back | home

Press Release

Tribune Reports 2005 Third Quarter Results

CHICAGO, October 13, 2005 -- Tribune Company (NYSE:TRB) today reported third quarter 2005 diluted earnings per share of $.07 compared with $.37 in the third quarter of 2004. The 2005 third quarter results included a net non-operating loss of $.43 per diluted share related primarily to an adverse tax ruling discussed in the following paragraph. The 2004 third quarter results included a net non-operating loss of $.04 per diluted share and a charge of $.10 per diluted share related to the anticipated settlement with advertisers regarding misstated circulation at Newsday and Hoy, New York.

On Sept. 27, 2005, the United States Tax Court issued an opinion disallowing the 1998 tax-free reorganization of Matthew Bender, a former subsidiary of The Times Mirror Company. Tribune acquired Times Mirror in June 2000, and inherited the preexisting tax dispute at that time. As announced by the Company on Sept. 27, 2005, the Company intends to appeal the Tax Court ruling to the U.S. Court of Appeals for the Seventh Circuit. Taxes and related interest for both the Matthew Bender transaction and a similar transaction completed by Times Mirror for its Mosby subsidiary in the same year total approximately $1 billion. Over time, deductions for state taxes and interest will reduce the net cash outlay to approximately $840 million. As a result of the Tax Court ruling, the Company recorded additional income tax expense of $150 million, or $.48 per diluted share, and additional goodwill of approximately $460 million in the third quarter of 2005.

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.

"Newspaper circulation trends showed meaningful improvement in the third quarter as we moved closer to stabilizing circulation levels," said Dennis FitzSimons, Tribune chairman, president and chief executive officer. "With the current soft advertising environment, we will continue to focus on our cost structure in both publishing and broadcasting."

THIRD QUARTER 2005 RESULTS
(Compared to Third Quarter 2004)

CONSOLIDATED

Tribune’s 2005 third quarter operating revenues decreased 1 percent to $1.40 billion from $1.41 billion in the 2004 third quarter. Consolidated cash operating expenses were down
4 percent, or $40 million. Operating cash flow was up 9 percent to $343 million, while operating profit increased 12 percent to $287 million.

PUBLISHING

Publishing’s third quarter operating revenues were $980 million, essentially flat compared with last year’s third quarter. Publishing cash operating expenses were down 5 percent, or
$39 million, as 2004 included a $55 million charge related to the anticipated settlement with advertisers regarding misstated circulation at Newsday and Hoy, New York. Publishing operating cash flow was $212 million, a 22 percent increase from $174 million in 2004. Publishing operating profit increased 29 percent to $170 million, up from $132 million in 2004.

Management Discussion

• Advertising revenues increased 2 percent for the quarter. Excluding Newsday, advertising revenues increased 3 percent. In September 2004, Newsday implemented lower ad rates as a result of the significant reduction in reported circulation.
• Retail advertising revenues were up 1 percent for the quarter. An increase in hardware/home improvement stores was partially offset by decreases in the
  food & drug, electronics and department stores categories. Preprint revenues increased 1 percent; excluding Newsday, preprint revenue grew 4 percent.
• National advertising was down 3 percent for the quarter, with decreases in wireless, movies, technology and transportation, partially offset by an increase in the financial category.
• Classified advertising was up 7 percent for the quarter: help wanted revenues were up 17 percent; real estate revenues rose 16 percent; and auto revenues were down
  4 percent for the quarter.
• Circulation revenues were down 7 percent for the quarter.
  • Total net paid circulation for Tribune’s 11 metro newspapers averaged
    3.0 million copies daily (Mon-Sat) and 4.3 million copies Sunday for the 2005 third quarter, a decline of 2.3 percent and 3.0 percent, respectively, from the prior year.
  • Individually paid circulation (home delivery plus single copy) averaged
    2.8 million copies daily and 4.1 million copies Sunday, a decline of 1.3 percent and 2.8 percent, respectively.
• Interactive revenues, which are included in the above categories, were up
  46 percent to $47 million mainly due to strength in classified help wanted revenues.
• Cash operating expenses decreased 5 percent, or $39 million, due to the absence of the previously discussed 2004 charge of $55 million related to Newsday and Hoy, New York. All other cash operating expenses were up $16 million, primarily due to a 1 percent increase in compensation expense and a 5 percent rise in newsprint and ink expense due to higher market prices, partially offset by lower consumption.

BROADCASTING AND ENTERTAINMENT

Broadcasting and entertainment’s third quarter operating revenues decreased 2 percent to $422 million, down from $432 million in 2004. Group cash operating expenses were down 1 percent compared with the 2004 third quarter, despite additional costs related to Hurricane Katrina at our two New Orleans television stations. Operating cash flow was $144 million, down 5 percent from $151 million, and operating profit decreased 6 percent to $131 million from $138 million.

Television’s third quarter revenues decreased 6 percent to $307 million, down from
$327 million in 2004. Television cash operating expenses were up 4 percent from last year. Television operating cash flow was $105 million, a 21 percent decrease from $133 million. Television operating profit declined 23 percent to $94 million, down from $121 million.

Management Discussion

• Television revenues were affected by a continuing uneven advertising environment, particularly in major markets, as well as softness in the movie, telecom and automobile categories. Station revenues in New York, Los Angeles, Chicago and Boston continue to be impacted by ratings issues.
• Radio/entertainment revenues and cash flow reflect improvements at the Chicago Cubs, due mainly to more home games and higher broadcast and marketing revenues. This was partially offset by a decline at Tribune Entertainment due primarily to fewer programs in production.

EQUITY RESULTS

Net equity income was $8 million in the third quarter of 2005, compared with a loss of $1.6 million in the third quarter of 2004. The increase reflects improvements at TV Food Network and Comcast SportsNet Chicago. In addition, the Company is no longer recording losses for The WB Network as the Company’s book investment has been reduced to zero.

NON-OPERATING ITEMS

In the 2005 third quarter, Tribune recorded a pretax non-operating gain of $27 million
($17 million after-tax), primarily from marking-to-market the derivative component of the Company’s PHONES and the related Time Warner investment. In addition, the Company recorded $150 million of additional income tax expense as a result of the Matthew Bender Tax Court ruling. In the aggregate, non-operating items in the third quarter of 2005 resulted in an after-tax loss of $134 million, or $.43 per diluted share.

In the 2004 third quarter, the Company recorded a pretax non-operating loss of $20 million ($12 million after-tax, or $.04 per diluted share) primarily from marking-to-market the derivative component of the Company’s PHONES and the related Time Warner investment.

ADDITIONAL FINANCIAL DETAILS

Interest expense for the 2005 third quarter increased to $39 million, up 10 percent from $35 million in the third quarter of 2004, primarily due to the new bond issuances in August, which were used to repay lower interest rate commercial paper borrowings. Debt, excluding the PHONES, was $2.0 billion at the end of the 2005 third quarter, and increased to $2.9 billion shortly thereafter as a result of issuing commercial paper to pay the federal portion of the Matthew Bender and Mosby tax liabilities.

Diluted weighted average shares outstanding declined by 3 percent primarily due to stock repurchases. The Company repurchased 3.6 million shares in the third quarter and 9.0 million shares in the first three quarters of 2005.

Capital expenditures were $43 million in the third quarter of 2005.

2005 FINANCIAL ASSUMPTIONS

Consolidated revenues will continue to be impacted by many factors, including changes in national and local economic conditions, job creation, circulation and audience share levels. Investors are encouraged to review the Company’s monthly revenue releases for current trends.

For the full year 2005, consolidated operating expenses are expected to decline due to the absence of the $90 million advertising settlement charge and the $41 million of position elimination costs recorded in 2004. All other consolidated operating expenses are expected to be flat to up slightly for 2005 due to higher expenses for retirement plans and newsprint, along with a slight increase in broadcast rights expense. Net equity income is projected to be higher than 2004. Interest expense is expected to be up from 2004 due to the payment of the Matthew Bender and Mosby tax liabilities and higher interest rates. Capital expenditures are projected to be flat to up slightly over 2004.

The Company is required to adopt Financial Accounting Standard No. 123R, which requires the expensing of stock options, in the first quarter of 2006.

WEBCAST OF CONFERENCE CALL

Today at 8 a.m. (CDT), a live webcast of the 2005 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 13 through October 20. 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 top 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 the Los Angeles Times, Chicago Tribune and Newsday, plus a wide range of targeted publications including Spanish-language Hoy. The Company’s broadcasting group operates 26 television stations; Superstation WGN on national cable; Chicago’s WGN-AM; 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. 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. The Company's next 10-Q report to be filed with the SEC may contain updates to the information included in this release.