Exhibit 99.1
TRIBUNE MEDIA COMPANY REPORTS SECOND QUARTER 2015 RESULTS
CONTINUED PROGRESS AGAINST STRATEGIC OBJECTIVES
NEW YORK, August 13, 2015 — Tribune Media Company (the “Company”) (NYSE:TRCO) today reported its results for the three months and six months ended June 30, 2015.
Second Quarter Financial Highlights(each as compared to the three months ended June 29, 2014)
| | • | | Consolidated operating revenue grew 6% to $501.5 million. |
| | • | | Television and Entertainment segment revenue grew 4%, driven by higher advertising revenues and increased carriage and retransmission fees. |
| | • | | Consolidated operating profit decreased 39% to $19.8 million. |
| | • | | Consolidated Adjusted EBITDA decreased 29%, in large part driven by three factors: |
| | • | | Previously announced change in the timing of the amortization of programming expense for original programming at WGN America, |
| | • | | Planned production funding for co-owned original programming for WGN America, and |
| | • | | Implementation costs for improved technology applications and the establishment of new shared services operations. |
| | • | | Basic and diluted loss per share from continuing operations of $(0.04), which includes a pre-tax charge of $37 million for loss on the extinguishment of debt related to the Company’s refinancing of its Term Loan Facility and issuance of $1.1 billion of 5.875% Senior Notes due in 2022. |
Strategic Highlights
| | • | | Conversion of WGN America from a superstation to a basic cable network is ahead of schedule, with an expectation of at least 75% of subscribers converted by the end of 2015. |
| | • | | 48% increase in carriage fees resulting, in part, from improved off-network and original programming. |
| | • | | Achieved higher rates for local TV station retransmission, driving 23% increase in fees. |
| | • | | Acquisitions of Infostrada Statistics B.V. (“Infostrada Sports”), SportsDirect Inc. (“SportsDirect”) and Covers Media Group (“Covers”) combined to create Gracenote Sports, a leading provider of sports metadata. |
“We are making noticeable progress against our strategy to build Tribune Media for sustainable, long-term, profitable growth. Our strategy is gaining momentum and accelerating top-line growth. Today’s results reinforce our confidence that our strategy is the right one to drive long-term value for our shareholders,” said Peter Liguori, Tribune Media’s President and Chief Executive Officer.
“Our Television and Entertainment segment experienced revenue growth in all key areas and the outlook remains positive. We continue to post gains in our local station business due to its unique ability to deliver content to our loyal local viewers. Our decision to focus on local news and live sports, especially in major markets, is already paying dividends as we continue to grow advertising market share and generate higher retransmission fees. We are also encouraged that WGN America’s conversion to a cable network is ahead of schedule and our investment
in high quality original and syndicated content is creating value for our MVPD partners, advertisers and audience. Our Digital and Data segment is demonstrating its ability to develop new revenue-generating solutions and services for its expanding client base. With four strategic acquisitions in the quarter, the Digital and Data business is furthering its position as a major player in the evolving sports and entertainment data arena.”
Second Quarter and Year-to-Date 2015 Results
Consolidated
Consolidated operating revenues for the second quarter of 2015 were $501.5 million compared to $475.0 million in the second quarter of 2014, representing an increase of $26.5 million, or 5.6%. Revenue increase driven by:
| | • | | higher core advertising revenues (local and national advertising revenues, excluding political revenues), |
| | • | | retransmission consent revenues and carriage fees in the Television and Entertainment segment, and |
| | • | | the favorable impact of 2014 and 2015 acquisitions in the Digital and Data segment. |
For the six months ended June 30, 2015, consolidated operating revenues were $974.3 million compared to $921.1 million in the six months ended June 29, 2014, representing an increase of $53.2 million, or 5.8%.
Consolidated operating profit for the second quarter of 2015 decreased by $12.4 million to $19.8 million, from $32.2 million in the second quarter of 2014. For the six months ended June 30, 2015, consolidated operating profit decreased $1.8 million to $80.7 million from $82.5 million in the six months ended June 29, 2014.
Basic and diluted earnings (loss) per common share from continuing operations for the second quarter of 2015 were $(0.04) compared to $0.67 for the second quarter of 2014. The 2015 results include a pre-tax charge of $37 million in the second quarter of 2015 for loss on the extinguishment of debt related to the company’s refinancing of its Term Loan Facility and issuance of $1.1 billion of 5.875% Senior Notes due in 2022.
Consolidated Adjusted EBITDA decreased to $92.3 million from $130.3 million in the second quarter of 2014, representing a decrease of $38.0 million, or 29%. The decline is primarily attributable to three factors:
| | • | | Amortization of license fees increased by $24 million for our first-run original programs, “Salem” and “Manhattan” at WGN America; $13 million of the increase relates to the change in timing of this amortization from 2016 into 2015, which we previously disclosed in our guidance in the first quarter. |
| | • | | Production costs increased $11 million at Tribune Studios for our co-owned shows, “Manhattan” (second season), “Outsiders” and “Underground” as a result of production commencing on these three shows in the second quarter of this year. |
| | • | | We continued to incur implementation costs for improved technology applications and the establishment of new shared services operations, which efforts are expected to yield savings beginning in 2016. |
For the six months ended June 30, 2015, consolidated Adjusted EBITDA decreased $47.0 million, or 18%, to $221.3 million as compared to $268.3 million in the six months ended June 29, 2014.
Cash distributions from equity investments in the second quarter of 2015 were $34.2 million compared to $35.5 million in the second quarter of 2014. Cash distributions for the six months ended June 30, 2015 were $129.1 million compared to $155.7 million for the six months ended June 29, 2014. Cash distributions were lower in the first half of 2015 due to a $12.4 million non-recurring cash payment from Television Food Network, G.P. (“TV Food Network”) received in the first quarter of 2014, as well as the impact of working capital changes at TV Food Network which reduced cash available for distribution. In addition, the Company also received a cash distribution in the second quarter of 2014 of $159.6 million from Classified Ventures, LLC in connection with the sale of its Apartments.com business.
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Television and Entertainment Segment
Television and Entertainment segment revenues were $445.6 million in the second quarter of 2015, compared to $427.0 million in the second quarter of 2014, an increase of $18.6 million, or 4.4%, and were comprised of:
| | • | | Advertising revenues of $334.6 million as compared with $329.9 million in the second quarter of 2014, representing an increase of $4.7 million, or 1.4%. Core advertising (comprised of local and national advertising revenues, excluding political revenues) increased by $7.1 million, or 2.3%. Partially offsetting the increase in core advertising was a decrease in political advertising of $5.9 million due to 2015 being an off-cycle political year. |
| | • | | Local station retransmission consent fees of $70.1 million in the second quarter of 2015, compared to $57.1 million in the second quarter of 2014, an increase of $13.0 million, or 23%, as a result of contract renewals with distribution partners at higher rates that became effective in late 2014. |
| | • | | Carriage fees of $21.6 million in the second quarter of 2015 compared to $14.6 million in the second quarter of 2014, an increase of $7.0 million, or 48%, as a result of obtaining higher rates for WGN America distribution. |
Television and Entertainment segment revenues for the six months ended June 30, 2015 were $855.9 million, compared to $827.2 million for the six months ended June 29, 2014. Specifically:
| | • | | Advertising revenues were $634.3 million for the first half of 2015, a decrease of $1.4 million, or 0.2%, as compared to advertising revenues of $635.7 million in the first half of 2014. |
| | • | | Local station retransmission consent fees were $138.9 million, as compared to $112.7 million in the first half of 2014, an increase of $26.2 million, or 23%. |
| | • | | Carriage fees were $43.1 million, as compared to $28.7 million, an increase of $14.4 million, or 50%. |
Television and Entertainment Adjusted EBITDA for the second quarter of 2015 was $104.3 million, compared to $140.6 million in the second quarter of 2014. Television and Entertainment Adjusted EBITDA was unfavorably impacted primarily by higher amortization of programming expenses and production costs associated with planned production funding for our co-owned original programming.
Consistent with the previously stated strategy, Tribune Studios made planned investments in co-owned original programming, including “Manhattan,” “Underground” and “Outsiders”. These investments in scripted original programming give the Company upside revenue potential through increased carriage fees and participation in the sale of domestic and international rights for these shows, including rights to stream the shows via video services.
For the six months ended June 30, 2015, Television and Entertainment Adjusted EBITDA was $239.2 million, as compared to $280.3 million for the six months ended June 29, 2014, a decrease of $41.1 million.
Digital and Data Segment
Digital and Data segment revenues in the second quarter of 2015 were $43.6 million, compared to $33.8 million in the second quarter of 2014, an increase of $9.8 million, or 29%. This increase included the favorable impact of the acquisitions of HWW, Baseline and What’s ON, which were consummated in the second half of 2014, as well as the acquisitions of Infostrada Sports, SportsDirect, Covers and Enswers Inc., all of which were acquired in the second quarter of 2015. For the six months ended June 30, 2015, Digital and Data segment revenues were $93.8 million, an increase of $28.5 million, as compared to $65.3 million for the six months ended June 29, 2014.
Digital and Data Adjusted EBITDA was $6.6 million in the second quarter of 2015, compared to a loss of $1.0 million in the second quarter of 2014, an increase of $7.6 million. This increase included the favorable impact of the acquisitions noted above. For the six months ended June 30, 2015, Digital and Data Adjusted EBITDA was $19.1 million compared to $4.1 million in the six months ended June 29, 2014.
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Corporate and Other
Real estate revenues for the second quarter of 2015 were $12.3 million compared to $14.2 million in the second quarter of 2014, representing a decrease of $1.9 million, or 14%, due primarily to a reduction in space leased by Tribune Publishing Company at several properties and the sale of the production facility and land in Baltimore, MD in December 2014. Real estate revenues for the six months ended June 30, 2015 were $24.5 million, compared to $28.6 million for the six months ended June 29, 2014, representing a decrease of $4.1 million, or 14%.
Corporate and Other Adjusted EBITDA for the second quarter of 2015 represented a loss of $18.6 million, compared to a loss of $9.3 million in the second quarter of 2014. The increase in losses was primarily a result of increased corporate costs driven by the implementation of improved technology applications, as well as the establishment of new shared services operations following the separation from Tribune Publishing systems in connection with the Company’s spin-off of its principal publishing operations in August 2014. For the six months ended June 30, 2015, Corporate and Other Adjusted EBITDA represented a loss of $37.1 million, compared to a loss of $16.1 million for the six months ended June 29, 2014.
Stock Repurchase Program
In October 2014, the Company announced a $400 million stock repurchase program, of which $233 million had been repurchased, as of March 29, 2015. During the second quarter of 2015, the Company repurchased approximately 0.4 million shares of the Company’s Class A common stock in open market transactions for $20 million. From the period of March 30, 2015 through August 12, 2015, the Company repurchased approximately 1.9 million shares of the Company’s Class A common stock for an aggregate purchase price of $100 million. Since the inception of the stock repurchase program through August 12, 2015, the Company has repurchased an aggregate 5.8 million shares of the Company’s Class A common stock, for an aggregate purchase price of approximately $333 million. As of August 12, 2015, the remaining authorized amount under the program totaled approximately $67 million.
Sale of Partnership Interest
On August 1, 2015, the Company agreed to sell all of its interest in Newsday Holdings LLC (“NHLLC”) to CSC Holdings LLC, the current majority owner of NHLLC. Upon the consummation of such sale, $103 million of deferred tax liability on the Company’s balance sheet will become payable and the Company expects to make this tax payment prior to the end of 2015.
Financial Guidance
The following represents the Company’s financial guidance for the full year 2015. The following statements, by their nature, are forward-looking and are subject to substantial risks and uncertainties, which are discussed below under “Cautionary Statement Regarding Forward-Looking Statements”, and may differ materially from our actual results.
As a result of various company activities, certain components of 2015 full year guidance have been updated. Programming expense guidance for WGN America / Tribune Studios has been revised to include production expenses of co-owned series which were previously planned to be expensed in 2016 and are now being expensed in the second and third quarters of 2015. Cash taxes and cash interest have been updated primarily to reflect the impact of the Company’s refinancing of its Term Loan Facility and issuance of $1.1 billion of 5.875% Senior Notes in June 2015. The revised cash tax guidance excludes the one-time payment of $103 million of cash taxes resulting from the sale of NHLLC as described above.
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Notwithstanding these changes in guidance, the Company’s overall revenue achievement and tight management of expenses across its businesses have kept it on track to meet its consolidated 2015 targets. Accordingly, we expect the following financial results as it relates to full-year 2015:
Consolidated
| | • | | Net Revenues: $2.00 billion to $2.03 billion |
| | • | | Adjusted EBITDA: $480 million to $495 million |
Television and Entertainment Segment
| | • | | Total Net Revenues: $1.75 billion to $1.77 billion |
| | • | | Core Advertising (local and national advertising revenues): Low to mid-single digit increases over 2014 |
| | • | | Retransmission Consent Fees: $275 million to $277 million |
| | • | | Cable Network Carriage Fees: $85 million to $87 million |
| | • | | WGN America / Tribune Studios Programming Expenses: $(150) million to $(160) million |
| | • | | Previous guidance of $(144) million |
| | • | | Adjusted EBITDA: $500 million to $515 million |
Digital and Data Segment
| | • | | Net Revenues: $200 million to $205 million |
| | • | | Adjusted EBITDA: $46 million to $48 million |
Corporate and Other
| | • | | Real Estate Revenues: approximately $50 million |
| | • | | Real Estate Expenses: approximately $(30) million |
| | • | | Corporate Expenses, excluding stock-based comp: $(86) million to $(88) million |
| | • | | Adjusted EBITDA: $(66) million to $(68) million |
Key Cash Flow Metrics
| | • | | Capital Expenditures: Total of $100 million, including approximately $50 million of non-recurring capital expenditures |
| | • | | Cash Taxes(1): $95 million to $100 million |
| | • | | Previous guidance of $135 million to $140 million |
| | • | | Cash Interest: approximately $130 million |
| | • | | Previous guidance of $140 million |
| | • | | Depreciation & Amortization: approximately $260 million |
| | • | | Stock-based Compensation: approximately $35 million |
| (1) | Guidance excludes a tax payment of approximately $252 million related to the gain on the sale of Classified Ventures in the fourth quarter of 2014, paid in the first quarter of 2015. Also excluded from guidance is a tax payment of approximately $103 million related to the Company’s agreement on August 1, 2015 to sell all of its interest in NHLLC to CSC Holdings LLC. The taxes associated with this transaction were on the balance sheet as of June 30, 2015 as a deferred tax liability and are now expected to be paid prior to the end of 2015. |
Long Term Outlook
| | • | | 2016 Consolidated Adjusted EBITDA year-over-year growth of greater than 30% |
In addition, the Company currently expects the following for the period of 2016 - 2019:
| | • | | WGN America and Tribune Studios revenue growth to be greater than 20% annually |
| | • | | WGN America and Tribune Studios programming expenses approximating 50% of net revenues |
| | • | | Digital and Data net revenue growth of 10% to 12% annually |
| | • | | Digital and Data Adjusted EBITDA margins growing to low 30% range |
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Conference Call Information
The Company will host a conference call today at 8:30 a.m. ET to discuss its second quarter results and a presentation deck will be posted to our website in advance of the call. The conference call can be accessed on the Investor Relations homepage of Tribune Media’s website atwww.tribunemedia.com, or by dialing (888) 317-6003 (domestic) or (412) 317-6061 (international). The confirmation code is 8454632.
An audio webcast replay will be available in the Events and Presentations section of the Tribune Media website approximately one hour after completion of the call. A replay of the call will also be available until August 21, 2015 at (877) 344-7529 (domestic) or (412) 317-0088 (international). The confirmation code for the replay is 10070360.
# # #
Tribune Media Company (NYSE: TRCO) is home to a diverse portfolio of television and digital properties driven by quality news, entertainment and sports programming. Tribune Media is comprised of Tribune Broadcasting’s 42 owned or operated local television stations reaching more than 50 million households, national entertainment network WGN America, available in approximately 73 million households, Tribune Studios, and Gracenote, one of the world’s leading sources of TV and music metadata powering electronic program guides in televisions, automobiles and mobile devices. Tribune Media also includes Chicago’s WGN-AM and the national multicast networks Antenna TV and THIS TV. Additionally, the Company owns and manages a significant number of real estate properties across the U.S. and holds other strategic investments in media. For more information please visit www.tribunemedia.com.
| | |
| INVESTOR CONTACT: | | MEDIA CONTACT: |
| Danielle DeVoe | | Gary Weitman |
| Director/Corporate Finance, Investor Relations | | SVP/Corporate Relations |
| 646/563-8296 | | 312/222-3394 |
| ddevoe@tribunemedia.com | | gweitman@tribunemedia.com |
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Non-GAAP Financial Measures
This press release includes a discussion of Adjusted EBITDA for the Company and our operating segments (Television and Entertainment, Digital and Data, and Corporate and Other) and presents Broadcast Cash Flow for our Television and Entertainment segment. Adjusted EBITDA and Broadcast Cash Flow are financial measures that are not recognized under accounting principles generally accepted in the U.S. (“GAAP”). Adjusted EBITDA for the Company is defined as net income before income (loss) from discontinued operations, net of taxes, income taxes, investment transactions, interest and dividend income, interest expense, pension expense (credit), equity income and losses, depreciation and amortization, stock-based compensation, certain special items (including severance), non-operating items, gain (loss) on sales of real estate and reorganization items. Adjusted EBITDA for the Company’s operating segments is calculated as segment operating profit plus depreciation, amortization, pension expense (credit), stock-based compensation and certain special items (including severance). Broadcast Cash Flow for the Television and Entertainment segment is calculated as Television and Entertainment Adjusted EBITDA plus broadcast rights- amortization expense less broadcast rights- cash payments. We believe that Adjusted EBITDA and Broadcast Cash Flow are measures commonly used by investors to evaluate our performance with that of our competitors. We also present Adjusted EBITDA because we believe investors, analysts and rating agencies consider it useful in measuring our ability to meet our debt service obligations. We further believe that the disclosure of Adjusted EBITDA and Broadcast Cash Flow is useful to investors, as these non-GAAP measures are used, among other measures, by our management to evaluate our performance. By disclosing Adjusted EBITDA and Broadcast Cash Flow, we believe that we create for investors a greater understanding of, and an enhanced level of transparency into, the means by which our management operates our company. Adjusted EBITDA and Broadcast Cash Flow are not measures presented in accordance with GAAP, and our use of these terms may vary from that of others in our industry. Adjusted EBITDA and Broadcast Cash Flow should not be considered as an alternative to net income, operating profit, revenues, cash provided by operating activities or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. The tables at the end of this press release include reconciliations of consolidated and segment Adjusted EBITDA and Broadcast Cash Flow to the most directly comparable financial measure calculated and presented in accordance with GAAP. No reconciliation of the forecasted range for Adjusted EBITDA on a consolidated or segment basis for fiscal 2015 is included in this release because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts and we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Forward-looking statements may include, but are not limited to, statements concerning our financial outlook and guidance, including our 2015 forecasted revenues, Adjusted EBITDA and other consolidated and segment financial performance guidance, our expectations for Adjusted EBITDA growth in 2016, our long-term outlook for WGN America and Tribune Studios revenue and programming expenses as well as Digital and Data segment revenue growth and Adjusted EBITDA margins, the conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business and growth strategy and product development efforts. Important factors that could cause actual results, developments and business decisions to differ materially from these forward-looking statements are uncertainties discussed below and in the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 6, 2015 and other filings with the SEC. “Forward-looking statements” include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “might,” “will,” “could” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “seek,” “designed,” “assume,” “implied,” “believe” and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties.
The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from projected or historical results or those anticipated or predicted by these forward-looking statements: competition and other economic conditions including fragmentation of the media landscape and competition from other media alternatives; changes in advertising demand and audience shares; changes in the overall market for television advertising, including through regulatory and judicial rulings; our ability to protect our intellectual property and other proprietary rights; availability and cost of broadcast rights; our ability to adapt to technological changes; availability and cost of quality network, syndicated and sports programming affecting our television ratings; the loss or modification of our network affiliation agreements; our ability to renegotiate retransmission consent agreements; the incurrence of additional tax-related liabilities related to historical income tax returns; our ability to expand our operations internationally; the incurrence of costs to address contamination issues at sites owned, operated or used by our business; adverse results from litigation, governmental investigations or tax-related proceedings or audits; our ability to settle unresolved claims filed in connection with our and certain of our direct and indirect wholly-owned subsidiaries’ Chapter 11 cases and resolve the appeals seeking to overturn the bankruptcy court order confirming the First Amended Joint Plan of Reorganization for Tribune Company and its Subsidiaries; our ability to satisfy pension and other postretirement employee benefit obligations; our ability to attract and retain employees; the effect of labor strikes, lock-outs and labor negotiations; our ability to realize benefits or synergies from acquisitions or divestitures or to operate our businesses effectively following acquisitions or divestitures; the financial performance of our equity method investments; the impairment of our existing goodwill and other intangible assets; compliance with both US and foreign government regulations applicable to our industry; changes in accounting standards; our ability to pay cash dividends on our common stock; increased interest rate risk due to our variable rate indebtedness; our indebtedness and ability to comply with
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covenants applicable to our debt financing and other contractual commitments; our ability to satisfy future capital and liquidity requirements; our ability to access the credit and capital markets at the times and in the amounts needed and on acceptable terms and other events beyond our control that may result in unexpected adverse operating results. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this press release may not in fact occur. Any forward-looking information presented herein is made only as of the date of this press release and we undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
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Tribune Media Company and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands of dollars, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, 2015 | | | June 29, 2014 | | | June 30, 2015 | | | June 29, 2014 | |
| | | | |
Operating Revenues | | | | | | | | | | | | | | | | |
Television and Entertainment | | $ | 445,622 | | | $ | 426,961 | | | $ | 855,922 | | | $ | 827,162 | |
Digital and Data | | | 43,625 | | | | 33,807 | | | | 93,827 | | | | 65,292 | |
Other | | | 12,277 | | | | 14,211 | | | | 24,512 | | | | 28,627 | |
| | | | | | | | | | | | | | | | |
Total operating revenues | | | 501,524 | | | | 474,979 | | | | 974,261 | | | | 921,081 | |
| | | | |
Operating Expenses | | | | | | | | | | | | | | | | |
Programming | | | 137,682 | | | | 94,992 | | | | 231,198 | | | | 175,623 | |
Direct operating expenses | | | 112,533 | | | | 103,431 | | | | 215,521 | | | | 203,704 | |
Selling, general and administrative | | | 165,122 | | | | 165,805 | | | | 315,595 | | | | 303,358 | |
Depreciation | | | 17,966 | | | | 17,540 | | | | 35,020 | | | | 34,251 | |
Amortization | | | 48,437 | | | | 61,018 | | | | 96,208 | | | | 121,692 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 481,740 | | | | 442,786 | | | | 893,542 | | | | 838,628 | |
| | | | | | | | | | | | | | | | |
| | | | |
Operating Profit | | | 19,784 | | | | 32,193 | | | | 80,719 | | | | 82,453 | |
| | | | |
Income on equity investments, net | | | 45,913 | | | | 118,953 | | | | 82,847 | | | | 157,216 | |
Interest and dividend income | | | 43 | | | | 147 | | | | 410 | | | | 318 | |
Interest expense | | | (40,374 | ) | | | (39,146 | ) | | | (79,586 | ) | | | (79,665 | ) |
Loss on extinguishment of debt | | | (37,040 | ) | | | — | | | | (37,040 | ) | | | — | |
Gain on investment transactions | | | 8,133 | | | | 700 | | | | 8,820 | | | | 700 | |
Other non-operating gain (loss) | | | 211 | | | | (1,295 | ) | | | 211 | | | | (1,138 | ) |
Reorganization items, net | | | (628 | ) | | | (2,165 | ) | | | (1,620 | ) | | | (4,381 | ) |
| | | | | | | | | | | | | | | | |
(Loss) Income from Continuing Operations Before Income Taxes | | | (3,958 | ) | | | 109,387 | | | | 54,761 | | | | 155,503 | |
Income tax (benefit) expense | | | (693 | ) | | | 42,305 | | | | 21,609 | | | | 59,954 | |
| | | | | | | | | | | | | | | | |
(Loss) Income from Continuing Operations | | | (3,265 | ) | | | 67,082 | | | | 33,152 | | | | 95,549 | |
Income from Discontinued Operations, net of taxes | | | — | | | | 15,840 | | | | — | | | | 28,441 | |
| | | | | | | | | | | | | | | | |
Net (Loss) Income | | $ | (3,265 | ) | | $ | 82,922 | | | $ | 33,152 | | | $ | 123,990 | |
| | | | | | | | | | | | | | | | |
| | | | |
Basic (Loss) Earnings Per Common Share from: | | | | | | | | | | | | | | | | |
Continuing Operations | | $ | (0.04 | ) | | $ | 0.67 | | | $ | 0.34 | | | $ | 0.96 | |
Discontinued Operations | | | — | | | | 0.16 | | | | — | | | | 0.28 | |
| | | | | | | | | | | | | | | | |
Net (Loss) Earnings Per Common Share | | $ | (0.04 | ) | | $ | 0.83 | | | $ | 0.34 | | | $ | 1.24 | |
| | | | |
Diluted (Loss) Earnings Per Common Share from: | | | | | | | | | | | | | | | | |
Continuing Operations | | $ | (0.04 | ) | | $ | 0.67 | | | $ | 0.34 | | | $ | 0.96 | |
Discontinued Operations | | | — | | | | 0.16 | | | | — | | | | 0.28 | |
| | | | | | | | | | | | | | | | |
Net (Loss) Earnings Per Common Share | | $ | (0.04 | ) | | $ | 0.83 | | | $ | 0.34 | | | $ | 1.24 | |
| | | | |
Regular dividends declared per common share | | $ | 0.25 | | | $ | — | | | $ | 0.25 | | | $ | — | |
| | | | |
Special dividends declared per common share | | $ | — | | | $ | — | | | $ | 6.73 | | | $ | — | |
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Tribune Media Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of dollars, except for share and per share data)
(Unaudited)
| | | | | | | | |
| | | June 30, 2015 | | | December 28, 2014 | |
Assets | | | | | | | | |
| | |
Current Assets | | | | | | | | |
Cash and cash equivalents | | $ | 403,511 | | | $ | 1,455,183 | |
Restricted cash and cash equivalents | | | 17,595 | | | | 17,600 | |
Accounts receivable (net of allowances of $6,231 and $7,313) | | | 425,947 | | | | 440,722 | |
Broadcast rights | | | 99,187 | | | | 147,423 | |
Income taxes receivable | | | 36,287 | | | | 4,931 | |
Deferred income taxes | | | 34,191 | | | | 29,675 | |
Prepaid expenses | | | 56,356 | | | | 26,300 | |
Other | | | 40,301 | | | | 38,989 | |
| | | | | | | | |
Total current assets | | | 1,113,375 | | | | 2,160,823 | |
| | | | | | | | |
| | |
Properties | | | | | | | | |
Property, plant and equipment | | | 984,662 | | | | 953,438 | |
Accumulated depreciation | | | (130,912 | ) | | | (102,841 | ) |
| | | | | | | | |
Net properties | | | 853,750 | | | | 850,597 | |
| | | | | | | | |
| | |
Other Assets | | | | | | | | |
Broadcast rights | | | 148,426 | | | | 157,014 | |
Goodwill | | | 3,946,481 | | | | 3,918,136 | |
Other intangible assets, net | | | 2,342,889 | | | | 2,397,794 | |
Investments | | | 1,669,581 | | | | 1,717,192 | |
Other | | | 172,914 | | | | 194,899 | |
| | | | | | | | |
Total other assets | | | 8,280,291 | | | | 8,385,035 | |
| | | | | | | | |
Total Assets | | $ | 10,247,416 | | | $ | 11,396,455 | |
| | | | | | | | |
10
Tribune Media Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of dollars, except for share and per share data)
(Unaudited)
| | | | | | | | |
| | | June 30, 2015 | | | December 28, 2014 | |
| | |
Liabilities and Shareholders’ Equity | | | | | | | | |
| | |
Current Liabilities | | | | | | | | |
Accounts payable | | $ | 77,671 | | | $ | 77,295 | |
Debt due within one year | | | 26,495 | | | | 4,088 | |
Income taxes payable | | | — | | | | 252,570 | |
Employee compensation and benefits | | | 66,755 | | | | 80,270 | |
Contracts payable for broadcast rights | | | 148,534 | | | | 178,685 | |
Deferred revenue | | | 32,457 | | | | 34,352 | |
Other | | | 63,471 | | | | 56,920 | |
| | | | | | | | |
Total current liabilities | | | 415,383 | | | | 684,180 | |
| | | | | | | | |
| | |
Non-Current Liabilities | | | | | | | | |
Long-term debt | | | 3,465,776 | | | | 3,490,897 | |
Deferred income taxes | | | 1,157,650 | | | | 1,156,214 | |
Contracts payable for broadcast rights | | | 262,145 | | | | 279,819 | |
Contract intangible liability, net | | | 26,642 | | | | 34,425 | |
Pension obligations, net | | | 457,535 | | | | 469,116 | |
Postretirement, medical, life and other benefits | | | 21,434 | | | | 21,456 | |
Other obligations | | | 65,705 | | | | 64,917 | |
| | | | | | | | |
Total non-current liabilities | | | 5,456,887 | | | | 5,516,844 | |
| | | | | | | | |
| | |
Shareholders’ Equity | | | | | | | | |
Preferred stock ($0.001 par value per share) | | | | | | | | |
Authorized: 40,000,000 shares; No shares issued and outstanding at June 30, 2015 and at Dec. 28, 2014 | | | — | | | | — | |
| | |
Class A Common Stock ($0.001 par value per share) | | | | | | | | |
| | |
Authorized: 1,000,000,000 shares; 99,949,057 shares issued and 95,884,932 shares outstanding at June 30, 2015 and 95,708,401 shares issued and 94,732,807 shares outstanding at Dec. 28, 2014 | | | 100 | | | | 96 | |
| | |
Class B Common Stock ($0.001 par value per share) | | | | | | | | |
| | |
Authorized: 1,000,000 shares at June 30, 2015 and 200,000,000 shares at Dec. 28, 2014; Issued and outstanding: 36,674 shares at June 30, 2015 and 2,438,083 shares at Dec. 28, 2014 | | | — | | | | 2 | |
Treasury stock, at cost: 4,064,125 shares at June 30, 2015 and 975,594 shares at Dec. 28, 2014 | | | (253,014 | ) | | | (67,814 | ) |
Additional paid-in-capital | | | 4,604,317 | | | | 4,591,470 | |
Retained earnings | | | 78,358 | | | | 718,218 | |
Accumulated other comprehensive loss | | | (55,939 | ) | | | (46,541 | ) |
| | | | | | | | |
Total Tribune Media Company shareholders’ equity | | | 4,373,822 | | | | 5,195,431 | |
Noncontrolling interest | | | 1,324 | | | | — | |
| | | | | | | | |
Total shareholders’ equity | | | 4,375,146 | | | | 5,195,431 | |
| | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 10,247,416 | | | $ | 11,396,455 | |
| | | | | | | | |
11
Tribune Media Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands of dollars)
(Unaudited)
| | | | | | | | |
| | | Six Months Ended | |
| | | June 30, 2015 | | | June 29, 2014 | |
| | |
Operating Activities | | | | | | | | |
Net income | | $ | 33,152 | | | $ | 123,990 | |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | | | | |
Stock-based compensation | | | 16,796 | | | | 16,026 | |
Pension credit, net of contributions | | | (14,583 | ) | | | (18,932 | ) |
Depreciation | | | 35,020 | | | | 49,864 | |
Amortization of contract intangible assets and liabilities | | | (7,079 | ) | | | (17,946 | ) |
Amortization of other intangible assets | | | 96,208 | | | | 124,874 | |
Income on equity investments, net | | | (82,847 | ) | | | (156,587 | ) |
Distributions from equity investments | | | 129,148 | | | | 155,730 | |
Non-cash loss on extinguishment of debt | | | 33,480 | | | | — | |
Original issue discount payments | | | (6,158 | ) | | | — | |
Amortization of debt issuance costs and original issue discount | | | 6,690 | | | | 6,675 | |
Gain on investment transactions | | | (8,820 | ) | | | (2,184 | ) |
Other non-operating (gain) loss | | | (211 | ) | | | 1,138 | |
Change in excess tax benefits from stock-based awards | | | 532 | | | | (896 | ) |
Transfers from restricted cash | | | 5 | | | | 684 | |
Changes in working capital items, excluding effects from acquisitions: | | | | | | | | |
Accounts receivable, net | | | 16,925 | | | | 55,291 | |
Prepaid expenses and other current assets | | | (29,812 | ) | | | (7,156 | ) |
Accounts payable | | | (4,174 | ) | | | 3,143 | |
Employee compensation and benefits, accrued expenses and other current liabilities | | | (8,567 | ) | | | (36,291 | ) |
Deferred revenue | | | (2,420 | ) | | | 16,757 | |
Income taxes | | | (284,524 | ) | | | 29,724 | |
Change in broadcast rights, net of liabilities | | | 8,998 | | | | (3,881 | ) |
Deferred income taxes | | | (5,805 | ) | | | (57,589 | ) |
Other, net | | | 1,668 | | | | (11,536 | ) |
| | | | | | | | |
Net cash (used in) provided by operating activities | | | (76,378 | ) | | | 270,898 | |
| | | | | | | | |
| | |
Investing Activities | | | | | | | | |
Capital expenditures | | | (38,717 | ) | | | (39,597 | ) |
Acquisitions, net of cash acquired | | | (69,974 | ) | | | (191,596 | ) |
Increase in restricted cash related to acquisition of Local TV | | | — | | | | 201,922 | |
Transfers to restricted cash, net | | | — | | | | (1,109 | ) |
Investments | | | (2,911 | ) | | | (2,330 | ) |
Distributions from equity investments | | | — | | | | 159,602 | |
Proceeds from sales of investments and real estate | | | 13,750 | | | | 705 | |
| | | | | | | | |
Net cash (used in) provided by investing activities | | | (97,852 | ) | | | 127,597 | |
| | | | | | | | |
| | |
Financing Activities | | | | | | | | |
Long-term borrowings | | | 1,100,000 | | | | — | |
Repayments of long-term debt | | | (1,100,342 | ) | | | (11,848 | ) |
Repayment of Senior Toggle Notes | | | — | | | | (172,237 | ) |
Long-term debt issuance costs | | | (20,207 | ) | | | (2,584 | ) |
Payments of dividends | | | (672,744 | ) | | | — | |
Common stock repurchases | | | (181,276 | ) | | | — | |
Change in excess tax benefits from stock-based awards | | | (532 | ) | | | 896 | |
Tax withholdings related to net share settlements of share-based awards | | | (3,831 | ) | | | (3,201 | ) |
Proceeds from stock option exercises | | | 166 | | | | 1,006 | |
Contribution from noncontrolling interest | | | 1,324 | | | | — | |
| | | | | | | | |
Net cash used in financing activities | | | (877,442 | ) | | | (187,968 | ) |
| | | | | | | | |
| | |
Net (Decrease) Increase in Cash and Cash Equivalents | | | (1,051,672 | ) | | | 210,527 | |
Cash and cash equivalents, beginning of period | | | 1,455,183 | | | | 640,697 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 403,511 | | | $ | 851,224 | |
| | | | | | | | |
| | |
Supplemental Schedule of Cash Flow Information | | | | | | | | |
Cash paid during the period for: | | | | | | | | |
Interest | | $ | 81,981 | | | $ | 67,086 | |
Income taxes, net of refunds | | $ | 311,672 | | | $ | 107,539 | |
12
Tribune Media Company - Consolidated
Reconciliation of Net Income to Adjusted EBITDA
(In thousands of dollars)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, 2015 | | | June 29, 2014 | | | June 30, 2015 | | | June 29, 2014 | |
Revenues | | $ | 501,524 | | | $ | 474,979 | | | $ | 974,261 | | | $ | 921,081 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net (Loss) Income | | $ | (3,265 | ) | | $ | 82,922 | | | $ | 33,152 | | | $ | 123,990 | |
Income from discontinued operations, net of taxes | | | — | | | | 15,840 | | | | — | | | | 28,441 | |
| | | | | | | | | | | | | | | | |
(Loss) Income from Continuing Operations | | | (3,265 | ) | | | 67,082 | | | | 33,152 | | | | 95,549 | |
Income tax (benefit) expense | | | (693 | ) | | | 42,305 | | | | 21,609 | | | | 59,954 | |
Reorganization items, net | | | 628 | | | | 2,165 | | | | 1,620 | | | | 4,381 | |
Other non-operating (gain) loss | | | (211 | ) | | | 1,295 | | | | (211 | ) | | | 1,138 | |
Gain on investment transaction | | | (8,133 | ) | | | (700 | ) | | | (8,820 | ) | | | (700 | ) |
Loss on extinguishment of debt | | | 37,040 | | | | — | | | | 37,040 | | | | — | |
Interest expense | | | 40,374 | | | | 39,146 | | | | 79,586 | | | | 79,665 | |
Interest and dividend income | | | (43 | ) | | | (147 | ) | | | (410 | ) | | | (318 | ) |
Income on equity investments, net | | | (45,913 | ) | | | (118,953 | ) | | | (82,847 | ) | | | (157,216 | ) |
| | | | | | | | | | | | | | | | |
Operating Profit | | | 19,784 | | | | 32,193 | | | | 80,719 | | | | 82,453 | |
Depreciation | | | 17,966 | | | | 17,540 | | | | 35,020 | | | | 34,251 | |
Amortization | | | 48,437 | | | | 61,018 | | | | 96,208 | | | | 121,692 | |
Stock-based compensation | | | 8,951 | | | | 6,121 | | | | 16,796 | | | | 14,570 | |
Severance and related charges | | | 335 | | | | 712 | | | | 1,236 | | | | 3,151 | |
Transaction-related costs | | | 3,825 | | | | 2,234 | | | | 5,463 | | | | 7,933 | |
Loss on sales of real estate | | | (9 | ) | | | — | | | | 97 | | | | — | |
Contract termination cost | | | — | | | | 15,646 | | | | — | | | | 15,646 | |
Other | | | 300 | | | | 2,398 | | | | 333 | | | | 3,956 | |
Pension credit | | | (7,280 | ) | | | (7,518 | ) | | | (14,583 | ) | | | (15,322 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 92,309 | | | $ | 130,344 | | | $ | 221,289 | | | $ | 268,330 | |
| | | | | | | | | | | | | | | | |
13
Tribune Media Company - Television and Entertainment
Reconciliation of Operating Profit to Adjusted EBITDA and Broadcast Cash Flow
(In thousands of dollars)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, 2015 | | | June 29, 2014 | | | June 30, 2015 | | | June 29, 2014 | |
Advertising | | $ | 334,557 | | | $ | 329,928 | | | $ | 634,259 | | | $ | 635,691 | |
Retransmission consent fees | | | 70,078 | | | | 57,122 | | | | 138,891 | | | | 112,687 | |
Carriage fees | | | 21,618 | | | | 14,591 | | | | 43,120 | | | | 28,719 | |
Barter/trade | | | 9,561 | | | | 10,472 | | | | 18,787 | | | | 20,783 | |
Copyright royalties | | | 3,832 | | | | 7,454 | | | | 8,097 | | | | 13,986 | |
Other | | | 5,976 | | | | 7,394 | | | | 12,768 | | | | 15,296 | |
| | | | | | | | | | | | | | | | |
Total Revenues (1) | | $ | 445,622 | | | $ | 426,961 | | | $ | 855,922 | | | $ | 827,162 | |
| | | | |
Operating Profit (1) | | $ | 47,088 | | | $ | 52,414 | | | $ | 126,436 | | | $ | 117,111 | |
Depreciation | | | 12,023 | | | | 13,136 | | | | 23,446 | | | | 25,512 | |
Amortization | | | 41,475 | | | | 56,172 | | | | 82,985 | | | | 112,827 | |
Stock-based compensation | | | 3,340 | | | | 2,113 | | | | 5,833 | | | | 4,636 | |
Severance and related charges | | | 340 | | | | 108 | | | | 536 | | | | 1,522 | |
Transaction-related costs | | | — | | | | 974 | | | | — | | | | 1,391 | |
Contract termination cost | | | — | | | | 15,646 | | | | — | | | | 15,646 | |
Other | | | — | | | | 12 | | | | 13 | | | | 1,568 | |
Pension expense | | | — | | | | 61 | | | | — | | | | 104 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA (1) | | $ | 104,266 | | | $ | 140,636 | | | $ | 239,249 | | | $ | 280,317 | |
| | | | | | | | | | | | | | | | |
| | | | |
Broadcast rights - Amortization | | | 110,913 | | | | 74,386 | | | | 182,921 | | | | 130,080 | |
| | | | |
Broadcast rights - Cash Payments | | | (117,062 | ) | | | (86,409 | ) | | | (201,777 | ) | | | (147,227 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Broadcast Cash Flow | | $ | 98,117 | | | $ | 128,613 | | | $ | 220,393 | | | $ | 263,170 | |
| (1) | At the beginning of fiscal 2015, the Company moved its Zap2it.com entertainment website business from the Digital and Data reportable segment to the Television and Entertainment reportable segment. Certain previously reported amounts have been reclassified to conform to the current presentation; the impact of this reclassification was immaterial. |
14
Tribune Media Company - Digital and Data
Reconciliation of Operating Profit to Adjusted EBITDA
(In thousands of dollars)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, 2015 | | | June 29, 2014 | | | June 30, 2015 | | | June 29, 2014 | |
Video and other | | $ | 29,329 | | | $ | 21,585 | | | $ | 55,551 | | | $ | 42,357 | |
Music | | | 14,296 | | | | 12,222 | | | | 38,276 | | | | 22,935 | |
| | | | | | | | | | | | | | | | |
Total Revenues (1) | | $ | 43,625 | | | $ | 33,807 | | | $ | 93,827 | | | $ | 65,292 | |
| | | | |
Operating Profit (Loss) (1) | | $ | (4,150 | ) | | $ | (8,910 | ) | | $ | (416 | ) | | $ | (10,996 | ) |
Depreciation | | | 2,321 | | | | 1,909 | | | | 4,426 | | | | 3,722 | |
Amortization | | | 6,962 | | | | 4,846 | | | | 13,223 | | | | 8,865 | |
Stock-based compensation | | | 679 | | | | 688 | | | | 1,230 | | | | 1,337 | |
Severance and related charges | | | (16 | ) | | | 504 | | | | (189 | ) | | | 1,136 | |
Transaction-related costs | | | 547 | | | | — | | | | 547 | | | | — | |
Other | | | 300 | | | | — | | | | 300 | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA (1) | | $ | 6,643 | | | $ | (963 | ) | | $ | 19,121 | | | $ | 4,064 | |
| | | | | | | | | | | | | | | | |
| (1) | At the beginning of fiscal 2015, the Company moved its Zap2it.com entertainment website business from the Digital and Data reportable segment to the Television and Entertainment reportable segment. Certain previously reported amounts have been reclassified to conform to the current presentation; the impact of this reclassification was immaterial. |
15
Tribune Media Company - Corporate and Other
Reconciliation of Operating Profit to Adjusted EBITDA
(In thousands of dollars)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, 2015 | | | June 29, 2014 | | | June 30, 2015 | | | June 29, 2014 | |
Total Revenues | | $ | 12,277 | | | $ | 14,211 | | | $ | 24,512 | | | $ | 28,627 | |
| | | | | | | | | | | | | | | | |
| | | | |
Operating Loss | | $ | (23,154 | ) | | $ | (11,311 | ) | | $ | (45,301 | ) | | $ | (23,662 | ) |
Depreciation | | | 3,622 | | | | 2,495 | | | | 7,148 | | | | 5,017 | |
Stock-based compensation | | | 4,932 | | | | 3,320 | | | | 9,733 | | | | 8,597 | |
Severance and related charges | | | 11 | | | | 100 | | | | 889 | | | | 493 | |
Transaction-related costs | | | 3,278 | | | | 1,260 | | | | 4,916 | | | | 6,542 | |
Loss on sales of real estate | | | (9 | ) | | | — | | | | 97 | | | | — | |
Other | | | — | | | | 2,386 | | | | 20 | | | | 2,388 | |
Pension credit | | | (7,280 | ) | | | (7,579 | ) | | | (14,583 | ) | | | (15,426 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | (18,600 | ) | | $ | (9,329 | ) | | $ | (37,081 | ) | | $ | (16,051 | ) |
| | | | | | | | | | | | | | | | |
16
