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Tribune Reports 2005 First Quarter
Results
CHICAGO, April 15, 2005 --
Tribune Company (NYSE: TRB) today reported
first quarter 2005 diluted earnings per share (EPS) of $.44
compared with $.35 in the first quarter of 2004. The 2005
first quarter results included a net non-operating gain of
$.03 per diluted share, while the 2004 first quarter results
included a net non-operating loss of $.05 per diluted share.
Tribune presents earnings per share
amounts on a generally accepted accounting principles ("GAAP")
basis only. This differs from the pro forma earnings per
share amounts supplied by broker analysts to databases
such as First Call.
"Our results in the first quarter were
in line with our expectations," said Dennis FitzSimons,
Tribune chairman, president and chief executive officer.
"Newspaper advertising revenue growth was solid in January
and February, although March was negatively impacted by the
timing of the Easter holiday. In television, our results
reflected overall industry softness and the impact of Local
People Meters in our major markets."
FIRST QUARTER 2005 RESULTS1
(Compared to First Quarter 2004)
CONSOLIDATED
Tribune’s 2005 first quarter operating
revenues decreased 1 percent to $1.32 billion from $1.33
billion in the 2004 first quarter. Consolidated cash operating
expenses increased
$5 million, or 0.5 percent. Operating cash flow was down
7 percent to $310 million, while operating profit decreased
8 percent to $252 million.
PUBLISHING
Publishing’s first quarter operating revenues were
$1 billion, flat compared with last year’s first quarter.
However, excluding Newsday, first quarter operating revenues
were up
2 percent. Newsday implemented lower ad rates as a result
of the significant reduction in reported circulation in September
2004. Publishing cash operating expenses were down
1 percent. Publishing operating cash flow was $243 million,
a 4 percent increase from $235 million. Publishing operating
profit increased 5 percent to $199 million, up from $190
million in 2004.
Management Discussion
- Advertising revenues increased 2 percent for the
quarter. Excluding Newsday, advertising revenues increased
3 percent.
- Retail advertising revenues rose 2 percent
for the quarter. Increases in auto supply, food and drug,
hardware/home improvement and health care categories were
partially offset by declines in education and apparel/fashion.
Preprint revenues increased 8 percent, led by a 14 percent
increase in Los Angeles, a 9 percent increase in Chicago
and a 10 percent increase in South Florida; Newsday was
up
2 percent.
- National advertising was down 1 percent
for the quarter with decreases in the transportation, technology,
resorts and movie categories, partially offset by increases
in financial and auto.
- Classified advertising was
up 3 percent for the quarter. Help wanted revenues for
the group were up 11 percent; Los Angeles was up 7 percent;
Chicago rose
11 percent; and Newsday was down 15 percent. Real estate
revenues rose
4 percent and auto revenues were down 5 percent for the
quarter.
- Circulation revenues were down 9
percent primarily due to volume declines at each of the
Company’s newspapers,
as well as selectively higher discounting. The largest
revenue declines were at Los Angeles and Newsday. Excluding
these two newspapers, circulation revenues were down
4 percent.
- Interactive revenues, which are included
in the above categories, were up
39 percent to $40 million due to strength in classified
and banner/sponsorship advertising.
- Cash operating
expenses decreased 1 percent due primarily to lower compensation
expense, partially offset by higher newsprint prices.
Newsprint and ink expense was 2 percent higher as newsprint
cost per ton was up 12 percent while consumption decreased
9 percent.
BROADCASTING AND ENTERTAINMENT
Broadcasting and Entertainment’s
first quarter operating revenues decreased 6 percent to
$310 million, down from $329 million in 2004. Group cash
operating expenses were up
5 percent, or $11 million. The increase was due to $13.5
million of additional compensation expense recorded by the
Chicago Cubs related to the Sammy Sosa trade. Operating cash
flow was $80 million, down 27 percent from $110 million,
and operating profit decreased 31 percent to $67 million
from $97 million.
Television’s first quarter revenues
decreased 5 percent to $290 million, down from
$306 million in 2004. Television cash operating expenses
were down 1 percent from last year. Television operating
cash flow was $99 million, a 13 percent decrease from
$114 million. Television operating profit declined 15 percent
to $87 million, down from $102 million.
Management Discussion
- Television advertising declines were primarily
driven by weakness in the automotive, movie and telecom
categories. Television revenues in New York, Los Angeles,
Chicago and Boston continue to be impacted by Local People
Meters.
- Television cash operating expenses were down
1 percent primarily due to lower sales commissions and
cost reduction initiatives.
- Radio/entertainment results
reflect the impact of the Cubs trade noted above.
EQUITY RESULTS
Net equity income was $0.5 million in the first quarter
of 2005, compared with a net loss of $4 million in the first
quarter of 2004. The increase reflects improvements at Comcast
SportsNet Chicago and TV Food Network.
NON-OPERATING ITEMS
In the 2005 first quarter, Tribune recorded a pretax non-operating
loss of $4 million. In addition, the Company recorded favorable
income tax settlement adjustments of
$12 million as a reduction in income tax expense. In the
aggregate, non-operating items in the first quarter of 2005
resulted in an after-tax gain of $9 million, or $.03 per
diluted share.
In the 2004 first quarter, the Company
recorded a pretax non-operating loss of $27 million ($16
million after-tax, or $.05 per diluted share). Non-operating
items in the first quarter of 2004 included a loss from
marking-to-market the Company’s PHONES derivatives and related Time Warner
investment and a gain from the sale of the Company’s
ownership interest in La Opinión.
ADDITIONAL FINANCIAL DETAILS
Corporate expenses for the 2005 first quarter increased
to $13.4 million from $12.9 million in the first quarter
of 2004 primarily due to higher retirement plan expense.
Net interest expense for the 2005 first quarter decreased
to $34 million, down 25 percent from $45 million in the
first quarter of 2004. The decrease was primarily due to
the retirement of higher interest rate debt, which was
replaced with commercial paper in the second quarter of
2004. Debt, excluding the PHONES, was $1.8 billion at the
end of the 2005 first quarter compared with $2.0 billion
at the end of the first quarter of 2004.
The effective tax rate in the 2005 first quarter was 33.5
percent, compared with
38.7 percent in the 2004 first quarter. In the first quarter
of 2005, the Company reduced its income tax expense and liabilities
by $12 million as a result of favorably resolving certain
federal income tax issues.
Diluted average shares outstanding declined by 5 percent
primarily due to significant stock repurchases in 2004.
Capital expenditures were about $37 million in the first
quarter of 2005.
2005 FINANCIAL ASSUMPTIONS
Consolidated revenues will continue
to be impacted by many factors, including changes in national
and local economic conditions, job creation, circulation
levels and audience shares. As a result of this limited
visibility, the Company is currently not providing revenue
guidance for 2005; investors are encouraged to review the
Company’s monthly revenue
releases for current trends.
Consolidated operating expenses are expected
to decline in 2005 due to the absence of the $90 million
advertising settlement charge and the $41 million of position
elimination costs recorded in 2004. Other consolidated operating
expenses are expected to be up about 2 percent for 2005 due
to higher expenses for retirement and medical plans and newsprint,
along with a slight increase in broadcast rights expense.
Net equity income is projected to be somewhat higher than
2004. Interest expense is expected to be somewhat below 2004
due to the full year impact of the debt refinancing in the
second quarter of 2004. The effective income tax rate for
2005 is expected to be approximately 38 percent. Capital
expenditures are projected to increase slightly over 2004.
The Company expects to adopt Financial Accounting Standard
No. 123R, which requires the expensing of stock options,
in the first quarter of 2006.
WEBCAST OF CONFERENCE CALL
Today at 8 a.m. (CDT), a live webcast of the 2005 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 15 through April 22. More information
about Tribune is available at www.tribune.com or by calling
800/757-1694.
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1 “Operating profit” for
each segment excludes interest income and expense, equity
income and losses, non-operating items and income taxes. “Operating
cash flow” is defined as operating profit before depreciation
and amortization. “Cash operating expenses” are
defined as operating expenses before depreciation and amortization.
Tables accompanying this release include a reconciliation
of operating profit to operating cash flow and operating
expenses to cash operating expenses. References to individual
daily newspapers include their related businesses.
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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 Securities and
Exchange Commission (“SEC”), including the most
current annual 10-K report and quarterly 10-Q report, which
contain a discussion of various factors that may affect the
company’s business or financial results. 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 top media
companies, operating businesses in publishing and broadcasting.
It reaches more than 80 percent of U.S. households and is
the only media organization with newspapers, television stations,
and websites in the nation’s top three markets. In
publishing, Tribune operates 11 leading daily newspapers
including the Los Angeles Times, Chicago Tribune and Newsday,
plus a wide range of targeted publications such as Spanish-language
Hoy. The company’s broadcasting group operates 26 television
stations, Superstation WGN on national cable, Chicago’s
WGN-AM and the Chicago Cubs baseball team. Popular news and
information websites complement Tribune’s print and
broadcast properties and extend the company’s nationwide
audience.
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