Tribune Reports First Quarter Earnings
EPS,
before special items, is $.32 for the quarter, equal to 2001
pro forma results
Cash
operating expenses down 5 percent in the quarter
CHICAGO, April 19, 2002 -- Tribune
Company (NYSE: TRB), one
of the country's premier media companies, operating businesses
in publishing, broadcasting and on the Internet, today reported
first quarter diluted earnings per share (EPS) of $.32, before
restructuring charges, non-operating items and the cumulative
effect of a change in accounting principle. These results
are even with a pro forma $.32 per share for the 2001 first
quarter. Strong cost controls, which reduced cash operating
expenses by 5 percent, and lower interest expense, offset
a 5 percent revenue shortfall. Pretax restructuring charges
of $27.3 million, primarily related to recently completed
staff reductions in publishing, were taken during the quarter.
No further restructuring charges are anticipated in 2002.
"Tribune is well prepared for an economic
recovery," said John Madigan, Tribune chairman and chief
executive officer. "While we have reduced operating expenses,
we remain committed to providing the highest quality journalism.
Right now, business is looking a little bit better and the
gradual improvement we are seeing at both our newspapers and
television stations gives us confidence that the advertising
market is strengthening."
"We have kept a tight reign on costs and
continue looking for opportunities to grow our businesses,"
said Dennis FitzSimons, Tribune president and chief operating
officer. "We've accomplished a great deal, as this quarter's
results demonstrate. At our newspapers, the cost controls
we put into place last year are paying off-we're showing increased
operating cash flow margins despite lower revenues."
Impact of Accounting Change
At the beginning of 2002, Tribune adopted Financial
Accounting Standard No. 142 covering goodwill and other intangible
assets. As a result, Tribune's full year amortization will
be reduced to approximately $10 million in 2002 and equity
losses will decrease by approximately $11 million from the
2001 level. In total, the impact of the new rules will add
approximately $.60 to full year diluted EPS in 2002.
First quarter 2002 results also reflect the
new impairment provisions of FAS 142, which resulted in a
pre-tax charge of $271 million ($166 million after taxes,
or $.51 per diluted share). This charge is shown as a separate
line item in our consolidated income statement and pertains
primarily to a write-down of certain intangible assets related
to the Times Mirror acquisition.
Comparisons to 2001 pro forma results as well
as 2001 actual results are presented in the tables accompanying
this release; full year 2001 pro forma tables are available
at tribune.com. Applying the change of FAS 142 to 2001 results
increases diluted EPS before non-operating items by $.13 over
the previously reported actual results.
FIRST QUARTER RESULTS
The management discussion of first quarter
2002 actual results excludes Tribune's restructuring charges.
Consolidated
Tribune's 2002 first quarter operating revenues
decreased 5 percent to $1.2 billion, down from $1.3 billion
in the 2001 first quarter. Consolidated cash operating expenses
were down 5 percent in the first quarter. EBITDA (earnings
before interest, taxes, depreciation, amortization and equity
results) was down 3 percent to $307 million, compared with
$315 million in the first quarter of 2001. On a pro forma
basis, Tribune's operating profit declined 3 percent to $252
million, compared with $260 million in the first quarter of
2001.
Publishing
Publishing's first quarter revenue declined
6 percent to $932 million, compared with $989 million in 2001.
Publishing EBITDA was $231 million, down 1 percent from $234
million in 2001. Publishing cash operating expenses were down
7 percent. On a pro forma basis, Publishing operating profit
decreased 2 percent to $190 million, down from $193 million
last year.
Management Discussion
- In spite of lower revenues, the publishing
group increased its operating cash flow margin from first
quarter 2001 by more than 1 percentage point due to excellent
cost controls. The Los Angeles Times led the way with
margin improvement of more than 3 percentage points in
the first quarter.
- Retail advertising was down 3 percent
year-over-year. Declines in department stores, health
care, electronics and hardware categories were partially
offset by increases in food and furniture/home furnishings.
- National was down 4 percent year-over-year.
Declines in travel/resorts, financial and auto manufacturing
categories were partially offset by increases from entertainment/amusements
and hi-tech.
- Classified was down 17 percent year-over-year.
Help wanted revenue for the group was down about 40 percent;
while all newspapers showed declines, trends are gradually
improving. Chicago was down in the 50 percent range; L.A.
was down in the 40 percent range; and New York was down
in the 30 percent range. Auto advertising increased by
4 percent year-over-year. Real estate was up almost 1
percent.
- Cash operating expenses were 7 percent
below first quarter 2001. Newsprint and ink expense was
26 percent below 2001 as newsprint prices were down 22
percent and consumption was 6 percent lower. Compensation
expense was 3 percent lower due to the voluntary retirement
program, outsourcing of certain circulation operations
at the Los Angeles Times and other reductions in force.
Other cash expenses were also 3 percent lower in spite
of higher outsourcing costs at the Los Angeles Times
Broadcasting and Entertainment
Broadcasting and Entertainment's first quarter
revenue declined 2 percent to $284 million compared with $290
million in 2001. Broadcasting and Entertainment EBITDA was
$84 million, down 15 percent from $100 million in 2001. On
a pro forma basis, Broadcasting and Entertainment operating
profit decreased 18 percent to $73 million from $89 million
in 2001.
Television's first quarter revenues declined
3 percent to $256 million, compared with $264 million in 2001.
Television cash operating expenses were up 6 percent, reflecting
the launch of new sitcoms and related accelerated amortization
of programming. Television EBITDA decreased 17 percent to
$85 million from $102 million last year.
Revenues for Radio/Entertainment, which also
includes the Chicago Cubs, increased 3 percent to $27 million
due to new programs at Tribune Entertainment and higher revenues
at WGN Radio, offset by a reduction in revenues due to the
time brokerage agreement with Entercom for Denver radio, which
took effect on Feb. 1. That fee is equivalent to Denver radio's
cash flow. Radio/Entertainment EBITDA improved by $2 million,
primarily due to the higher revenues.
Management Discussion
- Television revenues, excluding acquisitions,
declined 6 percent due to lower cable copyright royalties
and lower ad revenues at WGN Cable. Same-station advertising
revenues for the WB and Fox stations were down 1 percent
for the quarter.
- Television cash operating expenses, excluding
acquisitions, increased 4 percent. Programming costs were
up 10 percent due to increased amortization related to
the Fall 2001 launch of "Everybody Loves Raymond."
- During the February ratings period, "Everybody
Loves Raymond" and "Friends" ranked #1
or #2 with key adult demos in the early and late fringe
time periods in New York, Los Angeles and Chicago-despite
increased competition from the Olympics.
- Other cash expenses were down 1 percent,
including a 5 percent reduction in compensation.
- For the full year, programming expenses
will increase approximately 3 percent.
Interactive
Interactive's first quarter revenue increased
31 percent to $18 million, up from $14 million in 2001. Interactive
EBITDA losses decreased to about $200,000 from $7 million
in 2001.
Management Discussion
- First quarter revenue growth is due primarily
to higher classified revenues: recruitment was up 42 percent,
auto was up 30 percent and real estate was up 41 percent.
- Cash operating expenses were down 12 percent
in the first quarter mainly due to lower compensation
costs.
- The group is on track to be operating
cash flow positive by the end of 2002.
Equity Results
Equity losses for the 2002 first quarter were
$21 million, up from $17 million in 2001 on a pro forma basis
and include Tribune's $7.5 million share of restructuring
charges at CareerBuilder, primarily due to recent staff reductions
and asset write-downs. The rest of the losses reflect Tribune's
portion of planned operating losses at CareerBuilder, The
WB Network, BrassRing and Classified Ventures.
Interest and Taxes
Net interest expense for the 2002 first quarter
decreased to $53 million, down 15 percent from $63 million
in 2001. The decrease was primarily due to a reduction in
outstanding debt and lower interest rates. Debt at the end
of the first quarter was approximately $3.2 billion and is
expected decline to about $3.0 billion by the end of 2002.
Excluding restructuring charges, non-operating
items and the cumulative effect of a change in accounting
principle, the effective tax rate in the 2002 first quarter
was 39 percent, compared with a pro forma rate of 39.4 percent
in 2001.
Non-Operating Items
In the 2002 first quarter, Tribune recorded
a loss of $45 million, or $.09 per diluted share, from marking-to-market
the company's PHONES derivatives and related AOL Time Warner
investment.
Capital Expenditures
Capital expenditures in the first quarter were
approximately $42 million and should be approximately $275
million for the full year. Two significant preprint facility
projects underway in Los Angeles and Chicago are contributing
to higher than normal capital expenditures in 2002. Both of
these projects as well as Digital TV upgrades are expected
to be completed this year.
OUTLOOK
Diluted EPS, excluding restructuring charges,
for the second quarter and the full year 2002 are expected
to be toward the upper end of the range of analyst estimates.
WEBCAST OF THE CONFERENCE CALL
Today at 8:00 a.m. (CDT), a live Webcast of
the 2002 first quarter conference call will be accessible
through www.tribune.com and www.ccbn.com.
An archive of the Webcast will be available on these sites
from April 19 through May 10. More information about Tribune
is available at www.tribune.com
or by calling 800-757-1694.
:: :: ::
TRIBUNE (NYSE:
TRB) is one of the country's premier media companies,
operating businesses in broadcasting, publishing and on the
Internet. It reaches more than 80 percent of U.S. households,
and is the only media company with television stations, newspapers
and Web sites in the nation's top three markets. Tribune media
span 23 major-market television stations, including national
superstation WGN-TV; 12 market-leading daily newspapers, including
the Los Angeles Times, Chicago Tribune and Newsday; and news
and information Web sites in 18 of the nation's top 30 markets.
This press release contains certain comments
or forward-looking statements that are based largely on the
company's current expectations and are subject to certain
risks, trends and uncertainties. Such comments and statements
should be understood in the context of Tribune's publicly
available reports filed with the SEC, including the most current
annual report, 10-K and 10-Q, which contain a discussion of
various factors that may affect the company's business. These
factors could cause actual future performance to differ materially
from current expectations. Tribune Company is not responsible
for updating the information contained in this press release
beyond the published date, or for changes made to this document
by wire services or Internet service providers. |
