================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2003
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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
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 OCTOBER 31, 2003
----- -------------------------------
Common Stock, $1.67 par value 114,427,295*
* Consisting of 97,857,719 shares of Series A Common Stock and 16,569,576 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............................... 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 14
Item 4. Controls and Procedures........................................................ 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings.............................................................. 15
Item 2. Changes in Securities and Use of Proceeds...................................... 15
Item 3. Defaults Upon Senior Securities................................................ 15
Item 4. Submission of Matters to a Vote of Security Holders............................ 15
Item 5. Other Information.............................................................. 15
Item 6. Exhibits and Reports on Form 8-K............................................... 15
Signatures..................................................................... 20
i
PART I.
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
Belo Corp. and Subsidiaries
Three months ended Nine months ended
September 30, September 30,
--------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts (unaudited) 2003 2002 2003 2002
--------------------------------------------------------------------------------------------------------------
NET OPERATING REVENUES $ 356,268 $347,623 $1,048,163 $1,033,786
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits 128,842 127,352 383,240 375,410
Other production, distribution and operating costs 94,335 92,882 278,115 274,958
Newsprint, ink and other supplies 32,554 30,033 94,223 90,420
Depreciation 22,715 23,871 68,518 72,640
Amortization 2,119 2,087 6,325 6,213
----------------------------------------------------
Total operating costs and expenses 280,565 276,225 830,421 819,641
----------------------------------------------------
Earnings from operations 75,703 71,398 217,742 214,145
OTHER INCOME AND EXPENSE
Interest expense (23,225) (24,949) (70,608) (80,357)
Other income (expense), net (2,074) (1,085) (7,004) 5,337
----------------------------------------------------
Total other income and expense (25,299) (26,034) (77,612) (75,020)
EARNINGS
Earnings before income taxes 50,404 45,364 140,130 139,125
Income taxes 19,293 17,373 54,036 53,853
----------------------------------------------------
Net earnings $ 31,111 $ 27,991 $ 86,094 $ 85,272
====================================================
NET EARNINGS PER SHARE
Basic $ .27 $ .25 $ .76 $ .76
Diluted $ .27 $ .25 $ .75 $ .75
AVERAGE SHARES OUTSTANDING
Basic 113,678 112,225 113,226 111,632
Diluted 115,606 113,857 114,824 113,400
CASH DIVIDENDS DECLARED PER SHARE $ .19 $ .15 $ .34 $ .30
--------------------------------------------------------------------------------------------------------------
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 September 30, December 31,
(Current year unaudited) 2003 2002
---------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and temporary cash investments $ 30,568 $ 34,699
Accounts receivable, net 224,308 235,235
Other current assets 61,410 49,875
----------- -----------
Total current assets 316,286 319,809
Property, plant and equipment, net 538,056 565,114
Intangible assets, net 1,365,291 1,371,231
Goodwill, net 1,255,262 1,255,262
Other assets 105,012 102,639
----------- -----------
Total assets $ 3,579,907 $ 3,614,055
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 52,110 $ 66,247
Accrued expenses 97,630 99,396
Other current liabilities 66,337 49,999
----------- -----------
Total current liabilities 216,077 215,642
Long-term debt 1,318,375 1,441,200
Deferred income taxes 438,895 407,734
Other liabilities 120,960 136,249
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 97,405,218 shares at September 30, 2003
and 96,076,672 shares at December 31, 2002 162,667 160,448
Series B: Issued 16,584,801 shares at September 30, 2003
and 16,681,619 shares at December 31, 2002 27,696 27,858
Additional paid-in capital 899,794 877,007
Retained earnings 444,005 396,479
Accumulated other comprehensive income (48,562) (48,562)
----------- -----------
Total shareholders' equity 1,485,600 1,413,230
----------- -----------
Total liabilities and shareholders' equity $ 3,579,907 $ 3,614,055
=========== ===========
--------------------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Condensed Financial Statements.
2
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Belo Corp. and Subsidiaries
Nine months ended September 30,
----------------------------------------------------------------------------------------------------------------
In thousands (unaudited) 2003 2002
----------------------------------------------------------------------------------------------------------------
OPERATIONS
Net earnings $ 86,094 $ 85,272
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 74,843 78,853
Deferred income taxes 22,256 15,006
Pension contribution (20,000) --
Non-cash expenses 18,315 10,303
Net gain on sale of investments -- (1,841)
Equity loss from partnerships 8,279 2,494
Other, net (2,184) 3,159
Net change in current assets and liabilities:
Accounts receivable 10,442 19,351
Other current assets (7,624) (4,041)
Accounts payable (14,137) (8,388)
Accrued expenses (9,478) 17,980
Other current liabilities 13,753 24,003
---------- ----------
Net cash provided by operations 180,559 242,151
INVESTMENTS
Capital expenditures (41,249) (31,789)
Acquisitions -- (18,000)
Proceeds from sale of investments -- 27,000
Other investments (9,111) (11,616)
Other, net 926 398
---------- ----------
Net cash used for investments (49,434) (34,007)
FINANCING
Borrowings of debt 583,230 812,825
Repayments of debt (706,055) (1,020,525)
Payment of dividends on stock (27,739) (25,090)
Net proceeds from exercise of stock options 15,827 25,710
Other (519) 2,577
---------- ----------
Net cash used for financing (135,256) (204,503)
Net increase (decrease) in cash and temporary cash investments (4,131) 3,641
Cash and temporary cash investments at beginning of period 34,699 35,919
---------- ----------
Cash and temporary cash investments at end of period $ 30,568 $ 39,560
========== ==========
SUPPLEMENTAL DISCLOSURES
Interest paid, net of amounts capitalized $ 70,788 $ 69,584
Income taxes paid, net of refunds $ 34,440 $ 18,548
------------------------------------------------------------------------------------------------------------------
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, 2002 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 nine-month periods
ended September 30, 2003 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2003. 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, 2002.
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 nine months ended September 30, 2003 and 2002:
Three months ended Nine months ended
September 30, September 30,
------------------------------------------------------------------------------------------------------------
2003 2002 2003 2002
------------------------------------------------------------------------------------------------------------
Weighted average shares for basic earnings
per share 113,678 112,225 113,226 111,632
Effect of employee stock options 1,928 1,632 1,598 1,768
----------------------------------------------
Weighted average shares for diluted earnings
per share 115,606 113,857 114,824 113,400
==============================================
(3) The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation" and SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment of FASB
Statement No. 123" and continues to apply APB Opinion No. 25 in
accounting for its stock-based compensation plans. Because it is Belo's
policy to grant stock options at the market price on the date of grant,
the intrinsic value is zero, and therefore no compensation expense is
recorded. The Company plans to begin recording compensation expense for
stock options once accounting standard-setting bodies have issued final
accounting standards.
4
The following table illustrates the effect on net earnings and net
earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123 for the three and nine months
ended September 30, 2003 and 2002:
Three months ended Nine months ended
September 30, September 30,
-------------------------------------------------------------------------------------------------------------
2003 2002 2003 2002
-------------------------------------------------------------------------------------------------------------
Net earnings, as reported $ 31,111 $ 27,991 $ 86,094 $ 85,272
Less: Stock-based compensation expense
determined under fair value-based
method, net of tax 2,955 3,432 9,059 10,253
-------- --------- --------- ---------
Net earnings, pro forma $ 28,156 $ 24,559 $ 77,035 $ 75,019
======== ========= ========= =========
Per share amounts:
Basic net earnings per share, as reported $ .27 $ .25 $ .76 $ .76
======== ========= ========= =========
Basic net earnings per share, pro forma $ .25 $ .22 $ .69 $ .68
======== ========= ========= =========
Diluted net earnings per share, as reported $ .27 $ .25 $ .75 $ .75
======== ========= ========= =========
Diluted net earnings per share, pro forma $ .25 $ .22 $ .68 $ .67
======== ========= ========= =========
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. The
pro forma information presented above is not necessarily indicative of
the effects on reported or pro forma net earnings for future years.
(4) Net operating revenues, operating costs and expenses and earnings from
operations by industry segment are shown below.
Three months ended Nine months ended
September 30, September 30,
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In thousands 2003 2002 2003 2002
--------------------------------------------------------------------------------------------------------------
NET OPERATING REVENUES
Television Group $ 160,701 $ 158,717 $ 474,144 $ 470,420
Newspaper Group 184,121 179,496 542,442 536,750
Interactive Media 6,313 5,007 17,482 13,849
Other 5,133 4,403 14,095 12,767
---------------------------------------------------
Total net operating revenues $ 356,268 $ 347,623 $ 1,048,163 $ 1,033,786
===================================================
OPERATING COSTS AND EXPENSES
Television Group $ 104,683 $ 105,196 $ 313,314 $ 311,353
Newspaper Group 149,792 144,501 441,898 431,114
Interactive Media 8,254 8,752 24,898 24,841
Other 5,565 4,961 16,202 15,433
Corporate 12,271 12,815 34,109 36,900
---------------------------------------------------
Total operating costs and expenses $ 280,565 $ 276,225 $ 830,421 $ 819,641
===================================================
EARNINGS FROM OPERATIONS
Television Group $ 56,018 $ 53,521 $ 160,830 $ 159,067
Newspaper Group 34,329 34,995 100,544 105,636
Interactive Media (1,941) (3,745) (7,416) (10,992)
Other (432) (558) (2,107) (2,666)
Corporate (12,271) (12,815) (34,109) (36,900)
---------------------------------------------------
Total earnings from operations $ 75,703 $ 71,398 $ 217,742 $ 214,145
===================================================
5
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 September 30, 2003:
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Television Group
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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 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 50 WHAS ABC Owned February 1997
Austin 54 KVUE ABC Owned June 1999
Tucson 74 KMSB FOX Owned February 1997
Tucson 74 KTTU UPN Owned March 2002(d)
Spokane 79 KREM CBS Owned February 1997
Spokane 79 KSKN WB Owned October 2001
Boise(e) 124 KTVB NBC Owned February 1997
-------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Newspaper Group
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Daily Sunday
Newspaper Location Acquired Circulation(g) Circulation(g)
------------------------------------------------------------------------------------------------------------------------
(f)
The Dallas Morning News ("DMN") Dallas, TX February 1997 526,191 785,876
The Providence Journal ("PJ") Providence, RI July 1997 167,609 236,096
The Press-Enterprise ("PE") Riverside, CA June 1999 183,794 187,817
Denton Record-Chronicle Denton, TX 13,737 17,310
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Interactive Media
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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 over 2.0 million homes in the Pacific Northwest.
Texas Cable News ("TXCN") Cable news channel distributed to over 1.5 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 2003 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 Company also owns KTFT-LP (NBC), a low power television station in
Twin Falls, Idaho.
(f) The first issue of DMN was published by Belo on October 1, 1885.
(g) Average paid circulation data is for the six months ended September 30,
2003, according to 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, 2002.
(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
RESULTS OF OPERATIONS
Consolidated Results of Operations
Three Months Ended September 30, 2003 and 2002
Total net operating revenues for the third quarter of 2003 were $356,268, an
increase of $8,645, or 2.5 percent, as compared to the same period in 2002 due
to increases of $4,625 in the Newspaper Group, $1,984 in the Television Group,
$1,306 in Interactive Media and $730 in Other.
Salaries, wages and employee benefits expense increased $1,490, or 1.2 percent,
for the third quarter of 2003 as compared to the year earlier period due to
increases of $2,658 in salary expense and $2,417 in benefits expense, offset by
a decrease of $3,232 in third quarter 2003 performance-based bonus accruals as
compared to the third quarter of 2002.
Other production, distribution and operating costs increased $1,453, or 1.6
percent, in the third quarter of 2003 as compared to the third quarter of 2002
primarily due to an increase in insurance expense.
Newsprint, ink and other supplies increased $2,521, or 8.4 percent, in the third
quarter of 2003 as compared to the year earlier period. The average cost per
metric ton of newsprint increased 8.3 percent in the third quarter of 2003 as
compared to the year earlier period. Newsprint consumption increased 1.2 percent
between the third quarter periods.
Depreciation expense decreased $1,156 in the third quarter of 2003, from $23,871
in the third quarter of 2002 to $22,715 in the third quarter of 2003.
Amortization expense increased from $2,087 in third quarter of 2002 to $2,119 in
the third quarter of 2003.
Interest expense for the third quarter of 2003 was $23,225 or 6.9 percent lower
than third quarter 2002 expense of $24,949, due primarily to lower average debt
levels.
Other income (expense), net increased from expense of $1,085 in the third
quarter of 2002 to expense of $2,074 in the third quarter of 2003 due to an
increase in the Company's equity losses in local cable news partnerships with
Time Warner Cable ("Time Warner") (the Charlotte, Houston and San Antonio cable
news channels commenced operations in June 2002, December 2002 and April 2003,
respectively).
The effective tax rate for both the third quarter of 2003 and the third quarter
of 2002 was 38.3 percent.
As a result of the factors discussed above, net earnings of $31,111 (27 cents
per share) were reported for the three months ended September 30, 2003, as
compared to $27,991 (25 cents per share) for the same period in 2002.
7
Nine Months Ended September 30, 2003 and 2002
Total net operating revenues increased $14,377, or 1.4 percent, from $1,033,786
for the first nine months of 2002 to $1,048,163 for the same period in 2003, due
to increases of $5,692 in the Newspaper Group, $3,724 in the Television Group,
$3,633 in Interactive Media and $1,328 in Other.
Salaries, wages and employee benefits expense increased $7,830, or 2.1 percent,
for the nine months ended September 30, 2003 as compared to the year earlier
period due to increases of $11,329 in benefits expense and $5,344 in salary
expense, offset by a decrease of $9,390 in performance-based bonus accruals in
the first nine months of 2003 as compared to 2002.
Other production, distribution and operating costs increased $3,157, or 1.1
percent, for the nine months ended September 30, 2003 as compared to the same
period of 2002 primarily due to increases in insurance expense ($1,556),
professional and industry development ($925) and advertising and promotion
($635).
Newsprint, ink and other supplies increased $3,803, or 4.2 percent, for the nine
months ended September 30, 2003 as compared to the year earlier period. The
average cost per metric ton of newsprint increased 3.7 percent in the first nine
months of 2003 as compared to 2002. Newsprint consumption increased less than 1
percent compared to the prior year period.
Depreciation expense decreased $4,122, from $72,640 in the first nine months of
2002 to $68,518 in the first nine months of 2003.
Amortization expense increased from $6,213 in the nine months ended September
30, 2002 to $6,325 in the nine months ended September 30, 2003.
Interest expense for the nine months ended September 30, 2003 was $70,608 or
12.1 percent lower than the year earlier period expense of $80,357, due to lower
average debt levels and the refinancing of $250,000 in fixed rate notes with
lower rate revolving debt in June of 2002.
Other income (expense), net decreased from income of $5,337 for the nine months
ended September 30, 2002 to expense of $7,004 in the first nine months of 2003
primarily due to an increase in equity losses from Belo's local cable news
partnerships with Time Warner (the Charlotte, Houston and San Antonio cable news
channels commenced operations in June 2002, December 2002 and April 2003,
respectively). In addition, other income (expense), net in 2002 included a
credit of $4,787 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 on the sale of Belo's interest in the Dallas Mavericks and the American
Airlines Center.
The effective tax rate for the nine months ended September 30, 2003 was 38.6
percent compared with 38.7 percent for the nine months ended September 30, 2002.
As a result of the factors discussed above, net earnings for the nine months
ended September 30, 2003 were $86,094 (75 cents per share) as compared to
$85,272 (75 cents per share) for the nine months ended September 30, 2002.
8
Segment Results of Operations
Three Months Ended September 30, 2003 and 2002
Three months ended September 30, 2003
--------------------------------------------------------------------------------------------------------------
Operating Earnings Depreciation
Net Operating Costs and from and
Revenues Expenses Operations Amortization EBITDA
--------------------------------------------------------------------------------------------------------------
Television Group $ 160,701 $ 104,683 $ 56,018 $ 10,608 $ 66,626
Newspaper Group 184,121 149,792 34,329 11,846 46,175
Interactive Media 6,313 8,254 (1,941) 808 (1,133)
Other 5,133 5,565 (432) 652 220
Corporate -- 12,271 (12,271) 920 (11,351)
-----------------------------------------------------------------------
Segment total $ 356,268 $ 280,565 $ 75,703 $ 24,834 100,537
==========================================================
Other income (expense), net (2,074)
----------
Consolidated EBITDA (a) 98,463
Depreciation and amortization (24,834)
Interest expense (23,225)
Income taxes (19,293)
----------
Net earnings $ 31,111
==========
Three months ended September 30, 2002
--------------------------------------------------------------------------------------------------------------
Operating Earnings Depreciation
Net Operating Costs and from and
Revenues Expenses Operations Amortization EBITDA
--------------------------------------------------------------------------------------------------------------
Television Group $ 158,717 $ 105,196 $ 53,521 $ 11,976 $ 65,497
Newspaper Group 179,496 144,501 34,995 11,939 46,934
Interactive Media 5,007 8,752 (3,745) 862 (2,883)
Other 4,403 4,961 (558) 602 44
Corporate -- 12,815 (12,815) 579 (12,236)
-----------------------------------------------------------------------
Segment total $ 347,623 $ 276,225 $ 71,398 $ 25,958 97,356
=======================================================
Other income (expense), net (1,085)
----------
Consolidated EBITDA(a) 96,271
Depreciation and amortization (25,958)
Interest expense (24,949)
Income taxes (17,373)
----------
Net earnings $ 27,991
==========
--------------------------------------------------------------------------------------------------------------
(a) All references in this Form 10-Q to consolidated EBITDA and to its
components, EBITDA on a segment basis and operating costs and expenses
before depreciation and amortization, are references to non-GAAP
financial measures. Consolidated EBITDA, which is reconciled to net
earnings above, is defined as net earnings before interest expense,
income taxes, depreciation and amortization. EBITDA is not a measure of
financial performance under accounting principles generally accepted in
the United States. Accordingly, it should not be considered in
isolation or as a substitute for net earnings, operating income, cash
flow provided by operating activities or other income or cash flow data
prepared in accordance with accounting principles generally accepted in
the United States. Management believes that EBITDA is useful as a
supplemental measure of evaluating financial performance of the Company
and its business segments because of its focus on the Company's results
from operations before interest, income taxes, depreciation and
amortization. EBITDA is a common alternative measure of performance
used by investors, financial analysts and rating agencies to evaluate
financial performance. Because EBITDA is not a measurement determined
in accordance with GAAP and is thus susceptible to varying
calculations, EBITDA as presented may not be comparable to other
similarly titled measures of other companies.
Television Group
Television Group revenues for the third quarter of 2003 were $160,701, an
increase of $1,984, or 1.3 percent, from revenues of $158,717 in the third
quarter of 2002. Total spot revenues increased 1 percent for the third quarter
of 2003 as compared to the prior year period. The largest spot revenue increases
were reported in the automotive, financial services, radio and television and
insurance categories while decreases were reported in the movies, department
stores and health and beauty categories. Local spot revenues increased 10
percent and national spot revenues increased 1.5 percent. Local spot revenue
increases in the Seattle, Portland and Phoenix markets were
9
partially offset by a decrease in the Dallas/Fort Worth market. The largest
national spot revenue increase was reported in the Dallas/Fort Worth market.
Political advertising revenues declined from $11,494 in the third quarter of
2002 to $3,636 in the third quarter of 2003. Total spot revenues excluding
political advertising increased 6.8 percent for the third quarter of 2003 when
compared to the prior year period.
Television Group operating costs and expenses before depreciation and
amortization were approximately 1 percent higher for the third quarter of 2003
when compared to the same period of 2002. Increases in salaries, medical
insurance and other insurance expenses were offset by decreases in
performance-based bonus accruals, repairs and maintenance and cash programming
expenses. EBITDA for the Television Group increased 1.7 percent in the third
quarter of 2003 as compared to the third quarter of 2002. Total operating costs
and expenses were flat in the third quarter of 2003 when compared to the same
quarter of 2002 and earnings from operations increased 4.7 percent.
Newspaper Group
For the Newspaper Group, total revenues increased 2.6 percent and total
advertising revenues increased 2.2 percent in the third quarter of 2003 when
compared to the same period of 2002. General advertising revenues increased 21.1
percent for the third quarter as compared to the year earlier period, while
retail and classified advertising revenues declined 3.6 percent and 3.1 percent,
respectively. All other advertising revenues increased 10.3 percent in the third
quarter when compared to the same period of 2002, primarily due to an increase
in revenues from preprints and Total Market Coverage ("TMC").
DMN reported an increase in total revenues of 1.4 percent for the third quarter
of 2003 as compared to the prior year period. General advertising revenues
increased 19 percent in the third quarter of 2003 when compared to the same
period of 2002 with significant increases in the telecom, automotive and
technology categories. Classified advertising revenues declined 5.6 percent in
the third quarter of 2003 as compared to the year earlier period, due primarily
to a decrease in classified employment volume. Retail advertising revenues
decreased 4.6 percent in the third quarter of 2003 when compared to the prior
year period primarily due to decreased volumes in the department store and
automotive categories. Other advertising revenues increased 5 percent for the
third quarter of 2003 as compared to the prior year period due to an increase in
preprints and TMC revenues.
At PJ, total revenues increased 2.4 percent for the third quarter of 2003 when
compared to the year earlier period. Increases in revenues from preprints and
TMC and retail advertising revenues were partially offset by a decrease in
circulation revenues.
Total revenues at PE increased 7.2 percent for the quarter ended September 30,
2003 when compared to the prior year period. The increase in total revenues for
the third quarter of 2003 versus 2002 was primarily due to increases in general
advertising, other advertising and preprints and TMC revenue, partially offset
by a decrease in retail advertising revenue.
Newspaper Group total operating costs and expenses before depreciation and
amortization increased 4.1 percent in the third quarter of 2003 when compared to
the same period of 2002, due primarily to increases in newsprint expense and
salaries, wages and employee benefits expense. EBITDA for the Newspaper Group
decreased 1.6 percent for the third quarter of 2003 compared to the prior year
period. Total operating costs and expenses increased 3.7 percent while earnings
from operations decreased 1.9 percent in the third quarter of 2003 compared to
the prior year period.
Interactive Media and Other Segments
The Company continues to invest in its Interactive Media and regional cable news
operations. Interactive Media revenues, which are primarily derived from
advertising, increased 26.1 percent, from $5,007 in the third quarter of 2002 to
$6,313 in the third quarter of 2003. Interactive Media total costs and expenses
before depreciation and amortization decreased 5.6 percent for the quarter ended
September 30, 2003 as compared to the prior year period, due primarily to
decreases in salaries, wages and employee benefits, advertising and promotion
and outside services. As a result, the Interactive Media EBITDA deficit improved
from $2,883 in the third quarter of 2002 to $1,133 in the third quarter of 2003.
The Interactive Media loss from operations improved from $3,745 in the third
quarter of 2002 to $1,941 in the third quarter 2003.
10
Other revenues consist primarily of revenues from Belo's regional cable news
operations, NWCN and TXCN and, beginning in 2003, revenues from Belo's consumer
expositions business. Revenues from Belo's cable news operations are derived
from a combination of advertising and subscriber-based fees. Other revenues
increased 16.6 percent, from $4,403 in the third quarter of 2002 to $5,133 in
the third quarter of 2003, reflecting a revenue increase in cable news and the
inclusion of revenue from Belo's expositions business. Total operating costs and
expenses before depreciation and amortization increased 12.7 percent in the
third quarter of 2003 when compared to the same period of 2002. As a result,
EBITDA increased from $44 in the three-month period ended September 30, 2002 to
$220 in the same period of 2003. Total operating costs and expenses increased
12.2 percent in the third quarter of 2003 when compared to the third quarter of
2002. Loss from operations for the Other segment improved 22.6 percent for the
third quarter periods, from $558 in 2002 to $432 in 2003.
Nine Months Ended September 30, 2003 and 2002
Nine months ended September 30, 2003
--------------------------------------------------------------------------------------------------------------
Operating Earnings Depreciation
Net Operating Costs and from and
Revenues Expenses Operations Amortization EBITDA
--------------------------------------------------------------------------------------------------------------
Television Group $ 474,144 $ 313,314 $ 160,830 $ 32,015 $ 192,845
Newspaper Group 542,442 441,898 100,544 35,617 136,161
Interactive Media 17,482 24,898 (7,416) 2,545 (4,871)
Other 14,095 16,202 (2,107) 1,905 (202)
Corporate -- 34,109 (34,109) 2,761 (31,348)
------------------------------------------------------------------------
Segment total $ 1,048,163 $ 830,421 $ 217,742 $ 74,843 292,585
==========================================================
Other income (expense), net (7,004)
----------
Consolidated EBITDA(a) 285,581
Depreciation and amortization (74,843)
Interest expense (70,608)
Income taxes (54,036)
----------
Net earnings $ 86,094
==========
Nine months ended September 30, 2002
--------------------------------------------------------------------------------------------------------------
Operating Earnings Depreciation
Net Operating Costs and from and
Revenues Expenses Operations Amortization EBITDA
--------------------------------------------------------------------------------------------------------------
Television Group $ 470,420 $ 311,353 $ 159,067 $ 35,857 $ 194,924
Newspaper Group 536,750 431,114 105,636 36,299 141,935
Interactive Media 13,849 24,841 (10,992) 2,583 (8,409)
Other 12,767 15,433 (2,666) 1,779 (887)
Corporate -- 36,900 (36,900) 2,335 (34,565)
------------------------------------------------------------------------
Segment total $ 1,033,786 $ 819,641 $ 214,145 $ 78,853 $ 292,998
==========================================================
Other income (expense), net 5,337
----------
Consolidated EBITDA(a) 298,335
Depreciation and amortization (78,853)
Interest expense (80,357)
Income taxes (53,853)
----------
Net earnings $ 85,272
==========
---------------------------------------------------------------------------------------------------------------
(a) All references in this Form 10-Q to consolidated EBITDA and to its
components, EBITDA on a segment basis and operating costs and expenses
before depreciation and amortization, are references to non-GAAP
financial measures. Consolidated EBITDA, which is reconciled to net
earnings above, is defined as net earnings before interest expense,
income taxes, depreciation and amortization. EBITDA is not a measure of
financial performance under accounting principles generally accepted in
the United States. Accordingly, it should not be considered in
isolation or as a substitute for net earnings, operating income, cash
flow provided by operating activities or other income or cash flow data
prepared in accordance with accounting principles generally accepted in
the United States. Management believes that EBITDA is useful as a
supplemental measure of evaluating financial performance of the Company
and its business segments because of its focus on the Company's results
from operations before interest, income taxes, depreciation and
amortization. EBITDA is a common alternative measure of performance
used by investors, financial analysts and rating agencies to evaluate
financial performance. Because EBITDA is not a measurement determined
in accordance with GAAP and is thus susceptible to varying
calculations, EBITDA as presented may not be comparable to other
similarly titled measures of other companies.
11
Television Group
Television Group revenues for the year-to-date period ended September 30, 2003
were $474,144, an increase of less than 1 percent when compared to revenues for
the same period of 2002. Total spot revenues increased 0.6 percent for the first
nine months of 2003 as compared to the prior year period. The largest spot
revenue increases for the nine-month period were reported in the automotive,
radio and television and healthcare categories while the most significant
decreases were reported in the department stores, movies and restaurant
categories. For the first nine months of 2003 versus 2002, local spot revenues
increased 6.2 percent. The largest local spot revenue increases were in the
Portland, Seattle, Phoenix and St. Louis markets while the largest decrease was
in the Dallas/Fort Worth market. National spot revenues increased 1 percent for
the nine-month period comparisons with the most significant increases reported
in the Dallas/Fort Worth and Phoenix markets and the largest decreases reported
in the Portland and Seattle markets. Political advertising revenues were $5,514
in the first nine months of 2003 compared with $20,766 in the same period of
2002. Total spot revenues excluding political advertising increased 4.3 percent
for the nine months ended September 30, 2003 when compared to the prior year
period. The first nine months of 2002 also included approximately $9,000 of
advertising revenues generated by the Company's NBC affiliates from the
broadcast of the Winter Olympics.
Television Group operating costs and expenses before depreciation and
amortization increased 2.1 percent in first nine months of 2003 when compared to
the same period of 2002, primarily due to higher pension, medical insurance and
salaries expense, partially offset by lower accruals for performance-based
bonuses. EBITDA for the Television Group decreased 1.1 percent for the
nine-month period ended September 30, 2003 as compared to the prior year period.
Total operating costs and expenses increased less than 1 percent and earnings
from operations increased 1.1 percent for the first nine months of 2003 when
compared to the same period of 2002.
Newspaper Group
Newspaper Group total revenues increased 1.1 percent while total advertising
revenues increased 1 percent in the first nine months of 2003 when compared to
the same period of 2002. General advertising revenues increased 7.8 percent for
the year-to-date period ended September 30, 2003 as compared to the same period
of 2002. Classified and retail advertising revenues declined 4.2 percent and 2.4
percent, respectively, for the first nine months of 2003 when compared to the
year earlier period. All other advertising revenues increased 10.3 percent in
the year-to-date period when compared to the same period of 2002, primarily due
to increases in preprints and TMC.
Total revenues at DMN were flat for the first nine months of 2003 as compared to
the prior year period. Classified advertising revenues declined 6.1 percent in
the nine months ended September 30, 2003 when compared to the same period of
2002, primarily due to decreases in classified employment volumes. Retail
advertising revenues decreased 3.5 percent in the year-to-date period primarily
due to decreased volumes in the department store category. General advertising
revenues increased 4.2 percent in the nine-month period when compared to the
same period of 2002 due primarily to increased automotive volumes. Other
advertising revenues increased 6.3 percent for the nine-month period in 2003 as
compared to the prior year period due to increases in preprints and TMC
revenues.
PJ total revenues increased 1.7 percent for the first nine months of 2003 when
compared to the year earlier period. Revenue increases from preprints and TMC
and retail advertising were partially offset by decreases in circulation
revenues and classified advertising.
At PE, total revenues increased 5.7 percent for the nine-month period ended
September 30, 2003 when compared to the prior year period due to increases in
general advertising and preprints and TMC revenues partially offset by a
decrease in retail advertising revenue.
Newspaper Group total operating costs and expenses before depreciation and
amortization increased 2.9 percent in the first nine months of 2003 when
compared to the same period of 2002, due primarily to higher salaries, pension
and medical insurance expenses and an increase in newsprint expense in the first
nine months of 2003. EBITDA for the Newspaper Group decreased 4.1 percent for
the year-to-date period. Total operating costs and expenses increased 2.5
percent and earnings from operations decreased 4.8 percent in the nine-month
period ended September 30, 2003 when compared to the prior year period.
12
Interactive Media and Other Segments
Interactive Media revenues, which are primarily derived from advertising,
increased 26.2 percent, from $13,849 in the first nine months of 2002 to $17,482
in the same period of 2003. Interactive Media total costs and expenses before
depreciation and amortization were flat for the nine-month period ended
September 30, 2003 as compared to the prior year period. Decreases in salaries
and advertising and promotion expenses were offset by increases in computer and
medical insurance expenses. As a result, the Interactive Media EBITDA deficit
improved from $8,409 in the first nine months of 2002 to $4,871 in the first
nine months of 2003. The Interactive Media loss from operations improved from
$10,992 in the nine-month period of 2002 to $7,416 in the same period of 2003.
Other revenues consist primarily of revenues from Belo's regional cable news
operations, NWCN and TXCN and, beginning in 2003, revenues from Belo's consumer
expositions business. Revenues from Belo's cable news operations are derived
from a combination of advertising and subscriber-based fees. Other revenues
increased 10.4 percent, from $12,767 in the first nine months 2002 to $14,095 in
the first nine months of 2003, reflecting a revenue increase in cable news and
the inclusion of revenue from Belo's expositions business. Total operating costs
and expenses before depreciation and amortization increased 4.7 percent in the
nine-month period ended September 30, 2003 when compared to the year earlier
period. The EBITDA deficit for the Other segment improved from $887 in the
year-to-date period ended September 30, 2002 to $202 in the same period of 2003.
Total operating costs and expenses increased 5 percent for the nine-month period
comparison and loss from operations improved from a loss of $2,666 in the first
nine months of 2002 to a loss of $2,107 in the comparable 2003 period.
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 nine months of 2003, net cash
provided by operations was $180,559, compared with $242,151 for the same period
in 2002. Net cash provided by operations was lower in the first nine months of
2003 as compared to the year earlier period primarily due to cash requirements
for income taxes, 2002 bonuses paid in the first quarter of 2003 and
contributions to the Company's defined benefit pension plan. The Company also
used net cash provided by operations to fund capital expenditures and dividend
payments and to pay down debt. Total debt decreased $122,825 from December 31,
2002 to September 30, 2003.
At September 30, 2003, 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. The Company also has $150,000 of additional debt securities available
for future issuance under a shelf registration statement filed in April 1997.
At September 30, 2003, the Company had a $720,000 variable-rate revolving credit
facility under which borrowings were $200,000. Borrowings under the credit
facility mature upon expiration of the agreement on November 29, 2006. In
addition, the Company had $11,975 of short-term unsecured notes outstanding at
September 30, 2003. 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 September 30, 2003,
the Company was in compliance with all debt covenant requirements.
On July 25, 2003, Belo announced that its Board of directors approved an
increase in the Company's quarterly cash dividend rate from 7.5 cents per share
to 9.5 cents per share. In the first nine months of 2003, the Company paid
dividends of $27,739, or 24.5 cents per share, on Series A and Series B common
stock outstanding, compared with $25,090, or 22.5 cents per share, in the first
nine months of 2002.
Capital expenditures in the first nine months of 2003 of $41,249 were primarily
for Television Group and Newspaper Group equipment purchases.
During 2000 and 2001, Belo announced the formation of a series of cable news
partnerships with 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 September 30, 2003, investments totaling $32,058 ($5,108
of which
13
was invested in the first nine months of 2003) had been made related to the Time
Warner partnerships to fund capital expenditures and operating costs. The on-air
dates of the news channels in Charlotte, Houston, and San Antonio, were June 14,
2002, December 12, 2002, and April 7, 2003, respectively.
In the first nine months of 2003, the Company made contributions to its defined
benefit pension plan totaling $20,000. These contributions exceed the Company's
required minimum contribution for ERISA funding purposes, which was to be made
by September 2004. The Company made an additional contribution of $7,000 in
October 2003, which amount is classified as a current liability in the Company's
September 30, 2003 financial statements.
Other Matters
On October 1, 2003, the Company completed the sale of KENS-AM, Belo's radio
station in San Antonio, Texas for $3,201. The Company expects to record a gain
of approximately $1,800 ($1,100 net of taxes) in the fourth quarter of 2003.
Forward-Looking Statements
Statements in this report 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; general
economic conditions; and significant armed conflict, 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
Other than as disclosed, there have been no material changes in the Company's
exposure to market risk from the disclosure included in Belo's Annual Report on
Form 10-K for the fiscal year ended December 31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
The Company carried out an evaluation, as required by Exchange Act Rule
13a-15(b), under the supervision and with the participation of the Company's
management, including the Company's Chairman of the Board, President and Chief
Executive Officer and Executive Vice President/Chief Financial Officer, of the
effectiveness of the Company's disclosure controls and procedures, as of the end
of the period covered by this report. Based upon that evaluation, the Chairman
of the Board, President and Chief Executive Officer and Executive Vice
President/Chief Financial Officer concluded that, as of the end of the period
covered by this report, the Company's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) required to be included in the
Company's periodic SEC filings.
During the period covered by this report, there have been no changes to the
Company's internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, Belo's internal control
over financial reporting.
14
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
None.
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 plans, 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"))
15
EXHIBIT
NUMBER DESCRIPTION
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"))
3.11 * Amendment No. 1 to Amended and Restated Bylaws of the Company,
effective February 7, 2003 (Exhibit 3.11 to the Company's Annual
Report on Form 10-K dated March 12, 2003 (the "2002 Form 10-K"))
4.1 Certain rights of the holders of the Company's Common Stock are
set forth in Exhibits 3.1-3.11 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 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)
(3) * $200 million 7-3/4% Senior Debenture due 2027 (Exhibit
4.6(4) to the 2nd Quarter 1997 Form 10-Q)
(4) * 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)
16
EXHIBIT
NUMBER DESCRIPTION
(5) * (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)
(6) * 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)
(7) * $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"))
(8) * 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)
* (e) Fourth Amendment to Belo Savings Plan effective as of
August 23, 2002 (Exhibit 10.2(1)(e) to the Company's
Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2002 (the "3rd Quarter 2002 Form
10-Q"))
* (f) Fifth Amendment to Belo Savings Plan effective as of
September 27, 2002 (Exhibit 10.2(1)(f) to the 3rd
Quarter 2002 Form 10-Q)
* (g) Sixth Amendment to the Belo Savings Plan effective as
of January 1, 2002 (Exhibit 10.2(1)(g) to the 2002
Form 10-K)
17
EXHIBIT
NUMBER DESCRIPTION
~(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)
* (a) First Amendment to Belo 2000 Executive Compensation
Plan effective as of December 31, 2000 (Exhibit
10.2(6)(a) to the 2002 Form 10-K)
* (b) Second Amendment to Belo 2000 Executive Compensation
Plan dated December 5, 2002 (Exhibit 10.2(6)(b) to the
2002 Form 10-K)
12 Ratio of Earnings to Fixed Charges
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 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
32.2 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
18
(b) Reports on Form 8-K.
On July 25, 2003, Belo filed a current report on Form 8-K reporting
that the Company issued a press release announcing its consolidated
financial results for the quarter ended June 30, 2003 and also issued a
press release announcing the Company's monthly statistical report for
the month and six months ended June 30, 2003.
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.
November 10, 2003 By: /s/ Dunia A. Shive
---------------------------------------
Dunia A. Shive
Executive Vice President/
Chief Financial Officer
(Authorized Officer and Principal
Financial and Accounting Officer)
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 Securities and Exchange
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"))
3.11 * Amendment No. 1 to Amended and Restated Bylaws of the Company,
effective February 7, 2003 (Exhibit 3.11 to the Company's Annual Report
on Form 10-K dated March 12, 2003 (the "2002 Form 10-K"))
4.1 Certain rights of the holders of the Company's Common Stock are set
forth in Exhibits 3.1-3.11 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)
EXHIBIT
NUMBER DESCRIPTION
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 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)
(3) * $200 million 7-3/4% Senior Debenture due 2027 (Exhibit
4.6(4) to the 2nd Quarter 1997 Form 10-Q)
(4) * 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)
(5) * (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)
(6) * 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)
(7) * $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"))
(8) * 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"))
EXHIBIT
NUMBER DESCRIPTION
* (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)
* (e) Fourth Amendment to Belo Savings Plan effective as of
August 23, 2002 (Exhibit 10.2(1)(e) to the Company's
Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2002 (the "3rd Quarter 2002 Form
10-Q"))
* (f) Fifth Amendment to Belo Savings Plan effective as of
September 27, 2002 (Exhibit 10.2(1)(f) to the 3rd Quarter
2002 Form 10-Q)
* (g) Sixth Amendment to the Belo Savings Plan effective as of
January 1, 2002 (Exhibit 10.2(1)(g) to the 2002 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) 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)
EXHIBIT
NUMBER DESCRIPTION
~(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)
* (a) First Amendment to Belo 2000 Executive Compensation Plan
effective as of December 31, 2000 (Exhibit 10.2(6)(a) to
the 2002 Form 10-K)
* (b) Second Amendment to Belo 2000 Executive Compensation Plan
dated December 5, 2002 (Exhibit 10.2(6)(b) to the 2002
Form 10-K)
12 Ratio of Earnings to Fixed Charges
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 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
32.2 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
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.