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Tribune Reports 2002
Fourth Quarter and Full Year Earnings
Record EPS for fourth
quarter and full year EPS, before special items, up 58% for
the quarter and 42% for full year
CHICAGO, January 29, 2003 --
Tribune Company (NYSE:
TRB) today reported fourth quarter 2002 diluted earnings
per share (EPS) of $.57, up 58 percent from fourth quarter
2001 EPS of $.36. These results exclude non-operating items
in both 2002 and 2001 and restructuring charges in 2001. Including
these items, diluted EPS was $.57 in the fourth quarter of
2002, up 21 percent from $.47 in 2001. All amounts for 2001
are adjusted for intangible amortization.
For the full year 2002, Tribune reported diluted
EPS of $1.87, an increase of 42 percent from $1.32 for 2001.
These results exclude non-operating items and restructuring
charges in both years and the cumulative effect of a change
in accounting principle in 2002. Including these items, diluted
EPS for the full year 2002 was $1.30, up 44 percent from $.90
in 2001. All amounts for 2001 are adjusted for intangible
amortization.
Earnings per share amounts that exclude non-operating
items and restructuring charges are presented to aid in the
analysis of the company’s on-going operations. Tables
accompanying this release present a reconciliation of earnings
per share including and excluding restructuring and non-operating
items, for both the fourth quarters and full years 2002 and
2001.
"This was an outstanding year for our
company," said John Madigan, Tribune’s chairman.
"Our people have proven once again that they are star
performers. Through their efforts, we achieved record earnings
per share for the fourth quarter and full year, and our businesses
established real momentum heading into 2003."
Dennis FitzSimons, Tribune’s president and chief executive
officer, said, "Our results clearly demonstrate the strength
and resiliency of our local mass media franchises. In difficult
times, advertisers rely on media that deliver results. In
addition, the dedication of our employees, including a strong
focus on cost controls, enabled the company to grow EBITDA
by 20 percent to $1.5 billion, generate free cash flow of
$700 million and reduce debt by $650 million."
2002 RESULTS
The following discussion compares 2002 actual
results with adjusted 2001 results. For a more meaningful
comparison with 2002 results, the 2001 adjusted results eliminate
the amortization of goodwill and certain other intangible
assets. The following discussion also excludes restructuring
charges and non-operating items. Comparisons with fourth quarter
and full year 2001 adjusted results as well as 2001 actual
results are presented in the tables accompanying this release.
EBITDA is defined as earnings before interest,
taxes, depreciation, amortization, equity results and non-operating
items. The Company has presented EBITDA because it is a common
alternative measure of performance used by rating agencies,
financial analysts and investors. (See the tables accompanying
this release for a reconciliation of EBITDA to operating profit
and for a further discussion of the use of EBITDA).
FOURTH QUARTER RESULTS
CONSOLIDATED
Tribune’s 2002 fourth quarter operating
revenues increased 8 percent to $1.43 billion from
$1.32 billion in the 2001 fourth quarter. Consolidated cash
operating expenses increased
2 percent in the fourth quarter. EBITDA was up 29 percent
to $416 million, compared with $322 million in the fourth
quarter of 2001. Tribune’s operating profit increased
33 percent to $359 million, compared with $270 million in
2001.
PUBLISHING
Publishing’s fourth quarter operating
revenues were $1.0 billion, up 6 percent from last year’s
fourth quarter. Publishing EBITDA was $285 million, a 28 percent
increase from $223 million in 2001, while cash operating expenses
were down 1 percent. Publishing operating profit increased
31 percent to $242 million, up from $184 million in 2001.
Management Discussion
- In the fourth quarter 2002, publishing EBITDA
margin was 27 percent, up
5 percentage points from fourth quarter 2001, due primarily
to higher revenues and lower newsprint expense. EBITDA margins
improved from the fourth quarter 2001 in most markets.
- Retail advertising rose by 6 percent for
the quarter. Preprints, the primary driver of retail advertising
growth in the quarter, increased 13 percent led by a 19
percent increase in Los Angeles where new preprint facilities
for daily inserting are now operational. Preprint revenue
in Chicago and New York was up 13 percent and 14 percent,
respectively. Increases in department stores, food and furniture/home
furnishings were partially offset by a decline in electronics.
- National was up 14 percent for the quarter.
Increases in movies/entertainment, hi-tech (especially wireless),
auto manufacturers and financial categories were partially
offset by a decrease in travel.
- Classified increased 4 percent for the quarter.
Help wanted revenue for the group was down 6 percent, but
reflected continuing sequential improvement; Chicago fell
19 percent; Los Angeles was off 6 percent; and New York
was down 2 percent. Auto increased 7 percent and real estate
was up 8 percent.
- Cash operating expenses decreased 1 percent
from fourth quarter 2001. Excluding newsprint, cash operating
expenses were up 3 percent. Newsprint and ink expense was
18 percent below 2001 as newsprint cost per ton was down
19 percent and consumption decreased 1 percent. Compensation
expense was 3 percent higher due primarily to reinstatement
of management bonuses and a lower pension credit.
BROADCASTING AND ENTERTAINMENT
Broadcasting and Entertainment’s fourth
quarter operating revenues increased 16 percent to $371 million,
up from $319 million in 2001. EBITDA was $144 million, up
30 percent from $111 million in 2001. Operating profit increased
31 percent to $131 million from $100 million last year.
Television’s fourth quarter revenues
jumped 22 percent to $339 million, up from
$279 million in 2001. Television cash operating expenses increased
10 percent from last year. Television EBITDA increased 44
percent to $143 million from $99 million last year.
Radio/Entertainment revenues declined 21 percent
to $32 million and EBITDA decreased to $1.1 million due to
the partial divestiture of Tribune Denver Radio and six fewer
Cubs’ games in October 2002 compared with the 2001 season.
Management Discussion
- In the fourth quarter 2002, television
EBITDA margin was 42 percent, an increase of 6 percentage
points from fourth quarter 2001.
- Television advertising revenues, excluding
acquisitions, increased 23 percent in the quarter.
- Television cash operating expenses, excluding
acquisitions, were up 8 percent compared with last year.
Programming costs, excluding acquisitions, increased
10 percent, due to the fall 2002 launch of “Will and
Grace” and the addition of Clippers basketball games
at KTLA-TV, Los Angeles. Other television cash expenses,
excluding acquisitions, were up 6 percent compared with
last year, due to increases in selling costs, promotional
spending and costs for digital operations. Compensation,
excluding acquisitions, was up 6 percent due to higher commissions
and bonuses resulting from improved results.
- In November, the WB Network was the fastest
growing network in total viewers, up 17 percent, and delivered
record ratings in several key audience segments.
On Dec. 30, 2002, the company announced an
agreement to acquire two television stations, KPLR-TV, St.
Louis, and KWBP-TV, Portland, Ore., for $275 million. Both
stations are affiliates of the WB Network. Tribune will acquire
the stock of KPLR for cash. The KWBP transaction will be structured
as a tax deferred asset exchange partially funded with $55
million in remaining proceeds from the divestiture of Tribune
Denver Radio in 2001. The acquisitions are expected to close
late in the first quarter of 2003, pending regulatory approval.
INTERACTIVE
Interactive’s fourth quarter operating
revenues increased 17 percent to $19 million, up from $16
million in 2001. Interactive EBITDA was break even, compared
with a loss of
$3.7 million in 2001. Interactive operating loss decreased
to $1.6 million from a loss of $5.0 million last year.
Management Discussion
- Fourth quarter revenue growth was due primarily
to higher classified revenues, up 13 percent and banner/sponsorship
revenue, up 25 percent.
- Cash operating expenses were down 4 percent
due to lower compensation costs, partially offset by higher
promotional spending.
- Promotional spending on classified products,
especially automotive and recruitment, increased significantly
in the quarter as planned.
EQUITY RESULTS
Equity income was $11 million in the fourth
quarter, compared with a loss of $9.6 million in the fourth
quarter of 2001. The improvement was largely due to increased
profitability at the WB Network and lower losses at CareerBuilder
and Classified Ventures.
NON-OPERATING ITEMS
In the 2002 fourth quarter, Tribune recorded
a total after-tax non-operating loss of $1.8 million. In the
2002 fourth quarter, Tribune recorded a pre tax loss on derivatives
and related investments of $43 million ($26 million after-tax),
primarily from marking-to-market the company’s PHONES
derivatives and related AOL Time Warner investment. In the
fourth quarter of 2002, the Company reduced its income tax
liability by $26 million as a result of favorably resolving
certain federal income tax issues. This adjustment was recorded
as a reduction of income tax expense.
FULL YEAR RESULTS
CONSOLIDATED
For the full year 2002, operating revenues
increased 2 percent to $5.4 billion, up from $5.3 billion
in 2001. EBITDA was $1.5 billion, a 20 percent increase over
the $1.2 billion reported in 2001. Operating profit was up
23 percent to $1.3 billion, from $1.0 billion last year. Consolidated
cash operating expenses were down 3 percent.
PUBLISHING
For the full year 2002, operating revenues
for Publishing increased 1 percent to $3.9 billion, up from
$3.8 billion in 2001. EBITDA grew 20 percent to $1.0 billion,
from $851 million. Operating profit increased 22 percent to
$848 million, up from $693 million in 2001.
BROADCASTING AND ENTERTAINMENT
For the full year 2002, operating revenues
for Broadcasting and Entertainment increased 7 percent to
$1.4 billion, up from $1.3 billion in 2001. EBITDA rose 14
percent to $517 million from $452 million. Operating profit
for the year increased 15 percent to $470 million, from $407
million.
For the full year 2002, operating revenues
for television increased 8 percent to $1.2 billion, up from
$1.1 billion in 2001. EBITDA grew 16 percent to $494 million
from $426 million. Operating profit for the year increased
18 percent to $453 million, from $385 million.
INTERACTIVE
For the full year 2002, interactive operating
revenues rose 29 percent to $77 million, up from $59 million
in 2001, primarily on higher classified revenues. EBITDA was
$8.7 million, a turnaround from a $20 million loss.
ADDITIONAL FINANCIAL
DETAILS
Equity losses for the full year were $41 million,
including two one-time items related to CareerBuilder. In
the first quarter, the company recorded its $7.5 million share
of a restructuring charge for CareerBuilder. In the third
quarter, there was a one-time charge for Tribune’s $18
million share of CareerBuilder’s tax liability resulting
from its conversion to a Limited Liability Company in September
2002. This conversion from a standard C Corporation will generate
significant future tax savings.
Net interest expense for the 2002 fourth quarter
decreased to $50 million, down 15 percent from $59 million
in fourth quarter 2001. The decrease was due to a reduction
in outstanding debt and lower interest rates. Debt at year-end
2002, excluding the PHONES, was approximately $2.75 billion,
a $650 million reduction from $3.4 billion at the end of 2001.
The effective tax rate in the 2002 fourth quarter
was 39.0 percent, compared with a rate of 39.4 percent in
the fourth quarter of 2001. The effective tax rate for the
full year 2002 was 38.4 percent, compared with a rate of 39.4
percent for the full year 2001.
Capital expenditures were $71 million in the
fourth quarter and $187 million for the full year. The largest
projects reflected in these amounts, preprint facilities in
Chicago and Los Angeles and digital TV upgrades, are nearly
completed.
OUTLOOK FOR 2003
In December, management stated publicly that
Tribune expects to grow earnings per share, excluding non-operating
items and the 2002 restructuring charge, in the low double-digit
range in 2003. The company also plans to generate about $1.6
billion of EBITDA and free cash flow (defined as EBITDA less:
cash interest and income taxes paid, capital expenditures
and changes in working capital) of nearly $800 million. Debt
is expected to decline to $2.5 billion at year-end 2003.
WEBCAST
OF CONFERENCE CALL
Today at 8 a.m. (CDT), a live Webcast of the
2002 fourth 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 Jan. 29 through Feb. 5. More information about Tribune
is available at www.tribune.com
or by calling 800/757-1694.
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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. In
publishing, Tribune operates 12 market-leading daily newspapers
such as the Los Angeles Times, Chicago Tribune and Newsday
plus a wide range of targeted publications including Spanish-language
newspapers. In broadcasting, Tribune properties include 24
television stations and Superstation WGN on national cable.
The acquisition of two additional stations, KPLR-TV, St. Louis,
and KWBP-TV, Portland, Ore., will be completed in early 2003,
pending regulatory approvals. These publishing and broadcasting
interests are complemented by high-traffic 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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