Tribune Reports Second Quarter Earnings
EPS,
before special items, is $.52, up 33 percent from 2001 pro
forma results
Consolidated
EBITDA up 14 percent from 2001 pro forma results
CHICAGO, July 18, 2002 -- Tribune
Company (NYSE: TRB), one
of the country's premier media companies, operating businesses
in publishing, broadcasting and on the Internet, today reported
second quarter diluted earnings per share (EPS), before non-operating
items in both years and restructuring charges in 2001, of
$.52, compared with a pro forma $.39 per share for the 2001
second quarter. Including non-operating items in both years
and the restructuring charges in 2001, diluted EPS was $.33
in the second quarter of 2002 compared to a pro forma $.36
and a reported $.21 in 2001.
"Although the economy remains uncertain,
Tribune had a good second quarter, marked by revenue growth
and lower cash expenses," said John Madigan, Tribune
chairman and chief executive officer. "The cost control
measures we put in place last year are having a solid impact
on our cash flow, which continues to improve. Tribune is well-positioned
for the second half of 2002."
Dennis FitzSimons, Tribune president and chief
operating officer said, "The performance of our operating
groups was better during the final month of the quarter. On
a comparable basis, June advertising revenues were up 7 percent
at our television stations, 1 percent at our newspapers, and
37 percent at our interactive businesses." He added,
"As we move to the third quarter, we look to maintain
the sequential improvement we have seen since the start of
the year."
SECOND QUARTER RESULTS
The following discussion compares 2002 actual
results with pro forma 2001 results. For a more meaningful
comparison with 2002 results, the 2001 pro forma results eliminate
goodwill and certain other intangible asset amortization.
The following discussion also excludes restructuring charges
and non-operating items. 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.
CONSOLIDATED
Tribune's 2002 second quarter operating revenues
increased 1 percent to $1.38 billion from $1.37 billion in
the 2001 second quarter. Consolidated cash operating expenses
were down 4 percent in the second quarter. EBITDA (earnings
before interest, taxes, depreciation, amortization and equity
results) was up 14 percent to $398 million, compared with
$348 million in the second quarter of 2001. Tribune's operating
profit increased 16 percent to $343 million, compared with
$297 million last year.
PUBLISHING
Publishing's second quarter revenues were $965
million, even with last year's second quarter. Publishing
EBITDA was $263 million, up 16 percent from $227 million in
2001, while cash operating expenses were down 5 percent. Publishing
operating profit increased 17 percent to $221 million, up
from $189 million last year.
Management Discussion
The publishing group increased its operating
cash flow margin from second quarter 2001 by 4 percentage
points due to lower costs. New York and Los Angeles led the
way with margin improvement of 5 percentage points. Both Chicago
and Ft. Lauderdale increased more than 4 percentage points
over the same period.
Retail advertising was up 2 percent year-over-year.
An increase in the food, hardware and furniture/home furnishings
categories was partially offset by decreases in department
stores and electronics. Preprints, which are primarily retail
advertising, increased 12 percent as all markets showed increases
with Chicago and Los Angeles showing increases of 14 percent
and 19 percent, respectively.
National was up 2 percent year-over-year.
An increase in the movies/entertainment category was partially
offset by decreases in technology and auto manufacturing.
Classified was down 6 percent year-over-year. Help wanted
revenue for the group was down 23 percent; Chicago fell 36
percent; Los Angeles was off 26 percent; and New York was
down 16 percent. However, monthly trends in help wanted continue
to improve. Auto advertising increased 7 percent year-over-year.
Real estate was up 5 percent.
Cash operating expenses were 5 percent below
second quarter 2001. Newsprint and ink expense was 26 percent
below 2001 as newsprint prices were down 26 percent and consumption
decreased 2 percent. Compensation expense was 2 percent lower
due to the voluntary retirement program initiated in 2001,
outsourcing of certain circulation operations in Los Angeles
and other reductions in force. Other cash expenses were 2
percent higher primarily due to outsourcing certain circulation
functions as well as higher mailing costs associated with
a total market coverage customer in Los Angeles.
BROADCASTING AND ENTERTAINMENT
Broadcasting and Entertainment's second quarter
revenues increased 2 percent to $396 million, up from $387
million in 2001. EBITDA was $141 million, up 4 percent from
$135 million in 2001. Broadcasting and Entertainment operating
profit increased 5 percent to $130 million from $124 million
last year.
Television's second quarter revenues increased
1 percent to $316 million, up from $314 million in 2001. Television
cash operating expenses decreased 2 percent. Television EBITDA
increased 5 percent to $135 million from $128 million last
year.
Revenues for Radio/Entertainment increased
9 percent to $80 million due to revenue increases at WGN Radio
and the Chicago Cubs of 22 percent and 11 percent, respectively.
Revenue increased at Tribune Entertainment by 6 percent. Radio/Entertainment
EBITDA was $6 million, down 11 percent primarily due to higher
player compensation costs at the Chicago Cubs.
Management Discussion
Television revenues, excluding acquisitions,
were flat with last year, as increased advertising revenues
were offset by lower copyright royalties at WGN Cable.
Advertising revenues increased 3 percent in
the quarter, and 7 percent in June based on the strength of
the two largest categories, automotive and movies. Second
quarter and June advertising growth were negatively impacted
by 2 percentage points due to the absence of Dodgers baseball
at KTLA in Los Angeles. The rights to Dodgers telecasts expired
after the 2001 season and were not renewed.
Television cash operating expenses, excluding
acquisitions, decreased 3 percent.
Programming costs decreased 3 percent due to the absence of
Dodgers baseball rights fees. Excluding the Dodgers rights,
programming costs were up 3 percent due to increased amortization
related to the fall 2001 launch of "Everybody Loves Raymond."
Other cash expenses decreased 3 percent, including compensation,
which was down 1 percent.
The television group's operating cash flow
margin was 43 percent, an increase of 2 percentage points
from second quarter 2001.
"Friends" continues to be
the top rated off-network sitcom with ratings generally equal
to or above last year's numbers and during the May ratings
period, "Everybody Loves Raymond" was up, on average,
19 percent versus the programming airing during the same time
period in May 2001.
INTERACTIVE
Interactive's second quarter revenues increased
37 percent to $20 million, up from $14 million in 2001. Interactive
EBITDA was $4.2 million, compared with a loss of $5.1 million
in 2001. Interactive operating profit increased to $2.8 million
from a loss of $6.4 million last year.
Management Discussion
Second quarter revenue growth was due primarily
to higher classified revenues: recruitment was up 41 percent,
auto rose 34 percent and real estate increased 30 percent.
Cash operating expenses decreased 21 percent in the second
quarter mainly due to lower compensation and promotion costs.
Interactive was cash flow positive in the
second quarter due largely to higher revenues and lower compensation
and promotion expenses.
EQUITY RESULTS
Equity losses for the 2002 second quarter were
$4 million, down from $13 million in 2001. The losses reflect
Tribune's ownership interests in The WB Network, CareerBuilder,
BrassRing and Classified Ventures and represent Tribune's
portion of their operating losses. The lower losses reflect
improved results at each of these entities.
INTEREST AND TAXES
Net interest expense for the 2002 second quarter
decreased to $52 million, down 19 percent from $64 million
in 2001. The decrease was primarily due to a reduction in
outstanding debt and lower interest rates. Debt at the end
of the second quarter, excluding the PHONES, was approximately
$3.1 billion and is expected to continue to decline to about
$2.8 billion by the end of 2002.
The effective tax rate in the 2002 second quarter
was 39 percent, compared with a rate of 39.4 percent in 2001.
NON-OPERATING ITEMS
In the 2002 second quarter, Tribune recorded
a pre-tax loss of $99 million, or $.19 per diluted share,
from marking-to-market the company's PHONES derivatives and
related AOL Time Warner investment.
CAPITAL EXPENDITURES
Capital expenditures in the second quarter
were approximately $35 million. 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. Capital expenditures should be
approximately $225 million for the full year.
OUTLOOK
Diluted EPS for the third quarter and the full
year 2002 are expected to be at the upper end of the current
range of analyst estimates, which are $.30 to $.35 and $1.50
to $1.65, respectively.
WEBCAST OF CONFERENCE CALL
Today at 8:00 a.m. (CDT), a live Webcast of
the 2002 second 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 July 18 through August 9. More information about Tribune
is available at www.tribune.com
or by calling 800-757-1694.
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.
:: :: ::
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.
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