================================================================================ 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, 2002 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 the 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, 2002 ----- ---------------------------- Common Stock, $1.67 par value 112,188,621* * Consisting of 95,425,413 shares of Series A Common Stock and 16,763,208 shares of Series B Common Stock. ================================================================================ 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............................... 7 Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 12 PART II OTHER INFORMATION Item 1. Legal Proceedings.............................................................. 12 Item 2. Changes in Securities and Use of Proceeds...................................... 12 Item 3. Defaults Upon Senior Securities................................................ 12 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............................................... 13 i PART I. ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS Belo Corp. and Subsidiaries Three months ended Six months ended June 30, June 30, -------------------------- -------------------------- In thousands, except per share amounts (unaudited) 2002 2001 2002 2001 -------------------------------------------------- ---------- ---------- ---------- ---------- NET OPERATING REVENUES $ 366,239 $ 361,848 $ 686,096 $ 693,395 OPERATING COSTS AND EXPENSES Salaries, wages and employee benefits 124,889 127,589 247,994 253,771 Other production, distribution and operating costs 96,675 93,120 185,594 182,598 Newsprint, ink and other supplies 28,025 38,536 56,894 76,969 Depreciation 24,450 25,232 48,769 50,599 Amortization 2,484 20,227 4,126 40,478 ---------- ---------- ---------- ---------- Total operating costs and expenses 276,523 304,704 543,377 604,415 ---------- ---------- ---------- ---------- Earnings from operations 89,716 57,144 142,719 88,980 OTHER INCOME AND EXPENSE Interest expense (27,126) (28,205) (55,419) (59,114) Other, net 4,259 (29,047) 6,461 (28,795) ---------- ---------- ---------- ---------- Total other income and expense (22,867) (57,252) (48,958) (87,909) EARNINGS (LOSS) Earnings (loss) before income taxes 66,849 (108) 93,761 1,071 Income taxes 26,332 207 36,480 763 ---------- ---------- ---------- ---------- Net earnings (loss) $ 40,517 $ (315) $ 57,281 $ 308 ========== ========== ========== ========== NET EARNINGS PER SHARE Basic $ .36 $ .00 $ .51 $ .00 Diluted $ .36 $ .00 $ .51 $ .00 AVERAGE SHARES OUTSTANDING Basic 111,849 109,656 111,330 109,601 Diluted 114,032 109,656 113,167 110,135 CASH DIVIDENDS DECLARED PER SHARE $ .075 $ .075 $ .15 $ .15 See accompanying Notes to Consolidated Condensed Financial Statements. 1 CONSOLIDATED CONDENSED BALANCE SHEETS Belo Corp. and Subsidiaries In thousands, except share and per share amounts June 30, December 31, (Current year unaudited) 2002 2001 ------------------------------------------------ ------------ ------------ ASSETS Current assets: Cash and temporary cash investments $ 34,148 $ 35,913 Accounts receivable, net 228,418 231,673 Other current assets 53,061 64,593 ------------ ------------ Total current assets 315,627 332,179 Property, plant and equipment, net 574,309 597,106 Intangible assets, net 1,375,405 1,368,385 Goodwill, net 1,255,262 1,255,262 Other assets 88,113 119,293 ------------ ------------ Total assets $ 3,608,716 $ 3,672,225 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 54,967 $ 60,347 Accrued expenses 83,528 85,911 Other current liabilities 53,482 39,142 ------------ ------------ Total current liabilities 191,977 185,400 Long-term debt 1,551,450 1,696,900 Deferred income taxes 418,090 416,500 Other liabilities 54,785 52,680 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 95,170,571 shares at June 30, 2002 and 91,800,402 shares at December 31, 2001 158,935 153,307 Series B: Issued 16,961,070 shares at June 30, 2002 and 18,582,538 shares at December 31, 2001 28,325 31,033 Additional paid-in capital 865,657 837,515 Retained earnings 339,497 298,890 ------------ ------------ Total shareholders' equity 1,392,414 1,320,745 ------------ ------------ Total liabilities and shareholders' equity $ 3,608,716 $ 3,672,225 ============ ============ See accompanying Notes to Consolidated Condensed Financial Statements. 2 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Belo Corp. and Subsidiaries Six months ended June 30, -------------------------- In thousands (unaudited) 2002 2001 ------------------------ ---------- ---------- OPERATIONS Net earnings $ 57,281 $ 308 Adjustments to reconcile net earnings to net cash provided by operations: Net gain on sale of investments (1,841) -- Depreciation and amortization 52,895 91,077 Deferred income taxes 5,842 (8,412) Non-cash charge for write-down of Internet investments -- 28,785 Non-cash expenses 6,000 3,995 Other, net 757 2,548 Net change in current assets and liabilities: Accounts receivable 3,502 30,479 Other current assets 1,782 3,103 Accounts payable (5,432) (29,214) Accrued expenses 8,206 (18,424) Other current liabilities 21,941 (53,230) ---------- ---------- Net cash provided by operations 150,933 51,015 INVESTING Capital expenditures (16,885) (31,015) Acquisitions (18,000) -- Proceeds from sale of investments 27,000 -- Other investments (8,925) (1,493) Other, net (220) 1,235 ---------- ---------- Net cash used for investments (17,030) (31,273) FINANCING Borrowings of debt 611,700 415,350 Repayment of debt (757,250) (466,455) Purchase of treasury shares -- (12,621) Payment of dividends on stock (16,674) (16,430) Net proceeds from exercise of stock options 26,556 5,947 ---------- ---------- Net cash used for financing (135,668) (74,209) Net decrease in cash and temporary cash investments (1,765) (54,467) Cash and temporary cash investments at beginning of period 35,913 87,680 ---------- ---------- Cash and temporary cash investments at end of period $ 34,148 $ 33,213 ========== ========== SUPPLEMENTAL DISCLOSURES Interest paid, net of amounts capitalized $ 56,273 $ 63,479 Income taxes paid, net of refunds $ (88) $ 54,534 See accompanying Notes to Consolidated Condensed Financial Statements. 3 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Belo Corp. and Subsidiaries (in thousands, except per share amounts) (1) The accompanying unaudited consolidated condensed financial statements of Belo Corp. and subsidiaries (the "Company" or "Belo") have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The balance sheet at December 31, 2001 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, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. 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, 2001. Certain amounts for the prior periods have been reclassified to conform to the current year presentation. (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, 2002 and 2001: Three months ended Six months ended June 30, June 30, --------------------- --------------------- 2002 2001 2002 2001 -------- -------- -------- -------- Weighted average shares for basic earnings per share 111,849 109,656 111,330 109,601 Effect of employee stock options 2,183 -- 1,837 534 -------- -------- -------- -------- Weighted average shares for diluted earnings per share 114,032 109,656 113,167 110,135 ======== ======== ======== ======== (3) Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." Under the provisions of SFAS No. 142, goodwill and certain other intangibles with indefinite lives, namely Federal Communications Commission ("FCC") licenses, are no longer amortized, but are instead 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. Separable intangible assets that have finite useful lives will continue to be amortized over their useful lives. For Belo's Television Group, a reporting unit is defined as an operating cluster of television stations and for Belo's Newspaper Group, a reporting unit is defined as the newspaper operations in each individual market. During the second quarter of 2002, the Company's review for impairment of goodwill and other intangible assets indicated no impairment of these assets as of January 1, 2002. The Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets in assessing the recoverability of its goodwill and other intangibles. If these estimates or the related assumptions change, the Company may be required to record impairment charges for these assets in the future. 4 Prior to the adoption of SFAS No. 142, amortization expense was recorded for goodwill and other intangibles with indefinite lives. The following table sets forth a reconciliation of net earnings and net earnings per share information for the three and six months ended June 30, 2002 and 2001 as though SFAS No. 142 had been in effect at the beginning of fiscal 2001: Three months ended Six months ended June 30, June 30, ------------------------- ------------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Net earnings (loss), as reported $ 40,517 $ (315) $ 57,281 $ 308 Add back: Goodwill and FCC license amortization, net of tax -- 10,797 -- 22,282 ---------- ---------- ---------- ---------- Net earnings, pro forma $ 40,517 $ 10,482 $ 57,281 $ 22,590 ========== ========== ========== ========== Per share amounts: Basic net earnings per share, as reported $ .36 $ .00 $ .51 $ .00 Add back: Goodwill and FCC license amortization, net of tax -- .10 -- .21 ---------- ---------- ---------- ---------- Basic net earnings per share, pro forma $ .36 $ .10 $ .51 $ .21 ========== ========== ========== ========== Diluted net earnings per share, as reported $ .36 $ .00 $ .51 $ .00 Add back: Goodwill and FCC license amortization, net of tax -- .10 -- .21 ---------- ---------- ---------- ---------- Diluted net earnings per share, pro forma $ .36 $ .10 $ .51 $ .21 ========== ========== ========== ========== The reported effective tax rates for the second quarter and first six months of 2002 were 39.4 percent and 38.9 percent, respectively, compared to a rate exceeding 100 percent for the second quarter of 2001 and a rate of 71.2 percent for the first six months of 2001 primarily due to the elimination of non-deductible goodwill amortization upon adoption of SFAS No. 142. The pro forma effective tax rates would have been 43.2 percent and 40.9 percent for the second quarter and first six months of 2001, respectively, if SFAS No. 142 had been in effect at the beginning of 2001. The following table is as of June 30, 2002 and sets out the identifiable intangible assets that continue to be subject to amortization and the identifiable intangible assets that are no longer subject to amortization beginning January 1, 2002: Weighted Average Gross Carrying Accumulated Amortization Amount Amortization Period -------------- ------------ ------------ Amortized intangible assets: Television Group: Market alliance $ 8,832 $ 442(1) 5 years Newspaper Group: Subscriber lists 115,963 39,420 18 years Unamortized intangible assets: Television Group: FCC licenses 1,464,184 173,712 -------------- ------------ Total identifiable intangible assets $ 1,588,979 $ 213,574 (1) Acquired March 12, 2002. Amortization expense for intangible assets subject to amortization was $2,484 and $4,126 for the three and six months ended June 30, 2002, respectively. The annual amortization expense for intangible assets subject to amortization is estimated to be approximately $8,500 for each of the next five fiscal years. The total carrying amount of goodwill as of January 1, 2002 and June 30, 2002 is $1,255,262, of which amount $779,987, $470,043 and $5,232 is associated with the Television Group, Newspaper Group and Other, respectively. 5 (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 consolidated condensed 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 2002 2001 2002 2001 ------------ ---------- ---------- ---------- ---------- NET OPERATING REVENUES Television Group $ 171,087 $ 164,663 $ 311,698 $ 308,094 Newspaper Group 185,734 189,650 357,193 370,963 Interactive Media 4,847 3,369 8,841 6,267 Other 4,571 4,166 8,364 8,071 ---------- ---------- ---------- ---------- Total net operating revenues $ 366,239 $ 361,848 $ 686,096 $ 693,395 ========== ========== ========== ========== EARNINGS FROM OPERATIONS Television Group $ 65,783 $ 46,174 $ 105,661 $ 72,020 Newspaper Group 41,026 33,644 70,618 57,661 Interactive Media (3,440) (5,869) (7,248) (11,055) Other (867) (1,008) (2,108) (2,180) Corporate expenses (12,786) (15,797) (24,204) (27,466) ---------- ---------- ---------- ---------- Total earnings from operations $ 89,716 $ 57,144 $ 142,719 $ 88,980 ========== ========== ========== ========== DEPRECIATION AND AMORTIZATION Television Group $ 12,018 $ 27,678 $ 23,761 $ 55,493 Newspaper Group 12,477 15,381 24,360 30,640 Interactive Media 863 663 1,722 1,402 Other 605 687 1,177 1,340 Corporate 971 1,050 1,875 2,202 ---------- ---------- ---------- ---------- Total depreciation and amortization $ 26,934 $ 45,459 $ 52,895 $ 91,077 ========== ========== ========== ========== OPERATING CASH FLOW (SEE DEFINITION ABOVE) Television Group $ 77,801 $ 73,852 $ 129,422 $ 127,513 Newspaper Group 53,503 49,025 94,978 88,301 Interactive Media (2,577) (5,206) (5,526) (9,653) Other (262) (321) (931) (840) Corporate (11,815) (14,747) (22,329) (25,264) ---------- ---------- ---------- ---------- Total operating cash flow $ 116,650 $ 102,603 $ 195,614 $ 180,057 ========== ========== ========== ========== CONSOLIDATED CASH FLOW INFORMATION(a) Net cash provided by operations $ 150,933 $ 51,015 Net cash used for investments $ (17,030) $ (31,273) Net cash used for financing $ (135,668) $ (74,209) (a) Cash flow information is provided on a consolidated basis and is as presented in the Consolidated Condensed Statements of Cash Flows included herein. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The Company is an owner and operator of 19 television stations and publisher of four daily newspapers. The following table sets forth the Company's major media assets by segment as of June 30, 2002: 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 16 KTVK IND Owned November 1999 Phoenix 16 KASW WB Owned March 2000 St. Louis 22 KMOV CBS Owned June 1997 Portland 23 KGW NBC Owned February 1997 Charlotte 27 WCNC NBC Owned February 1997 San Antonio 37 KENS CBS Owned October 1997 San Antonio 37 KBEJ UPN LMA (c) Hampton/Norfolk 42 WVEC ABC Owned February 1984 New Orleans 43 WWL CBS Owned June 1994 Louisville 50 WHAS ABC Owned February 1997 Austin 54 KVUE ABC Owned June 1999 Tucson 73 KMSB FOX Owned February 1997 Tucson 73 KTTU UPN Owned March 2002(d) Spokane 78 KREM CBS Owned February 1997 Spokane 78 KSKN UPN/WB(e) Owned October 2001(f) Boise(g) 121 KTVB NBC Owned February 1997 Newspaper Group --------------- Daily Sunday Newspaper Location Acquired Circulation(i) Circulation(i) --------- -------- -------- -------------- -------------- The Dallas Morning News ("DMN") Dallas, TX (h) 529,617 776,868 The Providence Journal ("PJ") Providence, RI February 1997 164,065 232,040 The Press-Enterprise ("PE") Riverside, CA July 1997 184,562 189,095 Denton Record-Chronicle Denton, TX June 1999 14,783 19,098 Interactive Media Belo Interactive, Inc. Includes the Web site operations of Belo's operating companies, interactive alliances and Internet-based products and services.(j) Other Northwest Cable News ("NWCN") Cable news channel distributed to over 2.3 million homes in the Pacific Northwest. Texas Cable News ("TXCN") Cable news channel distributed to over 1.3 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 2002 Nielsen estimates. (b) Substantially all the revenue of the Company's television stations is derived from advertising. Less than 4 percent of Television Group 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 under a local marketing agreement ("LMA") in May 1999; the station's on-air date was August 3, 2000. (d) Belo acquired KTTU, previously operated under an LMA, on March 12, 2002. (e) The primary affiliation is with UPN. The WB network is currently a secondary affiliation. (f) Belo acquired KSKN, previously operated under an LMA, on October 1, 2001. (g) The Company also owns KTFT-LP (NBC), a low power television station in Twin Falls, Idaho. (h) The first issue of DMN was published by Belo on October 1, 1885. (i) Average paid circulation data is for the six months ended March 31, 2002 as filed in the Audit Bureau of Circulation's FAS-FAX report, except for the Denton Record-Chronicle, for which circulation data is taken from the Certified Audit of Circulations Report for the twelve-month period ended December 31, 2001. (j) The majority of Belo Interactive's Web sites are associated with the Company's television stations and newspapers and primarily provide news and information. 7 RESULTS OF OPERATIONS Consolidated Results of Operations Three Months Ended June 30, 2002 and 2001 Total net operating revenues increased $4,391, or 1.2 percent, for the second quarter of 2002 as compared to the same period in 2001 primarily due to a $6,975 increase in spot revenues for the Television Group, a $3,013 increase in preprints and Total Market Coverage ("TMC") revenues for the Newspaper Group and a $1,481 increase in Interactive Media advertising revenues, offset somewhat by a decrease of $6,876 in classified advertising revenues in the Newspaper Group. Salaries, wages and employee benefits expense decreased $2,700, or 2.1 percent, for the second quarter of 2002 as compared to the year earlier period due to a decrease in the number of employees in 2002 resulting primarily from a Company-wide reduction in force and an early retirement program at The Providence Journal in the fourth quarter of 2001, which amounts were offset by higher accruals in 2002 for performance-based bonuses and higher medical insurance expense. Salaries, wages and employee benefits expense in the second quarter of 2001 included a charge of $4,461 for early retirement costs and corporate staff reductions. Other production, distribution and operating costs increased $3,555, or 3.8 percent, in the second quarter of 2002 as compared to the second quarter of 2001 primarily due to increases in outside services ($1,772), outside solicitation ($1,187), cash programming ($1,060), distribution ($989) and insurance ($616) expenses, partially offset by a $1,905 decrease in bad debt expense. Newsprint, ink and other supplies decreased $10,511, or 27.3 percent, in the second quarter of 2002 as compared to the year earlier period primarily due to a decrease in the average cost per metric ton of newsprint. The average cost per metric ton of newsprint decreased 29.1 percent in the second quarter of 2002 as compared to the year earlier period. Newsprint consumption increased approximately 1 percent in the second quarter of 2002 as compared to the year earlier period. Depreciation expense decreased $782 in the second quarter of 2002, from $25,232 in the second quarter of 2001 to $24,450 in the second quarter of 2002. Amortization expense decreased from $20,227 in second quarter of 2001 to $2,484 in the second quarter of 2002 due to the Company's adoption of SFAS No. 142 effective January 1, 2002. See Note 3 of Notes to the Consolidated Condensed Financial Statements. Interest expense for the second quarter of 2002 of $27,126 was 3.8 percent lower than second quarter 2001 expense of $28,205, reflecting lower average debt levels. Other, net increased from expense of $29,047 in the second quarter of 2001 to income of $4,259 in the second quarter of 2002 primarily due to a charge of $28,785 in 2001 related to the write-down of the Company's investments in certain Internet-related companies and a credit of $4,787 in 2002 related to the favorable resolution of certain contingencies associated with the Company's sales of KOTV in Tulsa, Oklahoma, the Messenger-Inquirer in Owensboro, Kentucky, The Gleaner in Henderson, Kentucky and The Eagle in Bryan/College Station, Texas in the fourth quarter of 2000. The effective tax rate for the second quarter of 2002 was 39.4 percent. The Company recorded tax expense of $207 for the second quarter of 2001 on a loss before income taxes of $108. The second quarter 2001 tax provision was due to a 71.2 percent projected annual effective tax rate, resulting from non-deductible goodwill amortization (which was eliminated in 2002 upon adoption of SFAS No. 142) and lower projected annual pretax earnings. The effective tax rate would have been 43.2 percent for the second quarter of 2001 if SFAS No. 142 had been in effect at the beginning of 2001. As a result of the factors discussed above, net earnings of $40,517 (36 cents per share) were reported for the three months ended June 30, 2002, compared with a net loss of $315 (0 cents per share) for the same period in 2001. 8 Net earnings for the three months ended June 30, 2001 would have been $10,482 (10 cents per share) if SFAS No. 142 had been in effect at the beginning of 2001. Six Months Ended June 30, 2002 and 2001 Total net operating revenues declined $7,299, or 1.1 percent, for the six months ended June 30, 2002 as compared to the same period in 2001 primarily due to a decrease in classified advertising revenues ($18,326) for the Newspaper Group, partially offset by increases in Newspaper Group preprints and TMC revenues ($4,424), Television Group spot revenues ($4,104) and Interactive Media advertising revenues ($2,577). Salaries, wages and employee benefits expense declined $5,777, or 2.3 percent, for the six months ended June 30, 2002 as compared to the year earlier period due to a decrease in the number of employees in 2002 resulting primarily from a Company-wide reduction in force and an early retirement program at The Providence Journal in the fourth quarter of 2001, which amounts were partially offset by higher accruals in 2002 for performance-based bonuses and higher medical insurance expense. Salaries, wages and employee benefits expense in 2001 included a charge of $4,461 for early retirement costs and corporate staff reductions. Other production, distribution and operating costs increased $2,996, or 1.6 percent, in the first six months of 2002 as compared to the first six months of 2001, primarily due to increases in cash programming ($1,556), distribution ($1,432), outside services ($1,372) and outside solicitation ($1,370) expenses, partially offset by a $2,235 decrease in bad debt expense. Newsprint, ink and other supplies decreased $20,075, or 26.1 percent, in the six months ended June 30, 2002 as compared to the year earlier period. The average cost per metric ton of newsprint decreased 25.2 percent in the first six months of 2002 as compared to the year earlier period. Newsprint consumption decreased 3.5 percent as compared to the year earlier period. Depreciation expense decreased $1,830, from $50,599 in the first six months of 2001 to $48,769 in the first six months of 2002. Amortization expense decreased from $40,478 in the six months ended June 30, 2001 to $4,126 in the six months ended June 30, 2002 due to the Company's adoption of SFAS No. 142 effective January 1, 2002. See Note 3 of Notes to the Consolidated Condensed Financial Statements. Interest expense for the six months ended June 30, 2002 was $55,419, or 6.3 percent, lower than the year earlier period expense of $59,114, due primarily to lower average debt levels. Other, net increased from expense of $28,795 for the six month period ended June 30, 2001 to income of $6,461 in the first six months of 2002 primarily due to a charge of $28,785 in 2001 related to the write-down of the Company's investments in certain Internet-related companies, a credit of $4,787 in 2002 related to the favorable resolution of certain contingencies associated with the Company's sales in the fourth quarter of 2000 of KOTV in Tulsa, Oklahoma, the Messenger-Inquirer in Owensboro, Kentucky, The Gleaner in Henderson, Kentucky and The Eagle in Bryan/College Station, Texas and a gain of $2,375 in the first quarter of 2002 on the sale of Belo's interest in the Dallas Mavericks and the American Airlines Center. 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, 2002 was 38.9 percent. The effective tax rate for the six months ended June 30, 2001 was 71.2 percent. The lower rate in 2002 is due to the elimination of non-deductible goodwill amortization upon adoption of SFAS No. 142 and higher estimated pretax earnings. The effective tax rate would have been 40.9 percent for the first six months of 2001 if SFAS No. 142 had been in effect at the beginning of 2001. As a result of the factors discussed above, net earnings for the six months ended June 30, 2002 were $57,281 (51 cents per share) as compared to $308 (0 cents per share) for the six months ended June 30, 2001. Net earnings for the six months ended June 30, 2001 would have been $22,590 (21 cents per share) if SFAS No. 142 had been in effect at the beginning of 2001. 9 Segment Results of Operations Television Group Television Group revenues for the second quarter of 2002 were $171,087, a 3.9 percent increase compared with second quarter 2001 revenues of $164,663. In the first six months, Television Group revenues increased 1.2 percent, from $308,094 in 2001 to $311,698 in 2002. Total spot revenues including political revenue increased 4.5 percent and 1.4 percent for the quarter and six-month periods ended June 30, 2002, respectively, as compared to the prior year periods. Local spot advertising revenues were up 1.0 percent for the second quarter of 2002 and down 1.8 percent for the first six months of the year. National advertising revenues increased 4.7 percent in the second quarter of 2002 as compared to the second quarter of 2001 and were flat for the year-to-date period comparisons. Political advertising revenues increased $3,413 in the second quarter and $7,190 in the first six months of 2002 versus the same periods in 2001. Revenues for the first six months of 2002 included approximately $9,000 of advertising revenues generated by the Company's NBC affiliates from their broadcast of the Winter Olympics in February 2002. The most significant revenue increases for the quarter and six month periods ended June 30, 2002 were reported in the Dallas, Houston and Phoenix markets with strength in the automotive, movies and health and beauty categories. The largest revenue decrease for these periods was reported in the Seattle market due to difficult economic conditions in the Pacific Northwest. Television Group cash operating expenses for the quarter and six months ended June 30, 2002 increased $2,475, or 2.7 percent, and $1,695, or 0.9 percent, respectively, as a result of increases in accruals for performance-based bonuses, programming costs and insurance expenses. Television Group operating cash flow for the quarter and six months ended June 30, 2002 increased $3,949, or 5.3 percent, and $1,909, or 1.5 percent, respectively, from the comparable periods in 2001. Television Group operating cash flow margins improved from 44.9 percent in the second quarter of 2001 to 45.5 percent in the second quarter of 2002 but were relatively unchanged (approximately 41.5 percent) between the six-month periods. Newspaper Group Newspaper Group revenues decreased $3,916, or 2.1 percent, and $13,770, or 3.7 percent, for the quarter and six months ended June 30, 2002, respectively, as compared to the prior year periods. In the first six months of 2002 there was one more Sunday than in the first six months of 2001. After adjusting for the effects of the additional Sunday, Newspaper Group revenues decreased 5.1 percent for the year-to-date period. DMN reported revenue decreases of 3.3 percent and 5.7 percent for the second quarter and first six months of 2002 as compared to the year earlier periods. Classified advertising revenues declined 13.7 percent in the second quarter and 17.8 percent in the first six months of 2002 as compared to the year earlier periods, due to decreases in classified employment volume. General advertising revenues declined 4.8 percent and 7.0 percent for the quarter and six months ended June 30, 2002. The decrease in the second quarter of 2002 was due to a decline in volume, primarily in the packaged goods category, while the decrease for the year-to-date period was primarily due to a decline in volume in the financial category. Retail advertising revenues were down 1.7 percent and up 0.7 percent for the second quarter and first six months of 2002, respectively, as compared to the year earlier periods. Other advertising revenues improved for the quarter and year-to-date periods due to increases in preprints and TMC revenues. Total revenues for PJ and PE were flat for the second quarter and first six months of 2002 when compared to the same periods in 2001. The declines in classified advertising revenues at both papers were offset by gains in retail, general and other advertising revenues at PJ and improvements in general and other advertising revenue at PE. Newspaper Group cash operating expenses decreased 6.0 percent and 7.2 percent for the second quarter and six-month period ended June 30, 2002, respectively, as compared to the prior year periods, primarily due to lower newsprint expense. Newsprint expense decreased 28.6 percent and 27.7 percent for the quarter and year-to-date periods in 2002, respectively, from the comparable periods in 2001. Newspaper Group operating cash flow for the second quarter of 2002 was $53,503, an increase of 9.1 percent over second quarter 2001 operating cash flow of $49,025. For the year-to-date period, 2002 operating cash flow was $94,978, or 7.6 percent higher than 2001. Newspaper Group operating cash flow margins were 28.8 percent and 26.6 percent for the quarter and six-month periods ended June 30, 2002, respectively, as compared to 25.9 percent and 23.8 percent for the comparable 2001 periods. 10 Interactive Media Interactive Media revenues, which are principally derived from advertising, increased 43.9 percent, from $3,369 in the second quarter of 2001 to $4,847 in the second quarter of 2002. For the first six months of 2002, Interactive Media revenues increased 41.1 percent over the year earlier period, from $6,267 to $8,841. Interactive Media cash expenses decreased 13.4 percent and 9.8 percent for the quarter and six-month periods ended June 30, 2002, respectively, primarily as a result of lower outside services and expense reduction initiatives beginning in the third quarter of 2001 in response to the softening economy. As a result, Interactive Media's operating cash flow deficits improved from $5,206 in the second quarter of 2001 to $2,577 in the same period of 2002, and from $9,653 in the first six months of 2001 to $5,526 in the 2002 comparable period. Other Other revenues consist primarily of Belo's regional cable news operations, NWCN and TXCN. Other revenues increased 9.7 percent, from $4,166 in the second quarter of 2001 to $4,571 in the second quarter of 2002. For the six-month periods, Other revenues increased 3.6 percent, from $8,071 in 2001 to $8,364 in 2002. Cash expenses increased 7.7 percent and 4.3 percent during the second quarter and first six months of 2002, respectively, as compared to prior year periods. The operating cash flow deficit decreased from $321 for the second quarter of 2001 to $262 for the second quarter of 2002 and increased from $840 for the first six months of 2001 to $931 for the 2002 comparable period. Operating cash flow decreased at NWCN for the quarter and year-to-date periods, while TXCN reported a decrease in its cash flow deficit. 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 2002, net cash provided by operations was $150,933, compared with $51,015 for the same period in 2001. Higher net earnings and lower working capital requirements for taxes, bonus payments and interest in the first six months of 2002 as compared to the year earlier period, contributed to the increase in cash provided by operations. Total debt decreased $145,550 from December 31, 2001 to June 30, 2002. On June 3, 2002, the Company repaid $250,000 of Senior Notes due 2002 utilizing borrowings under its existing credit facility. At June 30, 2002, the Company had $1,100,000 in fixed-rate debt securities as follows: $300,000 of 7-1/8 percent Senior Notes due 2007; $350,000 of 8 percent Senior Notes due 2008; $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 7.5 percent. At June 30, 2002, the Company had borrowings of $422,000 under a $720,000 variable-rate revolving credit facility. Borrowings under the credit facility mature upon expiration of the agreement on November 29, 2006. In addition, the Company had $23,050 of short-term unsecured notes outstanding at June 30, 2002. 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, 2002, the Company was in compliance with all debt covenant requirements. The Company also has $150,000 of additional debt securities 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. On January 30, 2002, the Company sold its interest in the Dallas Mavericks and the American Airlines Center for $27,000 which resulted in a pretax gain of approximately $2,375. On March 12, 2002, Belo completed the purchase of KTTU, the UPN affiliate in the Tucson, Arizona television market, for $18,000 in cash. Belo had previously operated KTTU under a local marketing agreement. 11 In the first six months of 2002, the Company paid dividends of $16,674, or 15 cents per share, on Series A and Series B common stock outstanding, compared with $16,430, or 15 cents per share, in the first six months of 2001. Capital spending for 2002 is expected to be approximately $65,000. Capital expenditures in the first six months of 2002 were $16,885. Expenditures were primarily for Television Group equipment purchases, including those for equipment to be used in the transmission of digital television, and Newspaper Group equipment purchases. During 2000 and 2001, Belo announced the formation of a series of cable news partnerships with Time Warner Cable ("Time Warner"). The Time Warner agreements call for the creation of 24-hour cable news channels in Houston and San Antonio, Texas and Charlotte, North Carolina. As of June 30, 2002, investments totaling $24,250 ($10,000 of which was invested in the first six months of 2002) had been made related to the Time Warner partnerships which will be used to fund capital expenditures and operating costs. The on-air date of the news channel in Charlotte, North Carolina was June 14, 2002. The projected on-air dates of the news channels in Houston and San Antonio, Texas are late 2002 and early 2003, respectively. Forward-Looking Statements Statements in this Form 10-Q concerning the Company's business outlook or future economic performance, anticipated profitability, revenues, expenses, capital expenditures, investments, future financings 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; 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 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. 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. 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of the Company's shareholders was held on May 8, 2002. 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 ------- --- --------- John W. Bassett, Jr. 254,455,620 1,676,202 Robert W. Decherd 254,073,995 2,057,827 Laurence E. Hirsch 254,512,259 1,619,563 J. McDonald Williams 254,424,130 1,707,692 In addition to those directors elected at the Annual Meeting, the following directors continue in office: Henry P. Becton, Jr., Louis E. Caldera, Judith L. Craven, M.D., M.P.H., Roger A. Enrico, Stephen Hamblett, Dealey D. Herndon, Arturo Madrid, Ph.D., William T. Solomon and Lloyd D. Ward. No other matters were submitted to a vote of security holders at the Annual Meeting. ITEM 5. OTHER INFORMATION None. 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. 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) 13 EXHIBIT NUMBER DESCRIPTION 3.8 * Amended Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated May 4, 1988 (Exhibit 3.7 to the 1999 Form 10-K) 3.9 * Certificate of Designation of Series B Common Stock of the Company dated May 4, 1988 (Exhibit 3.8 to the 1999 Form 10-K) 3.10 * Amended and Restated Bylaws of the Company, effective December 31, 2000 (Exhibit 3.10 to the Company's Annual Report on Form 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) 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) * 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) (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")) 14 EXHIBIT NUMBER DESCRIPTION * (b) $50 million 7-1/4% Senior Debenture due 2027 (Exhibit 4.6(6)(b) to the 3rd Quarter 1997 Form 10-Q) (7) * 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) (8) * $350 million 8.00% Senior Note due 2008 (Exhibit 4.6(8) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001 (the "3rd Quarter 2001 Form 10-Q")) (9) * Officers' Certificate dated November 1, 2001 establishing terms of debt securities pursuant to Section 3.1 of the Indenture (Exhibit 4.6(9) to the 3rd Quarter 2001 Form 10-Q) 10.1 Financing agreements: (1) * Five-year Credit Agreement dated as of November 29, 2001 among the Company, as Borrower; J.P. Morgan Chase Bank, as Administrative Agent and as Competitive Advance Facility Agent; J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Co-Advisors, Co-Arrangers and Joint Bookrunners; Bank of America, N.A., Fleet National Bank and the Bank of New York, as Co-Syndication Agents; BNP Paribas, as Documentation Agent; and the Fuji Bank Limited and SunTrust Bank, as Senior Managing Agents (Exhibit 10.1(1) to the Company's Annual Report on Form 10-K dated March 15, 2002) 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) * (c) Second Amendment to Belo Savings Plan effective as of January 1, 2002 (Exhibit 4.16(c) to the Company's Registration Statement on Form S-8 (No. 333-88030) filed with the Securities and Exchange Commission on May 10, 2002) * (d) Third Amendment to Belo Savings Plan effective as of May 7, 2002 (Exhibit 4.16(d) to the Company's Registration Statement on Form S-8 (No. 333-88030) filed with the Securities and Exchange Commission on May 10, 2002) -(2) Belo 1986 Long-Term Incentive Plan: * (a) Belo Corp. 1986 Long-Term Incentive Plan (Effective May 3, 1989, as amended by Amendments 1, 2, 3, 4 and 5) (Exhibit 10.3(2) to the Company's Annual Report on Form 10-K dated March 10, 1997 (the "1996 Form 10-K")) * (b) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit 10.3(2)(b) to the Company's Annual Report on Form 10-K dated March 19, 1998 (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) 15 EXHIBIT NUMBER DESCRIPTION -(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 the Company's Registration Statement on Form S-8 (No. 333-43056) filed with the Securities and Exchange Commission on August 4, 2000) -(7) * Retirement Agreement between the Company and Burl Osborne, dated June 27, 2001 (Exhibit 10.2(8) to Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001) -(8) * Retirement Agreement between the Company and Michael J. McCarthy, dated March 15, 2002 (Exhibit 10.2(8) to Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002) 12 Ratio of Earnings to Fixed Charges 99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K. During the quarter covered by this report, there were no reports on Form 8-K filed. 16 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 9, 2002 By: /s/ Dunia Shive -------------------------------------- Dunia A. Shive Executive Vice President/ Chief Financial Officer (Authorized Officer and Principal Financial and Accounting Officer) 17 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 Form 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) 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) EXHIBIT NUMBER DESCRIPTION ------- ----------- 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) * 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) (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) * 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) (8) * $350 million 8.00% Senior Note due 2008 (Exhibit 4.6(8) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001 (the "3rd Quarter 2001 Form 10-Q")) (9) * Officers' Certificate dated November 1, 2001 establishing terms of debt securities pursuant to Section 3.1 of the Indenture (Exhibit 4.6(9) to the 3rd Quarter 2001 Form 10-Q) 10.1 Financing agreements: (1) * Five-year Credit Agreement dated as of November 29, 2001 among the Company, as Borrower; J.P. Morgan Chase Bank, as Administrative Agent and as Competitive Advance Facility Agent; J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Co-Advisors, Co-Arrangers and Joint Bookrunners; Bank of America, N.A., Fleet National Bank and the Bank of New York, as Co-Syndication Agents; BNP Paribas, as Documentation Agent; and the Fuji Bank Limited and SunTrust Bank, as Senior Managing Agents (Exhibit 10.1(1) to the Company's Annual Report on Form 10-K dated March 15, 2002) 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) * (c) Second Amendment to Belo Savings Plan effective as of January 1, 2002 (Exhibit 4.16(c) to the Company's Registration Statement on Form S-8 (No. 333-88030) filed with the Securities and Exchange Commission on May 10, 2002) * (d) Third Amendment to Belo Savings Plan effective as of May 7, 2002 (Exhibit 4.16(d) to the Company's Registration Statement on Form S-8 (No. 333-88030) filed with the Securities and Exchange Commission on May 10, 2002) -(2) Belo 1986 Long-Term Incentive Plan: * (a) Belo Corp. 1986 Long-Term Incentive Plan (Effective May 3, 1989, as amended by Amendments 1, 2, 3, 4 and 5) (Exhibit 10.3(2) to the Company's Annual Report on Form 10-K dated March 10, 1997 (the "1996 Form 10-K")) * (b) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit 10.3(2)(b) to the Company's Annual Report on Form 10-K dated March 19, 1998 (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 the Company's Registration Statement on Form S-8 (No. 333-43056) filed with the Securities and Exchange Commission on August 4, 2000) -(7) * Retirement Agreement between the Company and Burl Osborne, dated June 27, 2001 (Exhibit 10.2(8) to Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001) EXHIBIT NUMBER DESCRIPTION ------- ----------- -(8) * Retirement Agreement between the Company and Michael J. McCarthy, dated March 15, 2002 (Exhibit 10.2(8) to Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002) 12 Ratio of Earnings to Fixed Charges 99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002