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Tribune Reports 2006 First Quarter
Results
CHICAGO,
April 13, 2006 -- Tribune Company (NYSE:TRB) today
reported first quarter 2006 diluted earnings per share of
$.33 compared with $.44 in the first quarter of 2005.
First quarter 2006 results included the following:
- Stock-based compensation expense of $.04 per diluted share
as a result of the adoption of the new accounting standard
for stock-based compensation.
- A charge of $.04 per diluted
share for severance and other payments associated with the new union
contracts at Newsday.
- A gain of $.01 per diluted share related
to property sales in publishing.
- A net non-operating loss of $.02
per diluted share.
First quarter 2005 results included
the following:
- A net non-operating
gain of $.03 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.
"Newspaper ad revenues were flat for the quarter.
Strength in classified, with interactive revenues up nearly
30 percent, was offset by declines in national and retail
advertising. Television group revenues trended better,
and while down 2 percent, our New York, Washington, D.
C., and six Fox stations delivered good growth," said Dennis
FitzSimons, Tribune chairman, president and chief executive
officer. "Tight cost controls remain in effect," he added,
"and our actions in 2005 resulted in a 5 percent year-over-year
staff reduction, or approximately 1,200 positions across
the company, and lower compensation expense. Looking ahead,
our new labor agreements at Newsday will result in significant expense
savings, while in TV we expect our affiliation with the
CW Network to have a positive impact on revenues later
this year."
FIRST QUARTER 2006 RESULTS1
(Compared to First Quarter 2005)
CONSOLIDATED
Tribune’s 2006 first quarter operating revenues
decreased 1 percent, or $17 million,
to $1.30 billion. Consolidated cash operating expenses
were up 1 percent, or $15 million. In the first quarter of 2006, cash
operating expenses included $18 million of stock-based compensation expense
and a charge of $19 million associated with the new union contracts at
Newsday, partially offset by a $7 million gain on property sales. All
other cash operating expenses were down 2 percent, or $16 million, for
the quarter. Operating cash flow was down 10 percent to $279 million from
$310 million, while operating profit declined 12 percent to $223 million
from $252 million.
PUBLISHING
Publishing’s first quarter operating revenues
were $997 million, down 1 percent, or
$9 million. Publishing cash operating expenses were up
2 percent, or $17 million, as 2006 included a charge of $19 million associated
with the new union contracts at Newsday and $7 million of stock-based
compensation expense, partially offset by a $7 million gain on property
sales. Publishing operating cash flow was $217 million, an 11 percent
decrease from $243 million in 2005. Publishing operating profit was down
12 percent to
$174 million, from $199 million in 2005.
Management Discussion
- Advertising revenues were flat for the quarter. Excluding
Newsday, advertising revenues increased 1 percent. Revenues
were favorably impacted by the timing of the Easter holiday.
- Retail advertising revenues were down 2 percent
for the quarter. Decreases in the food & drug stores, department
stores, and electronics categories were partially offset by an increase
in the hardware/home improvement stores category. Preprint revenues
declined 2 percent; excluding Newsday, preprint revenues
were up
3 percent.
- National advertising was down 8 percent for the quarter,
primarily due to a decline in the movie category at Los
Angeles. Autos and technology were also down, partially offset
by an increase in the telecom/wireless category.
- Classified advertising
was up 8 percent for the quarter: help wanted revenues were up 7 percent;
real estate revenues rose 35 percent; and auto revenues were down
10 percent.
- Interactive advertising revenues, which are included
in the above categories, were up 30 percent to $51 million, mainly due
to strength in classified help wanted revenues.
- 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) in the first quarter, up 1
percent from the prior year, and 4.2 million copies Sunday,
down approximately 1 percent from the same reporting
period in 2005.
- Total net
paid circulation averaged 3.0 million copies daily
(Mon-Fri) and 4.3 million copies Sunday in the first
quarter, representing a decline of
3 percent, for both daily and Sunday, from the prior
year’s quarter
as the company continued to manage down "other paid"
circulation.
- Cash
operating expenses increased 2 percent, or $17 million,
due to the previously discussed $19 million charge
related to the Newsday union contracts and $7 million
of stock-based compensation expense, partially offset by $7 million
of gains on property sales. All other cash expenses were down slightly
as higher newsprint and total market coverage postage expenses were
offset by lower compensation and benefits, primarily due to a 5
percent (1,000 positions) reduction in staffing.
BROADCASTING AND ENTERTAINMENT
Broadcasting and entertainment’s first quarter
operating revenues decreased 2 percent to $303 million, down from $310
million in 2005. Group cash operating expenses were down 4 percent,
or $10 million, compared with the 2005 first quarter. The first quarter
of 2005 included $13.5 million of additional compensation expense recorded
by the Chicago Cubs related to a player trade. Operating cash flow was
$82 million, up 3 percent from $80 million, and operating profit increased
3 percent to $69 million from $67 million.
Television’s first quarter revenues decreased
2 percent to $284 million, down from
$290 million in 2005. Television cash operating expenses
were up 4 percent, or
$8 million, from last year. Television operating cash flow
was $86 million, a 13 percent decrease from $99 million in 2005. Television
operating profit declined 15 percent to
$74 million, down from $87 million.
Management Discussion
- Television revenue showed less of a decline than in any quarter
last year. Station revenues in New York were up for the
quarter, while Los Angeles and Chicago lagged. Softness
continued in the auto and retail categories, while movies
showed growth for the second consecutive quarter. The restaurants, education,
and telecom advertising categories were also up.
- Television cash operating expenses were up 4 percent due to an
$8 million increase in broadcasting rights and $2 million
of stock-based compensation expense, partially offset by staff reductions
and other savings.
EQUITY RESULTS
Net equity income was $6.5 million in the first quarter of 2006, compared
with
$0.5 million in the first quarter of 2005. The increase
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 recorded investment has been reduced
to zero.
NON-OPERATING ITEMS
In the 2006 first quarter, Tribune recorded a pretax non-operating loss
of $14 million
($8 million after-tax), primarily from marking-to-market
the derivative component of the Company’s PHONES and the related
Time Warner investment.
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.
ADDITIONAL FINANCIAL DETAILS
Corporate expenses for the 2006 first quarter increased to $20 million
from $13 million in the first quarter of 2005. The increase was due to
$8 million of stock-based compensation expense recorded in the first quarter
of 2006, partially offset by $1 million of savings primarily from staff
reductions in 2005.
As of the beginning of 2006, Tribune adopted Statement
of Financial Accounting Standards No. 123R, Share-Based Payment. The
statement requires the Company to expense stock-based compensation in
the income statement. Previously, the expense was disclosed in the footnotes
to the Company’s consolidated
financial statements. The Company recorded $18 million,
or $.04 per diluted share, of stock-based compensation expense in the
first quarter of 2006. The Company plans to record $32 million, or $.07
per diluted share, of stock-based compensation expense for the full
year of 2006. The Company issues substantially all of its stock-based
awards in February of each year. Stock-based awards granted to retirement
eligible employees are required to be expensed immediately. As a result,
the 2006 first quarter stock-based expense includes over half of the
expected full year expense.
Interest expense for the 2006 first quarter increased to $49 million,
up 39 percent from
$35 million in the first quarter of 2005, primarily due
to higher interest rates and debt levels. Debt, excluding the PHONES,
was $2.8 billion at the end of the 2006 first quarter and $1.8 billion
at the end of the 2005 first quarter.
Diluted weighted average shares outstanding declined by 5 percent primarily
due to stock repurchases. The Company repurchased 4.6 million shares in
the first quarter of 2006.
RECENT ACTIONS
On January 8, 2006, Newsday’s six collective
bargaining units voted to accept four-year contracts that include work-rule
flexibility and more efficient staffing, as well as modified retirement
and health care plans. Expected savings are approximately $7 million
in 2006 and more than $10 million annually thereafter. The Company recorded
a charge of
$19 million in the first quarter of 2006 for severance
and other payments associated with the 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 The CW, a new broadcast network,
being launched in fall 2006 by Warner Bros. Entertainment and CBS Corporation.
DETAILS OF CONFERENCE CALL
Today at 8 a.m. CT, management will host a conference call
to discuss first quarter 2006 results. To access the call, dial 800/901-5218
(domestic) or 617/786-4511 (international) at least 10 minutes prior to
the scheduled 8 a.m. start. The participant access code is 11607847. Replays
of the conference call will be available April 13 through April 20. To
hear the replay, dial 888/286-8010 (domestic) or 617/801-6888 (international)
and use access code 89538262. A live webcast will be accessible through
www.tribune.com and www.earnings.com. An archive of the webcast will be
available April 13 through April 27.
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 and dividend income, interest 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.
:: :: ::
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.
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. |
