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Tribune Reports 2003 Fourth Quarter
and Full Year Results
2003 Operating Cash
Flow Increases 6% to $1.6 Billion
Publishing and Broadcasting Groups Continue Margin Improvement
CHICAGO, January 28,
2004 -- Tribune Company (NYSE:
TRB) today reported fourth quarter 2003 diluted earnings
per share (EPS) of $1.00 compared with $.57 in the fourth
quarter of 2002. The 2003 fourth quarter results included
a net non-operating gain of $.34 per diluted share. Non-operating
items had no impact on 2002 fourth quarter diluted earnings
per share.
For the full year 2003, Tribune reported diluted earnings
per share of $2.61 compared with $1.30 in 2002. The 2003
full year results included a net non-operating gain of $.52
per diluted share. In 2002, Tribune recorded a net non-operating
loss of $.02 per diluted share, a restructuring charge of
$.05 per diluted share and a one-time $.50 loss per diluted
share for the cumulative effect of a change in accounting
principle related to the initial application of the impairment
provisions of FAS 142.
Tribune presents earnings per share
amounts on a generally accepted accounting principles ("GAAP")
basis only. This differs from the pro forma earnings per
share amounts supplied by broker analysts to databases
such as First Call.
"Our financial results reflect solid
growth at Tribune’s
publishing and broadcast groups," said Dennis FitzSimons,
Tribune’s Chairman, President and CEO. "We met
our goal of increasing operating cash flow to $1.6 billion.
Despite higher retirement plan costs, cash operating expenses
were up just 3 percent, reflecting our intense focus on cost
containment. Looking to 2004, we’ll continue to focus
on top line revenue growth by meeting the changing needs
of our readers, viewers and advertisers."
FOURTH QUARTER 2003 RESULTS
CONSOLIDATED
Tribune’s 2003 fourth quarter operating revenues increased
2.8 percent to $1.47 billion from $1.43 billion in the 2002
fourth quarter. Consolidated cash operating expenses decreased
$2 million, or 0.2 percent, in the fourth quarter of 2003
primarily due to lower broadcast rights expense and a decline
in Radio/Entertainment expenses, partially offset by higher
retirement plan and newsprint expenses and the impact of
the KPLR-TV, St. Louis and KWBP-TV, Portland, Ore. acquisitions.
Operating cash flow was up 10 percent to $458 million, compared
with $416 million in the fourth quarter of 2002. Tribune’s
operating profit increased 11.6 percent to $400 million,
compared with $359 million in 2002.
PUBLISHING
Publishing’s fourth quarter operating revenues were
$1.08 billion, up 2.3 percent from last year’s fourth
quarter. Publishing cash operating expenses rose by 0.8 percent.
Publishing operating cash flow was $304 million, a 6.6 percent
increase from $285 million in 2002. Publishing operating
profit increased 8.4 percent to $260 million, up from $240
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 1 percent for the quarter.
Preprint revenues increased 8 percent, with a 20 percent
increase in South Florida, an 8 percent increase in Chicago
and a 7 percent increase in Los Angeles. Increases in
furniture/home furnishing, hardware, electronics and health care were
partially offset by a decline in department stores and food.
- National
advertising was up 7 percent for the quarter with increases in the movies/entertainment,
financial and hi-tech categories, partially offset by decreases in travel/resorts
and auto manufacturers.
- Classified advertising
was up 3 percent for the quarter. Auto increased 4
percent and real estate was up 8 percent. Help wanted
revenues for the group were up
3 percent; New York rose 4 percent and Los Angeles
was up 2 percent while Chicago fell 7 percent.
- Interactive
revenues were $26 million, up 37 percent, due to strength
in classified and banner/sponsorship advertising.
- Cash
operating expenses increased 0.8 percent from fourth quarter
2002 due primarily to higher newsprint prices and a lower
pension credit. Newsprint and ink expense was 5 percent
higher than 2002 as newsprint cost per ton was up
8 percent and consumption decreased 2 percent.
- In
the fourth quarter 2003, publishing’s operating
cash flow margin was
28.0 percent, up from 26.9 percent in 2002.
BROADCASTING AND ENTERTAINMENT
Broadcasting and Entertainment’s
fourth quarter operating revenues increased 4.1 percent
to $386 million, up from $371 million in 2002. Group cash
operating expenses were down 4.8 percent in the fourth
quarter of 2003. Operating cash flow was $170 million,
up 18.1 percent from $144 million in 2002. Operating profit
rose 18.7 percent to $156 million from $131 million last
year.
Television’s fourth quarter revenues
increased 4.1 percent to $353 million, up from $339 million
in 2002. Television cash operating expenses decreased 2.2
percent from last year. Television operating cash flow
was up 12.8 percent and operating profit rose 12.6 percent.
Radio/Entertainment’s fourth quarter
revenues increased 4.2 percent to $33 million, up from
$32 million in 2002 due to playoff related revenues for
the Chicago Cubs, partially offset by fewer programs in
production at Tribune Entertainment. Radio/Entertainment
cash operating expenses decreased 21.1 percent from last
year primarily due to the production of fewer programs
at Tribune Entertainment. Radio/Entertainment operating
cash flow was $8.9 million, up from $1.1 million in 2002
and operating profit was
$7.5 million, up from a loss of $0.4 million in 2002.
Management Discussion
- Television results excluding acquisitions:
o Television revenues increased 1 percent in the quarter
compared to the fourth quarter of 2002 which showed a 22
percent increase.
o Television cash operating expenses were down 6 percent
compared with last year primarily due to decreased broadcast
rights amortization, partially offset by higher compensation
and benefits expense.
- Television’s operating cash
flow margin was 45.5 percent, up from 42 percent in 2002.
- The
Company reached a multi-level agreement with Comcast, the
nation’s largest MSO and the dominant cable
provider in the Chicago area. In partnership with Comcast
and the White Sox, Bulls and Blackhawks, the Company
will launch a new regional sports network in September
2004. The Company will receive significant rights fees
for the 72 Cubs games that will air on the channel, plus
a percentage of the network’s
profits. The Company has also sold its 8.6% interest
in The Golf Channel to Comcast for $100 million.
EQUITY RESULTS
Equity income was $12 million in the fourth quarter of 2003,
compared with $11 million in the fourth quarter of 2002.
NON-OPERATING ITEMS
In the 2003 fourth quarter, Tribune recorded
a net after-tax non-operating gain of
$114 million, or $.34 per diluted share, while in the 2002
fourth quarter the Company recorded a net after-tax non-operating
loss of $2 million. Non-operating items in 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 Sept. 11, 2001 damage sustained
by WPIX-TV in New York. The 2002 fourth quarter non-operating
items included a loss from marking-to-market the Company’s
PHONES derivatives and related Time Warner investment. In
addition, in the fourth quarters of 2003 and 2002, the Company
reduced its income tax expense and liabilities by $25 million
and $26 million, respectively, as a result of favorably resolving
certain state and federal income tax issues.
FULL YEAR RESULTS
CONSOLIDATED
For the full year 2003, operating revenues increased 3.9
percent to $5.6 billion, up from $5.4 billion in 2002. Consolidated
cash operating expenses were up 3.1 percent. Operating cash
flow was $1.6 billion, a 6.0 percent increase over the $1.5
billion reported in 2002. Operating profit, before restructuring
charges, was up 6.6 percent to $1.4 billion, from $1.3 billion
last year.
PUBLISHING
For the full year 2003, operating revenues
for Publishing increased 2.4 percent to
$4.0 billion, up from $3.9 billion in 2002. Cash operating
expenses increased 2.1 percent in 2003. Operating cash flow
grew 3.5 percent to $1.1 billion, from $1.0 billion. Operating
profit, before restructuring charges, increased 4.0 percent
to $885 million, up from $851 million in 2002.
BROADCASTING AND ENTERTAINMENT
For the full year 2003, operating revenues for Broadcasting
and Entertainment increased 7.9 percent to $1.6 billion,
up from $1.4 billion in 2002. Cash operating expenses increased
5.6 percent in 2003. Operating cash flow rose 11.9 percent
to $579 million from $517 million. Operating profit, before
restructuring charges, increased 12.4 percent to $529 million,
from $470 million.
For the full year 2003, operating revenues
for television increased 8.3 percent to
$1.3 billion, up from $1.2 billion in 2002. Cash operating
expenses increased 6 percent in 2003. Operating cash flow
grew 11.7 percent to $552 million from $494 million. Operating
profit, before restructuring charges, increased 11.9 percent
to $507 million, from $453 million.
Radio/Entertainment’s full year
2003 revenues increased 5.6 percent to $235 million, up
from $222 million in 2002. Radio/Entertainment cash operating
expenses increased
4.3 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 up 17.3 percent to $27 million, from $23 million
in 2002 and operating profit, before restructuring charges,
was up 27.4 percent to $21 million, from
$17 million in 2002.
EQUITY RESULTS
Equity income was $6 million for the
full year 2003, compared with a loss of $41 million in
2002. The full year 2002 losses included two one-time items
related to CareerBuilder. In the first quarter of 2002,
the Company recorded its $7.5 million share of a restructuring
charge for CareerBuilder. In the third quarter, there was
a one-time charge for Tribune’s
$18 million share of CareerBuilder’s tax liability
resulting from its conversion to a Limited Liability Company
in September 2002. The full year 2003 also reflects the recognition
of equity income from TV Food Network.
ADDITIONAL FINANCIAL DETAILS
Corporate expenses for the 2003 fourth quarter increased
25 percent to $16 million from
$13 million in the fourth quarter of 2002 mainly due to higher
compensation and benefits expense. Corporate expenses for
the full year 2003, before restructuring charges, increased
16.6 percent to $53 million from $46 million in 2002.
Net interest expense for the 2003 fourth quarter decreased
to $47 million, down 5.6 percent from $50 million in the
fourth quarter 2002. For the full year 2003, net interest
expense decreased 6.1 percent to $192 million, down from
$204 million in 2002. The decrease was primarily due to a
reduction in outstanding debt. Debt at year-end 2003, excluding
the PHONES, was approximately $2.0 billion compared with
$2.75 billion at the end of 2002.
The effective tax rate in the 2003 fourth quarter was 33.8
percent, compared with a rate of 29.4 percent in the fourth
quarter of 2002. The effective tax rate for the full year
2003 was 37.0 percent, compared with a rate of 35.3 percent
for the full year 2002. In both the fourth quarters and full
years of 2003 and 2002, the Company reduced its income tax
expense and liabilities as a result of favorably resolving
certain state and federal income tax issues. The adjustment
in 2003 was $25 million and was recorded in the fourth quarter.
The 2002 adjustment was $35 million, of which $26 million
was recorded in the fourth quarter.
Capital expenditures were about $90 million in the fourth
quarter and $194 million for the full year 2003.
2004 FULL YEAR OUTLOOK
As stated at the December 2003 analyst conferences, the
Company anticipates consolidated revenue growth of about
6 percent in 2004, including about 1 percent from new publications.
Consolidated operating expenses should grow in the range
of 5.5 percent due to higher expenses for retirement plans,
medical, newsprint and the impact of new publications. Full
year 2004 diluted earnings per share is expected to be within
the range of current Wall Street analyst estimates. This
projection assumes that non-operating items are not material
in 2004.
WEBCAST OF CONFERENCE CALL
Today at 8 a.m. (CDT), a live Webcast of the 2003 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 Jan. 28 through Feb. 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 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. |
