1 ================================================================================ 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: JUNE 30, 2001 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 (I.R.S. employer incorporation or organization) identification no.) P. O. BOX 655237 DALLAS, TEXAS 75265-5237 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (214) 977-6606 Former name, former address and former fiscal year, if changed since last report. NONE Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS OUTSTANDING AT JULY 31, 2001 ----- ---------------------------- Common Stock, $1.67 par value 109,901,743* * Consisting of 90,979,207 shares of Series A Common Stock and 18,922,536 shares of Series B Common Stock. ================================================================================ 2 BELO CORP. FORM 10-Q TABLE OF CONTENTS PAGE ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements........................................................... 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................... 6 Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 13 PART II OTHER INFORMATION Item 1. Legal Proceedings.............................................................. 13 Item 2. Changes in Securities and Use of Proceeds...................................... 13 Item 3. Defaults Upon Senior Securities................................................ 13 Item 4. Submission of Matters to a Vote of Security Holders............................ 13 Item 5. Other Information.............................................................. 13 Item 6. Exhibits and Reports on Form 8-K............................................... 14 i 3 PART I. ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF EARNINGS Belo Corp. and Subsidiaries Three months ended Six months ended June 30, June 30, -------------------------- -------------------------- In thousands, except per share amounts (unaudited) 2001 2000 2001 2000 ---------- ---------- ---------- ---------- TOTAL NET OPERATING REVENUES $ 361,848 $ 412,238 $ 693,395 $ 776,736 OPERATING COSTS AND EXPENSES Salaries, wages and employee benefits 127,589 133,789 253,771 264,228 Other production, distribution and operating costs 93,120 100,355 182,598 191,241 Newsprint, ink and other supplies 38,536 40,766 76,969 79,382 Depreciation 25,086 24,680 50,308 49,079 Amortization 20,373 21,143 40,769 42,063 ---------- ---------- ---------- ---------- Total operating costs and expenses 304,704 320,733 604,415 625,993 ---------- ---------- ---------- ---------- Earnings from operations 57,144 91,505 88,980 150,743 OTHER INCOME AND EXPENSE Interest expense (28,205) (33,296) (59,114) (64,776) Other, net (29,047) 1,080 (28,795) 1,728 ---------- ---------- ---------- ---------- Total other income and expense (57,252) (32,216) (87,909) (63,048) EARNINGS (LOSS) Earnings (loss) before income taxes (108) 59,289 1,071 87,695 Income taxes 207 27,030 763 40,043 ---------- ---------- ---------- ---------- Net earnings (loss) $ (315) $ 32,259 $ 308 $ 47,652 ========== ========== ========== ========== NET EARNINGS PER SHARE Basic $ .00 $ .27 $ .00 $ .40 Diluted $ .00 $ .27 $ .00 $ .40 AVERAGE SHARES OUTSTANDING Basic 109,656 118,762 109,601 118,738 Diluted 109,656 119,147 110,135 119,089 CASH DIVIDENDS DECLARED PER SHARE $ .075 $ .07 $ .15 $ .14 See accompanying Notes to Consolidated Condensed Financial Statements. 1 4 CONSOLIDATED CONDENSED BALANCE SHEETS Belo Corp. and Subsidiaries In thousands, except share and per share data June 30, December 31, (Current year unaudited) 2001 2000 ---------- ------------ ASSETS Current assets: Cash and temporary cash investments $ 33,213 $ 87,680 Accounts receivable, net 244,589 274,555 Other current assets 56,535 58,790 ---------- ---------- Total current assets 334,337 421,025 Property, plant and equipment, net 616,900 637,645 Intangible assets, net 2,658,624 2,710,209 Other assets 96,132 124,381 ---------- ---------- Total assets $3,705,993 $3,893,260 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 45,760 $ 74,979 Accrued expenses 90,082 127,163 Other current liabilities 55,153 100,541 ---------- ---------- Total current liabilities 190,995 302,683 Long-term debt 1,738,500 1,789,600 Deferred income taxes 394,816 404,221 Other liabilities 49,915 47,348 Shareholders' equity: Preferred stock, $1.00 par value. Authorized 5,000,000 shares; none issued Common stock, $1.67 par value. Authorized 450,000,000 shares: Series A: Issued 90,955,946 shares at June 30, 2001 and 90,993,229 shares at December 31, 2000 151,896 151,959 Series B: Issued 18,892,496 shares at June 30, 2001 and 18,860,440 shares at December 31, 2000 31,551 31,497 Additional paid-in capital 829,930 825,103 Retained earnings 318,390 340,849 ---------- ---------- Total shareholders' equity 1,331,767 1,349,408 ---------- ---------- Total liabilities and shareholders' equity $3,705,993 $3,893,260 ========== ========== See accompanying Notes to Consolidated Condensed Financial Statements. 2 5 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Belo Corp. and Subsidiaries Six months ended June 30, -------------------------- In thousands (unaudited) 2001 2000 ---------- ---------- OPERATIONS Net earnings $ 308 $ 47,652 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 91,077 91,142 Deferred income taxes (8,412) (744) Non-cash charge for write-down of Internet investments 28,785 -- Other, net 6,543 1,051 Net change in current assets and liabilities: Accounts receivable 30,479 (20,074) Other current assets 3,103 5,012 Accounts payable (29,214) (16,789) Accrued expenses (18,424) (5,358) Other current liabilities (53,230) (28,080) ---------- ---------- Net cash provided by operations 51,015 73,812 INVESTING Capital expenditures (31,015) (49,042) Acquisitions -- (16,100) Investments (1,493) (38,283) Other, net 1,235 (1,963) ---------- ---------- Net cash used for investments (31,273) (105,388) FINANCING Borrowings of debt 840,750 659,300 Repayment of debt (891,855) (611,957) Purchase of treasury shares (12,621) (16,578) Payment of dividends on stock (16,430) (16,632) Net proceeds from exercise of stock options 5,947 719 ---------- ---------- Net cash provided by (used for) financing (74,209) 14,852 Net decrease in cash and temporary cash investments (54,467) (16,724) Cash and temporary cash investments at beginning of period 87,680 45,593 ---------- ---------- Cash and temporary cash investments at end of period $ 33,213 $ 28,869 ========== ========== SUPPLEMENTAL DISCLOSURES Interest paid, net of amounts capitalized $ 63,479 $ 68,306 Income taxes paid, net of refunds $ 54,534 $ 71,639 See accompanying Notes to Consolidated Condensed Financial Statements. 3 6 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Belo Corp. and Subsidiaries (in thousands) (1) The accompanying unaudited consolidated condensed financial statements of Belo Corp. and subsidiaries (the "Company" or "Belo") have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The balance sheet at December 31, 2000 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six-month periods ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. 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, 2000. Certain amounts for the prior periods have been reclassified to conform to the current year presentation, including reclassification of the elimination of intersegment revenues. (2) The following table sets forth the reconciliation between weighted average shares used for calculating basic and diluted earnings per share for the three and six months ended June 30, 2001 and 2000: Three months ended Six months ended June 30, June 30, ------------------------- ------------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- Weighted average shares for basic earnings per share 109,656 118,762 109,601 118,738 Effect of employee stock options -- 385 534 351 ---------- ---------- ---------- ---------- Weighted average shares for diluted earnings per share 109,656 119,147 110,135 119,089 ========== ========== ========== ========== (3) On July 20, 2001, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets" effective for fiscal years beginning after December 15, 2001. Under the provisions of the new standard, goodwill and certain other intangibles will no longer be amortized, but instead will be reviewed at least annually for impairment at the reporting unit level and written down (expensed against earnings) when the implied fair value of a reporting unit, including goodwill and other related intangibles, is less than its carrying amount. The Company will adopt the new standard on January 1, 2002. The Company has not completed an analysis of the potential impact of application of the impairment test of goodwill; however, amortization of existing goodwill, which was approximately $18,801 and $37,626 for the three and six months ended June 30, 2001, respectively, and estimated to be $75,135 for fiscal year 2001, will cease upon adoption of the new standard. 4 7 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Belo Corp. and Subsidiaries (4) Net operating revenues, earnings from operations, depreciation and amortization, operating cash flow by industry segment and consolidated cash flow information are shown below. Operating cash flow is defined as earnings from operations plus depreciation and amortization. Operating cash flow is used in the broadcasting and publishing industries to analyze and compare companies on the basis of operating performance and liquidity. Operating cash flow should not be considered as a measure of financial performance or liquidity under generally accepted accounting principles and should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or financial statement data presented in the condensed consolidated financial statements. Because operating cash flow is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, operating cash flow as presented may not be comparable to other similarly titled measures of other companies. Three months ended Six months ended June 30, June 30, -------------------------- -------------------------- In thousands 2001 2000 2001 2000 ---------- ---------- ---------- ---------- NET OPERATING REVENUES Television group $ 164,663 $ 183,597 $ 308,094 $ 336,572 Newspaper group 189,650 222,635 370,963 428,752 Interactive media 3,369 2,520 6,267 4,707 Other 4,166 3,486 8,071 6,705 ---------- ---------- ---------- ---------- Total net operating revenues $ 361,848 $ 412,238 $ 693,395 $ 776,736 ========== ========== ========== ========== EARNINGS FROM OPERATIONS Television group $ 45,818 $ 58,277 $ 71,664 $ 89,930 Newspaper group 33,172 50,402 57,189 94,131 Interactive media (5,905) (4,085) (11,091) (7,630) Other (1,034) (1,624) (2,206) (3,132) Corporate expenses (14,907) (11,465) (26,576) (22,556) ---------- ---------- ---------- ---------- Total earnings from operations $ 57,144 $ 91,505 $ 88,980 $ 150,743 ========== ========== ========== ========== DEPRECIATION AND AMORTIZATION Television group $ 27,678 $ 28,453 $ 55,493 $ 56,444 Newspaper group 15,381 15,235 30,640 30,490 Interactive media 663 234 1,402 471 Other 687 831 1,340 1,648 Corporate 1,050 1,070 2,202 2,089 ---------- ---------- ---------- ---------- Total depreciation and amortization $ 45,459 $ 45,823 $ 91,077 $ 91,142 ========== ========== ========== ========== OPERATING CASH FLOW (SEE DEFINITION ABOVE) Television group $ 73,496 $ 86,730 $ 127,157 $ 146,374 Newspaper group 48,553 65,637 87,829 124,621 Interactive media (5,242) (3,851) (9,689) (7,159) Other (347) (793) (866) (1,484) Corporate (13,857) (10,395) (24,374) (20,467) ---------- ---------- ---------- ---------- Total operating cash flow $ 102,603 $ 137,328 $ 180,057 $ 241,885 ========== ========== ========== ========== CONSOLIDATED CASH FLOW INFORMATION(a) Net cash provided by operations $ 51,015 $ 73,812 Net cash used for investments $ (31,273) $ (105,388) Net cash provided by (used for) financing $ (74,209) $ 14,852 (a) Cash flow information is provided on a consolidated basis and is as presented in the Consolidated Condensed Statements of Cash Flows included herein. 5 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS) The Company is an owner and operator of 17 television stations and publisher of four daily newspapers. The Company also manages three television stations through local marketing agreements ("LMAs") and owns or operates six cable channels. The following table sets forth the Company's major media assets by group as of June 30, 2001: Television Group --------------------------- Network Market Market Rank (a) Station Affiliation(b) Status Acquired --------------------------- ------------------ ------------ -------------- ------------ -------------------------- Dallas/Fort Worth 7 WFAA ABC Owned March 1950 Houston 11 KHOU CBS Owned February 1984 Seattle/Tacoma 12 KING NBC Owned February 1997 Seattle/Tacoma 12 KONG IND Owned March 2000 Phoenix 17 KTVK IND Owned November 1999 Phoenix 17 KASW WB Owned March 2000 St. Louis 22 KMOV CBS Owned June 1997 Portland 23 KGW NBC Owned February 1997 Charlotte 28 WCNC NBC Owned February 1997 San Antonio 37 KENS CBS Owned October 1997 San Antonio 37 KBEJ UPN LMA (c) Hampton/Norfolk 41 WVEC ABC Owned February 1984 New Orleans 42 WWL CBS Owned June 1994 Louisville 48 WHAS ABC Owned February 1997 Austin 58 KVUE ABC Owned June 1999 Tucson 71 KMSB FOX Owned February 1997 Tucson 71 KTTU(d) UPN LMA (d) Spokane 77 KREM CBS Owned February 1997 Spokane 77 KSKN(d) UPN/WB(e) LMA (d) Boise 123 KTVB NBC Owned February 1997 Newspaper Group ------------------------------------- Daily Sunday Newspaper Location Acquired Circulation(g) Circulation(g) ------------------------------------- -------------------------- ---------------- ---------------- -------------- The Dallas Morning News ("DMN") Dallas, TX (f) 522,538 782,748 The Providence Journal ("PJ") Providence, RI February 1997 160,610 229,271 The Press-Enterprise ("PE") Riverside, CA July 1997 172,007 178,631 Denton Record-Chronicle Denton, TX June 1999 15,969 20,428 Interactive Media ------------------------------------- Belo Interactive, Inc. Includes the Web site operations of Belo's operating companies, interactive alliances and Internet-based products and services(h) Other ------------------------------------- Northwest Cable News ("NWCN") Cable news channel distributed to approximately 2 million homes in the Pacific Northwest Texas Cable News ("TXCN") Cable news channel distributed to approximately 1 million homes in Texas (a) Market rank is based on the relative size of the television market, or Designated Market Area ("DMA"), among the 210 generally recognized DMAs in the United States, based on May 2001 Nielsen estimates. (b) Substantially all the revenue of the Company's television stations is derived from advertising. Less than 4 percent of broadcasting revenue is provided by compensation paid by networks to the television stations for broadcasting network programming. (c) Belo entered into an agreement to operate KBEJ-TV under an LMA in May 1999; the station's on-air date was August 3, 2000. (d) Belo has managed KTTU-TV and KSKN-TV under LMAs since February 1997. Belo has agreed to purchase KTTU-TV and KSKN-TV, subject to Federal Communications Commission ("FCC") approval. (e) The primary affiliation is with UPN. The WB network is currently a secondary affiliation. (f) The first issue of DMN was published by Belo on October 1, 1885. (g) Average paid circulation data for DMN, PJ and PE is for the six months ended March 31, 2001 as filed in the Audit Bureau of Circulation (the "Audit Bureau") FAS-FAX report and is calculated in accordance with Audit Bureau guidelines. Circulation data for the Denton Record-Chronicle is as filed in the Certified Audit of Circulations Report for the twelve-month period ended December 31, 2000 and is calculated in accordance with the report guidelines. (h) The majority of Belo Interactive's Web sites are associated with the Company's television stations and newspapers and primarily provide news and information. 6 9 RESULTS OF OPERATIONS Consolidated Results of Operations Three Months Ended June 30, 2001 and 2000 Total net operating revenues declined $50,390 for the three months ended June 30, 2001 as compared to the same period in 2000. Second quarter 2000 revenues included $16,114 of revenue for the following companies that were sold in the fourth quarter of 2000: The Gleaner in Henderson, Kentucky, The Eagle in Bryan-College Station, Texas, the Messenger-Inquirer in Owensboro, Kentucky and KOTV (CBS) in Tulsa, Oklahoma. The balance of the 2001 revenue decline related primarily to lower advertising revenues as a result of the slowdown in the U.S. economy. Salaries, wages and employee benefits expense declined $6,200 for the second quarter of 2001 as compared to the year earlier period. Salaries, wages and benefits of the companies sold of $6,188 and decreases of $4,473 at Belo's other properties were partially offset by an increase of $4,461 related to early retirement costs and corporate staff reductions. Other production, distribution and operating costs declined $7,235 in the second quarter of 2001 as compared to the second quarter of 2000, with a $3,321 reduction as a result of the companies sold and decreases of $3,914 at Belo's other properties due to stringent cost controls. Newsprint, ink and other supplies decreased $2,230 in the second quarter of 2001 as compared to the year earlier period, with a $1,663 reduction due to the companies sold in addition to decreases of $567 at Belo's remaining properties. Newsprint consumption at the remaining properties decreased approximately 17.4 percent as compared to the year earlier period. The decrease in consumption was partially offset by an increase of 19.7 percent in the average cost per metric ton of newsprint in the second quarter of 2001 as compared to the year earlier period. Depreciation expense increased $406 in the second quarter of 2001, of which amount $1,253 was due to depreciation on prior year capital expenditures at Belo's current companies, partially offset by an $847 decrease in depreciation expense for the companies sold. The decrease in amortization expense in the second quarter of 2001 of $770 was due to a decrease associated with the operating companies sold in the fourth quarter of 2000 of $909, offset somewhat by an increase in amortization expense related primarily to 2000 acquisitions. Interest expense for the second quarter of 2001 of $28,205 was 15.3 percent lower than second quarter 2000 expense of $33,296, reflecting lower average debt levels and lower average interest rates. Other income (expense), net for the second quarter of 2001 decreased from income of $1,080 to expense of $29,047 primarily due to a charge of $28,785 related to the write-down of the Company's investments in certain Internet-related companies. The Company recorded tax expense of $207 during the second quarter of 2001 on a loss before income taxes of $108. The second quarter 2001 tax provision is due to a 71.2 percent projected annual effective tax rate, resulting from lower projected annual pretax earnings and non-deductible goodwill amortization. The effective tax rate for the second quarter of 2000 was 45.6 percent. As a result of the factors discussed above, a net loss of $315 (0 cents per share) was reported for the three months ended June 30, 2001, compared with net earnings of $32,259 (27 cents per share) for the same period in 2000. Six Months Ended June 30, 2001 and 2000 Total net operating revenues declined $83,341 for the six months ended June 30, 2001 as compared to the same period in 2000. Revenues for the six months ended June 30, 2000 included $30,413 of revenue for the companies that were sold in the fourth quarter of 2000. The balance of the 2001 revenue decline related primarily to lower advertising revenues as a result of the slowdown in the U.S. economy. 7 10 Salaries, wages and employee benefits expense declined $10,457 for the six months ended June 30, 2001 as compared to the year earlier period. Salaries, wages and benefits of the companies sold of $12,394 and decreases at Belo's other properties of $2,524 were partially offset by an increase of $4,461 related to early retirement costs and corporate staff reductions. Other production, distribution and operating costs declined $8,643 in the first six months of 2001 as compared to the first six months of 2000, with a $6,500 reduction as a result of the companies sold and decreases of $2,143 at Belo's other properties. Newsprint, ink and other supplies decreased $2,413 in the six months ended June 30, 2001 as compared to the year earlier period, with a $3,243 reduction due to the companies sold partially offset by an increase of $830 at Belo's remaining properties. Newsprint consumption decreased approximately 14.4 percent for the remaining companies as compared to the year earlier period. The average cost per metric ton of newsprint increased approximately 21.1 percent in the first six months of 2001 as compared to the year earlier period. Depreciation expense increased $1,229 in the first six months of 2001, of which amount $2,930 was due to depreciation on prior year capital expenditures at Belo's current companies, partially offset by a $1,701 decrease in depreciation expense from the companies sold. Of the $1,294 decrease in amortization expense in the six months ended June 30, 2001, $1,817 was associated with the operating companies sold in the fourth quarter of 2000, offset somewhat by an increase in amortization expense related primarily to 2000 acquisitions. Interest expense for the six months ended June 30, 2001 was $59,114 or 8.7 percent lower than the year earlier expense of $64,776, reflecting lower average debt levels and lower average interest rates. Other income (expense), net for the first six months of 2001 decreased from income of $1,728 to expense of $28,795 primarily due to a charge of $28,785 related to the write-down of the Company's investments in certain Internet-related companies. The provision for income taxes is computed utilizing the Company's expected annual effective income tax rate. The effective tax rate for the six months ended June 30, 2001 was 71.2 percent, compared with 45.7 percent for the year earlier period due to lower estimated pretax earnings. As a result of the factors discussed above, net earnings for the six months ended June 30, 2001 were $308 (0 cents per share) as compared to $47,652 (40 cents per share) for the six months ended June 30, 2000. 8 11 Segment Results of Operations To enhance comparability of the Company's results of operations for the quarters and six-month periods ended June 30, 2001 and 2000, certain information below is presented by segment on a proforma basis, "as adjusted" to take into account the 2000 dispositions of The Gleaner, The Eagle, the Messenger-Inquirer and KOTV as though each had occurred at the beginning of the respective periods presented. As Reported As Adjusted (in thousands) (in thousands) Three months ended June 30, Three months ended June 30, ------------------------------------ ------------------------------------ 2001 2000 % Chg. 2001 2000 % Chg. ---------- ---------- ---------- ---------- ---------- ---------- Net operating revenues Television group $ 164,663 $ 183,597 (10.3)% $ 164,663 $ 178,741 (7.9)% Newspaper group 189,650 222,635 (14.8)% 189,650 211,436 (10.3)% Interactive media 3,369 2,520 33.7% 3,369 2,461 36.9% Other 4,166 3,486 19.5% 4,166 3,486 19.5% ---------- ---------- ---------- ---------- Group revenues $ 361,848 $ 412,238 (12.2)% $ 361,848 $ 396,124 (8.7)% ========== ========== ========== ========== Operating cash flow(a) Television group $ 73,496 $ 86,730 (15.3)% $ 73,496 $ 84,924 (13.5)% Newspaper group 48,553 65,637 (26.0)% 48,553 62,376 (22.2)% Interactive media (5,242) (3,851) (36.1)% (5,242) (3,724) (40.8)% Other (347) (793) 56.2% (347) (793) 56.2% ---------- ---------- ---------- ---------- Group operating cash flow 116,460 147,723 (21.2)% $ 116,460 $ 142,783 (18.4)% ========== ========== Corporate expenses (13,857) (10,395) (33.3)% Depreciation and amortization (45,459) (45,823) 0.8% ---------- ---------- Earnings from operations $ 57,144 $ 91,505 (37.6)% ========== ========== As Reported As Adjusted (in thousands) (in thousands) Six months ended June 30, Six months ended June 30, ------------------------------------ ------------------------------------ 2001 2000 % Chg. 2001 2000 % Chg. ---------- ---------- ---------- ---------- ---------- ---------- Net operating revenues Television group $ 308,094 $ 336,572 (8.5)% $ 308,094 $ 327,792 (6.0)% Newspaper group 370,963 428,752 (13.5)% 370,963 407,226 (8.9)% Interactive media 6,267 4,707 33.1% 6,267 4,600 36.2% Other 8,071 6,705 20.4% 8,071 6,705 20.4% ---------- ---------- ---------- ---------- Group revenues $ 693,395 $ 776,736 (10.7)% $ 693,395 $ 746,323 (7.1)% ========== ========== ========== ========== Operating cash flow(a) Television group $ 127,157 $ 146,374 (13.1)% $ 127,157 $ 143,676 (11.5)% Newspaper group 87,829 124,621 (29.5)% 87,829 118,824 (26.1)% Interactive media (9,689) (7,159) (35.3)% (9,689) (6,938) (39.7)% Other (866) (1,484) 41.6% (866) (1,484) 41.6% ---------- ---------- ---------- ---------- Group operating cash flow 204,431 262,352 (22.1)% $ 204,431 $ 254,078 (19.5)% ========== ========== Corporate expenses (24,374) (20,467) (19.1)% Depreciation and amortization (91,077) (91,142) 0.1% ---------- ---------- Earnings from operations $ 88,980 $ 150,743 (41.0)% ========== ========== (a) Operating cash flow is defined as earnings from operations plus depreciation and amortization. Operating cash flow is used in the broadcasting and publishing industries to analyze and compare companies on the basis of operating performance and liquidity. Operating cash flow should not be considered as a measure of financial performance or liquidity under generally accepted accounting principles and should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or financial statement data presented in the condensed consolidated financial statements. Because operating cash flow is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, operating cash flow as presented may not be comparable to other similarly titled measures of other companies. 9 12 Television Group On a reported basis, television group revenues for the quarter and six months ended June 30, 2001 decreased $18,934, or 10.3 percent, and $28,478, or 8.5 percent, respectively, as compared to the prior year periods due to continued lower advertising revenues resulting from the slowdown in the U.S. economy and the disposition of KOTV in the fourth quarter of 2000. Additionally, political and .com advertising revenues declined significantly in 2001 as compared to 2000. Television group cash expenses for the quarter and six months ended June 30, 2001 decreased $5,700, or 5.9 percent, and $9,261, or 4.9 percent, respectively, as a result of stringent cost controls implemented early in 2001 and the sale of KOTV. As a result, on a reported basis, television group operating cash flow for the quarter and six months ended June 30, 2001 decreased $13,234, or 15.3 percent, and $19,217, or 13.1 percent, respectively, from the comparable periods in 2000. On an "as adjusted" basis, television group revenues for the second quarter of 2001 were $164,663, a 7.9 percent decrease compared with second quarter 2000 revenues of $178,741. Year-to-date television group revenues were down 6 percent from $327,792 in 2000 to $308,094 in the current year. Spot revenues decreased 8.1 percent and 6.1 percent for the quarter and six-month periods ended June 30, 2001, respectively, due in part to a decrease in political advertising. Excluding political advertising revenues, spot revenues were down 7.1 percent for the quarter and 4.3 percent for the six months ended June 30, 2001. National advertising revenues declined 13.5 percent and 13.9 percent for the quarter and year-to-date periods of 2001, compared with 2000, respectively. Decreases in national advertising were reported in nearly all Belo markets, with the most significant decreases in the Dallas/Fort Worth and Seattle/Tacoma markets. Local advertising revenues were down 2.9 percent for the second quarter of 2001 and up 2.2 percent for the first six months of the year. Cash operating expenses decreased 2.8 percent and 1.7 percent in the quarter and six-month periods ended June 30, 2001, respectively, due to cost control measures implemented in early 2001. Second quarter operating cash flow for the television group decreased 13.5 percent, from $84,924 in the second quarter of 2000 to $73,496 in the second quarter of 2001. Operating cash flow for the six month period ended June 30, 2001 declined 11.5 percent, from $143,676 in the six months ended June 30, 2000 to $127,157 for the six months ended June 30, 2001. Television group operating cash flow margins declined from 47.5 percent in the second quarter of 2000 to 44.6 percent in the second quarter of 2001 and from 43.8 percent in the first six months of 2000 to 41.3 percent in the same period of 2001. Newspaper Group On a reported basis, newspaper group revenues decreased $32,985, or 14.8 percent, and $57,789, or 13.5 percent, for the quarter and six months ended June 30, 2001, respectively, as compared to the prior year periods due to the sales of The Gleaner, The Eagle and the Messenger-Inquirer in the fourth quarter of 2000 and lower advertising revenues as a result of the slowdown in the U.S. economy. Newspaper group cash operating expenses were down 10.1 percent and 6.9 percent for the three and six month periods of 2001, respectively, as compared to the same periods in 2000, as a result of the dispositions and tight cost controls. As a result, on a reported basis, newspaper group operating cash flow declined $17,084, or 26 percent, and $36,792, or 29.5 percent, for the quarter and six months ended June 30, 2001, respectively. On an "as adjusted" basis, second quarter 2001 revenues for the newspaper group were $189,650, a decrease of 10.3 percent compared to revenues of $211,436 for the same period of 2000. Newspaper group revenues for the first six months of 2001 were $370,963, a decrease of 8.9 percent compared to revenues of $407,226 for the same period of 2000. Total advertising revenues for the newspaper group declined 11.7 percent and 10.2 percent for the quarter and year-to-date periods ended June 30, 2001, respectively, due mostly to significant declines in the classified employment category and lower .com advertising revenues. DMN reported revenue decreases of 12.4 percent and 10.1 percent for the second quarter and first six months of 2001 as compared to the year earlier periods. Classified advertising revenues declined 22 percent in the second quarter and 16.6 percent in the first six months of 2001 as compared to the year earlier period, primarily due to significant decreases in classified employment advertising. General advertising revenues declined 10.8 percent and 11.1 percent for the quarter and six months ended June 30, 2001, respectively, due to lower .com advertising. Excluding .com advertising, general advertising revenues decreased 0.4 percent and increased 1.2 percent in the quarter and year-to-date periods ended June 30, 2001. Retail advertising revenues were down 5.2 percent and 4.9 percent for the second quarter and first six months of 2001, respectively, as compared to the year earlier periods. 10 13 Total revenues for PJ decreased 10.3 percent and 9.9 percent in the second quarter and year-to-date 2001 periods, respectively, as compared to the same periods in 2000. Decreases were reported in all major advertising categories with the most significant decreases in classified employment and retail advertising. PE reported decreases in total revenues of .6 percent and 1.8 percent in the quarter and six month periods ended June 30, 2001, respectively, as compared to the prior year periods, primarily due to declines in retail and other advertising. On an "as adjusted" basis, newspaper group cash expenses decreased 5.3 percent and 1.8 percent for the quarter and six-month period ended June 30, 2001, respectively, as compared to the prior year periods due to continued cost controls initiated in early 2001 in response to the softening advertising environment. Operating cash flow for the second quarter of 2001 was $48,553 or 22.2 percent lower than second quarter 2000 operating cash flow of $62,376. For the year-to-date period, 2001 operating cash flow was $87,829 or 26.1 percent lower than 2000. Newspaper group operating cash flow margins were 25.6 percent and 23.7 percent for the quarter and six-month periods ended June 30, 2001, respectively, as compared to 29.5 percent and 29.2 percent for the comparable 2000 periods. Interactive Media On a reported basis, Interactive media revenues, which are principally derived from advertising on the group's various Web sites, increased 33.7 percent, from $2,520 in the second quarter of 2000 to $3,369 in the second quarter of 2001. For the first six months of 2001, Interactive media revenues increased 33.1 percent over the year earlier period, from $4,707 to $6,267. Interactive media cash expenses increased 35.2 percent and 34.5 percent for the quarter and six-month periods ended June 30, 2001, respectively, reflecting increased staffing and levels of operations. As a result, the Interactive media group reported operating cash flow deficits of $5,242 and $9,689 for the quarter and six months ended June 30, 2001, respectively, as compared to $3,851 and $7,159 for the comparable prior year periods. Other Other represents the Company's regional cable news operations, NWCN and TXCN. On both a reported and "as adjusted" basis, Other revenues increased 19.5 percent, from $3,486 in the second quarter of 2000 to $4,166 in the second quarter of 2001. During the six-month period, Other revenues increased 20.4 percent, from $6,705 in 2000 to $8,071 in 2001. Cash operating expenses increased 5.5 percent and 9.1 percent during the second quarter and first six months of 2001, respectively, as compared to prior year periods. The operating cash flow deficit decreased from $793 for the second quarter of 2000 to $347 for the second quarter of 2001 and from $1,484 for the first six months of 2000 to $866 for the 2001 comparable period, reflecting a decrease in the cash flow deficit at TXCN and an increase in operating cash flow at NWCN. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operations, bank borrowings and term debt are the Company's primary sources of liquidity. During the first six months of 2001, net cash provided by operations was $54,720, compared with $73,812 for the same period in 2000. Tax payments in the first six months of 2001 included approximately $40,200 for taxes due on fourth quarter 2000 transactions, including the sales of The Gleaner, The Eagle, the Messenger-Inquirer and KOTV and a gain in 2000 from the settlement of a lawsuit brought by the Company against a third party. Total debt decreased $51,105 from December 31, 2000 to June 30, 2001. At June 30, 2001, the Company had $1 billion in fixed-rate debt securities as follows: $250,000 of 6 7/8 percent Senior Notes due 2002; $300,000 of 7 1/8 percent Senior Notes due 2007; $200,000 of 7 3/4 percent Senior Debentures due 2027; and $250,000 of 7 1/4 percent Senior Debentures due 2027. The weighted average effective interest rate for the fixed-rate debt instruments is 7.3 percent. The Company also has $500,000 available for issuance under a shelf registration statement filed in April of 1997. Future issuances of fixed-rate debt may be used to refinance variable-rate debt in whole or in part or for other corporate needs as determined by management. At June 30, 2001, the Company had a $1 billion variable-rate revolving credit agreement with a syndicate of 24 banks under which borrowings were $722,000. Borrowings under the agreement mature upon expiration of the agreement on August 29, 2002, with one year extensions possible through August 29, 2004, at the request of the Company and with the consent of the participating banks. In addition, the Company had $10,100 of short-term 11 14 unsecured notes outstanding at June 30, 2001. These borrowings may be converted at the Company's option to revolving debt. Accordingly, such borrowings are classified as long-term in the Company's financial statements. The Company is required to maintain certain ratios as of the end of each quarter, as defined in its revolving credit agreement. As of June 30, 2001, the Company was in compliance with all debt covenant requirements. In the first six months of 2001, the Company paid dividends of $16,430, or 15 cents per share, on Series A and Series B common stock outstanding, compared with $16,632, or 14 cents per share, in the first six months of 2000. Capital expenditures in the first six months of 2001 were $31,015. Expenditures were primarily for broadcast equipment purchases, including those for equipment to be used in the transmission of digital television, and publishing equipment purchases. In the six months ended June 30, 2001, the Company repurchased 683,800 shares of its stock under an existing authorization for the repurchase of 18,116,719 shares as of December 31, 2000. The remaining authorization for the repurchase of shares as of June 30, 2001 was 17,432,919 shares. In addition, the Company also has a stock repurchase program authorizing the purchase of up to $2,500 of Company stock annually. The total cost of the treasury shares purchased in the first six months of 2001 was $12,621. All shares repurchased during the six-month period ended June 30, 2001 have been retired. Other Matters On January 25, 2001, Belo announced that it had agreed to purchase KTTU-TV, the UPN affiliate in the Tucson, Arizona television market, for $18,000 in cash, subject to approval by the FCC. Belo currently operates KTTU under a local marketing agreement with Clear Channel Communications, Inc. On July 26, 2001, Belo announced its agreement to purchase KSKN-TV, the UPN/WB affiliate in the Spokane, Washington television market, for $5,000 in cash, subject to FCC approval. Belo currently operates KSKN under a local marketing agreement. On July 20, 2001, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets" effective for fiscal years beginning after December 15, 2001. Under the provisions of the new standard, goodwill and certain other intangibles will no longer be amortized, but instead will be reviewed at least annually for impairment at the reporting unit level and written down (expensed against earnings) when the implied fair value of a reporting unit, including goodwill and other related intangibles, is less than its carrying amount. The Company will adopt the new standard on January 1, 2002. The Company has not completed an analysis of the potential impact of application of the impairment test of goodwill; however, amortization of existing goodwill, which was approximately $18,801 and $37,626 for the three and six months ended June 30, 2001, respectively, and estimated to be $75,135 for fiscal year 2001, will cease upon adoption of the new standard. Forward-Looking Statements Statements in this Form 10-Q concerning the Company's future financings and pending acquisitions, as well as any other statements concerning the Company's business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, investments or other financial and non-financial items that are not historical facts, are "forward-looking statements" as the term is defined under applicable federal securities laws. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those statements. Such risks, uncertainties and factors include, but are not limited to, changes in capital market conditions and prospects, and other factors such as changes in advertising demand, interest rates and newsprint prices; technological changes; development of Internet commerce; industry cycles; changes in pricing or other actions by competitors and suppliers; regulatory changes; the effects of Company acquisitions and dispositions; and general economic conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K and in the Company's periodic press releases. 12 15 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK No disclosure required. PART II. ITEM 1. LEGAL PROCEEDINGS A number of legal proceedings are pending against the Company, including several actions for alleged libel. In the opinion of management, liabilities, if any, arising from these actions would not have a material adverse effect on the results of operations, liquidity or financial position of the Company. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of the Company's shareholders was held on May 9, 2001. All nominees standing for election as directors were elected. The following chart indicates the number of votes cast with respect to each nominee for director: Withheld Nominee For Authority ------- --- --------- Judith L. Craven, M.D., M.P.H. 237,566,720 1,799,248 Stephen Hamblett 237,427,426 1,938,542 Dealey D. Herndon 237,656,910 1,709,058 In addition to those directors elected at the Annual Meeting, the following directors continued in office after the meeting: John W. Bassett, Jr., Henry P. Becton, Jr., Robert W. Decherd, Roger A. Enrico, Laurence E. Hirsch, Arturo Madrid, Ph.D., Burl Osborne, William T. Solomon and J. McDonald Williams. No other matters were submitted to a vote of security holders at the Annual Meeting. ITEM 5. OTHER INFORMATION On July 27, 2001, the Board of Directors elected Louis E. Caldera as a Class III director and Lloyd D. Ward as a Class II director of the Company to fill existing vacancies on the Board. 13 16 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) 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. Exhibits marked with a tilde (~) are management contracts or compensatory plan contracts or arrangements filed pursuant to Item 601 (b)(10)(iii)(A) of Regulation S-K. All other documents are filed with this report. EXHIBIT NUMBER DESCRIPTION ------- ----------- 3.1 * Certificate of Incorporation of the Company (Exhibit 3.1 to the Company's Annual Report on Form 10-K dated March 15, 2000 (the "1999 Form 10-K")) 3.2 * Certificate of Correction to Certificate of Incorporation dated May 13, 1987 (Exhibit 3.2 to the 1999 Form 10-K) 3.3 * Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated April 16, 1987 (Exhibit 3.3 to the 1999 Form 10-K) 3.4 * Certificate of Amendment of Certificate of Incorporation of the Company dated May 4, 1988 (Exhibit 3.4 to the 1999 Form 10-K) 3.5 * Certificate of Amendment of Certificate of Incorporation of the Company dated May 3, 1995 (Exhibit 3.5 to the 1999 Form 10-K) 3.6 * Certificate of Amendment of Certificate of Incorporation of the Company dated May 13, 1998 (Exhibit 3.6 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 (the "2nd Quarter 1998 Form 10-Q")) 3.7 * Certificate of Ownership and Merger, dated December 20, 2000, but effective as of 11:59 p.m. on December 31, 2000 (Exhibit 99.2 to Belo's Current Report on Form 8-K filed with the Commission on December 29, 2000) 3.8 * Amended Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated May 4, 1988 (Exhibit 3.7 to the 1999 Form 10-K) 3.9 * Certificate of Designation of Series B Common Stock of the Company dated May 4, 1988 (Exhibit 3.8 to the 1999 Form 10-K) 3.10 * Amended and Restated Bylaws of the Company, effective December 31, 2000 (Exhibit 3.10 to the Company's Annual Report on 10-K dated March 13, 2001 (the "2000 Form 10-K")) 4.1 Certain rights of the holders of the Company's Common Stock are set forth in Exhibits 3.1-3.10 above 4.2 * Specimen Form of Certificate representing shares of the Company's Series A Common Stock (Exhibit 4.2 to the 2000 Form 10-K) 4.3 * Specimen Form of Certificate representing shares of the Company's Series B Common Stock (Exhibit 4.3 to the 2000 Form 10-K) 4.4 * Amended and Restated Form of Rights Agreement as of February 28, 1996 between the Company and Chemical Mellon Shareholder Services, L.L.C., a New York banking corporation (Exhibit 4.4 to the 1999 Form 10-K) 14 17 EXHIBIT NUMBER DESCRIPTION ------- ----------- 4.5 * Supplement No. 1 to Amended and Restated Rights Agreement between the Company and The First National Bank of Boston dated as of November 11, 1996 (Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1996) 4.6 * Supplement No. 2 to Amended and Restated Rights Agreement between the Company and The First National Bank of Boston dated as of June 5, 1998 (Exhibit 4.6 to the 2000 Form 10-K) 4.7 Instruments defining rights of debt securities: (1) * Indenture dated as of June 1, 1997 between the Company and The Chase Manhattan Bank, as Trustee (Exhibit 4.6(1) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (the "2nd Quarter 1997 Form 10-Q")) (2) * (a) $200 million 6-7/8% Senior Note due 2002 (Exhibit 4.6(2)(a) to the 2nd Quarter 1997 Form 10-Q) * (b) $50 million 6-7/8% Senior Note due 2002 (Exhibit 4.6(2)(b) to the 2nd Quarter 1997 Form 10-Q) (3) * (a) $200 million 7-1/8% Senior Note due 2007 (Exhibit 4.6(3)(a) to the 2nd Quarter 1997 Form 10-Q) * (b) $100 million 7-1/8% Senior Note due 2007 (Exhibit 4.6(3)(b) to the 2nd Quarter 1997 Form 10-Q) (4) * $200 million 7-3/4% Senior Debenture due 2027 (Exhibit 4.6(4) to the 2nd Quarter 1997 Form 10-Q) (5) * Officer's 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) (6) * (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 quarterly period ended September 30, 1997 (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) (7) * Officer's 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) 10.1 Financing agreements: (1) * Amended and Restated Credit Agreement (Five-year $1,000,000,000 revolving credit and competitive advance facility dated as of August 29, 1997 among the Company and The Chase Manhattan Bank, as Administrative Agent and Competitive Advance Facility Agent, Bank of America National Trust and Savings Association and Bank of Tokyo-Mitsubishi, Ltd., as Co-Syndication Agents, and NationsBank, as Documentation Agent)(Exhibit 10.2(1) to the 3rd Quarter 1997 Form 10-Q) 15 18 EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.2 Compensatory plans: ~(1) Belo Savings Plan: * (a) Belo Savings Plan Amended and Restated July 1, 2000 (Exhibit 10.2(1) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000 (the "2nd Quarter 2000 Form 10-Q")) * (b) First Amendment to the Belo Savings Plan effective December 31, 2000 (Exhibit 10.2(1)(b) to the 2000 Form 10-K) ~(2) * Belo 1986 Long-Term Incentive Plan: * (a) Belo Corp. 1986 Long-Term Incentive Plan (Effective May 3, 1989, as amended by Amendments 1, 2, 3, 4 and 5) (Exhibit 10.3(2) the Company's Annual Report on Form 10-K dated March 10, 1997 (the "1996 Form 10-K")) * (b) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit 10.3(2)(b) to the 1997 Form 10-K) * (c) Amendment No. 7 to 1986 Long-Term Incentive Plan (Exhibit 10.2(2)(c) to the 1999 Form 10-K) * (d) Amendment No. 8 to 1986 Long-Term Incentive Plan (Exhibit 10.3(2)(d) to the 2nd Quarter 1998 Form 10-Q) ~(3) * Belo 1995 Executive Compensation Plan, as restated to incorporate amendments through December 4, 1997 (Exhibit 10.3(3) to the 1997 Form 10-K) (a) Amendment to 1995 Executive Compensation Plan, dated July 21, 1998 (Exhibit 10.3(3)(a) to the 2nd Quarter 1998 Form 10-Q) (b) Amendment to 1995 Executive Compensation Plan, dated December 16, 1999 (Exhibit 10.3(3)(b) to the 1999 Form 10-K) ~(4) * Management Security Plan (Exhibit 10.3(1) to the 1996 Form 10-K) (a) Amendment to Management Security Plan of Belo Corp. and Affiliated Companies (as Restated Effective January 1, 1982) (Exhibit 10.2(4)(a) to the 1999 Form 10-K) ~(5) * Belo Supplemental Executive Retirement Plan (a) Belo Supplemental Executive Retirement Plan As Amended and Restated Effective January 1, 2000 (Exhibit 10.2(5)(a) to the 1999 Form 10-K) (b) First Amendment to Belo Supplemental Executive Retirement Plan as Amended and Restated Effective January 1, 2000, dated July 27, 2000 (Exhibit 10.2(5) to the 2nd Quarter 2000 Form 10-Q) ~(6) * Belo 2000 Executive Compensation Plan (Exhibit 4.15 to Registration Statement Form S-8 (No. 333-43056) filed with the Securities and Exchange Commission on August 4, 2000) ~(7) * Retirement Agreement between the Company and Ward L. Huey, Jr., dated November 3, 2000 (Exhibit 10.2(7) to the 2000 10-K) ~(8) Retirement Agreement between the Company and Burl Osborne, dated June 27, 2001 12 Ratio of Earnings to Fixed Charges (b) Reports on Form 8-K During the quarter covered by this report, there were no reports on Form 8-K filed. 16 19 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. August 10, 2001 By:/s/ Dunia A. Shive ------------------------------------------ Dunia A. Shive Executive Vice President/ Chief Financial Officer By:/s/ Janice E. Bryant ------------------------------------------ Janice E. Bryant Vice President/Controller 17 20 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION ------ ----------- 3.1 * Certificate of Incorporation of the Company (Exhibit 3.1 to the Company's Annual Report on Form 10-K dated March 15, 2000 (the "1999 Form 10-K")) 3.2 * Certificate of Correction to Certificate of Incorporation dated May 13, 1987 (Exhibit 3.2 to the 1999 Form 10-K) 3.3 * Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated April 16, 1987 (Exhibit 3.3 to the 1999 Form 10-K) 3.4 * Certificate of Amendment of Certificate of Incorporation of the Company dated May 4, 1988 (Exhibit 3.4 to the 1999 Form 10-K) 3.5 * Certificate of Amendment of Certificate of Incorporation of the Company dated May 3, 1995 (Exhibit 3.5 to the 1999 Form 10-K) 3.6 * Certificate of Amendment of Certificate of Incorporation of the Company dated May 13, 1998 (Exhibit 3.6 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 (the "2nd Quarter 1998 Form 10-Q")) 3.7 * Certificate of Ownership and Merger, dated December 20, 2000, but effective as of 11:59 p.m. on December 31, 2000 (Exhibit 99.2 to Belo's Current Report on Form 8-K filed with the Commission on December 29, 2000) 3.8 * Amended Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated May 4, 1988 (Exhibit 3.7 to the 1999 Form 10-K) 3.9 * Certificate of Designation of Series B Common Stock of the Company dated May 4, 1988 (Exhibit 3.8 to the 1999 Form 10-K) 3.10 * Amended and Restated Bylaws of the Company, effective December 31, 2000 (Exhibit 3.10 to the Company's Annual Report on 10-K dated March 13, 2001 (the "2000 Form 10-K")) 4.1 Certain rights of the holders of the Company's Common Stock are set forth in Exhibits 3.1-3.10 above 4.2 * Specimen Form of Certificate representing shares of the Company's Series A Common Stock (Exhibit 4.2 to the 2000 Form 10-K) 4.3 * Specimen Form of Certificate representing shares of the Company's Series B Common Stock (Exhibit 4.3 to the 2000 Form 10-K) 4.4 * Amended and Restated Form of Rights Agreement as of February 28, 1996 between the Company and Chemical Mellon Shareholder Services, L.L.C., a New York banking corporation (Exhibit 4.4 to the 1999 Form 10-K) 21 EXHIBIT NUMBER DESCRIPTION ------ ----------- 4.5 * Supplement No. 1 to Amended and Restated Rights Agreement between the Company and The First National Bank of Boston dated as of November 11, 1996 (Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1996) 4.6 * Supplement No. 2 to Amended and Restated Rights Agreement between the Company and The First National Bank of Boston dated as of June 5, 1998 (Exhibit 4.6 to the 2000 Form 10-K) 4.7 Instruments defining rights of debt securities: (1) * Indenture dated as of June 1, 1997 between the Company and The Chase Manhattan Bank, as Trustee (Exhibit 4.6(1) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 (the "2nd Quarter 1997 Form 10-Q")) (2) * (a) $200 million 6-7/8% Senior Note due 2002 (Exhibit 4.6(2)(a) to the 2nd Quarter 1997 Form 10-Q) * (b) $50 million 6-7/8% Senior Note due 2002 (Exhibit 4.6(2)(b) to the 2nd Quarter 1997 Form 10-Q) (3) * (a) $200 million 7-1/8% Senior Note due 2007 (Exhibit 4.6(3)(a) to the 2nd Quarter 1997 Form 10-Q) * (b) $100 million 7-1/8% Senior Note due 2007 (Exhibit 4.6(3)(b) to the 2nd Quarter 1997 Form 10-Q) (4) * $200 million 7-3/4% Senior Debenture due 2027 (Exhibit 4.6(4) to the 2nd Quarter 1997 Form 10-Q) (5) * Officer's 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) (6) * (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 quarterly period ended September 30, 1997 (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) (7) * Officer's 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) 10.1 Financing agreements: (1) * Amended and Restated Credit Agreement (Five-year $1,000,000,000 revolving credit and competitive advance facility dated as of August 29, 1997 among the Company and The Chase Manhattan Bank, as Administrative Agent and Competitive Advance Facility Agent, Bank of America National Trust and Savings Association and Bank of Tokyo-Mitsubishi, Ltd., as Co-Syndication Agents, and NationsBank, as Documentation Agent)(Exhibit 10.2(1) to the 3rd Quarter 1997 Form 10-Q) 22 EXHIBIT NUMBER DESCRIPTION ------ ----------- 10.2 Compensatory plans: ~(1) Belo Savings Plan: * (a) Belo Savings Plan Amended and Restated July 1, 2000 (Exhibit 10.2(1) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2000 (the "2nd Quarter 2000 Form 10-Q")) * (b) First Amendment to the Belo Savings Plan effective December 31, 2000 (Exhibit 10.2(1)(b) to the 2000 Form 10-K) ~(2) * Belo 1986 Long-Term Incentive Plan: * (a) Belo Corp. 1986 Long-Term Incentive Plan (Effective May 3, 1989, as amended by Amendments 1, 2, 3, 4 and 5) (Exhibit 10.3(2) the Company's Annual Report on Form 10-K dated March 10, 1997 (the "1996 Form 10-K")) * (b) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit 10.3(2)(b) to the 1997 Form 10-K) * (c) Amendment No. 7 to 1986 Long-Term Incentive Plan (Exhibit 10.2(2)(c) to the 1999 Form 10-K) * (d) Amendment No. 8 to 1986 Long-Term Incentive Plan (Exhibit 10.3(2)(d) to the 2nd Quarter 1998 Form 10-Q) ~(3) * Belo 1995 Executive Compensation Plan, as restated to incorporate amendments through December 4, 1997 (Exhibit 10.3(3) to the 1997 Form 10-K) (a) Amendment to 1995 Executive Compensation Plan, dated July 21, 1998 (Exhibit 10.3(3)(a) to the 2nd Quarter 1998 Form 10-Q) (b) Amendment to 1995 Executive Compensation Plan, dated December 16, 1999 (Exhibit 10.3(3)(b) to the 1999 Form 10-K) ~(4) * Management Security Plan (Exhibit 10.3(1) to the 1996 Form 10-K) (a) Amendment to Management Security Plan of Belo Corp. and Affiliated Companies (as Restated Effective January 1, 1982) (Exhibit 10.2(4)(a) to the 1999 Form 10-K) ~(5) * Belo Supplemental Executive Retirement Plan (a) Belo Supplemental Executive Retirement Plan As Amended and Restated Effective January 1, 2000 (Exhibit 10.2(5)(a) to the 1999 Form 10-K) (b) First Amendment to Belo Supplemental Executive Retirement Plan as Amended and Restated Effective January 1, 2000, dated July 27, 2000 (Exhibit 10.2(5) to the 2nd Quarter 2000 Form 10-Q) ~(6) * Belo 2000 Executive Compensation Plan (Exhibit 4.15 to Registration Statement Form S-8 (No. 333-43056) filed with the Securities and Exchange Commission on August 4, 2000) ~(7) * Retirement Agreement between the Company and Ward L. Huey, Jr., dated November 3, 2000 (Exhibit 10.2(7) to the 2000 10-K) ~(8) Retirement Agreement between the Company and Burl Osborne, dated June 27, 2001 12 Ratio of Earnings to Fixed Charges