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Tribune Reports 2005 Second Quarter
Results
CHICAGO, July 14, 2005 -- Tribune
Company (NYSE: TRB) today reported second quarter 2005 diluted
earnings per share of $.73 compared with $.29 in the second
quarter of 2004. The 2005 second quarter results included
a net non-operating gain of
$.13 per diluted share, while the 2004 second quarter results
included a net non-operating loss of $.24 per diluted share.
Publishing operating profit in the 2004 second quarter included
two pretax charges totaling $52 million, or $.09 per diluted
share: $17 million for the elimination of 375 positions and
$35 million as the initial estimate of the cost to settle
with advertisers regarding misstated circulation at Newsday
and Hoy, New York.
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.
"Second quarter results reflect our continued
focus on cost controls in the face of a weak advertising
environment in the nation’s largest markets," said
Dennis J. FitzSimons, Tribune chairman, president and chief
executive officer. "Our businesses generated about
$400 million in operating cash flow during the quarter, and
we repurchased more than
5 million shares of stock."
SECOND QUARTER 2005
RESULTS1
(Compared to Second Quarter 2004)
CONSOLIDATED
Tribune’s 2005 second quarter
operating revenues decreased 2 percent to $1.46 billion
from $1.5 billion in the 2004 second quarter. Consolidated
cash operating expenses were down 5 percent, or $52 million.
Operating cash flow was up 5 percent to $396 million, while
operating profit increased 6 percent to $338 million.
PUBLISHING
Publishing’s second quarter operating revenues were
$1 billion, down 1 percent compared with last year’s
second quarter. Publishing cash operating expenses were down
6 percent, or $53 million; $52 million of the decrease is
attributable to the two charges discussed above. Publishing
operating cash flow was $263 million, a 21 percent increase
from
$217 million in 2004. Publishing operating profit increased
27 percent to $218 million, up from $171 million in 2004.
Management Discussion
- Advertising revenues increased 1 percent for the
quarter. Excluding Newsday, advertising revenues increased
2 percent. In September 2004, Newsday implemented lower
ad rates as a result of the significant reduction in reported
circulation.
- Retail advertising revenues were down
1 percent for the quarter. Decreases in department stores,
food and drug and electronics categories were partially
offset by increases in general merchandise. Preprint revenues
increased 4 percent, led by an 11 percent increase in Los
Angeles, a 5 percent increase in Chicago and a
13 percent increase in South Florida; Newsday was down
5 percent.
- National advertising was down 4 percent
for the quarter, with decreases in transportation, wireless
and resorts, partially offset by increases in financial,
auto and package goods. Los Angeles was down 4 percent;
Chicago was up 3 percent; and Newsday decreased 12 percent.
- Classified
advertising was up 6 percent for the quarter. Help wanted
revenues for the group were up 13 percent; Los Angeles
was up 9 percent; Chicago rose
10 percent; and Newsday was flat. Real estate revenues
rose 18 percent and auto revenues were down 7 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.
- Interactive
revenues, which are included in the above categories, were
up
45 percent to $45 million due to strength in classified
revenues.
- Cash operating expenses decreased 6 percent,
or $53 million, due primarily to the absence of the two
previously discussed 2004 charges, which totaled $52 million.
All other cash operating expenses were down $1 million,
primarily due to a
1 percent decrease in compensation expense, which was driven
by a 5 percent staffing reduction. Newsprint and ink
expense was flat compared with last year’s second
quarter, as newsprint cost per ton was up 9 percent while
consumption decreased 8 percent.
BROADCASTING AND ENTERTAINMENT
Broadcasting and entertainment’s
second quarter operating revenues decreased 6 percent to
$423 million, down from $450 million in 2004. Group cash
operating expenses were flat compared with the 2004 second
quarter. Operating cash flow was $147 million, down
16 percent from $174 million, and operating profit decreased
16 percent to $134 million from $160 million.
Television’s second quarter revenues
decreased 9 percent to $335 million, down from
$368 million in 2004. Television cash operating expenses
were up 1 percent from last year. Television operating cash
flow was $132 million, a 21 percent decrease from
$167 million. Television operating profit declined 22 percent
to $121 million, down from $155 million.
Management Discussion
- Television revenues were affected by a continuing
uneven advertising environment, particularly in major markets,
as well as softness in the automobile, movie and telecom
categories. Station revenues in New York, Los Angeles,
Chicago and Boston continue to be impacted by Local People
Meters.
- Radio/entertainment results reflect increased
revenues for the Chicago Cubs primarily due to higher game
receipts and growth in broadcasting and marketing revenues.
EQUITY RESULTS
Net equity income was $12 million in the second quarter
of 2005, compared with
$4 million in the second quarter of 2004. The increase reflects
improvements at TV Food Network, CareerBuilder and Comcast
SportsNet Chicago.
NON-OPERATING ITEMS
In the 2005 second quarter, Tribune
recorded a pretax non-operating gain of $67 million ($41
million after-tax, or $.13 per diluted share), primarily
from marking-to-market the Company’s
PHONES derivatives and related Time Warner investment.
In the 2004 second quarter, the Company recorded a pretax
non-operating loss of
$127 million ($80 million after-tax, or $.24 per diluted
share). Non-operating items in the second quarter of 2004
included an after-tax loss of $88 million from the early
retirement of debt and an after-tax gain of $12 million from
marking-to-market the Company’s PHONES derivatives
and related Time Warner investment.
ADDITIONAL FINANCIAL DETAILS
Corporate expenses for the 2005 second quarter increased
to $13.5 million from
$12.7 million in the second quarter of 2004, primarily due
to higher retirement plan expense.
Net interest expense for the 2005 second quarter decreased
to $34 million, down 3 percent from $35 million in the second
quarter of 2004. Debt, excluding the PHONES, was $1.9
billion at the end of the 2005 second quarter, compared with
$2.2 billion at the end of the second quarter of 2004.
The effective tax rate in the 2005 second quarter was 39.0
percent, compared with
40.0 percent in the 2004 second quarter.
Diluted weighted average shares outstanding declined by
4 percent primarily due to significant stock repurchases.
The Company repurchased 15.5 million shares in the full year
2004 and 5.4 million shares in the first half of 2005.
Capital expenditures were about $35 million in the second
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. Investors are encouraged to
review the Company’s
monthly revenue releases for current trends.
For the full year 2005, consolidated operating expenses
are expected to decline due to the absence of the $90 million
advertising settlement charge and the $41 million of position
elimination costs recorded in 2004. All other consolidated
operating expenses are expected to be flat to up slightly
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 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 is required 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 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 14 through July 21. 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. ::
:: ::
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 web sites 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 including 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 web sites complement Tribune’s print
and broadcast properties and extend the Company’s nationwide
audience.
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. Any of 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. This press release is being furnished
to the SEC through a Form 8-K. The Company's next 10-Q report
to be filed with the SEC may contain updates to the information
included in this release.
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