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Tribune Reports 2006 Fourth Quarter
and Full Year Results
CHICAGO,
February 8, 2007 -- Tribune Company
(NYSE: TRB) today reported fourth quarter 2006 diluted earnings
per share from continuing operations of $.96 compared with
$.42 in the fourth quarter of 2005. For the full year 2006,
Tribune reported diluted earnings per share from continuing
operations of $2.39 compared with $1.63 in 2005.
Fourth quarter 2006 and 2005 results from continuing operations
included the following:
- A charge of $.02 per diluted share in the
2006 quarter for the elimination of approximately 400 positions,
compared with a charge of $.09 per diluted share in the
2005 quarter for the elimination of approximately 900 positions.
The position eliminations in both quarters were primarily
in the publishing group.
- A charge of $.01 per diluted share in the 2006 quarter
and a charge of $.04 per diluted share in the 2005 quarter
related to the shutdown of the Los Angeles Times San Fernando
Valley printing facility.
- A gain of $.02 per diluted
share in the 2006 quarter related to the sale of the corporate
airplane.
- 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 gain of $.29
per diluted share in the 2006 quarter, compared with a
net non-operating loss of $.04 per diluted share in the
2005 quarter.
Full year 2006 and 2005 results from continuing operations
included the following:
- A charge of $.04 per diluted share in 2006 for
severance and other payments associated with the new union
contracts at Newsday.
- A charge of $.02 per diluted share in 2006 for the
elimination of approximately 400 positions compared with
a charge of $.09 per diluted share in 2005 for the elimination
of approximately 900 positions. The position eliminations
in both years were primarily in the publishing group.
- A
charge of $.01 per diluted share in 2006 and a charge of
$.04 per diluted share in 2005 related to the shutdown
of the Los Angeles Times San Fernando Valley printing facility.
- A
gain of $.02 per diluted share in 2006 related to real
property sales in publishing.
- A gain of $.01 per
diluted share in 2006 related to the Company’s share
of a one-time favorable income tax adjustment recorded
at CareerBuilder.
- A gain of $.02 per diluted share
in 2006 related to the sale of the corporate airplane.
- 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 net non-operating gain of $.40 per diluted
share in 2006 compared with a net non-operating loss of
$.30 per diluted share in 2005.
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.
Tribune’s fourth quarter included
14 weeks in 2006 compared to 13 weeks in 2005. The full
year was comprised of 53 weeks in 2006 compared to 52 weeks
in 2005.
"We ended 2006 on a positive note with solid cash flow
performance in the fourth quarter. Key factors were improved
results in broadcasting, strong interactive revenue growth,
and excellent expense control throughout the company," said
Dennis FitzSimons, Tribune chairman, president and CEO. "Our
interactive businesses have shown continued growth and we
will build on that momentum. New revenue initiatives and
efficient operations will be top priorities in 2007."
In June 2006, the Company announced the sales of its Atlanta
and Albany television stations. The sale of the Atlanta station
closed in August 2006. In September 2006, the Company announced
an agreement to sell its Boston station. The sales of the
Albany and Boston stations closed in December 2006. The results
of operations for these stations are reported as discontinued
operations.
FOURTH QUARTER 2006
RESULTS FROM CONTINUING OPERATIONS1
(Compared to Fourth Quarter 2005)
(14 weeks in 2006 vs. 13 weeks in 2005)
CONSOLIDATED
For the fourth quarter of 2006, the additional week increased
consolidated fourth quarter operating revenues and cash expenses
by approximately 6 percent, operating cash flow by approximately
7 percent and operating profit by approximately 9 percent.
Tribune’s 2006 fourth quarter
operating revenues increased 5 percent, or $75 million,
to $1.5 billion. Consolidated cash operating expenses were
up 3 percent, or $27 million, which included $5 million
of stock-based compensation expense. In the fourth quarter
of 2006, cash operating expenses also included $7 million
of severance charges for the elimination of approximately
400 positions at publishing, a $4 million charge for the
disposition of a press from the Los Angeles Times San Fernando
Valley printing facility, and a $7 million gain from the
sale of the corporate airplane. 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 San Fernando Valley printing facility, and a pension
curtailment gain of $18 million. Depreciation and amortization
expense in the fourth quarter of 2005 included accelerated
depreciation of $16 million related to the shutdown of
the San Fernando Valley printing facility. Operating cash
flow was up 14 percent to $383 million from $335 million,
while operating profit increased 23 percent to $323 million
from $264 million.
PUBLISHING
For the fourth quarter of 2006, the additional week increased
fourth quarter advertising revenues, operating revenues and
cash expenses by approximately 6 percent, operating cash
flow by approximately 8 percent and operating profit by approximately
10 percent.
Publishing’s fourth quarter operating
revenues were $1.1 billion, up 4 percent, or $39
million. Publishing cash operating expenses were flat at
$840 million. Publishing operating cash flow was $271 million,
a 16 percent increase from $233 million in 2005. Publishing
operating profit increased 30 percent to $225 million,
up from $174 million in 2005.
Publishing’s operating profit
in the 2006 fourth quarter included $7 million of severance
charges for the elimination of approximately 400 positions
and a $4 million charge for the disposition of a press
from the Los Angeles Times San Fernando Valley printing
facility. Publishing operating profit in the 2005 fourth
quarter included $22 million of expenses related to the
shutdown of the 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.
Management Discussion
- Advertising revenues increased 4 percent, or
$33 million, for the quarter. Without the additional week
in 2006, advertising revenues were down 3 percent.
- Retail advertising revenues increased 7 percent
for the quarter primarily due to increases across all categories.
Preprint revenues increased 7 percent; excluding Newsday,
preprint revenues were up 9 percent.
- National
advertising revenues increased 3 percent for the quarter,
with increases in the movies, transportation and health
care categories, partially offset by decreases in the auto
and resorts categories.
- Classified advertising revenues
were flat for the quarter: real estate revenues rose
5 percent, offset by a 4 percent decline in help wanted
revenues and a 1 percent decline in auto revenues.
- Interactive
revenues, which are included in the above categories, were
up 31 percent to $61 million, mainly due to strength across
all classified categories.
- Circulation revenues
were up 1 percent, or $1.5 million, for the quarter. Excluding
the additional week in 2006, circulation revenues were down
6 percent.
- Individually paid circulation
(home delivery plus single copy) for Tribune’s
11 metro newspapers averaged 2.7 million copies daily
(Mon-Fri) and 4.1 million copies Sunday, down about
2 percent and 3 percent, respectively, from the fourth
quarter of 2005.
- Total net paid
circulation averaged 2.8 million copies daily (Mon-Fri),
off
5.7 percent from the prior year’s fourth quarter,
and 4.2 million copies Sunday, representing a decline
of 4.3 percent from 2005 as the Company continued to
reduce "other paid" circulation.
- Cash operating expenses
remained flat at $840 million as $3 million of stock-based
compensation expense in 2006 and incremental expenses as
a result of the additional week were offset by lower severance
charges and lower compensation expense due to staff reductions.
BROADCASTING AND ENTERTAINMENT
For the fourth quarter of 2006, the additional week increased
fourth quarter operating revenues, operating cash flow and
operating profit by approximately 5 percent and cash expenses
by approximately 6 percent.
Broadcasting and entertainment’s
fourth quarter operating revenues increased 11 percent
to $356 million, up from $320 million in 2005. Group cash
operating expenses were up 14 percent, or $28 million,
to $236 million. Operating cash flow was $119 million, up
7 percent from $112 million, while operating profit increased
7 percent to $106 million from $99 million in 2005.
Television’s fourth quarter revenues
increased 10 percent to $325 million, up from $296 million
in 2005. Television cash operating expenses were up 9 percent,
or
$16 million from last year. Television operating cash flow
was $119 million, a 12 percent increase from $106 million
in 2005. Television operating profit increased 13 percent
to
$107 million, up from $95 million.
Management Discussion
- Station revenues in Los Angeles, New York and
Chicago all showed improvement for the quarter. On a group
basis, gains in the political, movies, telecom and education
categories were partially offset by a decline in the retail
category.
- Television’s cash operating
expenses were up 9 percent, or $16 million, with broadcast
rights and compensation each up $6 million. The increase
in expenses was primarily due to the additional week.
- Radio/entertainment
revenues reflect higher revenues for the Chicago Cubs and
WGN Radio, partially offset by reduced revenues at Tribune
Entertainment. Fourth quarter cash operating expenses in
2006 reflect higher expenses at the Cubs and in 2005 included
a favorable $5.4 million litigation settlement at Tribune
Entertainment.
EQUITY RESULTS
Net equity income was $29 million in the fourth quarter
of 2006, compared with $21 million in the fourth quarter
of 2005. The increase reflects improvements at TV Food Network,
CareerBuilder and Classified Ventures.
NON-OPERATING ITEMS
In the 2006 fourth quarter, Tribune
recorded a pretax non-operating gain of $60 million, which
included a $45 million gain from marking-to-market the
derivative component of the Company’s
PHONES and the related Time Warner investment and a $17 million
gain from the sale of the Company’s investment in BrassRing.
In addition, the Company recorded a favorable $33 million
income tax expense adjustment, most of which related to the
Company’s PHONES as a result of reaching an agreement
with the Internal Revenue Service appeals office pertaining
to the deduction of interest expense on the PHONES. In the
aggregate, non-operating items in the 2006 fourth quarter
resulted in an after-tax gain of $69 million, or $.29 per
diluted share.
In the 2005 fourth quarter, Tribune
recorded a pretax non-operating loss of $20 million ($12
million after-tax, or $.04 per diluted share), primarily
from marking-to-market the derivative component of the
Company’s PHONES and the related Time Warner
investment.
FULL YEAR RESULTS FROM CONTINUING OPERATIONS
(53 weeks in 2006 vs. 52 weeks in 2005)
CONSOLIDATED
For the full year 2006, the additional week increased operating
revenues, cash expenses and operating cash flow by approximately
1.5 percent and operating profit by approximately 2 percent.
For 2006, operating revenues were flat at $5.5 billion.
Consolidated cash operating expenses increased 2 percent,
or $63 million, which included $32 million of stock-based
compensation expense. Operating cash flow was $1.3 billion,
down 4 percent from 2005, while operating profit declined
4 percent to $1.1 billion.
PUBLISHING
For the full year 2006, the additional week increased advertising
revenues, operating revenues, cash expenses, operating cash
flow and operating profit by approximately 2 percent.
For 2006, operating revenues for publishing decreased $4
million to $4.1 billion. Cash operating expenses for the
year increased 1 percent in 2006, or $23 million. Operating
cash flow decreased 3 percent to $923 million, from $951
million in 2005. Operating profit decreased 1 percent, or
$11 million, in 2006.
Publishing operating profit for the full year 2006 included
$9 million of severance charges for the elimination of approximately
400 positions, a $4 million charge for the disposition of
a press from the Los Angeles Times San Fernando Valley printing
facility, $20 million of severance and other payments associated
with the new union contracts at Newsday, and $7 million of
gains from sales of real properties. For the full year 2005,
publishing operating profit included a pretax charge of $22
million for the shutdown of the 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.
BROADCASTING AND ENTERTAINMENT
For the full year 2006, the additional week increased operating
revenues, cash expenses, operating cash flow and operating
profit by approximately 1 percent.
For 2006, full year operating revenues for
broadcasting and entertainment increased 1 percent to $1.43
billion, up from $1.41 billion in 2005. Cash operating expenses
increased 3 percent, or $33 million, in 2006. Operating cash
flow declined 5 percent to $443 million from $465 million.
Operating profit decreased 6 percent to $392 million, down
from $417 million.
For the full year 2006, operating revenues
for television increased 1 percent to
$1.18 billion, up from $1.17 billion in 2005. Cash operating
expenses increased
5 percent in 2006. Operating cash flow declined 6 percent
to $403 million from
$427 million. Operating profit decreased 7 percent to $358
million, from $383 million in 2005.
EQUITY RESULTS
Equity income was $81 million for the
full year 2006, compared with $41 million for the full
year 2005. The increase primarily reflects improvements
at TV Food Network, CareerBuilder and Classified Ventures,
as well as the absence of losses from The WB Network. In
addition, 2006 results included the Company’s
$6 million share of a one-time favorable income tax adjustment
at CareerBuilder.
NON-OPERATING ITEMS
For the full year 2006, Tribune recorded
a pretax non-operating gain of $103 million, which included
a $59 million gain from restructuring TMCT, LLC and TMCT
II, LLC, a $19 million gain on the sale of 2.8 million
shares of Time Warner stock unrelated to the PHONES, a
$17 million gain from the sale of the Company’s
investment in BrassRing, and an $11 million gain from marking-to-market
the derivative component of the Company’s PHONES and
the related Time Warner investment. In addition, the Company
recorded a favorable $34 million income tax expense adjustment,
most of which relates to the Company’s PHONES as a
result of reaching an agreement with the Internal Revenue
Service appeals office pertaining to the deduction of interest
expense on the PHONES. In the aggregate, non-operating items
for the 2006 year resulted in an after-tax gain of $110 million,
or $.40 per diluted share.
In 2005, Tribune recorded a pretax non-operating
gain of $70 million 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 for the 2005 year resulted
in an after-tax loss of $96 million, or $.30 per diluted
share.
ADDITIONAL FINANCIAL DETAILS
(Fourth Quarter and Full Year)
Corporate expenses for the 2006 fourth quarter
decreased to $8 million from
$9 million in the fourth quarter of 2005 and for the full
year 2006 increased 13 percent to $56 million from $49 million.
The fourth quarter and full year 2006 included a $7 million
gain related to the sale of the corporate airplane and $1
million and $11 million, respectively, of stock-based compensation
expense. The 2005 fourth quarter and full year included a
pension curtailment gain of $4 million as a result of the
Company’s replacement of certain defined benefit plans
with a defined contribution plan.
In conjunction with the leveraged recapitalization
initiated in May of last year, the Company acquired 45 million
shares of its common stock at a price of $32.50 per share
on July 5, 2006. The Company also acquired 10 million shares
of its common stock from the McCormick Tribune Foundation
and the Cantigny Foundation at a price of $32.50 per share
on July 12, 2006. Full year 2006 repurchases totaled 71 million
shares as Tribune repurchased in the open market 5 million
shares in the first quarter and 11 million shares in the
third quarter. Diluted weighted average shares outstanding
declined by 22 percent and 13 percent for the fourth quarter
and full year 2006, respectively, from the same periods in
2005.
Interest expense for the 2006 fourth quarter increased to
$94 million, up 103 percent from $46 million in the fourth
quarter of 2005. For the full year 2006, interest expense
increased 76 percent to $274 million, up from $155 million
in 2005. The increases in both periods were primarily due
to higher debt levels and interest rates. Debt, excluding
the PHONES, was $4.4 billion at the end of the 2006 fourth
quarter and $2.8 billion at the end of the 2005 fourth quarter.
The increase was largely due to financing the stock repurchases
in 2006.
Capital expenditures were $103 million for the fourth quarter
and $222 million for the full year 2006.
DETAILS OF CONFERENCE CALL
Today at 8 a.m., CT, management will host
a conference call to discuss fourth quarter 2006 results.
To access the call, dial 888/396-2384 (domestic) or 617/847-8711
(international) at least 10 minutes prior to the scheduled
8 a.m. start. The participant access code is 83643639. Replays
of the conference call will be available February 8 through
February 15. To hear the replay, dial 888/286-8010 (domestic)
or 617/801-6888 (international) and use access code 79892811.
A live webcast will be accessible through www.tribune.com and www.earnings.com. An archive of the webcast will be available
on these sites from February 8 through February 22.
More information about Tribune is available at www.tribune.com
or by calling 800/757-1694.
:: ::
::
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.
:: ::
::
TRIBUNE (NYSE: TRB) is one of
the country’s top media
companies, operating businesses in publishing, interactive
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’s leading daily
newspapers include the Los Angeles Times, Chicago Tribune,
Newsday (Long Island, NY), The Sun (Baltimore), South Florida
Sun-Sentinel, Orlando Sentinel and Hartford Courant. The
Company’s broadcasting group operates 23 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.
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-K
report to be filed with the SEC may contain updates to the
information included in this release. |
