Broadcasting and entertainment’s fourth quarter operating revenues remained essentially flat at $385 million versus $386 million in 2003. Cash operating expenses were up 3 percent in the fourth quarter of 2004. Operating cash flow was $162 million, down 5 percent from $170 million in 2003. Operating profit declined 4 percent to $149 million from $156 million last year.
Television’s fourth quarter revenues were $352 million compared with $353 million in the fourth quarter of 2003. Television cash operating expenses were up 1 percent from last year. Television operating cash flow was $158 million, a 2 percent decrease from $161 million in the fourth quarter of 2003. Television operating profit in the fourth quarter of 2004 was down 1 percent to $147 million compared with $148 million last year.
Net equity income was $20 million in the fourth quarter of 2004, compared with net equity income of $12 million in the fourth quarter of 2003. The increase was primarily due to additional equity income from TV Food Network and the recognition of equity income from Comcast Sports Network.
In the 2004 fourth quarter, Tribune recorded a net after-tax non-operating gain of $18 million, or $.06 per diluted share, primarily from marking-to-market the Company’s PHONES derivatives and related Time Warner investment. In the 2003 fourth quarter, Tribune recorded a net after-tax non-operating gain of $114 million, or $.34 per diluted share. Non-operating items in the fourth quarter of 2003 included gains from the sale of the Company’s ownership interest in The Golf Channel, marking-to-market the Company’s PHONES derivatives and related Time Warner investment, and insurance recoveries related to the Sept. 11, 2001 damage sustained by WPIX-TV in New York.
IMPACT OF ACCOUNTING CHANGE
In the fourth quarter of 2004, Tribune elected to early adopt the provisions of the Financial Accounting Standards Board’s Emerging Issues Task Force Topic No. D-108, which requires the use of a direct valuation method for valuing intangible assets such as Federal Communication Commission (“FCC”) licenses and reviewing them for impairment. Historically, Tribune had been using a residual valuation method to review its FCC licenses each year for impairment. The effect of this change was a one-time pretax charge of $29 million ($18 million after-tax, or $.05 per diluted share). The charge was recorded in the fourth quarter of 2004 as a cumulative effect of a change in accounting principle in the consolidated income statement.
FULL YEAR RESULTS
CONSOLIDATED
For the full year 2004, operating revenues increased 2 percent to $5.7 billion, up from $5.6 billion in 2003. Consolidated cash operating expenses were up 7 percent; 3 percentage points, or $131 million, of the increase is attributable to the position eliminations and estimated advertiser settlement charges in publishing discussed below. Operating cash flow was $1.45 billion, a 9 percent decrease compared with the $1.59 billion reported in 2003. Operating profit was down 11 percent to $1.2 billion, from $1.4 billion last year.
PUBLISHING
For the full year 2004, operating revenues for publishing increased 2 percent to $4.1 billion, up from $4.0 billion in 2003. Cash operating expenses increased 8 percent in 2004; 4 percentage points, or $131 million, of the increase is attributable to the charges discussed below. Operating cash flow declined 15 percent to $905 million, from $1.1 billion in 2003. Operating profit decreased 18 percent to $726 million from $885 million in 2003.
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 atNewsday andHoy, New York, for the periods September 2001 through March 2004. The Company will continue to evaluate the adequacy of this charge. The full year 2004 also included a pretax charge of $41 million for the elimination of about 600 positions. These position eliminations will result in annual compensation expense savings of approximately $41 million for the full year 2005.
BROADCASTING AND ENTERTAINMENT
For the full year 2004, operating revenues for broadcasting and entertainment increased 3 percent to $1.60 billion,up from $1.56 billion in 2003. Cash operating expenses increased 2 percent in 2004. Operating cash flow rose 3 percent to $597 million from $579 million. Operating profit increased 3 percent to $544 million, from $529 million.
4
For the full year 2004, operating revenues for television increased 2 percent to $1.35 billion,up from $1.32 billion in 2003. Cash operating expenses increased 1 percent in 2004. Operating cash flow grew 4 percent to $573 million from $552 million. Operating profit increased 4 percent to $526 million, from $507 million in 2003.
EQUITY RESULTS
Equity income was $18 million for the full year 2004, compared with $6 million in 2003. The increase was primarily due to additional equity income from TV Food Network.
ADDITIONAL FINANCIAL DETAILS
Corporate expenses for the 2004 fourth quarter decreased 10 percent to $14 million from $16 million in the fourth quarter of 2003, primarily due to lower compensation expense. Corporate expenses for the full year 2004 decreased 2 percent to $52 million from $53 million.
Net interest expense for the 2004 fourth quarter decreased to $35 million, down 26 percent from $47 million in the fourth quarter of 2003. For the full year 2004, net interest expense decreased 22 percent to $150 million, down from $192 million in 2003. The decreases were primarily due to the retirement of higher interest rate debt, which was replaced with commercial paper in the second quarter of 2004. Debt, excluding the PHONES, remained flat at $2.0 billion at the end of 2004 and 2003.
The effective tax rate in the 2004 fourth quarter was 38.7 percent, compared with 33.8 percent in the 2003 fourth quarter. The effective tax rate for the full year 2004 was 39.1 percent, compared with a rate of 37.0 percent for the full year 2003. In both the fourth quarter and full year of 2003, the Company reduced its income tax expense and liabilities by $25 million as a result of favorably resolving certain state and federal income tax issues.
Capital expenditures were about $95 million in the fourth quarter and $217 million for the full year 2004.
2005 FINANCIAL ASSUMPTIONS
Consolidated revenues will continue to be impacted by many factors, including changes in national and local economic conditions, job creation, circulation levels and audience share. As a result of this limited visibility, the Company said in December that it would not be providing revenue guidance for 2005; investors are encouraged to review the Company’s monthly revenue releases for current trends.
Consolidated cash operating expenses are expected to decline in 2005 due to the absence of the $90 million advertising settlement charge and the $41 million of position elimination costs. Other consolidated cash operating expenses are expected to be up about 2 percent for 2005 due to higher expenses for retirement and medical plans and newsprint along with a slight increase in broadcast rights expense. Net equity income is projected to be somewhat higher than 2004. Interest expense is expected to be somewhat below 2004 due
5
to the full year impact of the debt refinancing in the second quarter of 2004. The effective income tax rate for 2005 is expected to be approximately 39%. Capital expenditures are projected to increase slightly over 2004.
WEBCAST OF CONFERENCE CALL
Today at 8:00 a.m. (CDT), a live Webcast of the 2004 fourth quarter conference call will be accessible through www.tribune.com and www.ccbn.com. An archive of the Webcast will be available on these sites from January 28 through February 4. More information about Tribune is available at www.tribune.com or by calling 800/757-1694.
TRIBUNE (NYSE: TRB) is one of the country’s premier 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 theLos Angeles Times,Chicago Tribune and Newsday, plus a wide range of targeted publications including Spanish-languageHoy. The Company’s broadcasting group operates 26 television stations; Superstation WGN on national cable; WGN-AM in Chicago; 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.
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. Information relating to the estimated cost of settlement withNewsday andHoy, New York, advertisers is based on facts currently available. 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.
MEDIA CONTACT:
Gary Weitman
312/222-3394 (Office)
312/222-1573 (Fax)
gweitman@tribune.com | INVESTOR CONTACT:
Ruthellyn Musil
312/222-3787 (Office)
312/222-1573 (Fax)
rmusil@tribune.com |
6
TRIBUNE COMPANY
FOURTH QUARTER RESULTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
| FOURTH QUARTER (A)
| |
|---|
| 2004
| | 2003
| | %
Change
|
|---|
| OPERATING REVENUES | | $ 1,484,148 | | $ 1,469,633 | | 1.0 | |
| OPERATING EXPENSES (B) | | 1,115,545 | | 1,069,250 | | 4.3 | |
|
| |
| |
| OPERATING PROFIT (C) | | 368,603 | | 400,383 | | (7.9 | ) |
| | | |
| Net Income on Equity Investments | | 19,505 | | 12,285 | | 58.8 | |
| Interest Income | | 483 | | 974 | | (50.4 | ) |
| Interest Expense | | (35,062 | ) | (47,850 | ) | (26.7 | ) |
| Non-Operating Items (D) | | 29,403 | | 145,750 | | (79.8 | ) |
|
| |
| |
| | | |
| Income Before Income Taxes and Cumulative Effect of Change | |
| in Accounting Principle | | 382,932 | | 511,542 | | (25.1 | ) |
| | | |
| Income Taxes | | (148,330 | ) | (173,129 | ) | (14.3 | ) |
|
| |
| |
| | | |
| Income Before Cumulative Effect of Change in Accounting Principle | | 234,602 | | 338,413 | | (30.7 | ) |
| | | |
| Cumulative Effect of Change in Accounting Principle, net of tax (E) | | (17,788 | ) | – | | NM | |
|
| |
| |
| | | |
| NET INCOME | | 216,814 | | 338,413 | | (35.9 | ) |
| | | |
| Preferred Dividends, net of tax | | (2,077 | ) | (5,991 | ) | (65.3 | ) |
|
| |
| |
| Net Income Attributable to Common Shares | | $ 214,737 | | $ 332,422 | | (35.4 | ) |
|
| |
| |
| | | |
| EARNINGS PER SHARE | |
| Basic: | |
| Before cumulative effect of change in accounting principle, net | | $ .73 | | $ 1.06 | | (31.1 | ) |
| Cumulative effect of change in accounting principle, net | | (.05 | ) | – | | NM | |
|
| |
| |
| Total | | $ .68 | | $ 1.06 | | (35.8 | ) |
|
| |
| |
| | | |
| Diluted: | |
| Before cumulative effect of change in accounting principle, net | | $ .72 | | $ 1.00 | | (28.0 | ) |
| Cumulative effect of change in accounting principle, net | | (.05 | ) | – | | NM | |
|
| |
| |
| Total (F) | | $ .67 | | $ 1.00 | | (33.0 | ) |
|
| |
| |
| | | |
| DIVIDENDS PER COMMON SHARE | | $ .12 | | $ .11 | | 9.1 | |
|
| |
| |
| | | |
| Diluted Weighted Average Common Shares Outstanding (G) | | 321,411 | | 336,085 | | (4.4 | ) |
|
| |
| |
7
| (A) | | 2004 fourth quarter: Sept. 27, 2004 to Dec. 26, 2004. (13 weeks)
2003 fourth quarter: Sept. 29, 2003 to Dec. 28, 2003. (13 weeks) |
| (B) | | Operating expenses for 2004 include a charge of $24 million, or $.05 per diluted share, related to the elimination of approximately 230 positions in the publishing group. |
| (C) | | Operating profit excludes interest income and expense, equity earnings and losses, non-operating items and income taxes. |
| (D) | | The fourth quarter of 2004 included the following non-operating items: |
| Pretax
Gain
| | After-tax
Gain
| | Diluted EPS
|
|---|
| Gain on derivatives and related investments (1) | | $27,614 | | $16,844 | | $ .06 | |
| Gain on sales of subsidiaries and investments, net | | 1,711 | | 1,044 | | – | |
| Other, net | | 78 | | 48 | | – | |
|
| |
| |
| |
| Total non-operating items | | $29,403 | | $17,936 | | $ .06 | |
|
| |
| |
| |
| | The fourth quarter of 2003 included the following non-operating items: |
| Pretax
Gain (Loss)
| | After-tax
Gain (Loss)
| | Diluted EPS
|
|---|
| Gain on derivatives and related investments (1) | | $ 42,609 | | $ 26,077 | | $ .08 | |
| Gain on sales of investments, net (2) | | 85,725 | | 52,463 | | .16 | |
| Loss on investment write-downs | | (1,515 | ) | (927 | ) | – | |
| Gain on insurance recoveries (3) | | 22,291 | | 13,642 | | .04 | |
| Other, net | | (3,360 | ) | (2,056 | ) | (.01 | ) |
| Income tax settlement adjustments (4) | | – | | 25,034 | | .07 | |
|
| |
| |
| |
| Total non-operating items | | $ 145,750 | | $ 114,233 | | $ .34 | |
|
| |
| |
| |
| (1) | | Gain on derivatives and related investments represents the net change in fair values of the Company’s PHONES derivatives and related Time Warner shares. |
| (2) | | For the fourth quarter of 2003, gain on sales of investments relates primarily to the divestiture of the Company’s investment in The Golf Channel. |
| (3) | | In the fourth quarter of 2003, the Company recorded a pretax gain of $22 million as a result of settling the business interruption and property damage insurance claims filed by WPIX-TV, New York, as a result of the events of Sept. 11, 2001. |
| (4) | | In the fourth quarter of 2003, the Company reduced its income tax expense and liabilities by a total of $25 million as a result of favorably resolving certain state and federal income tax issues. |
| (E) | | As a result of adopting the provisions of the Financial Accounting Standards Board’s Emerging Issues Task Force Topic No. D-108, which requires the use of a direct valuation method for intangible assets such as FCC licenses, the Company recorded a one-time pretax charge of $29 million ($18 million after tax, or $.05 per diluted share) in the fourth quarter of 2004 as a cumulative effect of a change in accounting principle in the consolidated income statement. |
8
| (F) | | For the fourth quarter of 2003, diluted EPS was computed assuming that the Series B, C, D-1 and D-2 convertible preferred shares were converted into common shares. The Series B convertible preferred shares were converted into 15.4 million shares of common stock on Dec. 16, 2003. Also, for both years, weighted average common shares outstanding was adjusted for the dilutive effect of stock options. In 2004, the Series C, D-1 and D-2 convertible preferred shares were not included in the calculation of diluted EPS because their effects were antidilutive. Following are the calculations for the fourth quarter: |
| Fourth Quarter
| |
|---|
| 2004
| | 2003
|
|---|
| Net income | | $ 216,814 | | $ 338,413 | |
| Additional ESOP contribution required assuming Series B | |
| preferred shares were converted, net of tax | | – | | (1,865 | ) |
| Dividends for Series C, D-1 and D-2 preferred stock | | (2,077 | ) | – | |
|
| |
| |
| Adjusted net income | | $ 214,737 | | $ 336,548 | |
|
| |
| |
| Weighted average common shares outstanding | | 317,715 | | 314,606 | |
| Assumed conversion of Series B preferred shares into common | | – | | 12,768 | |
| Assumed conversion of Series C, D-1 and D-2 preferred shares | |
| into common | | – | | 2,209 | |
| Assumed exercise of stock options, net of common | |
| shares assumed repurchased | | 3,696 | | 6,502 | |
|
| |
| |
| Adjusted weighted average common | |
| shares outstanding | | 321,411 | | 336,085 | |
|
| |
| |
| Diluted earnings per share | | $ .67 | | $ 1.00 | |
|
| |
| |
| (G) | | The number of common shares outstanding, in thousands, at Dec. 26, 2004 was 317,073. |
9
TRIBUNE COMPANY
FULL YEAR RESULTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
| FULL YEAR (A)
| |
|---|
| 2004
| | 2003
| | %
Change
|
|---|
| OPERATING REVENUES | | $ 5,726,247 | | $ 5,594,829 | | 2.3 | |
| OPERATING EXPENSES (B) | | 4,507,958 | | 4,234,355 | | 6.5 | |
|
| |
| |
| | | |
| OPERATING PROFIT (C) | | 1,218,289 | | 1,360,474 | | (10.5 | ) |
| | | |
| Net Income on Equity Investments | | 17,931 | | 5,590 | | NM | |
| Interest Income | | 3,053 | | 6,048 | | (49.5 | ) |
| Interest Expense | | (153,118 | ) | (198,123 | ) | (22.7 | ) |
| Non-Operating Items (D) | | (145,044 | ) | 241,247 | | NM | |
|
| |
| |
| | | |
| Income Before Income Taxes and Cumulative Effect of Change | |
| in Accounting Principle | | 941,111 | | 1,415,236 | | (33.5 | ) |
| | | |
| Income Taxes | | (367,787 | ) | (523,857 | ) | (29.8 | ) |
|
| |
| |
| | | |
| Income Before Cumulative Effect of Change in Accounting Principle | | 573,324 | | 891,379 | | (35.7 | ) |
| | | |
| Cumulative Effect of Change in Accounting Principle, net of tax (E) | | (17,788 | ) | – | | NM | |
|
| |
| |
| | | |
| NET INCOME | | 555,536 | | 891,379 | | (37.7 | ) |
| | | |
| Preferred Dividends, net of tax | | (8,308 | ) | (24,441 | ) | (66.0 | ) |
|
| |
| |
| | | |
| Net Income Attributable to Common Shares | | $ 547,228 | | $ 866,938 | | (36.9 | ) |
|
| |
| |
| | | |
| EARNINGS PER SHARE | |
| Basic: | |
| Before cumulative effect of change in accounting principle, net | | $ 1.75 | | $ 2.78 | | (37.1 | ) |
| Cumulative effect of change in accounting principle, net | | (.05 | ) | – | | NM | |
|
| |
| |
| Total | | $ 1.70 | | $ 2.78 | | (38.8 | ) |
|
| |
| |
| | | |
| Diluted: | |
| Before cumulative effect of change in accounting principle, net | | $ 1.72 | | $ 2.61 | | (34.1 | ) |
| Cumulative effect of change in accounting principle, net | | (.05 | ) | – | | NM | |
|
| |
| |
| Total (F) | | $ 1.67 | | $ 2.61 | | (36.0 | ) |
|
| |
| |
| | | |
| DIVIDENDS PER COMMON SHARE | | $ .48 | | $ .44 | | 9.1 | |
|
| |
| |
| | | |
| Diluted Weighted Average Common Shares Outstanding (G) | | 327,237 | | 336,243 | | (2.7 | ) |
|
| |
| |
10
| (A) | | 2004 full year: Dec. 29, 2003 to Dec. 26, 2004. (52 weeks)
2003 full year: Dec. 30, 2002 to Dec. 28, 2003. (52 weeks) |
| (B) | | Operating expenses for 2004 include a charge of $41 million, or $.07 per diluted share, for the elimination of approximately 600 positions in the publishing group and a charge of $90 million, or $.17 per diluted share, related to the anticipated settlement with advertisers regarding misstated circulation atNewsday andHoy, New York. |
| (C) | | Operating profit excludes interest income and expense, equity earnings and losses, non-operating items and income taxes. |
| (D) | | The full year 2004 included the following non-operating items: |
| Pretax
Gain (Loss)
| | After-tax
Gain (Loss)
| | Diluted EPS
|
|---|
| Loss on derivatives and related investments (1) | | $ (18,497 | ) | $(11,283 | ) | $ (.03 | ) |
| Loss on early debt retirement (2) | | (140,506 | ) | (87,549 | ) | (.26 | ) |
| Gain on sales of subsidiaries and investments, net (3) | | 20,347 | | 12,412 | | .03 | |
| Loss on investment write-downs and other, net | | (6,388 | ) | (3,897 | ) | (.02 | ) |
|
| |
| |
| |
| Total non-operating items | | $(145,044 | ) | $(90,317 | ) | $ (.28 | ) |
|
| |
| |
| |
| | The full year 2003 included the following non-operating items: |
| Pretax
Gain (Loss)
| | After-tax
Gain (Loss)
| | Diluted EPS
|
|---|
| Gain on derivatives and related investments (1) | | $ 84,066 | | $ 51,448 | | $ .16 | |
| Gain on sales of subsidiaries and investments, net (3) | | 147,507 | | 90,261 | | .27 | |
| Loss on investment write-downs | | (9,764 | ) | (5,976 | ) | (.01 | ) |
| Gain on insurance recoveries (4) | | 22,291 | | 13,642 | | .04 | |
| Other, net | | (2,853 | ) | (1,746 | ) | (.01 | ) |
| Income tax settlement adjustments (5) | | – | | 25,034 | | .07 | |
|
| |
| |
| |
| Total non-operating items | | $ 241,247 | | $ 172,663 | | $ .52 | |
|
| |
| |
| |
| (1) | | Gain (loss) on derivatives and related investments represents the net change in fair values of the Company’s PHONES derivatives and related Time Warner shares. |
| (2) | | Loss on early debt retirement relates to the retirement of $620 million of debt in the second quarter of 2004 at a cash premium of $137 million. |
| (3) | | In 2004, gain on sales of subsidiaries and investments relates primarily to the sale of the Company’s 50% interest inLa Opinion. In 2003, gain on sales of subsidiaries and investments relates primarily to the sale of the Company’s investment in The Golf Channel and the divestiture of the assets of Denver radio station KKHK-FM, now known as KQMT-FM, which were exchanged for the assets of KWBP-TV, Portland, Ore. |
| (4) | | In 2003, the Company recorded a pretax gain of $22 million as a result of settling the business interruption and property damage insurance claims filed by WPIX-TV, New York, as a result of the events of Sept. 11, 2001. |
| (5) | | In 2003, the Company reduced its income tax expense and liabilities by a total of $25 million as a result of favorably resolving certain state and federal income tax issues. |
| (E) | | As a result of adopting the provisions of the Financial Accounting Standards Board’s Emerging Issues Task Force Topic No. D-108, which requires the use of a direct valuation method for intangible assets such as FCC licenses, the Company recorded a one-time pretax charge of $29 million ($18 million after tax, or $.05 per diluted share) in the fourth quarter of 2004 as a cumulative effect of a change in accounting principle in the consolidated income statement. |
11
| (F) | | For the full year 2003, diluted EPS was computed assuming that the Series B convertible preferred shares and the LYONs debt securities were converted into common shares. The Series B convertible preferred shares were converted into 15.4 million shares of common stock on Dec. 16, 2003 and the LYONs were converted into approximately seven million shares of common stock during June 2003. Also, for both years, weighted average common shares outstanding was adjusted for the dilutive effect of stock options. The Series C, D-1 and D-2 convertible preferred shares were not included in the calculation of diluted EPS because their effects were antidilutive. Following are the calculations for the full year: |
| Full Year
| |
|---|
| 2004
| | 2003
|
|---|
| Net income | | $ 555,536 | | $ 891,379 | |
| Additional ESOP contribution required assuming Series B | |
| preferred shares were converted, net of tax | | – | | (9,100 | ) |
| Dividends for Series C, D-1 and D-2 preferred stock | | (8,308 | ) | (8,252 | ) |
| LYONs interest expense, net of tax | | – | | 2,884 | |
|
| |
| |
| Adjusted net income | | $ 547,228 | | $ 876,911 | |
|
| |
| |
| Weighted average common shares outstanding | | 322,420 | | 311,295 | |
| Assumed conversion of Series B preferred shares into common | | – | | 15,171 | |
| Assumed exercise of stock options, net of common | |
| shares assumed repurchased | | 4,817 | | 6,565 | |
| Assumed conversion of LYONs debt securities | | – | | 3,212 | |
|
| |
| |
| Adjusted weighted average common | |
| shares outstanding | | 327,237 | | 336,243 | |
|
| |
| |
| Diluted earnings per share | | $ 1.67 | | $ 2.61 | |
|
| |
| |
(G) The number of common shares outstanding, in thousands, at Dec. 26, 2004 was 317,073.
12
TRIBUNE COMPANY
BUSINESS SEGMENT DATA (Unaudited)
(In thousands)
| FOURTH QUARTER
| | FULL YEAR
| |
|---|
| 2004
| | 2003
| | %
Change
| | 2004
| | 2003
| | %
Change
|
|---|
| PUBLISHING | | | | | | | | | | | | | |
| Operating Revenues | | $ 1,098,946 | | $ 1,083,324 | | 1.4 | | $ 4,129,850 | | $ 4,036,920 | | 2.3 | |
| Cash Operating Expenses (A) (B) | | (819,799 | ) | (779,595 | ) | 5.2 | | (3,224,614 | ) | (2,975,331 | ) | 8.4 | |
|
| |
| | |
| |
| |
| Operating Cash Flow (C) (D) | | 279,147 | | 303,729 | | (8.1 | ) | 905,236 | | 1,061,589 | | (14.7 | ) |
| Depreciation and Amortization Expense | | (45,319 | ) | (43,261 | ) | 4.8 | | (179,029 | ) | (176,283 | ) | 1.6 | |
|
| |
| | |
| |
| |
| Total Operating Profit (D) | | $ 233,828 | | $ 260,468 | | (10.2 | ) | $ 726,207 | | $ 885,306 | | (18.0 | ) |
| | |
| BROADCASTING AND ENTERTAINMENT | |
| Operating Revenues | |
| Television | | $ 352,437 | | $ 353,294 | | (0.2 | ) | $ 1,353,618 | | $ 1,323,038 | | 2.3 | |
| Radio/Entertainment | | 32,765 | | 33,015 | | (0.8 | ) | 242,779 | | 234,871 | | 3.4 | |
|
| |
| | |
| |
| |
| Total Operating Revenues | | 385,202 | | 386,309 | | (0.3 | ) | 1,596,397 | | 1,557,909 | | 2.5 | |
| | |
| Cash Operating Expenses (A) | |
| Television | | (194,096 | ) | (192,539 | ) | 0.8 | | (780,540 | ) | (771,272 | ) | 1.2 | |
| Radio/Entertainment | | (29,241 | ) | (24,129 | ) | 21.2 | | (219,132 | ) | (208,074 | ) | 5.3 | |
|
| |
| | |
| |
| |
| Total Cash Operating Expenses | | (223,337 | ) | (216,668 | ) | 3.1 | | (999,672 | ) | (979,346 | ) | 2.1 | |
| | |
| Operating Cash Flow (C) (D) | |
| Television | | 158,341 | | 160,755 | | (1.5 | ) | 573,078 | | 551,766 | | 3.9 | |
| Radio/Entertainment | | 3,524 | | 8,886 | | (60.3 | ) | 23,647 | | 26,797 | | (11.8 | ) |
|
| |
| | |
| |
| |
| Total Operating Cash Flow | | 161,865 | | 169,641 | | (4.6 | ) | 596,725 | | 578,563 | | 3.1 | |
| | |
| Depreciation and Amortization Expense | |
| Television | | (11,595 | ) | (12,611 | ) | (8.1 | ) | (47,340 | ) | (44,506 | ) | 6.4 | |
| Radio/Entertainment | | (1,355 | ) | (1,391 | ) | (2.6 | ) | (5,085 | ) | (5,538 | ) | (8.2 | ) |
|
| |
| | |
| |
| |
| Total Depreciation and Amortization Expense | | (12,950 | ) | (14,002 | ) | (7.5 | ) | (52,425 | ) | (50,044 | ) | 4.8 | |
| | |
| Operating Profit (D) | |
| Television | | 146,746 | | 148,144 | | (0.9 | ) | 525,738 | | 507,260 | | 3.6 | |
| Radio/Entertainment | | 2,169 | | 7,495 | | (71.1 | ) | 18,562 | | 21,259 | | (12.7 | ) |
|
| |
| | |
| |
| |
| Total Operating Profit | | $ 148,915 | | $ 155,639 | | (4.3 | ) | $ 544,300 | | $ 528,519 | | 3.0 | |
| | |
| CORPORATE EXPENSES | |
| Operating Cash Flow (C) (D) | | $ (13,738 | ) | $ (15,251 | ) | (9.9 | ) | $ (50,583 | ) | $ (51,292 | ) | (1.4 | ) |
| Depreciation and Amortization Expense | | (402 | ) | (473 | ) | (15.0 | ) | (1,635 | ) | (2,059 | ) | (20.6 | ) |
|
| |
| | |
| |
| |
| Total Operating Loss (D) | | $ (14,140 | ) | $ (15,724 | ) | (10.1 | ) | $ (52,218 | ) | $ (53,351 | ) | (2.1 | ) |
| | |
| CONSOLIDATED | |
| Operating Revenues | | $ 1,484,148 | | $ 1,469,633 | | 1.0 | | $ 5,726,247 | | $ 5,594,829 | | 2.3 | |
| Cash Operating Expenses (A) (B) | | (1,056,874 | ) | (1,011,514 | ) | 4.5 | | (4,274,869 | ) | (4,005,969 | ) | 6.7 | |
|
| |
| | |
| |
| |
| Operating Cash Flow (C) (D) | | 427,274 | | 458,119 | | (6.7 | ) | 1,451,378 | | 1,588,860 | | (8.7 | ) |
| Depreciation and Amortization Expense | | (58,671 | ) | (57,736 | ) | 1.6 | | (233,089 | ) | (228,386 | ) | 2.1 | |
|
| |
| | |
| |
| |
| Total Operating Profit (D) | | $ 368,603 | | $ 400,383 | | (7.9 | ) | $ 1,218,289 | | $ 1,360,474 | | (10.5 | ) |
13
| (A) | | The Company uses cash operating expenses to evaluate internal performance. The Company has presented cash operating expenses because it is a common measure used by rating agencies, financial analysts and investors. Cash operating expenses are not a measure of financial performance under generally accepted accounting principles (“GAAP”) and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. |
| | Following is a reconciliation of operating expenses to cash operating expenses for the fourth quarter of 2004: |
| Publishing
| | Broadcasting and
Entertainment
| | Corporate
| | Consolidated
| |
|---|
| Operating expenses | | $865,118 | | $236,287 | | $14,140 | | $1,115,545 | |
| Less: depreciation and amortization expense | | 45,319 | | 12,950 | | 402 | | 58,671 | |
|
| |
| |
| |
| |
| Cash operating expenses | | $819,799 | | $223,337 | | $13,738 | | $1,056,874 | |
|
| |
| |
| |
| |
| | Following is a reconciliation of operating expenses to cash operating expenses for the fourth quarter of 2003: |
| Publishing
| | Broadcasting and
Entertainment
| | Corporate
| | Consolidated
| |
|---|
| Operating expenses | | $822,856 | | $230,670 | | $15,724 | | $1,069,250 | |
| Less: depreciation and amortization expense | | 43,261 | | 14,002 | | 473 | | 57,736 | |
|
| |
| |
| |
| |
| Cash operating expenses | | $779,595 | | $216,668 | | $15,251 | | $1,011,514 | |
|
| |
| |
| |
| |
| | Following is a reconciliation of operating expenses to cash operating expenses for the full year 2004: |
| Publishing
| | Broadcasting and
Entertainment
| | Corporate
| | Consolidated
| |
|---|
| Operating expenses | | $3,403,643 | | $1,052,097 | | $52,218 | | $4,507,958 | |
| Less: depreciation and amortization expense | | 179,029 | | 52,425 | | 1,635 | | 233,089 | |
|
| |
| |
| |
| |
| Cash operating expenses | | $3,224,614 | | $ 999,672 | | $50,583 | | $4,274,869 | |
|
| |
| |
| |
| |
| | Following is a reconciliation of operating expenses to cash operating expenses for the full year 2003: |
| Publishing
| | Broadcasting and
Entertainment
| | Corporate
| | Consolidated
| |
|---|
| Operating expenses | | $3,151,614 | | $1,029,390 | | $53,351 | | $4,234,355 | |
| Less: depreciation and amortization expense | | 176,283 | | 50,044 | | 2,059 | | 228,386 | |
|
| |
| |
| |
| |
| Cash operating expenses | | $2,975,331 | | $ 979,346 | | $51,292 | | $4,005,969 | |
|
| |
| |
| |
| |
| (B) | | Publishing cash operating expenses for the fourth quarter and full year 2004 include charges of $24 million and $41 million, respectively, for the elimination of approximately 230 and 600 positions, respectively, in the publishing group. Publishing cash operating expenses for the full year 2004 also include a charge of $90 million related to the anticipated settlement with advertisers regarding misstated circulation atNewsdayandHoy, New York. |
| (C) | | Operating cash flow is defined as operating profit before depreciation and amortization. The Company uses operating cash flow along with operating profit and other measures to evaluate the financial performance of the Company’s business segments. The Company has presented operating cash flow because it is a common alternative measure of financial performance used by rating agencies, financial analysts and investors. These groups use operating cash flow along with other measures as a way to estimate the value of a company. The Company’s definition of operating cash flow may not be consistent with that of other companies. Operating cash flow does not represent cash provided by operating activities as reflected in the Company’s consolidated statements of cash flows, is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. |
14
| (D) | | Operating profit for each segment excludes interest income and expense, equity earnings and losses, non-operating items and income taxes. |
| | Following is a reconciliation of operating profit (loss) to operating cash flow for the fourth quarter of 2004: |
| Publishing
| | Broadcasting and
Entertainment
| | Corporate
| | Consolidated
| |
|---|
| Operating profit (loss) | | $233,828 | | $148,915 | | $(14,140 | ) | $368,603 | |
| Add back: depreciation and amortization expense | | 45,319 | | 12,950 | | 402 | | 58,671 | |
|
| |
| |
| |
| |
| Operating cash flow | | $279,147 | | $161,865 | | $(13,738 | ) | $427,274 | |
|
| |
| |
| |
| |
| | Following is a reconciliation of operating profit (loss) to operating cash flow for the fourth quarter of 2003: |
| Publishing
| | Broadcasting and
Entertainment
| | Corporate
| | Consolidated
| |
|---|
| Operating profit (loss) | | $260,468 | | $155,639 | | $(15,724 | ) | $400,383 | |
| Add back: depreciation and amortization expense | | 43,261 | | 14,002 | | 473 | | 57,736 | |
|
| |
| |
| |
| |
| Operating cash flow | | $303,729 | | $169,641 | | $(15,251 | ) | $458,119 | |
|
| |
| |
| |
| |
| | Following is a reconciliation of operating profit (loss) to operating cash flow for the full year 2004: |
| Publishing
| | Broadcasting and
Entertainment
| | Corporate
| | Consolidated
| |
|---|
| Operating profit (loss) | | $726,207 | | $544,300 | | $(52,218 | ) | $1,218,289 | |
| Add back: depreciation and amortization expense | | 179,029 | | 52,425 | | 1,635 | | 233,089 | |
|
| |
| |
| |
| |
| Operating cash flow | | $905,236 | | $596,725 | | $(50,583 | ) | $1,451,378 | |
|
| |
| |
| |
| |
| | Following is a reconciliation of operating profit (loss) to operating cash flow for the full year 2003: |
| Publishing
| | Broadcasting and
Entertainment
| | Corporate
| | Consolidated
| |
|---|
| Operating profit (loss) | | $ 885,306 | | $528,519 | | $(53,351 | ) | $1,360,474 | |
| Add back: depreciation and amortization expense | | 176,283 | | 50,044 | | 2,059 | | 228,386 | |
|
| |
| |
| |
| |
| Operating cash flow | | $1,061,589 | | $578,563 | | $(51,292 | ) | $1,588,860 | |
|
| |
| |
| |
| |
15
TRIBUNE COMPANY
SUMMARY OF REVENUES (Unaudited)
For Fourth Quarter Ended December 26, 2004
(In thousands)
| Fourth Quarter (13 weeks)
| | Year-to-Date (52 weeks)
|
|---|
| 2004
| | 2003
| | %
Change
| | 2004
| | 2003
| | %
Change
|
|---|
| Publishing | | | | | | | | | | | | | |
| Advertising | |
| Retail | | $ 407,141 | | $ 388,501 | | 4.8 | | $1,371,088 | | $1,310,063 | | 4.7 | |
| National | | 218,658 | | 221,736 | | (1.4 | ) | 790,760 | | 780,524 | | 1.3 | |
| Classified | | 253,623 | | 241,238 | | 5.1 | | 1,068,203 | | 1,019,382 | | 4.8 | |
|
| |
| | |
| |
| |
| | |
| Sub-Total | | 879,422 | | 851,475 | | 3.3 | | 3,230,051 | | 3,109,969 | | 3.9 | |
| Circulation | | 154,766 | | 164,116 | | (5.7 | ) | 643,947 | | 663,870 | | (3.0 | ) |
| Other | | 64,758 | | 67,733 | | (4.4 | ) | 255,852 | | 263,081 | | (2.7 | ) |
|
| |
| | |
| |
| |
| | |
| Segment Total (A)(B) | | 1,098,946 | | 1,083,324 | | 1.4 | | 4,129,850 | | 4,036,920 | | 2.3 | |
|
| |
| | |
| |
| |
| | |
| Broadcasting & Entertainment | |
| Television (C) | | 352,437 | | 353,294 | | (0.2 | ) | 1,353,618 | | 1,323,038 | | 2.3 | |
| Radio/Entertainment | | 32,765 | | 33,015 | | (0.8 | ) | 242,779 | | 234,871 | | 3.4 | |
|
| |
| | |
| |
| |
| | |
| Segment Total (D) | | 385,202 | | 386,309 | | (0.3 | ) | 1,596,397 | | 1,557,909 | | 2.5 | |
|
| |
| | |
| |
| |
| | |
| Consolidated Revenues (E) | | $1,484,148 | | $1,469,633 | | 1.0 | | $5,726,247 | | $5,594,829 | | 2.3 | |
|
| |
| | |
| |
| |
| (A) | | Interactive advertising revenues for 2004 and 2003 are included in the appropriate publishing categories. |
| (B) | | Publishing revenues for 2003 have been reclassified to conform with the 2004 presentation. There was no effect on total revenues. |
| (C) | | Includes KPLR-TV, St. Louis and KWBP-TV, Portland, both acquired in March of 2003. Excluding acquisitions, television revenues increased 1.3% for the year-to-date. |
| (D) | | Excluding acquisitions, broadcasting and entertainment revenues increased 1.6% for the year-to-date. |
| (E) | | Excluding acquisitions, consolidated revenues increased 2.1% for the year-to-date. |
16
TRIBUNE COMPANY
SUMMARY OF NEWSPAPER ADVERTISING VOLUME (Unaudited) (A)
For Fourth Quarter Ended December 26, 2004
(In thousands)
| Fourth Quarter (13 weeks)
| | Year-to-Date (52 weeks)
|
|---|
| 2004
| | 2003
| | %
Change
| | 2004
| | 2003
| | %
Change
|
|---|
| Full Run | | | | | | | | | | | | | |
| L.A. Times | | 697 | | 737 | | (5 | ) | 2,493 | | 2,640 | | (6 | ) |
| Chicago Tribune | | 572 | | 645 | | (11 | ) | 2,173 | | 2,265 | | (4 | ) |
| Newsday | | 401 | | 399 | | 1 | | 1,577 | | 1,542 | | 2 | |
| Other Daily Newspapers (B) | | 3,651 | | 3,531 | | 3 | | 14,245 | | 13,662 | | 4 | |
|
| |
| | |
| |
| |
| Total | | 5,321 | | 5,312 | | – | | 20,488 | | 20,109 | | 2 | |
|
| |
| | |
| |
| |
| | |
| Part Run | |
| L.A. Times | | 1,481 | | 1,463 | | 1 | | 5,901 | | 5,849 | | 1 | |
| Chicago Tribune | | 1,697 | | 1,518 | | 12 | | 6,641 | | 5,756 | | 15 | |
| Newsday | | 516 | | 512 | | 1 | | 1,935 | | 1,886 | | 3 | |
| Other Daily Newspapers (B) | | 1,664 | | 1,562 | | 7 | | 6,338 | | 6,131 | | 3 | |
|
| |
| | |
| |
| |
| Total | | 5,358 | | 5,055 | | 6 | | 20,815 | | 19,622 | | 6 | |
|
| |
| | |
| |
| |
| | |
| Total Advertising Inches | |
| Full Run | |
| Retail | | 1,893 | | 1,793 | | 6 | | 6,394 | | 6,067 | | 5 | |
| National | | 1,094 | | 1,067 | | 3 | | 3,990 | | 3,839 | | 4 | |
| Classified | | 2,334 | | 2,452 | | (5 | ) | 10,104 | | 10,203 | | (1 | ) |
|
| |
| | |
| |
| |
| Sub-Total | | 5,321 | | 5,312 | | – | | 20,488 | | 20,109 | | 2 | |
| Part Run | | 5,358 | | 5,055 | | 6 | | 20,815 | | 19,622 | | 6 | |
|
| |
| | |
| |
| |
| Total | | 10,679 | | 10,367 | | 3 | | 41,303 | | 39,731 | | 4 | |
|
| |
| | |
| |
| |
| | |
| Preprint Pieces | |
| L.A. Times | | 1,091,771 | | 909,717 | | 20 | | 3,622,143 | | 3,060,926 | | 18 | |
| Chicago Tribune | | 1,285,858 | | 982,945 | | 31 | | 4,362,882 | | 3,367,934 | | 30 | |
| Newsday | | 813,329 | | 783,408 | | 4 | | 2,824,900 | | 2,788,186 | | 1 | |
| Other Daily Newspapers (B) | | 1,209,438 | | 1,160,799 | | 4 | | 4,110,507 | | 3,929,944 | | 5 | |
|
| |
| | |
| |
| |
| Total | | 4,400,396 | | 3,836,869 | | 15 | | 14,920,432 | | 13,146,990 | | 13 | |
|
| |
| | |
| |
| |
| (A) | Volume for 2003 has been modified to conform with the 2004 presentation. Volume is based on preliminary internal data, which may be updated in subsequent reports. Advertising volume is presented only for daily newspapers. |
| (B) | Other daily newspapers includeThe Baltimore Sun, South Florida Sun-Sentinel, Orlando Sentinel, The Hartford Courant,The Morning Call, Daily Press, The Advocate,Greenwich Time, Hoy,New York, Hoy,Chicagoand Hoy,Los Angeles. |
17
TRIBUNE COMPANY
SUMMARY OF REVENUES (Unaudited)
For Period 12 Ended December 26, 2004
(In thousands)
| Period 12 (5 weeks)
| | Year-to-Date (52 weeks)
|
|---|
| 2004
| | 2003
| | %
Change
| | 2004
| | 2003
| | %
Change
|
|---|
| Publishing | | | | | | | | | | | | | |
| Advertising | |
| Retail | | $180,545 | | $172,668 | | 4.6 | | $1,371,088 | | $1,310,063 | | 4.7 | |
| National | | 86,967 | | 90,344 | | (3.7 | ) | 790,760 | | 780,524 | | 1.3 | |
| Classified | | 81,565 | | 77,640 | | 5.1 | | 1,068,203 | | 1,019,382 | | 4.8 | |
|
| |
| | |
| |
| |
| | |
| Sub-Total | | 349,077 | | 340,652 | | 2.5 | | 3,230,051 | | 3,109,969 | | 3.9 | |
| Circulation | | 58,479 | | 62,223 | | (6.0 | ) | 643,947 | | 663,870 | | (3.0 | ) |
| Other | | 23,625 | | 25,650 | | (7.9 | ) | 255,852 | | 263,081 | | (2.7 | ) |
|
| |
| | |
| |
| |
| | |
| Segment Total (A)(B) | | 431,181 | | 428,525 | | 0.6 | | 4,129,850 | | 4,036,920 | | 2.3 | |
|
| |
| | |
| |
| |
| | |
| Broadcasting & Entertainment | |
| Television (C) | | 133,383 | | 132,588 | | 0.6 | | 1,353,618 | | 1,323,038 | | 2.3 | |
| Radio/Entertainment | | 9,661 | | 12,782 | | (24.4 | ) | 242,779 | | 234,871 | | 3.4 | |
|
| |
| | |
| |
| |
| | |
| Segment Total (D) | | 143,044 | | 145,370 | | (1.6 | ) | 1,596,397 | | 1,557,909 | | 2.5 | |
|
| |
| | |
| |
| |
| | |
| Consolidated Revenues (E) | | $574,225 | | $573,895 | | 0.1 | | $5,726,247 | | $5,594,829 | | 2.3 | |
|
| |
| | |
| |
| |
| (A) | | Interactive advertising revenues for 2004 and 2003 are included in the appropriate publishing categories. |
| (B) | | Publishing revenues for 2003 have been reclassified to conform with the 2004 presentation. There was no effect on total revenues. |
| (C) | | Includes KPLR-TV, St. Louis and KWBP-TV, Portland, both acquired in March of 2003. Excluding acquisitions, television revenues increased 1.3% for the year-to-date. |
| (D) | | Excluding acquisitions, broadcasting and entertainment revenues increased 1.6% for the year-to-date. |
| (E) | | Excluding acquisitions, consolidated revenues increased 2.1% for the year-to-date. |
18
TRIBUNE COMPANY
SUMMARY OF NEWSPAPER ADVERTISING VOLUME (Unaudited) (A)
For Period 12 Ended December 26, 2004
(In thousands)
| Period 12 (5 weeks)
| | Year-to-Date (52 weeks)
|
|---|
| 2004
| | 2003
| | %
Change
| | 2004
| | 2003
| | %
Change
|
|---|
| Full Run | | | | | | | | | | | | | |
| L.A. Times | | 311 | | 327 | | (5 | ) | 2,493 | | 2,640 | | (6 | ) |
| Chicago Tribune | | 218 | | 260 | | (16 | ) | 2,173 | | 2,265 | | (4 | ) |
| Newsday | | 147 | | 144 | | 2 | | 1,577 | | 1,542 | | 2 | |
| Other Daily Newspapers (B) | | 1,386 | | 1,368 | | 1 | | 14,245 | | 13,662 | | 4 | |
|
| |
| | |
| |
| |
| Total | | 2,062 | | 2,099 | | (2 | ) | 20,488 | | 20,109 | | 2 | |
|
| |
| | |
| |
| |
| | |
| Part Run | |
| L.A. Times | | 530 | | 572 | | (7 | ) | 5,901 | | 5,849 | | 1 | |
| Chicago Tribune | | 557 | | 527 | | 6 | | 6,641 | | 5,756 | | 15 | |
| Newsday | | 180 | | 184 | | (2 | ) | 1,935 | | 1,886 | | 3 | |
| Other Daily Newspapers (B) | | 610 | | 575 | | 6 | | 6,338 | | 6,131 | | 3 | |
|
| |
| | |
| |
| |
| Total | | 1,877 | | 1,858 | | 1 | | 20,815 | | 19,622 | | 6 | |
|
| |
| | |
| |
| |
| | |
| Total Advertising Inches | |
| Full Run | |
| Retail | | 830 | | 807 | | 3 | | 6,394 | | 6,067 | | 5 | |
| National | | 434 | | 428 | | 1 | | 3,990 | | 3,839 | | 4 | |
| Classified | | 798 | | 864 | | (8 | ) | 10,104 | | 10,203 | | (1 | ) |
|
| |
| | |
| |
| |
| Sub-Total | | 2,062 | | 2,099 | | (2 | ) | 20,488 | | 20,109 | | 2 | |
| Part Run | | 1,877 | | 1,858 | | 1 | | 20,815 | | 19,622 | | 6 | |
|
| |
| | |
| |
| |
| Total | | 3,939 | | 3,957 | | – | | 41,303 | | 39,731 | | 4 | |
|
| |
| | |
| |
| |
| | |
| Preprint Pieces | |
| L.A. Times | | 484,542 | | 410,373 | | 18 | | 3,622,143 | | 3,060,926 | | 18 | |
| Chicago Tribune | | 535,051 | | 425,652 | | 26 | | 4,362,882 | | 3,367,934 | | 30 | |
| Newsday | | 357,192 | | 335,318 | | 7 | | 2,824,900 | | 2,788,186 | | 1 | |
| Other Daily Newspapers (B) | | 546,884 | | 504,173 | | 8 | | 4,110,507 | | 3,929,944 | | 5 | |
|
| |
| | |
| |
| |
| Total | | 1,923,669 | | 1,675,516 | | 15 | | 14,920,432 | | 13,146,990 | | 13 | |
|
| |
| | |
| |
| |
| (A) | Volume for 2003 has been modified to conform with the 2004 presentation. Volume is based on preliminary internal data, which may be updated in subsequent reports. Advertising volume is presented only for daily newspapers. |
| (B) | Other daily newspapers includeThe Baltimore Sun, South Florida Sun-Sentinel, Orlando Sentinel, The Hartford Courant,The Morning Call, Daily Press, The Advocate,Greenwich Time, Hoy,New York, Hoy,Chicagoand Hoy,Los Angeles. |
19