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Tribune Reports 2005 Fourth
Quarter and Full Year Results
CHICAGO,
February 1, 2006 -- Tribune Company (NYSE:TRB) today
reported fourth quarter 2005 diluted earnings per share of
$.43 compared with $.67 in the fourth quarter of 2004. For
the full year 2005, Tribune reported diluted earnings per
share of $1.67, flat with 2004.
Fourth quarter 2005 and 2004 results included the following:
- A severance charge of $.09 per diluted share
in the 2005 quarter for the elimination of approximately
900 positions, compared with a charge of $.05 per diluted
share in the 2004 quarter for the elimination of approximately
230 positions. The position eliminations in both years
were primarily in the publishing group.
- A charge of $.04 per diluted share, or $22 million,
in the 2005 quarter for the announced shutdown of the Los
Angeles Times San Fernando Valley printing facility. This
charge included $16 million of accelerated depreciation
and $6 million of cash operating expenses.
- A pension curtailment gain
of $.03 per diluted share in the 2005 quarter as a result
of the Company’s
replacement of certain defined benefit plans with a defined
contribution plan.
- A net non-operating loss of $.04 per diluted share
in the 2005 quarter, compared with a net non-operating
gain of $.06 per diluted share in the 2004 quarter.
- A
charge of $.05 per diluted share in the 2004 quarter for
the cumulative effect of a change in accounting principle
related to intangible assets.
Full year 2005 and 2004 results
included the following:
- A charge of $.09 per diluted
share in 2005 for the elimination of approximately 900
positions, compared with a charge of $.07 per diluted share
in 2004 for the elimination of approximately 600 positions.
The position eliminations in both years were primarily
in the publishing group.
- A charge of $.04 per diluted share, or $22 million,
in 2005 for the announced shutdown of the Los Angeles Times
San Fernando Valley printing facility. The charge included
$16 million of accelerated depreciation and $6 million
of cash operating expenses.
- A pension curtailment
gain of $.03 per diluted share in 2005 as a result of the
Company’s replacement of
certain defined benefit plans with a defined contribution
plan.
- A charge of $.17 per diluted share in 2004
related to the anticipated settlement with advertisers
regarding misstated circulation at Newsday and Hoy, New
York.
- A net non-operating loss of $.30 per diluted
share in 2005, compared with a net non-operating loss of
$.28 per diluted share in 2004.
- A charge of $.05
per diluted share in 2004 for the cumulative effect of
a change in accounting principle related to intangible
assets.
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.
"In 2005, our local media businesses
generated $1.4 billion in operating cash flow and we repurchased
12 million shares of our stock," said Dennis FitzSimons,
Tribune chairman, president and chief executive officer.
"We have taken aggressive steps to reduce expenses. Now,
our top priority for 2006 is revenue growth. The recent decision
to affiliate 16 of our TV stations with The CW Network is
a great step forward for our broadcasting group. We also
look to continue expanding our interactive operations."
FOURTH QUARTER 2005 RESULTS
(Compared to Fourth Quarter 2004)
CONSOLIDATED
Tribune’s 2005 fourth quarter
operating revenues decreased 5 percent to $1.41 billion
from $1.48 billion in the 2004 fourth quarter. Consolidated
cash operating expenses were up
2 percent, or $17 million. In the fourth quarter of 2005,
cash operating expenses included
$45 million of severance charges, $6 million of expenses
related to the shutdown of the Los Angeles Times San Fernando
Valley printing facility and a pension curtailment gain of
$18 million. In the fourth quarter of 2004, operating expenses
included $24 million of severance charges. All other cash
operating expenses were up 1%, or $7 million, for the quarter.
Depreciation and amortization expense in the fourth quarter
of 2005 included accelerated depreciation of $16 million
related to the shutdown of the Los Angeles Times San Fernando
Valley printing facility. Operating cash flow was down 20
percent to
$341 million from $427 million, while operating profit decreased
27 percent to $269 million from $369 million.
The plant shutdown and elimination of approximately 900
positions will result in annual savings of approximately
$55-$60 million, primarily in publishing, beginning in 2006.
PUBLISHING
Publishing’s fourth quarter operating
revenues were $1.07 billion, down 2 percent compared with
last year’s
fourth quarter. Publishing cash operating expenses were up
2 percent, or $20 million. Publishing operating cash flow
was $233 million, a 17 percent decrease from $279 million
in 2004. Publishing operating profit decreased 26 percent
to
$174 million, down from $234 million in 2004.
Publishing operating profit in the 2005 fourth quarter included
$22 million of expenses related to the shutdown of the Los
Angeles Times San Fernando Valley printing facility,
$43 million of severance charges for the elimination of over
800 positions and a pension curtailment gain of $13 million.
Publishing operating profit in the 2004 fourth quarter included
$24 million of severance charges for the elimination of approximately
230 positions.
Management Discussion
- Advertising revenues decreased 2 percent for
the quarter.
- Retail advertising revenues were
down 4 percent for the quarter. Decreases in the department
stores, furniture/home furnishings, electronics, and
food & drug store categories
were partially offset by increases in the hardware/home
improvement and personal services categories. Preprint
revenues, which are principally included in retail, were
down 3 percent, due primarily to volume declines at Newsday.
Excluding Newsday, preprint revenues were up 1 percent
due to strength in Los Angeles.
- National advertising
revenues were down 5 percent for the quarter, with decreases
in the wireless, technology, movies and auto categories,
partially offset by an increase in the financial category.
- Classified
advertising revenues were up 3 percent for the quarter:
help wanted was up 11 percent, real estate rose 19 percent,
while auto was down 16 percent for the quarter.
- Interactive
revenues, which are included in the above advertising categories,
were up 40 percent to $46 million, mainly due to increases
in classified help wanted.
- Circulation revenues
were down 4 percent for the quarter.
- Individually
paid circulation (home delivery plus single copy) for
Tribune’s
11 metro newspapers averaged 2.8 million copies daily (Mon-Fri)
and 4.2 million copies Sunday, down 2.0 percent and 0.5
percent, respectively, from the prior year’s
quarter.
- Total
net paid circulation averaged 3.0 million copies daily
(Mon-Fri) and 4.4 million copies Sunday for the 2005
fourth quarter, a decline of 3.7 percent and 1.9 percent,
respectively, from the prior year’s quarter, as the
company continued to manage down "other paid" circulation.
- Cash
operating expenses increased 2 percent, or $20 million,
primarily due to the previously discussed plant shutdown
costs and higher severance charges, partially offset by
the pension curtailment gain. All other cash expenses rose
$8 million primarily due to a 6 percent rise in newsprint
and ink expense; higher market prices were partially offset
by lower consumption.
BROADCASTING AND ENTERTAINMENT
Broadcasting and entertainment’s
fourth quarter operating revenues decreased 11 percent
to $343 million, down from $385 million in 2004. Group
cash operating expenses were up 1 percent compared with
the 2004 fourth quarter. Operating cash flow was $118 million,
down 27 percent from $162 million, and operating profit
decreased 30 percent to
$105 million from $149 million.
Television’s fourth quarter revenues
decreased 10 percent to $319 million, down from
$352 million in 2004. Television cash operating expenses
were up 7 percent, or
$13 million, from last year. Television operating cash flow
was $112 million, a 29 percent decrease from $158 million.
Television operating profit declined 31 percent to
$101 million, down from $147 million.
Management Discussion
- Television advertising revenues reflect softness
in the telecom, auto and food categories, partially offset
by increases in the financial and education categories.
Station revenues continue to be impacted by ratings issues
and market softness.
- Television cash operating expenses were up 7
percent compared with last year primarily due to higher
broadcast rights amortization expense.
- FTEs were
down 3 percent, or approximately 90 positions, from the
prior year.
- Radio/entertainment revenues for 2005
reflect lower syndication revenues at Tribune Entertainment
and fewer home games for the Chicago Cubs. Cash operating
expenses in the fourth quarter of 2005 included a one-time
$5.4 million net recovery of legal costs from a litigation
settlement.
EQUITY RESULTS
Net equity income was $21 million in the fourth
quarter of 2005, compared with $20 million in the fourth
quarter of 2004. The increase was primarily due to higher
TV Food Network income.
NON-OPERATING ITEMS
In the 2005 fourth quarter, Tribune
recorded a pretax non-operating loss of $20 million ($12
million after-tax, or $.04 per diluted share), while in
the 2004 fourth quarter the Company recorded a pretax non-operating
gain of $29 million ($18 million after-tax, or $.06 per
diluted share). Non-operating items in both quarters were
primarily from marking-to-market the derivative component
of the Company’s PHONES and the related Time Warner
investment.
FULL YEAR RESULTS
CONSOLIDATED
For the full year 2005, operating revenues decreased 2 percent
to $5.6 billion, down from
$5.7 billion in 2004. Consolidated cash operating expenses
were down 2 percent compared with the prior year. Operating
cash flow was $1.39 billion, a 4 percent decrease compared
with $1.45 billion reported in 2004. Operating profit was
down 6 percent to $1.15 billion, from $1.22 billion in 2004.
PUBLISHING
For the full year 2005, operating revenues for publishing
decreased 1 percent to
$4.10 billion, down from $4.13 billion in 2004. Cash operating
expenses decreased
2 percent in 2005. Operating cash flow rose 5 percent to
$951 million, from $905 million in 2004. Operating profit
increased 5 percent, or $34 million, in 2005.
For the full year 2005, publishing operating profit included
a pretax charge of $22 million for the shutdown of the Los
Angeles Times San Fernando Valley printing facility, $43
million of severance charges for the elimination of over
800 positions and a pension curtailment gain of $13 million.
For the full year 2004, publishing operating profit included
a pretax charge of $90 million related to the anticipated
settlement with advertisers regarding misstated circulation
at Newsday and Hoy, New York. The full year 2004 also included
a pretax charge of $41 million for the elimination of about
600 positions.
BROADCASTING AND ENTERTAINMENT
For the full year 2005, operating revenues for broadcasting
and entertainment decreased
6 percent to $1.5 billion, down from $1.6 billion in 2004.
Cash operating expenses increased 1 percent in 2005. Operating
cash flow declined 18 percent to $488 million from
$597 million. Operating profit decreased 20 percent to $437
million, down from
$544 million.
For the full year 2005, operating revenues for television
decreased 8 percent to
$1.25 billion, down from $1.35 billion in 2004. Cash operating
expenses increased
3 percent in 2005. Operating cash flow declined 22 percent
to $449 million from
$573 million. Operating profit decreased 23 percent to $403
million, from $526 million in 2004.
EQUITY RESULTS
Equity income was $41 million for the
full year 2005, compared with $18 million in 2004. The
increase primarily reflects improvements at TV Food Network
and Comcast SportsNet Chicago. In addition, the Company
is no longer recording losses for The WB Network as the
Company’s book investment has
been reduced to zero.
NON-OPERATING ITEMS
In 2005, Tribune recorded a pretax non-operating
gain of $70 million ($43 million after-tax), primarily
from marking-to-market the derivative component of the
Company’s PHONES and
the related Time Warner investment. In addition, the Company
recorded $150 million of additional income tax expense in
the third quarter of 2005 as a result of the Matthew Bender
Tax Court ruling, and recorded favorable income tax settlement
adjustments of $12 million as a reduction in income tax expense
in the first quarter of 2005. In the aggregate, non-operating
items in 2005 resulted in an after-tax loss of
$96 million, or $.30 per diluted share.
In 2004, Tribune recorded a pretax non-operating
loss of $145 million ($90 million after-tax, or $.28 per
diluted share). Non-operating items in 2004 primarily included
a pretax loss of $141 million from the early retirement
of debt, a pretax loss of $18 million from marking-to-market
the derivative component of the Company’s PHONES and
the related Time Warner investment, and an $18 million pretax
gain from the sale of the Company’s ownership interest
in La Opinion.
ADDITIONAL FINANCIAL DETAILS
(Fourth Quarter and Full Year)
Corporate expenses for the 2005 fourth
quarter decreased 34 percent to $9 million from $14 million
in the fourth quarter of 2004. Corporate expenses for the
full year 2005 decreased 5 percent to $49 million from
$52 million. The declines were primarily due to a pension
curtailment gain of approximately $4 million as a result
of the Company’s replacement
of certain defined benefit plans with a defined contribution
plan.
Interest expense for the 2005 fourth quarter increased to
$46 million, up 32 percent from $35 million in the fourth
quarter of 2004. For the full year 2005, interest expense
increased 1 percent to $155 million, up from $153 million
in 2004. The increases were primarily due to new bond issuances
in August and the issuance of commercial paper in late September
to pay the federal portion of the Matthew Bender and Mosby
tax liabilities. Debt, excluding the PHONES, was $2.8 billion
at the end of 2005 and $2.0 billion at the end of 2004.
Diluted weighted average shares outstanding declined by
4 percent for both the fourth quarter and full year primarily
due to stock repurchases. The Company repurchased
3.2 million shares in the fourth quarter and 12.2 million
shares in the full year 2005.
Capital expenditures were $91 million in the fourth quarter
and $206 million for the full year 2005.
RECENT ACTIONS
On January 8, 2006, Newsday’s
six collective bargaining units voted to accept new four-year
contracts that include position eliminations, work rule
improvements, and an increase in employee health care contributions,
resulting in savings of approximately $7 million in 2006
and more than $10 million annually thereafter. The Company
expects to record one-time charges of approximately $15
million in the first quarter of 2006 related to severance
and other payments associated with the new contracts.
On January 24, 2006, the Company announced
that it had reached a 10-year agreement to affiliate 16
of its television stations (including those in New York,
Los Angeles and Chicago) with a new broadcast network being
launched in fall 2006 by Warner Bros. Entertainment and
CBS Corporation. The new network will air the best programming
currently on the WB Network and the UPN Network; the WB
Network will shut down at that time. The Company will not
incur any costs related to the shutdown of the network.
Three of Tribune’s current
WB network affiliates (Philadelphia, Atlanta and Seattle)
will become independent stations at that time.
WEBCAST OF CONFERENCE CALL
Today at 8 a.m. (CST), a live webcast
of the 2005 fourth quarter conference call will be accessible
through www.tribune.com and www.fulldisclosure.com. An
archive of the webcast will be available on these sites
from February 1 through February 8. 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 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. The Company's next 10-K report
to be filed with the SEC may contain updates to the information
included in this release.
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. |
