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Tribune Reports 2007 First Quarter Results
CHICAGO,
April 19, 2007 -- Tribune Company
(NYSE: TRB) today reported first quarter 2007 diluted earnings
per share from continuing operations of $.08 compared with
$.32 in the first quarter of 2006.
First quarter 2007 results from continuing operations included
the following:
- A net non-operating loss of $.20 per diluted
share.
First quarter 2006 results from continuing operations included
the following:
- A charge of $.04 per diluted share for severance
and other payments associated with the new union contracts
at Newsday.
- A net non-operating loss of $.02 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.
"The print advertising environment was
challenging in the first quarter due to softness in classified
categories," said
Dennis FitzSimons, Tribune chairman, president and chief
executive officer. "Our interactive division continues
to generate significant growth and our newspapers continue
to innovate -- the Los Angeles Times launched new travel
and fashion sections and RedEye will add a weekend edition
in May. In broadcasting, revenue improvements in primetime
helped offset weaker market conditions due in part to the
absence of political spending versus last year."
FIRST QUARTER 2007 RESULTS FROM CONTINUING
OPERATIONS 1
(Compared to First Quarter 2006)
CONSOLIDATED
Tribune’s 2007 first quarter operating
revenues decreased 4 percent, or $55 million, to $1.2 billion.
Consolidated cash operating expenses were down 2 percent,
or $22 million. In the first quarter of 2006, cash operating
expenses included a charge of $19 million associated with
the new union contracts at Newsday. Operating cash flow
was down 12 percent to $238 million from $271 million,
while operating profit declined 16 percent to $181 million
from $217 million.
PUBLISHING
Publishing’s first quarter operating
revenues were $931 million, down 5 percent, or $54
million. Publishing cash operating expenses decreased $26
million, or 3 percent, to $748 million, in part due to
the charge of $19 million in 2006 associated with the new
union contracts at Newsday. Publishing operating cash flow
was $184 million, a 13 percent decline from $212 million
in 2006. Publishing operating profit decreased 18 percent
to $140 million, from $170 million in 2006.
Management Discussion
- Advertising revenues decreased 6 percent, or
$47 million, for the quarter.
- Retail advertising
revenues were down 1 percent for the quarter. Increases
at Chicago and South Florida were more than offset by decreases
at Newsday and Los Angeles. Preprint revenues increased
2 percent for the quarter.
- National advertising
revenues were down 2 percent for the quarter, with declines
across most categories.
- Classified advertising
revenues declined 14 percent for the quarter, with the
largest declines at South Florida and Orlando: real estate
revenues fell by 15 percent, help wanted revenues declined
14 percent and auto revenues were down 16 percent.
- Interactive
revenues, which are included in the above categories, were
up
17 percent to $60 million, mainly due to strength in the
classified auto and real estate categories.
- Circulation
revenues were down 7 percent for the quarter.
- Individually
paid circulation (home delivery plus single copy) for
Tribune’s
9 metro newspapers averaged 2.8 million copies daily
(Mon-Fri), flat from the prior year’s
first quarter, and 4.0 million copies Sunday, down
about 3 percent from the same reporting period in 2006.
- Total
net paid circulation averaged 2.9 million copies daily
(Mon-Fri), off
2 percent from the prior year’s first quarter,
and 4.1 million copies Sunday, representing a decline
of 4 percent from the prior year as the Company continued
to reduce "other
paid" circulation.
- Cash operating expenses
decreased $26 million due in part to the previously discussed
$19 million charge related to the Newsday union contracts
in 2006, partially offset by a $2 million gain on real
property sales in 2006. All other cash expenses were down
$9 million as decreases in newsprint, compensation and
promotion expenses were partially offset by increases in
mailed preprint advertising postage and outside services
expense.
BROADCASTING AND ENTERTAINMENT
Broadcasting and entertainment’s
first quarter operating revenues decreased slightly to
$283 million, from $284 million in 2006. Group cash operating
expenses increased 2 percent, or $4 million, to $209 million.
Operating cash flow was $74 million, down
7 percent from $80 million, and operating profit decreased
9 percent to $61 million from $67 million in 2006.
Television’s first quarter revenues
decreased 1 percent to $264 million in 2007. Television
cash operating expenses were up 2 percent, or $4 million
from last year. Television operating cash flow was $78
million, down 6 percent from $83 million in 2006. Television
operating profit declined 8 percent to $67 million, down
from $73 million.
Management Discussion
- Station revenues in New York, Los Angeles and
Chicago all showed improvements for the quarter. On a group
basis, declines in the auto, retail and movie categories
were partially offset by gains in the telecom, entertainment/recreation
and packaged goods categories.
- Television’s
cash operating expenses were up 2 percent, or $4 million,
primarily due to higher compensation expense, partially
offset by a decrease in broadcast rights.
EQUITY RESULTS
Net equity income was $13 million in the first
quarter of 2007, compared with
$7 million in the first quarter of 2006. The increase reflects
improvements at TV Food Network and CareerBuilder.
NON-OPERATING ITEMS
In the 2007 first quarter, Tribune recorded
a pretax non-operating loss of $76 million ($49 million
after-tax), of which $70 million related to marking-to-market
the derivative component of the Company’s PHONES
and the related Time Warner investment.
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.
ADDITIONAL FINANCIAL DETAILS
Corporate expenses for the 2007 first quarter were $20 million,
down 4% from the first quarter of 2006.
Diluted weighted average shares outstanding declined by
21 percent from the first quarter of 2006 due to the stock
repurchases in 2006.
Interest expense for the 2007 first quarter increased to
$83 million, up 71 percent from $49 million in the first
quarter of 2006. The increase in interest expense was due
to higher debt levels and interest rates. Debt, excluding
the PHONES, was $4.3 billion at the end of the 2007 first
quarter and $2.8 billion at the end of the 2006 first quarter.
The increase was primarily due to financing the stock repurchases
in 2006.
Capital expenditures were $21 million in the first quarter
of 2007.
DISCONTINUED OPERATIONS
On February 12, 2007, the Company announced
an agreement to sell the New York edition of Hoy, the Company’s
Spanish-language daily newspaper. On March 6, 2007, the Company
announced an agreement to sell its Southern Connecticut Newspapers
-- the Advocate (Stamford) and Greenwich Time (collectively
"SCNI") for $73 million. The sales of these business units
are expected to close in the second quarter of 2007. The
assets and liabilities of these business units are now
classified as held for sale and their results of operations
are reported as discontinued operations. In the first quarter
of 2007, the Company recorded an after-tax loss of $33
million to write down the SCNI net assets to estimated
fair value, less costs to sell. The Company expects to
record a pretax gain on the sale of the New York edition
of Hoy when the sale closes.
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 in 2006 are reported as
discontinued operations.
CONFERENCE CALL
As a result of Tribune’s April
2nd announcement of its going-private transaction, the
Company will not hold a first quarter earnings conference
call or webcast.
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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.
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Important Additional Information Regarding the Merger and
the Tender Offer will be filed with the SEC:
In connection with our proposed
merger transaction, Tribune Company will file a proxy statement
and other documents with the Securities and Exchange Commission
(the “SEC”).
BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE PROPOSED
MERGER TRANSACTION, INVESTORS AND SECURITY HOLDERS ARE URGED
TO READ THE PROXY STATEMENT AND OTHER RELEVANT MATERIALS
WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders may obtain a
free copy of the proxy statement (when available) and other
documents filed by Tribune with the SEC at the SEC’s
website at http://www.sec.gov. The definitive proxy statement
and other relevant documents may also be obtained free of
charge on Tribune’s website at www.tribune.com or by
directing a request to Tribune Company, 435 North Michigan
Avenue, Chicago, IL 60611, Attention: Investor Relations.
You may also read and copy any reports, statements and other
information filed by Tribune with the SEC at the SEC public
reference room at 450 Fifth Street, N.W. Room 1200, Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit
the SEC’s website for further information on its public
reference room.
Tribune Company and its directors
and executive officers may be deemed to be “participants” in the solicitation
of proxies from the shareholders of Tribune in connection
with the proposed merger transaction. Information about Tribune
and its directors and executive officers and their ownership
of Tribune common stock is set forth in the proxy statement
for Tribune’s Annual Meeting of Shareholders, which
Tribune filed with the SEC on April 6, 2007. Shareholders
and investors may obtain additional information regarding
the interests of Tribune Company and its directors and executive
officers in the merger transaction, which may be different
than those of Tribune’s shareholders generally, by
reading the proxy statement and other relevant documents
regarding the merger transaction, which will be filed with
the SEC.
This press release is for informational purposes only and
is not an offer to buy or the solicitation of an offer to
sell any shares of Tribune's common stock. The solicitation
of offers to buy Tribune's common stock will only be made
pursuant to the offer to purchase and related materials that
the Company will be sending to its shareholders (when available).
Shareholders should read those materials carefully (when
available) because they will contain important information,
including the various terms and conditions of the offer.
Shareholders will be able to obtain copies of the offer to
purchase, related materials filed by the Company as part
of the statement on Schedule TO and other documents when
filed with the SEC through the SEC's internet address at
http://www.sec.gov without charge. Shareholders will also
be able to obtain copies of the offer to purchase and related
materials, when and as filed with the SEC (excluding exhibits),
without charge from the Company or by written or oral request
directed to the information agent identified in the offer
to purchase.
Forward-Looking Statements
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. You can identify
these and other forward-looking statements by the use of
such words as "will," "expect," "plans," "believes," "estimates," "intend," "continue," or
the negative of such terms, or other comparable terminology.
Forward-looking statements also include the assumptions underlying
or relating to any of the foregoing statements. Actual results
could differ materially from the expectations expressed in
these statements. Factors that could cause actual results
to differ include risks related to the transactions being
consummated; the risk that required regulatory approvals
or financing might not be obtained in a timely manner, without
conditions, or at all; the impact of the substantial indebtedness
incurred to finance the consummation of the tender offer
and the merger; the ability to satisfy all closing conditions
in the definitive agreements; difficulties in retaining employees
as a result of the merger agreement; risks of unforeseen
material adverse changes to our business or operations; risks
that the proposed transaction disrupts current plans, operations,
and business growth initiatives; the risk associated with
the outcome of any legal proceedings that may be instituted
against Tribune and others following announcement of the
merger agreement; and other factors described in Tribune’s
publicly available reports filed with the SEC, including
the most current annual 10-K report, which contain a discussion
of various factors that may affect Tribune's business or
financial results. These factors, including also the ability
to complete the tender offer or the merger, could cause actual
future performance to differ materially from current expectations.
Tribune 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. Tribune's next quarterly 10-Q report
to be filed with the SEC may contain updates to the information
included in this release.
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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. |
