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Tribune Reports 2007 Second Quarter Results
CHICAGO,
July 25, 2007 -- Tribune Company
(NYSE: TRB) today reported second quarter 2007 diluted earnings
per share from continuing operations of $.17 compared with
$.53 in the second quarter of 2006.
Second quarter 2007 results
from continuing operations included the following:
- A charge of $.08 per diluted share for the elimination
of approximately 450 positions at publishing and corporate.
- A charge of $.07 per diluted share for the write-off
of Los Angeles Times plant equipment related to the previously
closed San Fernando Valley facility.
- A net non-operating loss of $.15
per diluted share.
Second quarter 2006 results from continuing
operations included the following:
- A gain of $.01
per diluted share related to the Company’s
share of a one-time favorable income tax adjustment recorded
at CareerBuilder.
- A net non-operating loss 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.
"Our second quarter results reflect
the difficult advertising environment, although strong
cost controls partially offset revenue declines," said
Dennis FitzSimons, Tribune chairman,
president and chief executive officer. "Publishing
was impacted by soft print advertising and comparisons to
record real estate spending, particularly in Florida, in
2006. However,
second quarter interactive revenues increased 17 percent
over the same period last year. In television, the telecom
and entertainment categories showed growth. Demand was soft
across other categories and there was little political
spending versus last year. As we look
to Tribune’s second half, year-over-year comparisons
will ease and new revenue initiatives are expected to contribute
to publishing results. The launch of new CW and syndicated
shows will positively impact our television group."
"Our going-private transaction
is on track and the financing for it is fully committed,"
FitzSimons added. "We anticipate closing the transaction
in the fourth quarter, following
FCC approval, and expect to be in full compliance with
our credit agreements."
SECOND QUARTER 2007 RESULTS FROM CONTINUING OPERATIONS1
(Compared to Second Quarter 2006)
CONSOLIDATED
Tribune’s 2007 second quarter
operating revenues decreased 7 percent, or $95 million,
to $1.3 billion. Consolidated cash operating expenses were
up 1 percent, or $9 million, in the
second quarter of 2007 due to a charge of $28 million for
the elimination of approximately
450 positions at publishing and corporate and a charge
of $24 million for the write-off of
Los Angeles Times plant equipment related to the previously
closed San Fernando Valley
facility. All other cash operating expenses were down 4
percent, or $43 million.
Operating cash flow was down 29 percent
to $254 million from $359 million, while operating profit
declined 36 percent to $196 million from $304 million.
PUBLISHING
Publishing’s second quarter operating
revenues were $920 million, down 9 percent, or $95 million.
Publishing cash operating expenses increased $7 million,
or 1 percent, to $773 million. In the second quarter of
2007, publishing cash operating expenses included
a charge of $25 million for the elimination of approximately
440 positions and a charge of
$24 million for the write-off of Los Angeles Times plant
equipment related to the previously closed San Fernando Valley
facility. Publishing operating cash flow was $147 million,
a 41 percent decline from $250 million in 2006. Publishing
operating profit decreased 51 percent to $102 million, from
$208 million in 2006.
Management Discussion
- Advertising revenues decreased 11 percent, or
$91 million, for the quarter.
- Retail advertising revenues were down 5 percent for
the quarter, with the largest decreases at Los Angeles,
Newsday and South Florida. Preprint revenues decreased
4 percent for the quarter.
- National advertising revenues
were down 11 percent for the quarter, with declines
across most categories.
- Classified advertising revenues
declined 18 percent for the quarter, with the largest declines
at Los Angeles, South Florida and Orlando: real estate
revenues fell by 24 percent, help wanted revenues declined
16 percent and auto revenues were down 12 percent.
- Interactive revenues, which are included
in the above categories, were up 17 percent to $66 million,
mainly due to strength in the classified auto and real
estate categories.
- Circulation revenues were down 6 percent for the quarter.
- Individually paid circulation
(home delivery plus single copy) for Tribune’s 9 metro newspapers averaged 2.6
million copies daily (Mon-Fri), down 1.4 percent from the
prior year’s second quarter, and
3.9 million copies Sunday, down 3.6 percent from the
same reporting period in 2006.
- Total net paid circulation
averaged 2.7 million copies daily (Mon-Fri), off 2.9
percent from the prior year’s second quarter,
and 4.0 million copies Sunday, representing a decline
of 4.0 percent from the prior year as the Company continued
to reduce "other paid" circulation.
- Cash
operating expenses increased $7 million as the 2007 second
quarter included
a charge of $25 million for the elimination of approximately
440 positions and a charge of $24 million for the write-off
of Los Angeles Times plant equipment related to the previously
closed San Fernando Valley facility. All other cash expenses
were down 6 percent, or $42 million, primarily due to lower
compensation and newsprint expenses.
BROADCASTING AND ENTERTAINMENT
Broadcasting and entertainment’s
second quarter operating revenues were flat at $393 million.
Group cash operating expenses increased 1 percent, or $2
million, to $273 million. Operating cash flow was $120 million,
down 2 percent from $123 million, and operating profit decreased
2 percent to $108 million from $110 million in 2006.
Television’s second quarter operating
revenues decreased 7 percent to $287 million in 2007. Television
cash operating expenses were down 4 percent, or $8 million,
from last year. Television operating cash flow was $100 million,
down 12 percent from $115 million in 2006. Television operating
profit declined 14 percent to $89 million, down from $104
million.
Management Discussion
- Station revenues in Los Angeles and Chicago were
down for the quarter and
revenues in St. Louis were lower because KPLR no longer
carries Cardinals
baseball. New York showed improvement. On a group basis,
declines in the auto,
restaurant, financial and retail categories, as well as
the absence of political
advertising, were partially offset by gains in the telecom,
media and
entertainment/recreation categories.
- Television’s cash operating
expenses were down 4 percent, or $8 million, primarily
due to a decrease in broadcast rights.
- Radio/Entertainment
revenues and operating cash flow reflect more home games
for the Chicago Cubs compared to last year’s second
quarter.
EQUITY RESULTS
Net equity income was $29 million in
the second quarter of 2007, compared with $26 million in
the second quarter of 2006. The increase reflects improvements
at TV Food Network, Classified Ventures and Comcast SportsNet
Chicago. Net equity income in 2006 included the Company’s
$6 million share of a one-time favorable income tax adjustment
at CareerBuilder.
NON-OPERATING ITEMS
In the 2007 second
quarter, Tribune recorded a pretax non-operating loss of
$42 million. The major components included a $27 million
loss from marking-to-market the derivative component of the
Company’s PHONES and the related
Time Warner investment and $21 million of expenses related
to the leveraged ESOP and going-private transactions approved
by the Company’s board of directors on April 1, 2007.
In the aggregate, non-operating items in the 2007 second
quarter resulted in an after-tax loss of $30 million, or
$.15 per share.
In the 2006 second quarter, Tribune
recorded a pretax non-operating loss of $7 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 income tax adjustments of $4 million
as an increase in income tax expense. In the aggregate, nonoperating
items in the 2006 second quarter resulted in an after-tax
loss of $8 million, or $.03 per share.
ADDITIONAL FINANCIAL DETAILS
Corporate
expenses for the 2007 second quarter were $14 million, down
1 percent from the second quarter of 2006, and included a
$3 million charge for severance.
Diluted weighted average shares outstanding
declined by 32 percent from the second quarter of 2006 due
to stock repurchases in 2006 and 2007. The Company repurchased
126 million shares in June 2007 in connection with the Company’s
tender offer which expired on May 24, 2007.
Interest expense
for the 2007 second quarter increased to $116 million, up
145 percent from $47 million in the second quarter of 2006.
The increase in interest expense was due to higher debt levels
and interest rates. Debt, excluding the PHONES, was $8.6
billion at the end of the 2007 second quarter and $2.6 billion
at the end of the 2006 second quarter.
The increase was primarily
due to financing the stock repurchases in the second quarter
of 2007 and second half of 2006.
Capital expenditures were
$31 million in the second 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. The Company completed the
sale of the New York edition of Hoy on May 15, 2007. In March
2007, the Company announced its intention to sell its Southern
Connecticut Newspapers -- The
Advocate
(Stamford) and Greenwich Time (collectively "SCNI").
The Company expects to sell
SCNI during the second half of 2007. The results of operations
for both the New York
edition of Hoy and SCNI are reported as discontinued operations.
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.
:: :: ::
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.
:: :: ::
OTHER INFORMATION
Important Additional Information Regarding
the Merger has been filed with the SEC
In connection with our proposed merger between
a wholly-owned subsidiary of the
Tribune Employee Stock Ownership Trust and Tribune Company,
Tribune filed a definitive proxy statement with the Securities
and Exchange Commission (the "SEC") on July 13,
2007. BEFORE MAKING ANY VOTING DECISION WITH RESPECT TO THE
PROPOSED MERGER TRANSACTION, INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT BECAUSE
IT CONTAINS IMPORTANT INFORMATION. Investors and security
holders may obtain a free copy of the definitive proxy statement
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.
The Company and its directors
and executive officers may be deemed to be "participants" in
the solicitation of proxies from the shareholders of the
Company in connection with the proposed merger. 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 the Company and its directors and executive
officers in the merger, which may be different than those
of Tribune’s shareholders generally, by reading the
definitive proxy statement and other relevant documents regarding
the merger, which have been filed with the SEC.
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 and 10-Q 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 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.
:: :: ::
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, N.Y.), 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. |
