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Tribune Reports 2003 Third Quarter
Results
CHICAGO, October 16, 2003
-- Tribune Company (NYSE: TRB) today reported
third quarter 2003 diluted earnings per share (EPS) of $.53
compared with $.71 in the third quarter of 2002. The 2003
and 2002 third quarter results included a net non-operating
gain of $.05 per diluted share and $.25 per diluted share,
respectively.
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.
"Despite a challenging advertising environment
in the third quarter, Tribune achieved solid revenue growth
in both our newspaper and television businesses," said
Dennis FitzSimons, Tribune’s President and CEO. "Tribune
has generated more than $1.1 billion of operating cash flow
year-to-date and is on track to reach $1.6 billion for the
full year. In the fourth quarter, we expect revenues to grow
and expenses to be flat, setting the stage for a strong 2004."
THIRD QUARTER 2003 RESULTS
CONSOLIDATED
Tribune’s 2003 third quarter operating
revenues increased 3.4 percent to $1.39 billion from $1.34
billion in the 2002 third quarter. Consolidated cash operating
expenses increased
$52 million, or 5.5 percent, in the third quarter of 2003
primarily due to: a lower pension credit; higher newsprint
expenses; the impact of the KPLR-TV, St. Louis and KWBP-TV,
Portland, Ore. acquisitions; and higher cash operating expenses
for the Chicago Cubs. Operating cash flow was down 2.0 percent
to $370 million, compared with $378 million in the third quarter
of 2002. Tribune’s operating profit decreased 2.5 percent
to $314 million, compared with $322 million in 2002. Equity
income was $1 million in the third quarter of 2003, compared
with a loss of $28 million in the third quarter of 2002.
PUBLISHING
Publishing’s third quarter operating
revenues were $966 million, up 2.0 percent from last year’s
third quarter. Publishing cash operating expenses rose by
3.6 percent. Publishing operating cash flow was $236 million,
a 2.5 percent decrease from $243 million in 2002. Publishing
operating profit decreased 3.3 percent to $193 million, down
from $199 million in 2002.
Management Discussion
- Retail, national and classified advertising
revenues discussed below include both print and interactive
revenues for 2003 and 2002.
- Retail advertising revenues rose by 2 percent
for the quarter. Preprint revenues increased 5 percent,
led by an 11 percent increase in Chicago. Preprint revenues
in Los Angeles were up 6 percent, while New York was down
2 percent. Increases in furniture/home furnishing, food
and hardware were partially offset by a decline in electronics
and department stores.
- National advertising was up 6 percent for
the quarter with increases in the hi-tech, financial, auto
manufacturers and movies/entertainment categories.
- Classified advertising was up slightly
for the quarter. Auto increased 3 percent and real estate
was up 10 percent. Help wanted revenues for the group were
down
7 percent; Chicago fell 14 percent; Los Angeles was off
5 percent; and New York was down 4 percent.
- Interactive revenues were $25 million,
up 24 percent, due to strength in classified and banner
and sponsorship advertising.
- Cash operating expenses increased 3.6 percent
from third quarter 2002, due primarily to higher newsprint
prices and a lower pension credit. Newsprint and ink expense
was 9 percent higher than 2002 as newsprint cost per ton
was up 8 percent and consumption increased 1 percent.
- In third quarter 2003, publishing’s
operating cash flow margin was 24.5 percent.
- CareerBuilder announced partnerships with
AOL and MSN, replacing Monster as the exclusive job listings
provider at the end of this year. This will bring CareerBuilder’s
reach to well over 10 million users each month.
BROADCASTING AND ENTERTAINMENT
Broadcasting and Entertainment’s third
quarter operating revenues increased 6.5 percent to $419 million,
up from $394 million in 2002. Operating cash flow was $145
million, down 1.7 percent from $148 million in 2002. Operating
profit decreased 2.1 percent to $134 million from $137 million
last year.
Television’s third quarter revenues increased
5.4 percent to $327 million, up from $310 million in 2002.
Television cash operating expenses rose 9.7 percent from last
year. Television operating cash flow was down slightly and
operating profit decreased 1 percent.
Radio/Entertainment’s third quarter revenues
increased 10.7 percent to $93 million, up from $84 million
in 2002 due to the Chicago Cubs. Radio/Entertainment cash
operating expenses rose 15.9 percent from last year primarily
due to higher player compensation for the Chicago Cubs and
increased program costs at Tribune Entertainment. Radio/Entertainment
operating cash flow was down 11 percent and operating profit
decreased 12 percent.
Management Discussion
- Television results excluding acquisitions:
- Television revenues increased 2 percent
in the quarter.
- Television cash operating expenses
were up 6 percent compared with last year primarily
due to increased broadcast rights amortization and higher
compensation and benefits expense.
- In third quarter 2003, television’s
operating cash flow margin was 40.2 percent.
EQUITY RESULTS
Equity income was $1 million in the third quarter
of 2003, compared with a loss of $28 million in the third
quarter of 2002. The third quarter 2002 losses reflected the
Company’s $18 million share of CareerBuilder’s
one-time tax charge resulting from its conversion to a Limited
Liability Company in September 2002. The third quarter of
2003 also reflects the recognition of equity income from TV
Food Network and improvements at the WB Network.
NON-OPERATING ITEMS
In the 2003 third quarter, Tribune recorded
a net after-tax non-operating gain of $19 million, or $.05
per diluted share, primarily from marking-to-market the Company’s
PHONES derivatives and related Time Warner investment. In
the 2002 third quarter, Tribune recorded a net after-tax non-operating
gain of $82 million, or $.25 per diluted share, primarily
from the divestiture of two Denver radio stations, KOSI-FM
and KEZW-AM, which were exchanged for the assets of two television
stations, WTTV-TV, Indianapolis, and its satellite station
WTTK-TV, Kokomo, Indiana, and from marking-to-market the Company’s
PHONES derivatives and related Time Warner investment.
ADDITIONAL FINANCIAL DETAILS
Corporate expenses for the 2003 third quarter
decreased 10 percent to $12 million from
$13 million in the third quarter of 2002 mainly due to lower
management bonus expense.
Net interest expense for the 2003 third quarter
decreased to $48 million, down 5 percent from $50 million
in the third quarter 2002. The decrease was primarily due
to a reduction in outstanding debt, including the LYONs redemption
in June 2003. Debt at the end of the 2003 third quarter, excluding
the PHONES, was just above $2.2 billion compared with $2.75
billion at the end of 2002.
The effective tax rate in the 2003 third quarter
was 38.8 percent, compared with a rate of 36.5 percent in
the third quarter of 2002. In the third quarter of 2002, the
Company reduced its state income tax expense and liabilities
by a total of $9 million, net of federal taxes, as a result
of favorably resolving certain state income tax issues.
Capital expenditures were about $42 million
in the third quarter of 2003.
OUTLOOK
The Company anticipates that its fourth quarter
diluted earnings per share will be within the range of current
Wall Street analyst estimates. This assumes that the economy
continues to rebound and non-operating items for the fourth
quarter are not material. Fourth quarter 2003 consolidated
operating expenses should be flat compared to 2002 due to
lower expenses for management bonuses and broadcast rights
amortization in 2003.
WEBCAST OF CONFERENCE
CALL
Today at 8 a.m. (CDT), a live Webcast of the
2003 third 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 October 16 through October
23. More information about Tribune is available at www.tribune.com
or by calling 800/757-1694.
1“Operating
profit” for each segment excludes interest income and
expense, equity earnings 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.
:: :: ::
TRIBUNE (NYSE: TRB) is one of the country’s
premier media companies, operating businesses in broadcasting
and publishing. It reaches more than 80 percent of U.S. households
and is the only media organization with television stations,
newspapers and Web sites in the nation’s top three markets.
In publishing, Tribune operates 13 leading daily newspapers
including the Los Angeles Times, Chicago Tribune, Newsday
and Spanish-language Hoy, plus a wide range of targeted publications.
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 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. 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 Securities
and Exchange Commission through a Form 8-K. |
