 in the nine months ended September 30, 2012. The 2013 operating cash flows were primarily provided by net earnings adjusted for non-cash and pension-related items, and routine changes in working capital. The 2012 operating cash flows were provided primarily by net earnings adjusted for non-cash and pension-related items, receipt of a $31,615 federal income tax refund, and routine changes in working capital. The decrease in net cash provided by operations is primarily due to the receipt of the federal income tax refund in the first quarter 2012, increase in pension contributions and fluctuations in working capital due to the normal differences between political and non-political years.

Investing Cash Flows

Net cash flows used for investing activities were $20,493 in the nine months ended September 30, 2013, compared to $16,278 in the nine months ended September 30, 2012. The 2013 and 2012 investing cash flows were primarily used for capital expenditures.

Capital Expenditures

Total capital expenditures were $20,578 in the first nine months of 2013 compared with $15,483 in the first nine months of 2012.

Financing Cash Flows

Net cash flows used for financing activities were $42,284 in the nine months ended September 30, 2013 compared with $27,503 in the nine months ended September 30, 2012. The 2013 financing cash flows consisted primarily of borrowings and repayments under the Company’s revolving credit facility and dividends paid. The 2012 financing cash flows consisted primarily of dividends paid and common stock repurchased.

Long-Term Debt

At September 30, 2013, Belo had $712,599 in fixed-rate debt securities as follows: $272,599 of 8% Senior Notes due 2016; $200,000 of 7 ³/₄% Senior Debentures due 2027; and $240,000 of 7 ¹/₄% Senior Debentures due 2027. The weighted average effective interest rate for the fixed-rate debt instruments is 7.7%.

At September 30, 2013, Belo had variable-rate debt capacity of $200,000 under a revolving credit agreement (Credit Agreement). The Company is required to maintain certain leverage and interest ratios specified in the Credit Agreement. The leverage ratio is generally defined as the ratio of 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 September 30, 2013, the Company’s leverage ratio was 2.8, its interest coverage ratio was 4.2 and its senior leverage ratio was 0.0. At September 30, 2013, there was no balance outstanding under the Credit Agreement, all funds were available for borrowing and the Company was in compliance with all debt covenant requirements.

Dividends

On September 26, 2013, the Company declared a quarterly dividend of eight cents per share on Series A and Series B common stock outstanding, to be paid on December 6, 2013, to shareholders of record on October 15, 2013.

On September 6, 2013, the Company paid a quarterly dividend of $8,389, or eight cents per share, on Series A and Series B common stock outstanding as of the record date of August 16, 2013.

 

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On May 31, 2013, the Company paid a quarterly dividend of $8,345, or eight cents per share, on Series A and Series B common stock outstanding as of the record date of May 10, 2013.

On March 1, 2013, the Company paid a quarterly dividend of $8,362, or eight cents per share, on Series A and Series B common stock outstanding as of the record date of February 8, 2013.

Share Repurchase

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 September 30, 2013, under this authority was 12,010 shares. During the nine months ended September 30, 2013, no shares were repurchased.

Other

The Company has various sources available to meet its 2013 capital and operating commitments, including cash on hand, short-term investments, internally-generated funds and the $200,000 Credit Agreement. The Company believes its resources are adequate to meet its foreseeable needs.

Forward-Looking Statements

Statements in this Form 10-Q concerning Belo’s business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, dividends, 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. 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 factors include, but are not limited to, uncertainties regarding changes in capital market conditions and prospects, and other factors such as changes in advertising demand, interest and discount rates and programming and production costs; changes in viewership patterns and demography, and actions by viewership measurement services; 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; FCC 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; significant armed conflict; the ability to meet the conditions to closing the transactions with Gannett, including receipt of regulatory approvals and clearances, within the time frame contemplated or at all; the effect of transaction-related costs and expenses; the potentially adverse effect of the transactions on the ability of Belo to retain employees and maintain business relationships; as well as other risks detailed in Belo’s other public disclosures and filings with the Securities and Exchange Commission (“SEC”), including Belo’s Annual Report on Form 10-K.

 

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 year ended December 31, 2012.

 

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Item 4.

Controls and Procedures

During the quarter ended September 30, 2013, 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 and Treasurer, 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 and Treasurer 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 and Treasurer, as appropriate, to allow timely decisions regarding required disclosure.

PART II.

 

Item 1.

Legal Proceedings

On June 14, 2013, a purported class action lawsuit was filed by a purported individual shareholder of the Company in the 68^th Judicial District Court of Dallas County, Texas, against the Company, Gannett Co., Inc., and members of the Company’s board of directors. On June 17, 2013, June 24, 2013, and July 16, 2013, respectively, three similar lawsuits were filed by other purported shareholders of the Company in the Chancery Court of the State of Delaware against the Company, members of the Belo board, Gannett Co., Inc. and Gannett’s merger subsidiary. All four lawsuits arise out of the Company’s Merger Agreement with Gannett Co., Inc., announced on June 13, 2013. The four lawsuits challenge the Merger, asserting claims of breach of fiduciary duty against the individual defendants and aiding and abetting breach of this duty against the corporate defendants. The Delaware Court of Chancery ordered the consolidation of the three Delaware actions, and on July 11, 2013, Delaware plaintiffs filed an amended, consolidated complaint. On September 30, 2013, the Delaware plaintiffs voluntarily dismissed the Delaware action without prejudice, which dismissal the Delaware Court of Chancery approved. The plaintiff in the Texas action has indicated that he intends to file an amended petition and has agreed that the defendants are not required to answer or otherwise respond to the current petition. The Company believes the lawsuits complaints are without merit and intends to vigorously defend against them.

In addition to the proceedings disclosed above, other legal proceedings are pending against the Company, including matters relating to 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 condition of the Company.

 

Item 1A.

Risk Factors

Set forth below is a discussion of the material changes in the Company’s risk factors as previously disclosed in Item 1A of Part I of the Company’s Annual Report on Form-10-K for the year ended December 31, 2012 (2012 10-K). The information presented below updates, and should be read in conjunction with, the risk factors and other information disclosed the 2012 10-K.

On June 12, 2013, the Company entered into a Merger Agreement with Gannett Co., Inc., and Delta Acquisition Corp., a wholly-owned subsidiary of Gannett. Consummation of the Merger is subject to several conditions, including (1) receipt of required regulatory approvals, including the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Act, and FCC consent for the transactions, (2) completion of the restructuring, and (3) the absence of any order or injunction prohibiting the completion of the transactions. Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party and (ii) the performance in all material respects by the other party of its obligations under the Merger Agreement. There can be no assurance that the Merger will occur in accordance with the announced plan or at all, and there are uncertainties regarding the execution, timing, costs, consequences, and other effects of the Merger.

 

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Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

There have been no unregistered sales of equity securities in the last three years.

Issuer Purchases of Equity Securities

None.

 

Item 3.

Defaults Upon Senior Securities

None.

 

Item 4.

Mine Safety Disclosures

None.

 

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”))
2.2		*		Agreement and Plan of Merger by and among Belo Corp., Gannett Co., Inc., and Delta Acquisition Corp. dated as of June 12, 2013 (Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 18, 2013 (Securities and Exchange Commission File No. 001-08598)(the “June 18, 2013 Form 8-K”))
3.1		*		Amended and Restated Certificate of Incorporation of the Company dated May 9, 2012 (Exhibit 3.1(i) to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 10, 2012 (Securities and Exchange Commission File No. 001-08598)(the May 10, 2012 Form 8-K”))
3.2		*		Certificate of Designation of Series B Common Stock of the Company dated May 9, 2012 (Exhibit 3.1(i) to the May 10, 2012 Form 8-K)
3.3		*		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”))
3.4		*		Amendment No. 1 to the Bylaws of Belo Corp. (as amended and restated 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 July 29, 2011 (Securities and Exchange Commission File No 001-08598))

 

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3.5		*		Amendment No. 2 to the Bylaws of Belo Corp. (as amended and restated 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 September 23, 2011 (Securities and Exchange Commission File No. 001-08598))
4.1				Certain rights of the holders of the Company’s Common Stock are set forth in Exhibits 3.1-3.5 above
4.2		*		Specimen Form of Certificate representing shares of the Company’s Series A Common Stock (Exhibit 4.1 to the May 10, 2012 Form 8-K)
4.3		*		Specimen Form of Certificate representing shares of the Company’s Series B Common Stock (Exhibit 4.2 to the May 10, 2012 Form 8-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. 8% Senior Notes due 2016 (Exhibit 4.1 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”))
				(7)		*		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)
				(8)		*		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)		*		Amendment and Restated Revolving Credit Facility Agreement, dated as of December 21, 2011, among the Company, as Borrower; JPMorgan Chase Bank, N.A., as Administrative Agent; JPMorgan Securities LLC, Suntrust Robinson Humphrey, Inc., and RBC Capital Markets, as Joint Lead Arrangers and Joint Bookrunners; Suntrust Bank and Royal Bank of Canada as Co-Syndication agents, The Northern Trust Company and Capital One N.A. as Co-Documentation Agents (Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 22, 2011 (Securities and Exchange file No. 001-08598)(the “December 22, 2011 Form 8-K”))
				(2)		*		Guarantee Agreement dated as of December 21, 2011, among Belo Corp., the Subsidiaries of Belo Corp. identified therein and JPMorgan Chase Bank, N.A. (Exhibit 10.2 to the December 22, 2011 Form 8-K)

 

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~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 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”))
						*		(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))
						*		(f)		Fifth Amendment to the Amended and Restated Belo Savings Plan dated December 3, 2010 (Exhibit 10.2.1(f) to the Company’s Annual Report on Form 10-K dated March 11, 2011 (Securities and Exchange Commission file No. 001-08598))
				~ (2)		*		Belo 1995 Executive Compensation Plan, as restated to incorporate amendments through December 4, 1997 (Exhibit 10.3(3) to the Company’s Annual Report on Form 10-K dated March 19, 1998 (Securities and Exchange Commission File No. 002-74702))
						*		(a)		Amendment to 1995 Executive Compensation Plan, dated July 21, 1998 (Exhibit 10.2(3)(a) 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))
						*		(b)		Amendment to 1995 Executive Compensation Plan, dated December 16, 1999 (Exhibit 10.2(3)(b) 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”))
						*		(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”))
								(e)		Amendment to 1995 Executive Compensation Plan, dated June 12, 2013.
				~ (3)		*		Management Security Plan (Exhibit 10.3(1) to the Company’s Annual Report on Form 10-K dated March 12, 1997 (Securities and Exchange Commission No. 001-08598))
						*		(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)
				~ (4)				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)

 

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				~ (5)		*		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))
				~ (6)		*		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)(c) to the 2005 Form 10-K)
				~ (7)		*		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 Employee Option Awards (Exhibit 10.2 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))
						*		(b)		Form of Belo 2004 Executive Compensation Plan Award Notification for Employee 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 5, 2012 (Securities and Exchange Commission file No. 001-08598))
						*		(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))
				~ (8)		*		Summary of Non-Employee Director Compensation (Exhibit 10.2(9) to the 2009 Form 10-K)
				~ (9)		*		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))
								(a)		Form of Exhibit A (Separation Agreement and General Release) to Change in Control Severance Plan.
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))

 

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				(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)
						*		(a) Amendment to Employee Matters Agreement as set forth in the Pension Plan Transfer Agreement dated as of October 6, 2010 (Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 8, 2010 (Securities and Exchange Commission File No. 001-08598)(the “October 8, 2010 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)
				(4)		*		Pension Plan Transfer Agreement by and between Belo Corp. and A. H. Belo Corporation dated as of October 6, 2010 (Exhibit 10.1 to the October 8, 2010 Form 8-K)
10.4				Agreements relating to the merger with Gannett Co., Inc., and Delta Acquisition Corp:
				(1)		*		Form of Voting and Support Agreement and Irrevocable Proxy dated as of June 12, 2013 (Exhibit 10.1 to the June 18, 2013 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

 

¥101.INS		XBRL Instance Document
¥101.SCH		XBRL Taxonomy Extension Schema Document
¥101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
¥101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
¥101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
¥101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

				BELO CORP.
October 31, 2013				By:		/s/ Carey P. Hendrickson
						Carey P. Hendrickson
						Senior Vice President/Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

 

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