<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 26, 1993
Commission number 1-8572
TRIBUNE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-1880355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
435 North Michigan Avenue, Chicago, Illinois 60611
(Address of principal executive officer) (Zip Code)
Registrant's telephone number, including area code: (312) 222-9100
Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
Name of each exchange on
Title of each class which registered
- ------------------- -------------------------
<S> <C>
Common Stock (without par value) New York Stock Exchange
Preferred Share Purchase Rights Chicago Stock Exchange
Pacific Stock Exchange
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X. No.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
Aggregate market value of the Company's voting stock held by non-affiliates
on March 3, 1994, based upon the closing price of the Company's Common Stock as
reported on the New York Stock Exchange Composite Transactions list for such
date: approximately $3,427,000,000.
At March 3, 1994 there were 67,167,342 shares of the Company's Common Stock
outstanding.
The following documents are incorporated by reference, in part:
1993 Annual Report to Stockholders (Parts I and II, to the extent described
therein).
Definitive Proxy Statement for the April 19, 1994 Annual Meeting of
Stockholders (Part III, to the extent described herein).
<PAGE>
PART I
ITEM 1. BUSINESS.
Tribune Company (the "Company") is an information and entertainment company.
Through its subsidiaries, the Company is engaged in the publishing of
newspapers, books and information in print and digital formats and the
broadcasting, production and syndication of information and entertainment in
metropolitan areas in the United States. The Company also has an ownership
interest in a Canadian newsprint manufacturer. The Company was founded in 1847
and incorporated in Illinois in 1861. As a result of a corporate restructuring
in 1968, the Company became a holding company incorporated in Delaware.
References in this report to "Tribune Company" or "the Company" include Tribune
Company and its subsidiaries, unless the context otherwise indicates. The
information in this Item 1 should be read in conjunction with the information
contained under the heading "Management's Discussion and Analysis of Results of
Operations and Financial Condition" in the Company's 1993 Annual Report to
Stockholders, which is incorporated herein by reference.
BUSINESS SEGMENTS
Through 1992, the Company's operations were divided for reporting purposes
into three industry segments: Publishing, Broadcasting and Entertainment, and
Newsprint Operations. The newsprint operations segment consisted entirely of
QUNO Corporation ("QUNO"), which operates in Canada while the other segments
operate in the United States. As a result of an initial public offering
completed by QUNO in February 1993, the Company's ownership interest in the
newsprint operations segment was reduced from 100% to 59%, and its voting
interest was reduced to 49%. As the Company's voting interest is now less than
50%, the Company is using the equity method of accounting for its investment in
QUNO beginning in 1993 and newsprint operations is no longer reported as a
business segment. On March 20, 1991, the Company sold its New York newspaper,
the Daily News. The following table sets forth operating revenue and profit
information regarding each segment of the Company and presents publishing
results both including and excluding the New York Daily News (in millions).
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER
-----------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Publishing
Publishing excluding Daily News (1)..... $1,229.4 $1,176.2 $1,150.9 $1,205.6 $1,216.4
New York Daily News..................... - - - 321.8 422.0
-------- -------- -------- -------- --------
Total Publishing..................... 1,229.4 1,176.2 1,150.9 1,527.4 1,638.4
Broadcasting and Entertainment (2)....... 727.2 684.0 617.5 624.0 584.3
Intercompany............................. (4.1) (4.4) (4.0) (3.2) (3.4)
-------- -------- -------- -------- --------
Total................................ 1,952.5 1,855.8 1,764.4 2,148.2 2,219.3
Newsprint Operations..................... - 366.3 422.1 351.7 456.7
Intercompany............................. - (117.2) (142.5) (138.0) (213.5)
-------- -------- -------- -------- --------
Total Operating Revenues............. $1,952.5 $2,104.9 $2,044.0 $2,361.9 $2,462.5
-------- -------- -------- -------- --------
Operating Profit (Loss) (3):
Publishing
Publishing excluding Daily News (4)..... $ 255.1 $ 224.5 $ 217.0 $ 278.6 $ 299.3
New York Daily News..................... - - - (114.5) (2.2)
-------- -------- -------- -------- --------
Total Publishing..................... 255.1 224.5 217.0 164.1 297.1
Broadcasting and Entertainment (2)....... 125.7 121.3 100.2 107.5 96.8
Corporate expenses....................... (24.4) (23.6) (22.2) (22.6) (22.1)
-------- -------- -------- -------- --------
Total................................ 356.4 322.2 295.0 249.0 371.8
Newsprint Operations..................... - (53.8) (7.0) (11.1) 61.3
-------- -------- -------- -------- --------
Total Operating Profit............... $ 356.4 $ 268.4 $ 288.0 $ 237.9 $ 433.1
-------- -------- -------- -------- --------
</TABLE>
1
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- ----------
(1) 1992 amounts have been restated to conform to the 1993 presentation.
(2) 1992 includes $12.3 million of Major League Baseball expansion fees.
(3) Operating profit for each segment excludes interest income and expense, non-
operating gains and losses, equity in QUNO net loss and income taxes.
(4) 1992 includes a $15.3 million charge for the disposition of The Peninsula
Times Tribune.
The following table sets forth asset information for each industry segment
(in millions).
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER
---------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Assets:
Publishing...................... $ 988.4 $ 856.4 $ 861.9 $ 924.3 $1,018.4
Broadcasting and Entertainment.. 1,155.3 1,149.5 1,120.0 1,065.0 1,175.4
Corporate (1)................... 392.7 133.2 132.2 148.6 157.2
Intercompany receivables........ - (10.8) (18.7) (12.3) (29.2)
-------- -------- -------- -------- --------
Total....................... 2,536.4 2,128.3 2,095.4 2,125.6 2,321.8
Newsprint Operations............ - 623.3 699.9 700.5 691.7
-------- -------- -------- -------- --------
Total Assets................ $2,536.4 $2,751.6 $2,795.3 $2,826.1 $3,013.5
-------- -------- -------- -------- --------
</TABLE>
- ----------
(1) 1993 Corporate assets include a $250.9 million investment in and advances to
QUNO Corporation.
The Company's results of operations, when examined on a quarter-by-quarter
basis, reflect the seasonality of advertising that affects both publishing and
broadcasting operations. Second and fourth quarter advertising revenues are
typically higher than first and third quarter revenues. Results for the second
quarter usually reflect spring advertising, while the fourth quarter includes
advertising related to the holiday season.
PUBLISHING
The publishing segment represented 63% of the Company's consolidated operating
revenues for 1993. The combined average circulation of the Company's
newspapers was approximately 1.4 million daily and 2.0 million Sunday, according
to Audit Bureau of Circulation ("ABC") averages for the six-month period ended
September 1993. The Company's primary newspapers are the Chicago Tribune, the
Fort Lauderdale-based Sun-Sentinel and The Orlando Sentinel. In Virginia, the
Company owns the Newport News Daily Press. In California, the Company owns two
daily newspapers and a weekly newspaper located in suburban areas in the San
Diego market. The Company also operated one daily newspaper and several weekly
newspapers in Palo Alto, California, which ceased their publication in March
1993. The Company recorded a $15.3 million pre-tax charge in 1992 for the
closure of these Palo Alto-based papers. For 1993, the portion of total
publishing operating revenues represented by each of the Company's principal
newspapers was as follows: Chicago Tribune--53%; Sun-Sentinel--19%; The Orlando
Sentinel--16%; and California and Virginia Newspapers--5%. On July 28, 1993,
the Company acquired Contemporary Books, Inc., a publisher of non-fiction trade
titles and educational books and materials, for $22.0 million in cash and $18.5
million in common stock. On September 13, 1993, the Company acquired Compton's
Multimedia Publishing Group for $57 million in cash. Compton's develops and
distributes interactive multimedia software for the consumer and education
markets. Both of these acquisitions were accounted for as purchases and the
results of their operations are included in the consolidated statements of
income from the respective dates of their acquisition. In February 1994, the
Company acquired substantially all of the assets of The Wright Group, a leading
publisher of "whole language" educational materials for the elementary school
market, for approximately $100 million in cash. The acquisition will be
accounted for as a purchase in 1994. In addition, the Company owns a newspaper
syndication and media marketing company, direct mail operations and other
publishing-related businesses.
2
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Each of the Company's newspapers operates independently to meet most
effectively the needs of the area it serves. Editorial policies are established
by local management. The Company coordinates certain aspects of operations and
resources in order to provide greater efficiency and economies of scale.
The Company's newspapers compete for readership and advertising in varying
degrees with other metropolitan, suburban and national newspapers as well as
with television, radio and other media. Competition for newspaper advertising
is based upon circulation levels, readership demographics, price, service and
advertiser results, while competition for circulation is based upon the content
of the newspaper, service and price.
The Company's newspapers are printed in Company-owned production facilities.
The principal raw material is newsprint. In 1993, the Company's newspapers
utilized approximately 376,000 metric tons of newsprint. Approximately 70% of
the newspapers' supply was purchased from QUNO, with the remainder purchased
from outside sources. The Company is party to a contract with QUNO expiring in
2007 to supply newsprint based on market prices. Under the contract, the
Company has agreed to purchase specified minimum amounts of newsprint each year
subject to certain limitations. The specified minimum annual volume is 250,000
metric tons in years 1994 to 1999, 225,000, 200,000 and 175,000 metric tons in
years 2000 to 2002, respectively, and 150,000 metric tons in each of years 2003
to 2007. See "QUNO Corporation" for a discussion of the Company's investment in
the newsprint manufacturing business.
The following table provides a breakdown of revenues for the publishing
segment for the last five years, excluding revenues at the Daily News.
<TABLE>
<CAPTION>
OPERATING REVENUES EXCLUDING DAILY NEWS
(IN THOUSANDS)
FISCAL YEAR ENDED DECEMBER
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Advertising:
Retail........ $ 435,107 $ 427,997 $ 429,340 $ 442,946 $ 455,959
General....... 120,589 128,501 124,391 129,481 128,813
Classified.... 336,828 311,553 300,795 356,356 374,480
---------- ---------- ---------- ---------- ----------
Total...... 892,524 868,051 854,526 928,783 959,252
Circulation..... 246,093 238,302 234,720 222,992 210,305
Other (1) (2)... 90,785 69,827 61,636 53,844 46,823
---------- ---------- ---------- ---------- ----------
Total...... $1,229,402 $1,176,180 $1,150,882 $1,205,619 $1,216,380
---------- ---------- ---------- ---------- ----------
</TABLE>
- -----------
(1) 1992 amounts have been restated to conform to the 1993 presentation.
(2) Primarily includes revenues from advertising placement services, the
syndication of columns, features, information and comics to newspapers,
publishing books and information in print and digital formats, commercial
printing operations, direct mail operations and other publishing-related
activities. 1993 includes revenues from Contemporary Books and Compton's,
from their respective dates of acquisition, totaling $24 million.
Total advertising revenues improved in 1993 due to increases in full run
linage and preprint volume and higher advertising rates. The increase in retail
advertising reflects increases in the electronics and department store
categories in Chicago and Fort Lauderdale. General advertising revenues
decreased in 1993 due to lower advertising in the transportation and resorts
categories at nearly all the newspapers. Classified advertising also increased
in 1993 as help wanted and automobile advertising improved at most newspapers.
Chicago Tribune
Founded in 1847, the Chicago Tribune is published daily, including Sunday, and
primarily serves an
3
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eight-county market in northern Illinois and Indiana. This market ranks third
in the United States in number of households. For the six months ended
September 1993, the Chicago Tribune ranked 8th in average daily circulation and
5th in average Sunday circulation in the nation, based on ABC averages.
Approximately 69% and 50% of the Tribune's daily and Sunday circulation,
respectively, is sold through home delivery, with the remainder primarily sold
at newsstands and vending boxes. The daily edition's newsstand price increased
by $.15 to $.50 and its home delivery price increased $.05 to $.40 effective
September 27, 1992. The Sunday edition's newsstand price increased by $.25 to
$1.50 effective April 8, 1990. The following tables set forth selected
information for the Chicago Tribune.
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<CAPTION>
AVERAGES FOR THE TWELVE MONTHS ENDED DECEMBER
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CIRCULATION:
Daily................. 700,000 715,000 733,000 728,000 731,000
Sunday................ 1,113,000 1,114,000 1,121,000 1,119,000 1,132,000
FISCAL YEAR ENDED DECEMBER
--------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(IN THOUSANDS)
ADVERTISING INCHES:
Full Run (all zones)
Retail.............. 1,222 1,202 1,195 1,181 1,343
General............. 294 345 347 386 396
Classified.......... 1,214 1,183 1,213 1,452 1,572
-------- -------- -------- -------- --------
Total............ 2,730 2,730 2,755 3,019 3,311
Part Run.............. 4,672 4,442 4,299 4,523 4,683
Preprinted Inserts.... 2,437 2,210 2,002 1,874 1,753
-------- -------- -------- -------- --------
Total Inches..... 9,839 9,382 9,056 9,416 9,747
-------- -------- -------- -------- --------
OPERATING REVENUES...... $647,112 $619,670 $604,703 $632,001 $635,548
-------- -------- -------- -------- --------
</TABLE>
The 1993 improvement in advertising volume is due to increases in part run and
preprinted inserts as more targeted zoning options were offered to advertisers.
The daily edition price increase on September 27, 1992 contributed to the
decrease in circulation volume between 1993 and 1992.
Based on ABC averages for the six months ended September 1993, the Chicago
Tribune had a 29% lead in total daily circulation and a 110% lead in Sunday
circulation over its principal competitor, the Chicago Sun-Times. The Chicago
Tribune's total advertising volume and operating revenues are estimated to be
substantially greater than those of the Sun-Times. The Chicago Tribune also
competes with other city, suburban and national daily newspapers, direct mail
operations and other media. In September 1993, the Chicago Tribune began
publishing Exito!, targeted to Spanish-speaking households. The Chicago Tribune
also operates Chicago Online, a local interactive computer service that offers
news and entertainment information through a joint venture with America Online
and audiotex services and publications targeted to specific consumer market
segments.
Sun-Sentinel
The Sun-Sentinel is published daily, including Sunday, and leads the Fort
Lauderdale market in circulation. Approximately 66% and 64% of the Sun-
Sentinel's daily and Sunday circulation, respectively, is sold through home
delivery, with the remainder sold at newsstands and vending boxes. The paper's
principal competition comes from the Miami Herald and national and local
publications, as well as other media. The Miami/Fort
4
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Lauderdale market ranks 16th in the nation in terms of households. The
newsstand price of all Sunday editions was increased by $.25 to $1.00 on
November 20, 1989. In January 1992, the newsstand price of the Palm Beach
Sunday edition increased by $.25 to $1.25. Prior to March 27, 1992, the News
and the Sun-Sentinel, based in Fort Lauderdale, Florida, were published in the
afternoon and morning, respectively. The paper was combined for Saturday and
Sunday editions as the Fort Lauderdale Sun-Sentinel. The News, which accounted
for approximately three percent of 1991 circulation, discontinued publication
after the March 27, 1992 edition. The following tables set forth selected
information for the Sun-Sentinel.
<TABLE>
<CAPTION>
AVERAGES FOR THE TWELVE MONTHS ENDED DECEMBER
----------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CIRCULATION:
Daily................. 263,000 259,000 251,000 245,000 254,000
Sunday................ 362,000 350,000 338,000 328,000 330,000
FISCAL YEAR ENDED DECEMBER
----------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(IN THOUSANDS)
ADVERTISING INCHES:
Full Run (all zones)
Retail.............. 1,155 1,105 1,182 1,221 1,421
General............. 203 214 214 252 259
Classified.......... 2,261 2,091 2,159 2,520 2,661
-------- -------- -------- -------- --------
Total............ 3,619 3,410 3,555 3,993 4,341
Part Run.............. 2,831 2,889 2,629 2,326 2,284
Preprinted Inserts.... 1,564 1,473 1,314 1,269 1,581
-------- -------- -------- -------- --------
Total Inches..... 8,014 7,772 7,498 7,588 8,206
-------- -------- -------- -------- --------
OPERATING REVENUES...... $233,169 $221,881 $214,990 $226,763 $228,333
-------- -------- -------- -------- --------
</TABLE>
The 1993 improvement in advertising volume is primarily due to increased help
wanted and automotive advertising. The 1991 and 1990 reductions in advertising
volume are attributable primarily to the slowdown in the south Florida economy
during those years.
In 1989, the Sun-Sentinel began a commercial printing operation. In 1991, two
weekly publications, XS and Exito!, targeted to young adults and Spanish-
speaking households, respectively, were launched and continued to expand
readership in 1992 and 1993. Like the Chicago Tribune, the Sun-Sentinel also
operates audiotex services and publications targeted to specific consumer market
segments.
The Orlando Sentinel
The Orlando Sentinel is published daily including Sunday and serves primarily
a five-county area in central Florida. It is the only major daily newspaper in
the Orlando market, although it competes with other Florida and national
newspapers as well as other media. Approximately 74% of the paper's daily and
66% of its Sunday circulation is sold on a home delivery basis, with the
remainder sold at newsstands and vending boxes. On October 12, 1992, the weekly
home delivery price was increased by $.50 to $3.75. On March 30, 1992, the
newsstand price of the daily edition increased $.15 to $.50, except for most
Thursday editions, which had been priced at $.50 since February 1991. The
newsstand price of the Sunday edition was increased to $1.50 from $1.25 at the
end of 1990. The Orlando/Daytona Beach/Melbourne market ranks 23rd among U.S.
markets in terms of households. The following tables set forth selected
information for The Orlando Sentinel.
5
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<TABLE>
<CAPTION>
AVERAGES FOR THE TWELVE MONTHS ENDED DECEMBER
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CIRCULATION:
Daily................. 269,000 281,000 283,000 280,000 269,000
Sunday................ 387,000 387,000 382,000 384,000 371,000
FISCAL YEAR ENDED DECEMBER
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(IN THOUSANDS)
ADVERTISING INCHES:
Full Run (all zones)
Retail.............. 956 985 1,074 1,074 1,113
General............. 83 90 93 118 142
Classified.......... 1,665 1,522 1,468 1,796 2,005
-------- -------- -------- -------- --------
Total............ 2,704 2,597 2,635 2,988 3,260
Part Run.............. 1,766 2,024 2,157 1,890 1,963
Preprinted Inserts.... 2,508 2,220 1,877 1,924 1,902
-------- -------- -------- -------- --------
Total Inches..... 6,978 6,841 6,669 6,802 7,125
-------- -------- -------- -------- --------
OPERATING REVENUES...... $202,327 $196,043 $196,180 $203,307 $207,974
-------- -------- -------- -------- --------
</TABLE>
The economy in central Florida began to strengthen in 1993. Advertising
volume was up overall due to improved help wanted and automotive advertising and
increased preprint volume from increased zoning. The 1991 and 1990 reductions
in advertising volume are attributable primarily to the slowdown in the central
Florida economy during those years.
In 1990, The Orlando Sentinel launched US Express, a free weekly entertainment
publication that is used to distribute advertising to non-subscribers. US
Express is syndicated nationally, beginning in 1993.
California and Virginia Newspapers
The Times Advocate, located in Escondido, California, serves the northern
portion of San Diego County. The Times Advocate was published weekday
afternoons and Saturday and Sunday mornings until April 1992, when the weekday
afternoon edition was converted to a morning edition. In 1988, the Times
Advocate acquired several weekly newspaper publications, which complement the
paper's daily coverage with more local news and advertising. In June 1990, one
of these weekly publications, The Californian, began publishing six days a week.
The Palo Alto-based Times Tribune ceased publication in March 1993. A $15.3
million pre-tax charge was recorded at December 27, 1992, for the closure of the
Times Tribune.
In 1986, the Company purchased the Daily Press/The Times-Herald in Newport
News, Virginia. The Daily Press is published every morning including Sunday.
The Times-Herald was published each weekday afternoon until September 1, 1991,
when this edition was discontinued. The Daily Press constitutes the only major
daily newspaper in the market, although it competes with other regional and
national newspapers as well as other media. In addition to Newport News, the
Daily Press market includes Hampton, Williamsburg and eight other cities and
counties in Virginia. This market area is commonly called the Virginia
Peninsula and, together with Norfolk, Portsmouth and Virginia Beach, is the 39th
largest U.S. market in terms of households. The weekly home delivery price was
increased by $.30 to $2.75 in September 1992. The newsstand price of the daily
edition increased by $.10 to $.35, and the Sunday edition newsstand price was
increased to $1.25 from $1.00, both effective October 1, 1990. Approximately
78% of the paper's daily and 75% of its Sunday circulation is sold on a home
delivery basis, with the remainder sold at newsstands and vending boxes.
6
<PAGE>
The following tables set forth selected combined information for the
California and Virginia daily newspapers.
<TABLE>
<CAPTION>
AVERAGES FOR THE TWELVE MONTHS ENDED DECEMBER
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CIRCULATION (1):
Daily....................... 154,000 153,000 154,000 159,000 150,000
Sunday...................... 179,000 178,000 175,000 177,000 162,000
FISCAL YEAR ENDED DECEMBER
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(IN THOUSANDS)
ADVERTISING INCHES (1) (2):
Full Run (all zones)
Retail.................... 1,111 1,114 1,154 1,269 1,456
General................... 61 61 88 99 125
Classified................ 1,362 1,227 1,176 1,319 1,537
------- ------- ------- ------- -------
Total.................. 2,534 2,402 2,418 2,687 3,118
Part Run (3)................ 781 801 922 948 674
Preprinted Inserts (3)...... 3,313 3,198 3,129 2,962 2,688
------- ------- ------- ------- -------
Total Inches........... 6,628 6,401 6,469 6,597 6,480
------- ------- ------- ------- -------
OPERATING REVENUES (3)....... $65,146 $82,506 $86,323 $92,233 $93,853
------- ------- ------- ------- -------
</TABLE>
- -----------
(1) The Peninsula Times Tribune was closed on March 12, 1993. Circulation and
inches relating to the Times Tribune have been excluded from all years
presented.
(2) The Times-Herald (afternoon edition) was discontinued on September 1, 1991.
Inches relating to this edition have been excluded from all years presented.
(3) Includes related weekly publications.
The increased inches in 1993 reflect the improving economies of both Virginia
& California.
Related Businesses
The Company is engaged in publishing books and information in print and
digital formats through Contemporary Books Inc. and Compton's Multimedia
Publishing Group, both acquired in 1993. The Company is also involved in
syndication activities, primarily through Tribune Media Services, Inc. ("TMS"),
involving the marketing of columns, features, information and comic strips to
newspapers, direct mail operations through AmeriComm/Illinois, acquired in 1991,
and other publishing-related activities. TMS is also engaged in advertising
placement services for television listings in newspapers and the development of
news products and services for electronic and print media. Tribune Properties is
responsible for oversight of the Company's real estate assets and property
leasing transactions. The Company also owns Gold Coast, a shopper publication
located in Fort Lauderdale. During 1990, 13 other shoppers and weekly
publications located on Florida's Gulf Coast were sold and during 1989 Penny
Saver, an Illinois shopper publication, was sold. Total operating revenues for
these related businesses are shown below, net of intercompany revenues. The
amount for 1992 has been restated to conform to the 1993 presentation.
7
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RELATED BUSINESS REVENUES
---------------------------
(IN THOUSANDS)
1993.......... $81,648
1992.......... 56,080
1991.......... 48,686
1990.......... 51,315
1989.......... 50,672
Sale of the New York Daily News
On March 20, 1991 the Company sold the New York Daily News to Maxwell
Newspapers, Inc. ("Maxwell"). Daily News operating losses for 1991 through the
date of sale were recorded as part of the Company's 1990 financial statements.
Founded in 1919 by Tribune Company as America's first tabloid newspaper, the
Daily News serves the New York metropolitan area, the largest market in the
United States. The following tables set forth selected historical information
for the New York Daily News included as part of total Publishing through 1990.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER
--------------------------
1990 1989
-------- --------
(IN THOUSANDS)
<S> <C> <C>
OPERATING REVENUES:
Advertising:
Retail............................... $114,151 $152,580
General.............................. 47,981 59,920
Classified........................... 43,147 63,730
-------- --------
Total............................. 205,279 276,230
Circulation............................ 116,222 145,629
Other.................................. 322 165
-------- --------
Total............................. $321,823 $422,024
-------- --------
ADVERTISING INCHES:
Full Run (all zones)
Retail............................... 467 591
General.............................. 141 183
Classified........................... 189 294
-------- --------
Total............................. 797 1,068
Part Run............................... 919 1,341
Preprinted Inserts..................... 854 1,097
-------- --------
Total Inches...................... 2,570 3,506
-------- --------
</TABLE>
BROADCASTING AND ENTERTAINMENT
The broadcasting and entertainment segment represented 37% of the Company's
consolidated operating revenues for 1993. The segment currently includes
independent VHF television stations located in New York, Los Angeles, Chicago
and Denver, independent UHF television stations located in Philadelphia, Atlanta
and New Orleans, and six radio stations in New York, Chicago, Denver (2) and
Sacramento (2). In November 1993, the Company announced that it had reached an
agreement to acquire independent television station WLVI-Boston for
approximately $25 million in cash plus the amount of working capital at closing.
The acquisition is expected to be completed in the second quarter of 1994,
subject to FCC approval. In January 1993, the Company acquired its
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<PAGE>
two Denver radio stations, KOSI-FM and KEZW-AM, for $19.9 million. The
acquisition was accounted for as a purchase in 1993. In June 1992, the Company
exercised its warrant to acquire a controlling common equity interest in WPHL-
TV, Inc., in Philadelphia. This warrant was acquired by the Company in 1991
for $19 million. The exercise of the warrant was accounted for as a purchase and
the results of WPHL are included in the Company's consolidated statements of
income since June 1992. In entertainment, the Company owns the Chicago Cubs
baseball team, produces and syndicates television programming and, beginning in
1993, operates a Chicago area cable programming service. The following table
shows sources of revenue for the broadcasting and entertainment segment for the
last five years.
<TABLE>
<CAPTION>
OPERATING REVENUES
(IN THOUSANDS)
FISCAL YEAR ENDED DECEMBER
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Television (1)...... $536,773 $477,193 $445,883 $458,897 $419,416
Radio (2)........... 58,740 49,552 49,167 47,380 48,728
Entertainment (3)... 131,700 157,306 122,464 117,704 116,182
-------- -------- -------- -------- --------
Total........... $727,213 $684,051 $617,514 $623,981 $584,326
-------- -------- -------- -------- --------
</TABLE>
- -----------
(1) Includes WPHL-Philadelphia since its acquisition on June 5, 1992.
(2) Includes KOSI/KEZW-Denver since their acquisition on January 6, 1993.
(3) 1992 includes $12.3 million of Major League Baseball expansion fees.
Television
In 1993, television broadcasting contributed 74% of broadcasting and
entertainment operating revenues. The Company's television stations compete for
audience and advertising with other television and radio stations, cable
television and other media serving the same markets. Competition for audience
and advertising is based upon various interrelated factors including programming
content, audience acceptance and price. Selected data for the Company's
television stations is shown in the following table.
<TABLE>
<CAPTION>
MARKET (1) MAJOR
-------------------- COMMERCIAL EXPIRATION
HOUSEHOLDS NATIONAL STATIONS IN OF FCC
(000'S) RANK CHANNEL MARKET (2) LICENSE (3)
---------- -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
WPIX - New York, New York... 6,692 1 11-VHF 6 1994 (4)
KTLA - Los Angeles,
California........... 5,006 2 5-VHF 7 1993 (5)
WGN - Chicago, Illinois.... 3,071 3 9-VHF 7 1997
WPHL - Philadelphia,
Pennsylvania......... 2,661 4 17-UHF 6 1994 (6)
WGNX - Atlanta, Georgia..... 1,510 11 46-UHF 6 1997
KWGN - Denver, Colorado..... 1,091 21 2-VHF 6 1993 (7)
WGNO - New Orleans,
Louisiana............ 609 41 26-UHF 5 1997
</TABLE>
- -----------
(1) Source: Nielsen Station Index, September 1993. Ranking of
markets is based on number of television households in DMA
(Designated Market Area).
(2) Source: 1993 Television & Cable Fact Book.
(3) See "Governmental Regulation."
(4) Expires on June 1, 1994. Renewal application filed on February 1, 1994 is
pending.
(5) Expired on December 1, 1993. Renewal application filed on August 2, 1993
is pending.
(6) Expires on August 1, 1994. Renewal application will be filed.
(7) Expired on April 1, 1993. Renewal application filed on December 1, 1992 is
pending.
9
<PAGE>
Independent television stations, in contrast to network affiliates, are
required to produce or acquire all of their programming and to sell all
advertising time. Programming emphasis at the Company's stations is placed on
syndicated series, feature motion pictures, local and regional sports coverage,
news and children's programs. The stations acquire most of their programming
from outside sources, although a significant amount is produced locally or
supplied by Tribune Entertainment (see "Entertainment"). Contracts for
purchased programming generally cover a period of one to seven years, with
payment also typically made over several years. The expense for amortization of
television broadcast rights in 1993 was approximately $221 million, which
represents approximately 41% of total television operating revenues.
Average audience share information for the Company's television stations for
the past five years is shown in the following table.
<TABLE>
<CAPTION>
AVERAGE AUDIENCE SHARE (1)
YEAR ENDED DECEMBER
---------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
WPIX - New York, New York............ 10.8% 11.5% 10.5% 9.8% 9.0%
KTLA - Los Angeles, California....... 9.5 9.5 9.8 9.8 10.3
WGN - Chicago, Illinois............. 11.5 12.0 13.0 13.0 13.5
WPHL - Philadelphia, Pennsylvania (2) 5.8 5.0 5.0 4.8 5.5
WGNX - Atlanta, Georgia.............. 7.0 7.3 7.5 6.8 6.3
KWGN - Denver, Colorado.............. 12.0 9.8 10.3 9.8 10.8
WGNO - New Orleans, Louisiana........ 8.0 7.8 7.3 6.5 6.8
</TABLE>
- ------------
(1) Represents the estimated number of television households tuned to a specific
station as a percent of total viewing households in a defined area. The
percentages shown reflect the average Nielsen ratings shares for the
February, May, July and November measurement periods for 7 a.m. to 1 a.m.
daily, except for WGNO's 1992 and 1991 figures, which are based on Arbitron
ratings shares calculated in the same manner.
(2) Acquired June 5, 1992.
Radio
In 1993, the Company's radio stations contributed 8% of broadcasting and
entertainment operating revenues. The largest radio station owned by the
Company, measured in terms of operating revenues, is WGN. Radio operations
include Tribune Radio Networks, which produces and distributes farm and sports
programming to radio stations, primarily in the Midwest. Selected information
for the Company's radio stations is shown in the following table.
<TABLE>
<CAPTION>
NUMBER OF
NATIONAL OPERATING
MARKET STATIONS IN AUDIENCE
FORMAT FREQUENCY RANK (1) MARKET (2) SHARE (3)
------------------ --------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C>
WQCD - New York, New York.... Contemporary Jazz 101.9-FM 1 48 3.1%
WGN - Chicago, Illinois..... Talk/News/Sports 720-AM 3 37 6.8%
KOSI - Denver, Colorado (4).. Adult Contemporary 101.1-FM 24 33 6.7%
KEZW - Denver, Colorado (4).. Big Band/Nostalgia 1430-AM 24 33 2.4%
KYMX - Sacramento, California Adult Contemporary 96.1-FM 29 25 5.1%
KCTC - Sacramento, California Big Band/Nostalgia 1320-AM 29 25 2.5%
</TABLE>
10
<PAGE>
- -----------
(1) Source: Radio markets ranked by Arbitron Metro Survey Area, Arbitron
Company 1993.
(2) Source: Arbitron Company 1993.
(3) Source: Average of Winter, Spring, Summer and Fall 1993 Arbitron shares for
persons 12 years old and over, 6 a.m. to midnight daily during the
period measured.
(4) Acquired January 1993.
Entertainment
In 1993, entertainment contributed 18% of the segment's operating revenues.
The entertainment portion of the broadcasting and entertainment segment includes
Tribune Entertainment Company, the Chicago Cubs baseball team, two minor league
baseball teams, ChicagoLand Television News and Tribune Regional Programming.
Starting in 1993, the Company has a 31% equity share in Television Food Network,
a 24-hour basic cable channel of nutrition and fitness. The Chicago Cubs
baseball team received $12.3 million in Major League Baseball expansion fees in
December 1992.
Tribune Entertainment Company was formed in 1982 to acquire and develop
programming for Company television stations and for syndication. Tribune
Entertainment participates in the production or distribution of first-run
programming, including a daily talk show, a combination home shopping and talk
show, music and variety shows, television movies and specials. Tribune
Entertainment's most popular program is "Geraldo," a one-hour, daily talk show
which is aired on 142 stations that cover 95% of U. S. television households and
is sold internationally to many cities in Canada, as well as to several
countries in Latin America and Europe. During the 1993-1994 television season,
Tribune Entertainment will originate approximately 13 hours of first-run
programs per week. On average, the Company's seven television stations will
utilize over 9 hours per week of programming furnished by Tribune Entertainment.
The Company owns the Chicago Cubs baseball team. In addition to providing
local sports entertainment, the Cubs represent an important source of live
programming for the Company's Chicago-based broadcasting operations and regional
cable programming service. In 1992, the Company acquired a Class AA Southern
League franchise in Orlando and a Class A Midwest League franchise in Rockford,
Illinois.
ChicagoLand Television News, a regional 24-hour cable news programming service,
was launched in January 1993 and currently is available to more than 1.1 million
cable households in the Chicago-area market. Tribune Regional Programming, Inc.
was formed to develop and produce cable television services dedicated to
specific local markets.
QUNO CORPORATION
In February 1993, QUNO completed an initial public offering of 9 million
shares of common stock. At the conclusion of the offering, the Company holds
8.8 million, or 49%, of the voting common shares and 4.2 million non-voting
common shares of QUNO for a combined total of 59% of QUNO's total 22 million
outstanding common shares. The Company also holds a $138.8 million subordinated
debenture, convertible into 11.7 million voting common shares of QUNO. As the
Company's voting interest is now less than 50%, the Company is accounting for
its investment in QUNO using the equity method of accounting beginning in 1993.
QUNO is no longer a business segment for reporting purposes.
Based in Canada, QUNO's principal operation is the manufacturing and marketing
of newsprint. QUNO's related operations presently include a sawmill, a
materials recycling company and 60% ownership of a hydro-electric power company
in Baie-Comeau, Quebec. QUNO operates two newsprint mills, in Thorold, Ontario
and Baie-Comeau, Quebec. The mills were started in 1913 and 1937, respectively,
to assure a dependable supply of newsprint at competitive prices for the
Company's newspapers. QUNO ranks seventh in production capacity among
newsprint-producing groups in North America.
11
<PAGE>
The following table shows sources of revenue for QUNO Corporation from 1989
through 1992, the last year QUNO's balance sheet and income statement were
consolidated in the Company's financial statements.
OPERATING REVENUES
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER
--------------------------------------------
1992 1991 1990 1989
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Newsprint:
Affiliated Customers...... $117,195 $142,585 $137,986 $213,458
Unaffiliated Customers.... 224,781 255,603 185,597 210,893
Lumber and Other............ 24,293 23,940 28,155 32,315
-------- -------- -------- --------
Total................... $366,269 $422,128 $351,738 $456,666
-------- -------- -------- --------
</TABLE>
Diminished newsprint revenues for 1992 reflect lower transaction prices.
Production and Sales
The Company's paper mills in Baie-Comeau and Thorold currently have annual
newsprint production capacities of approximately 469,000 and 346,000 metric
tons, respectively. Competition for newsprint sales is based upon price, product
quality and customer service. Sales of newsprint through 1993 are shown in the
following table.
<TABLE>
<CAPTION>
NEWSPRINT SALES
(IN THOUSANDS OF METRIC TONS)
FISCAL YEAR ENDED DECEMBER
----------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Affiliated customers........... 271 266 269 250 363
Unaffiliated customers......... 471 508 473 332 367
--- --- --- --- ---
Total sales............. 742 774 742 582 730
--- --- --- --- ---
</TABLE>
QUNO reported an operating loss of $31 million in 1993, $23 million less than
the $54 million operating loss incurred in 1992. This was partially the result
of higher average newsprint selling prices. The North American newsprint
industry has endured significant economic difficulties over the past several
years mainly caused by a capacity/demand imbalance. New mills and improvements
to existing paper machines have increased overall production capacity, while
demand has diminished or remained stagnant. As a result, QUNO's transaction
prices over the 1989-1993 period have declined by approximately 20%.
On August 1, 1992, and again on March 1, 1993, QUNO began implementing, along
with the rest of the industry, a reduction in discounts offered on newsprint
sales. Though prices began to soften in the second half of 1993, newsprint
prices averaged 5% higher in 1993 than in 1992.
QUNO supplies newsprint to most of the Company's newspapers. The newspapers
also purchase newsprint from other suppliers to maintain diversified sources of
supply. Approximately 35% of QUNO's 1993 sales (in metric tons) were to the
Company's newspapers. See "Publishing" for a discussion of the supply contract
between the Company and QUNO.
12
<PAGE>
QUNO sells newsprint to approximately 100 unaffiliated customers located
primarily in North America. The majority of such sales are to medium and small
newspapers and commercial printers, with no single unaffiliated customer
accounting for more than 10% of total newsprint revenue. Generally, QUNO sells
newsprint under renewable contracts varying in length from one to five years.
These contracts base the selling price on the list price for comparable
newsprint at the date of shipment, with negotiated discounts from the list
price.
Manufacturing Facilities
QUNO's Baie-Comeau mill is the largest newsprint mill in eastern Canada, with
an annual production capacity of approximately 469,000 metric tons. The mill is
on the St. Lawrence tidewater with year-round navigable access to the Atlantic
seaboard, overseas ports and a rail ferry service with connections to the
railway systems of North America.
The Thorold mill, with annual production capacity of about 346,000 metric
tons, currently uses a blend of two types of pulp in making newsprint. One type
is thermo-mechanically produced and the other is produced from de-inked recycled
waste newspapers and magazines.
Scierie des Outardes ("SDO"), the QUNO sawmill located near the Baie-Comeau
newsprint mill, produces finished lumber that is sold in North America and
overseas. SDO is a source of fiber to the Baie-Comeau mill, providing wood chips
for conversion into pulp. SDO can produce approximately 225,000 cubic meters of
construction grade lumber per year.
The papermaking process generally requires substantial quantities of power and
steam. The Baie-Comeau mill purchases approximately 45% of its total electric
power needs from the Manicouagan Power Company, a 60%-owned QUNO subsidiary, and
the remainder from Hydro-Quebec, a governmental agency. The Thorold mill
purchases all of its power directly from Ontario Hydro, a governmental agency.
Power supplies at both mills are believed to be adequate to meet QUNO's needs
for the foreseeable future.
Fiber Supply
The primary ingredient in the manufacture of newsprint is fiber, which is
derived from roundwood logs, wood chips and recycled newspapers and magazines.
The Baie-Comeau mill processes both roundwood logs and wood chips obtained
primarily from QUNO's timber limits and its sawmill in Quebec. At Thorold, the
mill's newsprint is produced approximately 70% from recycled paper pulp and 30%
from virgin wood pulp. The wood chips are obtained from outside contractors who
harvest QUNO's Ontario timber limits and process the cuttings into chips.
Recycled papers for the Thorold mill are obtained primarily in the southern
Ontario area from newspaper publishers, magazine printers and community
recyclers.
Timber limits in Canada are generally made available by provincial governments
to forest products companies by means of long-term licenses or forest supply and
management agreements. Under such agreements, QUNO holds exclusive cutting
rights in Quebec and Ontario on a total of approximately 8,270 square kilometers
of timberlands. QUNO's agreements with the Province of Quebec are for a term of
25 years and are subject to a review of QUNO's performance every five years. In
Ontario, QUNO has 20-year forest management agreements that call for a review
every five years of QUNO's performance under the reforestation provisions
thereof. QUNO also owns 700 square kilometers of timberlands. QUNO believes its
combined fiber sources continue to be adequate to meet its needs for the
foreseeable future.
13
<PAGE>
GOVERNMENTAL REGULATION
Various aspects of the Company's operations are subject to regulation by
governmental authorities in the United States and Canada.
The Company's television and radio broadcasting operations are subject to
Federal Communications Commission ("FCC") jurisdiction under the Communications
Act of 1934, as amended. FCC rules, among other things, govern the term, renewal
and transfer of radio and television broadcasting licenses, prohibit
concentrations of broadcasting control inconsistent with the public interest,
strictly limit common ownership of most communications media in the same market
and regulate network programming and syndication of programs. The FCC also
regulates certain commercial practices of local broadcast stations, including
the rates charged for political advertising and the quantity of advertising
within children's programs. The Company is permitted to own both newspaper and
broadcast operations in the Chicago market by virtue of "grandfather" provisions
in the FCC regulations. Licensees are currently permitted to own up to 12
television stations, 18 AM radio stations and 18 FM radio stations. These
numerical limits are subject to other FCC regulations which impose geographic
market restrictions and limit the percentage of the national television audience
that may be reached by a licensee's television stations in the aggregate.
Television and radio broadcasting licenses are subject to renewal by the FCC at
five-year and seven-year intervals, respectively, and at such times may be
subject to competing applications for the licensed frequencies. The Company
presently has FCC authorization to operate seven television stations and three
AM and three FM radio stations.
From time to time, the FCC revises existing regulations and policies in ways
that could affect the Company's broadcasting operations. In addition, Congress
from time to time considers and adopts substantive amendments to the
Communications Act of 1934 and related legislation. The Company cannot predict
what regulations or legislation may be proposed or finally enacted or what
effect, if any, such regulations or legislation could have on the Company's
broadcasting operations.
EMPLOYEES
The average number of full-time equivalent employees of the Company in 1993
was 9,900, approximately 2,500 less than the average for 1992. This decrease was
due to QUNO employees being included in the Company's 1992 total, but omitted in
1993 due to the deconsolidation of QUNO in 1993.
Pension and other employee benefit plans are provided for substantially all
employees of the Company. Eligible employees also participate in the Company's
Employee Stock Ownership Plan.
During 1993, the Company's publishing segment employed approximately 7,700
full-time equivalent employees, about 9% of whom were represented by a total of
7 unions. Contracts with unionized employees of the publishing segment expire at
various times through October 1996.
Broadcasting and entertainment had an average of 2,100 full-time equivalent
employees in 1993. Approximately 26% of these employees are represented by a
total of 21 unions.
14
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
Information with respect to the executive officers of the Company is set forth
below. The descriptions of the business experience of these individuals include
the principal positions held by them since March 1989.
Charles T. Brumback (65)
Chairman since January 1993, President since January 1989 and Chief Executive
Officer since August 1990 (Chief Operating Officer until July 1990) of the
Company; formerly President and Chief Executive Officer of Chicago Tribune
Company*; Director of the Company since 1981.
James E. Cushing, Jr. (38)
Vice President and General Counsel of the Company since November 1993; Vice
President/Business Affairs of ChicagoLand Television News* from March 1993 to
November 1993 (Director/Business Affairs from March 1992 to March 1993); Senior
Counsel from October 1990 to March 1992 and Counsel of the Company until October
1990.
James C. Dowdle (60)
Executive Vice President of the Company since August 1991; President and Chief
Executive Officer of Tribune Broadcasting Company* since 1981; Director of the
Company since 1985.
Stanley J. Gradowski (55)
Vice President and Secretary of the Company since 1982.
David J. Granat (47)
Vice President (since May 1991) and Treasurer (since 1985) of the Company.
Donald C. Grenesko (45)
Senior Vice President and Chief Financial Officer (since March 1993) and Vice
President and Chief Financial Officer (from October 1991 to March 1993) of the
Company; President and Chief Executive Officer (until September 1991), Chicago
National League Ball Club, Inc.*
Joseph A. Hays (63)
Vice President/Corporate Relations of the Company since 1983.
David D. Hiller (40)
Senior Vice President/Development since November 1993; Senior Vice President and
General Counsel (from March to November 1993) and Vice President and General
Counsel (until March 1993) of the Company; Partner, Sidley & Austin until
November 1993.
John E. Houghton (62)
Retired since January 1993. Chairman since January 1989 (Chief Executive Officer
until January 1991) of QUNO Corporation. Director of the Company since 1980.
M. Catherine Jaros (44)
Vice President/Marketing of the Company since November 1992; formerly Director
of Marketing, Strategy and External Development, May-October 1992; Director of
Corporate Strategies and Acquisitions, September 1991 to May 1992; Director of
Marketing and Specialty Products, May-August 1991; Director of Strategy,
December 1990 to May 1991, all at Kraft USA; Vice President Business Development
until 1990 at Tappan Capital Partners.
- -----------
*A subsidiary of the Company.
15
<PAGE>
John S. Kazik (51)
Senior Vice President/Information Systems since March 1993; Vice
President/Information Systems from December 1989 to March 1993 of the Company
and Vice President of Chicago Tribune Company* since 1982.
James N. Longson (47)
Vice President/Technology of the Company since August 1992; Director of
Corporate Development of the Company from April 1991 to August 1992; Vice
President/Director of Marketing and Strategic Planning of the New York Daily
News from July 1990 to April 1991; formerly Vice President, Facilities and
Systems Development of the New York Daily News.
John W. Madigan (56)
Executive Vice President of the Company and President and Chief Executive
Officer of Tribune Publishing Company* since August 1991; Publisher of the
Chicago Tribune since August 1990 and President and Chief Executive Officer of
Chicago Tribune Company* until September 1993. Director of the Company since
1975.
R. Mark Mallory (43)
Vice President and Controller since May 1991 (Controller and Director of
Planning until May 1991) of the Company.
William B. Nelson (43)
Vice President/Financial Operations of the Company since February 1994 and Vice
President/Chief Financial Officer of Chicago Tribune Company* since January
1983.
Andrew J. Oleszczuk (37)
Vice President/Development of the Company since December 1993; Director of
Planning from August 1990 to December 1993 and Manager of Planning of Tribune
Broadcasting Company* until August 1990.
Shaun M. Sheehan (49)
Vice President/Washington of the Company since July 1992 and Vice
President/Washington of Tribune Broadcasting Company* since February 1986.
John T. Sloan (42)
Senior Vice President/Administration since March 1993 and Vice President/Human
Resources of the Company from August 1991 to February 1993; Vice President and
Director of Human Resources of the New York Daily News from September 1989 to
July 1991; formerly Vice President and Director of Employee Relations of Chicago
Tribune Company*.
Scott C. Smith (43)
President and Chief Executive Officer of Sun-Sentinel Company* (since September
1993); Senior Vice President/Development (August 1991 to September 1993), Senior
Vice President and Chief Financial Officer (October 1989 to July 1991) and Vice
President/Finance until October 1989 of the Company.
- ------------
*A subsidiary of the Company.
16
<PAGE>
ITEM 2. PROPERTIES.
The corporate headquarters of the Company are located at 435 North Michigan
Avenue, Chicago, Illinois. The general character, location and approximate size
of the principal physical properties used by the Company at December 26, 1993
are listed below. In addition to those listed, the Company owns or leases
transmitter sites, parking lots and other properties aggregating approximately
338 acres in 29 separate U.S. locations, and owns or leases an aggregate of
approximately 1,927,000 square feet of space in 187 locations. Included in
these figures are 82,000 square feet of space owned by The Peninsula Times
Tribune. On March 12, 1993, the Times Tribune ceased publication. Also
included in these figures are 62 acres and 233,000 square feet of space owned by
the Company which had previously been owned by the New York Daily News. On
March 20, 1991, the Company sold the Daily News. The Times Tribune and Daily
News properties are being offered for sale. The Company also owns the 39,000-
seat stadium used by the Chicago Cubs baseball team. The Company considers its
various properties to be in good condition and suitable for the purposes for
which they are used.
<TABLE>
<CAPTION>
APPROXIMATE AREA IN SQUARE FEET
-------------------------------
GENERAL CHARACTER OF PROPERTY OWNED LEASED
----------------------------- --------- -------
<S> <C> <C>
Publishing:
Printing plants, business and editorial
offices, and warehouse space located in:
Chicago, Illinois..................... 1,512,000(1) 111,000
Orlando, Florida...................... 407,000 81,000
Fort Lauderdale, Florida.............. - 135,000(2)
Deerfield Beach, Florida.............. 386,000 -
Newport News, Virginia................ 207,000 -
Escondido, California................. 62,000 -
Carlsbad, California.................. - 49,000
Broadcasting and Entertainment:
Business offices, studios, garages and
transmitters located in:
Chicago, Illinois...................... 99,000 4,000
Oak Brook, Illinois.................... - 69,000
Philadelphia, Pennsylvania............. 22,000 3,000
New York, New York..................... - 78,000(3)
Los Angeles, California................ 253,000 -
Denver, Colorado....................... 46,000 7,000
New Orleans, Louisiana................. - 15,000
Atlanta, Georgia....................... - 21,000
- -----------
</TABLE>
(1) Includes Tribune Tower, an approximately 630,000 square foot office building
in downtown Chicago, and Freedom Center, the approximately 697,000 square
foot production center of the Chicago Tribune. Tribune Tower houses the
Company's corporate headquarters, the Chicago Tribune's business and
editorial offices, offices of various subsidiary companies and approximately
77,800 square feet of space leased to unaffiliated tenants. Freedom Center
houses the Chicago Tribune's printing, packaging and distribution
operations.
(2) Consists of space leased in New River Center, which is owned by a real
estate joint venture in which the Company had a 50% interest at December 26,
1993. No portion of this building is listed as "owned" property in the
table.
(3) Includes space leased by subsidiary companies in the New York Daily News
building, which is owned by a limited partnership in which the Company has a
minority interest. No portion of this building is listed as "owned"
property in the table.
17
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are defendants from time to time in actions
for libel and other matters arising out of their business operations. In
addition, the Company and its subsidiaries are involved from time to time as
parties in various regulatory, environmental and other proceedings with
governmental authorities and administrative agencies. The Company does not
believe that any such proceedings presently pending will have a material adverse
effect on its consolidated financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Stock is presently listed on the New York, Chicago and
Pacific stock exchanges. The high and low sales prices of the Common Stock by
fiscal quarter for the two most recent fiscal years, as reported on the New York
Stock Exchange Composite Transactions list, were as follows:
<TABLE>
<CAPTION>
1993 1992
---------------- ----------------
QUARTER High Low High Low
------- ------ ------- ------ -------
<S> <C> <C> <C> <C>
First.......................... $56 7/8 $47 5/8 $46 3/4 $39 1/2
Second......................... 56 1/4 50 47 1/2 38 3/4
Third.......................... 55 48 3/8 47 1/4 40
Fourth......................... 61 1/4 50 7/8 50 3/4 42 3/8
</TABLE>
At March 3, 1994 there were 4,180 record holders of the Company's Common
Stock.
Quarterly cash dividends declared on Common Stock for both 1993 and 1992 were
$.24 per share. Total cash dividends declared on Common Stock by the Company
were $63,799,000 for 1993 and $62,450,000 for 1992.
ITEM 6. SELECTED FINANCIAL DATA.
The information for the years 1989 through 1993 contained under the heading
"Eleven Year Financial Summary" in the Company's 1993 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information contained under the heading "Management's Discussion and
Analysis of Results of Operations and Financial Condition" in the Company's 1993
Annual Report to Stockholders is incorporated herein by reference.
18
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's Consolidated Financial Statements and Notes thereto and the
information contained under the heading "Business Segments" appearing on pages
35 through 51 of the Company's 1993 Annual Report to Stockholders, together with
the report thereon of Price Waterhouse dated January 28, 1994, appearing on page
52 of such Annual Report and the information contained under the heading
"Quarterly Results" on pages 54 and 55, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information contained under the heading "Executive Officers of the
Company" in Item 1 hereof, and the information under the heading "Election of
Directors" in the definitive Proxy Statement for the Company's April 19, 1994
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the heading "Executive Compensation" (except
those portions relating to Item 13, below) in the definitive Proxy Statement for
the Company's April 19, 1994 Annual Meeting of Stockholders is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information contained under the subheadings "Principal Stockholders" and
"Management Ownership" under the heading "Ownership Information" in the
definitive Proxy Statement for the Company's April 19, 1994 Annual Meeting of
Stockholders, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the heading "Executive Compensation" (except
those portions relating to Item 11, above) and the subheadings "Compensation of
Directors" and "Other Transactions" in the definitive Proxy Statement for the
Company's April 19, 1994 Annual Meeting of Stockholders, is incorporated herein
by reference.
19
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
(a)(1)&(2) Financial Statements and Financial Statement Schedules filed as part
of this report
As listed in the Index to Financial Statements and Financial
Statement Schedules on page 23 hereof.
(a)(3) Index to Exhibits filed as part of this report
As listed in the Exhibit Index beginning on page 32 hereof.
(b) Reports on Form 8-K
The Company filed a Form 8-K Current Report dated October 29, 1993,
which reported under Item 5 the filing of a Prospectus Supplement on
October 25, 1993 relating to the offer and sale from time to time of
up to $300,000,000 principal amount of the Company's Medium-Term
Notes, Series C. This Supplement was to a Registration Statement on
Form S-3 (File No. 33-45793), effective July 13, 1992. No financial
statements were filed with the report.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 21, 1994.
TRIBUNE COMPANY
By: Charles T. Brumback
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on March 21, 1994.
Signature Title
--------- -----
Charles T. Brumback Chairman, President and Chief Executive Officer and
Director (principal executive officer)
James C. Dowdle Executive Vice President and Director
John W. Madigan Executive Vice President and Director
Donald C. Grenesko Senior Vice President and Chief Financial Officer
(principal financial officer)
21
<PAGE>
Signature Title
--------- -----
R. Mark Mallory Vice President and Controller
(principal accounting officer)
Stanton R. Cook Director
Diego E. Hernandez Director
Robert E. La Blanc Director
Newton N. Minow Director
Donald H. Rumsfeld Director
22
<PAGE>
TRIBUNE COMPANY
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
PAGE
----
Consolidated Statements of Income for each of the three fiscal years in
the period ended December 26, 1993 ..................................... *
Consolidated Statements of Financial Position at December 26, 1993 and
December 27, 1992 ...................................................... *
Consolidated Statements of Cash Flows for each of the three fiscal years
in the period ended December 26, 1993 .................................. *
Consolidated Statements of Stockholders' Investment for each of the three
fiscal years in the period ended December 26, 1993 ..................... *
Notes to Consolidated Financial Statements ............................... *
Report of Independent Accountants on Consolidated Financial Statements ... *
Report of Independent Accountants on Financial Statement Schedules ....... 24
Financial Statement Schedules for each of the three fiscal years in the
period ended December 26, 1993 (as applicable) ......................... 25-31
Schedule II Amounts receivable from related parties and underwriters,
promoters and employees other than related parties.
Schedule IV Indebtedness of and to related parties - noncurrent.
Schedule V Property, plant and equipment.
Schedule VI Accumulated depreciation, depletion and amortization of
property, plant and equipment.
Schedule VII Guarantees of securities of other issuers.
Schedule VIII Valuation and qualifying accounts and reserves.
Schedule X Supplementary income statement information.
- -----------
* Incorporated by reference to the Company's 1993 Annual Report to
Stockholders. See Item 8 of this Annual Report on Form 10-K.
------------
All other schedules required under Regulation S-X are omitted because they are
not applicable, not required or the required information is shown in the
consolidated financial statements or notes thereto. Columns omitted from certain
schedules included herein have been omitted because the information is not
applicable. Financial statements of entities accounted for by the equity method
have been omitted because they do not constitute significant subsidiaries.
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
TO THE BOARD OF DIRECTORS OF TRIBUNE COMPANY
Our audits of the consolidated financial statements referred to in our report
dated January 28, 1994 appearing on page 52 of the 1993 Annual Report to
Stockholders of Tribune Company (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedules appearing on pages
25 through 31 of this Form 10-K. In our opinion, these Financial Statement
Schedules present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
Price Waterhouse
Chicago, Illinois
January 28, 1994
24
<PAGE>
SCHEDULE II
TRIBUNE COMPANY AND SUBSIDIARIES
SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
(IN THOUSANDS OF DOLLARS)
================================================================================
<TABLE>
<CAPTION>
BALANCE AT DEDUCTIONS- BALANCE AT
BEGINNING AMOUNTS END OF PERIOD-
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED NOT CURRENT
- -------------- ---------- --------- ---------- --------------
<S> <C> <C> <C> <C>
Year ended December 26, 1993
J. J. Kusper (1) $242 $ - $242 $ -
E. B. Lasak (1) 142 - 142 -
Year ended December 27, 1992
J. J. Kusper (1) $242 $ - $ - $242
W. J. McNally (2) 150 - 150 -
E. B. Lasak (1) 142 - - 142
Year ended December 29, 1991
J. J. Kusper (1) $242 $ - $ - $242
W. J. McNally (2) 150 - - 150
E. B. Lasak (1) 142 - - 142
J. T. Sloan (1) 460 - 460 -
E. R. Moss (1) 168 - 168 -
C. T. Brumback (3) 40 - 40 -
</TABLE>
All of the above loans were made to assist in financing the purchase of
residences upon the employee's transfer at the request of the Company.
- ------------
(1) Promissory note secured by personal residence at a rate contingent upon the
net appreciation of the residence acquired.
(2) Non-interest bearing demand note secured by personal residence.
(3) Non-interest bearing demand note secured by shares of a cooperative
association and by common stock owned by Mr. Brumback.
================================================================================
25
<PAGE>
SCHEDULE IV
TRIBUNE COMPANY AND SUBSIDIARIES
SCHEDULE IV--INDEBTEDNESS OF AND TO RELATED PARTIES--NONCURRENT
(IN THOUSANDS OF U.S. DOLLARS)
================================================================================
<TABLE>
<CAPTION>
INDEBTEDNESS OF
----------------------------------------------------
BALANCE AT BALANCE AT
NAME DEC. 27, 1992 ADDITIONS DEDUCTIONS DEC. 26, 1993
- ---- ------------- --------- ---------- -------------
<S> <C> <C> <C> <C>
QUNO Corporation
Convertible Debenture (1) $138,757 - - $138,757
Riverwalk Center I
Joint Venture Mortgage Note (2) - $35,500 - $ 35,500
220 East Joint Venture
Mortgage Note $ 84,486 - (549) $ 83,937
</TABLE>
(1) The QUNO convertible debenture matures in 2002, is convertible at the option
of the Company into 11.7 million voting common shares of QUNO, and is
callable by QUNO after December 27, 1997.
(2) The mortgage note, purchased by the Company in 1993, is on a building owned
by a partnership in which the Company held a 50% interest at December 26,
1993.
================================================================================
26
<PAGE>
SCHEDULE V
TRIBUNE COMPANY AND SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS OF DOLLARS)
================================================================================
<TABLE>
<CAPTION>
OTHER CHANGES
BALANCE AT ADD (DEDUCT) BALANCE
BEGINNING ADDITIONS RETIRE- ----------------- AT END
CLASSIFICATION OF PERIOD AT COST MENTS (2) (3) OF PERIOD
-------------- ---------- -------- ------- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 26, 1993
Land...................................... $ 51,724 $ 2,583 $ 315 $1,095 $ (616) $ 54,471
Buildings and leasehold improvements...... 459,367 9,303 3,614 743 (158,533) 307,266
Machinery, equipment and furniture........ 1,327,533 69,651 12,610 4,109 (596,041) 792,642
Timber limits and leases, and land
improvements............................ 53,556 131 25 -- (45,975) 7,687
Construction in progress.................. 95,285 (6,048)(1) -- -- (50,136) 39,101
---------- -------- ------- ------ --------- ----------
$1,987,465 $ 75,620 $16,564 $5,947 $(851,301) $1,201,167
========== ======== ======= ====== ========= ==========
Year ended December 27, 1992
Land..................................... $ 48,152 $ 4,850 $ -- $ 135 $ (1,413) $ 51,724
Buildings and leasehold improvements..... 458,567 20,119 2,433 250 (17,136) 459,367
Machinery, equipment and furniture....... 1,325,716 76,261 17,725 4,528 (61,247) 1,327,533
Timber limits and leases, and land
improvements........................... 58,332 3,929 4,961 -- (3,744) 53,556
Construction in progress................. 70,630 25,073(1) 30 478 (866) 95,285
---------- -------- ------- ------ --------- ----------
$1,961,397 $130,232 $25,149 $5,391 $ (84,406) $1,987,465
========== ======== ======= ====== ========= ==========
Year ended December 29, 1991
Land..................................... $ 47,707 $ 121 $ -- $ -- $ 324 $ 48,152
Buildings and leasehold improvements..... 438,921 19,674 801 95 678 458,567
Machinery, equipment and furniture....... 1,273,051 67,393 19,722 852 4,142 1,325,716
Timber limits and leases, and land
improvements........................... 51,652 6,191 3 -- 492 58,332
Construction in progress................. 74,501 552(1) 83 -- (4,340) 70,630
---------- -------- ------- ------ --------- ----------
$1,885,832 $ 93,931 $20,609 $ 947 $ 1,296 $1,961,397
========== ======== ======= ====== ========= ==========
</TABLE>
- -----------
(1) Includes spending on construction projects less amounts transferred during
the year to other categories as the projects become operational.
(2) Property, plant and equipment of acquired companies.
(3) Represents (i) for 1992 and 1991, the effect of translating Canadian dollar
denominated accounts to U.S. dollars, as well as certain reclassifications
of items between categories, (ii) for 1992, deductions of $15.2 million
related to the disposition of The Peninsula Times Tribune and (iii) for
1993, deductions related to the assets of QUNO Corporation. As a result of
the initial public offering by QUNO in February 1993, QUNO's balance sheet
is no longer included in the consolidated financial statements. For 1993,
the deduction for QUNO's assets is as follows:
<TABLE>
<S> <C>
Land $ 616
Buildings and leasehold improvements 158,438
Machinery, equipment and furniture 594,708
Timber limits and leases, land improvements 45,975
Construction in progress 49,863
--------
Total $849,600
========
</TABLE>
================================================================================
27
<PAGE>
SCHEDULE VI
TRIBUNE COMPANY AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(IN THOUSANDS OF DOLLARS)
================================================================================
<TABLE>
<CAPTION>
ADDITIONS OTHER
BALANCE AT CHARGED CHANGES BALANCE
BEGINNING TO COSTS & ADD AT END OF
CLASSIFICATION OF PERIOD EXPENSES RETIREMENTS (DEDUCT)(1) PERIOD
-------------- ---------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Year ended December 26, 1993
Buildings and leasehold improvements ................. $189,576 $ 14,791 $ 2,288 $ (67,479) $134,600
Machinery, equipment and furniture ................... 697,061 65,824 11,012 (289,424) 462,449
Timber limits and leases, and land improvements ...... 26,885 474 7 (24,849) 2,503
-------- -------- ------- --------- --------
$913,522 $ 81,089 $13,307 $(381,752) $599,552
======== ======== ======= ========= ========
Year ended December 27, 1992
Buildings and leasehold improvements ................. $176,125 $ 21,721 $ 2,161 $ (6,109) $189,576
Machinery, equipment and furniture ................... 647,463 97,269 14,933 (32,738) 697,061
Timber limits and leases, and land improvements ...... 34,104 1,488 4,910 (3,797) 26,885
-------- -------- ------- --------- --------
$857,692 $120,478 $22,004 $ (42,644) $913,522
======== ======== ======= ========= ========
Year ended December 29, 1991
Buildings and leasehold improvements ................. $154,586 $ 20,806 $ 441 $ 1,174 $176,125
Machinery, equipment and furniture ................... 570,001 95,479 18,413 396 647,463
Timber limits and leases, and land improvements ...... 31,836 2,262 - 6 34,104
-------- -------- ------- --------- --------
$756,423 $118,547 $18,854 $ 1,576 $857,692
======== ======== ======= ========= ========
</TABLE>
Estimated useful lives and methods used for depreciation, amortization and
depletion are as follows:
Buildings--7 to 55 years--straight line.
Leasehold improvements--5 to 40 years--straight line.
Machinery, equipment and furniture--3 to 25 years--straight line.
Land improvements--10 to 30 years--straight line.
Timber limits and leases--5 years--straight line and unit-of-production
method.
- ------------
(1) Represents (i) for 1992 and 1991, the effect of translating Canadian dollar
denominated accounts to U.S. dollars, as well as certain reclassifications
of items between categories, (ii) for 1992, deductions of $9.2 million
related to the disposition of The Peninsula Times Tribune and (iii) for
1993, deductions related to assets of QUNO Corporation, whose balance sheet
is no longer consolidated in the Company's financial statements, beginning
in 1993. For 1993, the deduction for QUNO's assets is as follows:
Building and leasehold improvements $ 67,543
Machinery, equipment and furniture 289,294
Timber limits and leases, land improvements 24,733
--------
Total $381,570
========
================================================================================
28
<PAGE>
SCHEDULE VII
TRIBUNE COMPANY AND SUBSIDIARIES
SCHEDULE VII--GUARANTEES OF SECURITIES OF OTHER ISSUERS
(IN THOUSANDS OF DOLLARS)
================================================================================
<TABLE>
<CAPTION>
NAME OF ISSUER AMOUNT OWNED
OF SECURITIES BY PERSON AMOUNT IN NATURE OF
GUARANTEED BY TITLE OF ISSUE TOTAL AMOUNT OR PERSONS TREASURY OF ANY DEFAULT
PERSON FOR OF EACH CLASS GUARANTEED FOR WHICH ISSUER OF BY ISSUER
WHICH STATEMENT OF SECURITIES AND STATEMENT IS SECURITIES NATURE OF IN PRINCIPAL
IS FILED GUARANTEED OUTSTANDING FILED GUARANTEED GUARANTEE AND INTEREST
- --------------- --------------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 26, 1993
Tribune Company 8.19% Note due $ 17,970 -- -- Guarantee of --
Employee Stock June 15, 1994- principal
Ownership Plan Dec. 15, 1998 and interest
Tribune Company 8.40% Notes due $280,999 -- -- Guarantee of --
Employee Stock Dec. 15, 1994- principal and
Ownership Plan Dec. 15, 2003 interest
</TABLE>
================================================================================
29
<PAGE>
SCHEDULE VIII
TRIBUNE COMPANY AND SUBSIDIARIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(IN THOUSANDS OF DOLLARS)
==============================================================================
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ----------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Valuation accounts deducted from assets
to which they apply:
Year ended December 26, 1993
Allowance for doubtful accounts:
Bad debts............................... $19,329 $15,017 $14,672(1) $19,674
Rebates and volume discounts............ 4,082 17,375 15,699 5,758
------- ------- ------- -------
Total........................... $23,411 $32,392 $30,371 $25,432
======= ======= ======= =======
Year ended December 27, 1992
Allowance for doubtful accounts:
Bad debts............................... $19,423 $14,924 $15,018 $19,329
Rebates and volume discounts............ 3,926 15,299 15,143 4,082
------- ------- ------- -------
Total.......................... $23,349 $30,223 $30,161 $23,411
======= ======= ======= =======
Year ended December 29, 1991
Allowance for doubtful accounts:
Bad debts............................... $15,453 $21,397 $17,427 $19,423
Rebates and volume discounts............ 3,126 14,026 13,226 3,926
------- ------- ------- -------
Total........................... $18,579 $35,423 $30,653 $23,349
======= ======= ======= =======
</TABLE>
- --------------
(1) For 1993, $4,612 represents deductions pertaining to QUNO Corporation. As a
result of an initial public offering by QUNO in February 1993, QUNO's
balance sheet is no longer consolidated in the Company's financial
statements.
================================================================================
30
<PAGE>
SCHEDULE X
TRIBUNE COMPANY AND SUBSIDIARIES
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
(IN THOUSANDS OF DOLLARS)
================================================================================
<TABLE>
<CAPTION>
CHARGED TO COSTS AND EXPENSES
-----------------------------
YEAR ENDED DECEMBER
-----------------------------
ITEM 1993(1) 1992 1991
---- ------- ------- -------
<S> <C> <C> <C>
1. Maintenance and repairs..................... $18,060 $60,240 $61,190
2. Amortization of intangible assets........... 21,673 19,101 18,501
3. Taxes, other than payroll and income taxes.. 15,613 25,532 27,113
4. Advertising costs (2)....................... 44,126 49,594 46,015
</TABLE>
- ----------
(1) 1993 excludes supplementary income statement information for QUNO
Corporation as QUNO's income statement is no longer included in the
Company's consolidated financial statements. Amounts in 1992 and 1991
relating to QUNO were as follows:
<TABLE>
<CAPTION>
1992 1991
------- -------
<S> <C> <C>
Maintenance and repairs $42,894 $44,909
Amortization of intangible assets - -
Taxes, other than payroll and income taxes 10,856 13,120
Advertising costs 1,060 98
</TABLE>
(2) Includes all costs related to advertising, public relations and promotion
of the Company's products.
Amortization of preoperating costs and other deferrals and royalties are
omitted as none of these items exceed one percent of the Company's consolidated
operating revenues in any of the years.
================================================================================
31
<PAGE>
TRIBUNE COMPANY
EXHIBIT INDEX
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by Tribune Company with the Securities and Exchange
Commission, as indicated. Exhibits marked with a circle (o) are management
contracts or compensatory plan contracts or arrangements filed pursuant to
Item 601(b)(10)(iii)(A) of Regulation S-K. All other documents listed are
filed with this Report.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.1 * Restated Certificate of Incorporation of Tribune Company, dated
April 21, 1987; Certificate of Designations of Series A Junior
Participating Preferred Stock, dated December 31, 1987; Certificate
of Designations of Series B Convertible Preferred Stock, dated
April 4, 1989 (Exhibit 3.1 to Annual Report on Form 10-K for 1991).
3.2 * By-laws of Tribune Company.
4 * Rights Agreement between Tribune Company and The First National Bank
of Chicago, as Rights Agent, dated as of December 22, 1987 (Exhibit
1 to Form 8-K Current Report dated January 6, 1988); First Amendment
thereto dated as of July 31, 1990 (Exhibit 4 to Form 10-Q Quarterly
Report for the quarter ended July 1, 1990); Second Amendment thereto
dated as of October 31, 1990 (Exhibit 4 to Form 10-Q Quarterly
Report for the quarter ended September 30, 1990).
10.1a o* Employment agreement dated as of July 31, 1990 between Tribune
Company and Stanton R. Cook (Exhibit 19.1 to Form 10-Q Quarterly
Report for the quarter ended September 30, 1990).
10.1b o Consulting agreement dated as of December 14, 1993 between Tribune
Company and Stanton R. Cook.
10.2a o Employment agreement dated as of July 27, 1993 between Tribune
Company and Charles T. Brumback.
10.2b o Amendment dated February 15, 1994 to employment agreement dated as
of July 27, 1993 between Tribune Company and Charles T. Brumback.
10.3 o* Chicago Tribune Company Split-Dollar Insurance Plan dated
June 29, 1978, together with first amendment dated
August 28, 1981, covering certain employees of Tribune Company
and Chicago Tribune Company (Exhibit 10.4 in File No. 2-86087).
10.4a o* Tribune Company Supplemental Retirement Plan, as amended and
restated on January 1, 1989 (Exhibit 10.6 to Annual Report on
Form 10-K for 1988).
10.4b o First Amendment of Tribune Company Supplemental Retirement Plan,
effective January 1, 1994.
10.5 o* Quebec and Ontario Paper Company Ltd. Supplemental Retirement
Plan dated January 1, 1989 (Exhibit 10.7 to Annual Report on
Form 10-K for 1988).
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.6 o* Tribune Company Deferred Compensation Administration Plan, as
adopted on July 29, 1982, and first amendment thereto dated
December 1, 1982 (Exhibit 10.16 in File No. 2-86087); second
amendment thereto dated October 29, 1984, and third amendment
thereto dated December 16, 1986 (Exhibit 10.8b to Annual
Report on Form 10-K for 1989).
10.7 o* Tribune Company Directors' Deferred Compensation Plan, as
amended and restated on December 14, 1992 (Exhibit 10.7 to
Annual Report on Form 10-K for 1992).
10.8 o Tribune Company Bonus Deferral Plan, dated as of
December 14, 1993.
10.9a o* Tribune Company Management Incentive Plan, dated as of
January 1, 1991 (Exhibit 10.10 to Annual Report on Form 10-K
for 1990).
10.9b o* Amendment effective January 1, 1992 to the Tribune Company
Management Incentive Plan dated as of January 1, 1991
(Exhibit 10.9b to Annual Report on Form 10-K for 1991).
10.10 o* Tribune Company Amended and Restated 1984 Long-Term Performance
Plan, effective as of July 25, 1989 (Exhibit 19.2 to Form 10-Q
Quarterly Report for the quarter ended June 25, 1989);
Forms of Incentive Stock Option Agreement and Non-Qualified
Stock Option Agreements for Tribune Company Amended and
Restated 1984 Long-Term Performance Plan (Exhibit 19.2 to
Form 10-Q Quarterly Report for the quarter ended
July 1, 1990).
10.11 o* Tribune Company 1992 Long-Term Performance Plan, effective as
of April 29, 1992 (Exhibit 10.11 to Annual Report on Form 10-K
for 1992).
10.12a o* 1988 Restricted Stock Plan For Outside Directors, dated
February 16, 1988 (Exhibit 10.12 to Annual Report on Form 10-K
for 1992).
10.12b o Amendment effective April 28, 1992 to the 1988 Restricted Stock
Plan For Outside Directors.
10.13 o Tribune Company Executive Financial Counseling Plan, dated
October 19, 1988 and as amended effective January 1, 1994.
10.14 o* Tribune Company Transitional Compensation Plan for Executive
Employees, as amended and restated on July 26, 1988
(Exhibit 10.16 to Annual Report on Form 10-K for 1988);
amendment dated October 30, 1990 to Tribune Company Transitional
Compensation Plan for Executive Employees (Exhibit 10.14b to
Annual Report on Form 10-K for 1990).
10.15 o Tribune Company Supplemental Defined Contribution Plan,
effective as of January 1, 1994.
10.16 * Amendment and Restated Agreement of Limited Partnership of Two
Twenty East Limited Partnership, dated as of November 5, 1982,
and first amendment thereto dated December 6, 1982
(Exhibit 10.25 in File No. 2-86087).
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.17 * Asset Purchase Agreement dated March 14, 1991 by and among Maxwell
Newspapers, Inc., Mirror Group PLC, New York News Inc. and Tribune
Company; and letter amendment thereto dated March 20, 1991 (Exhibits
10.1 and 10.2 to Form 8-K Current Report dated March 14, 1991).
10.18 * Newsprint Agreement dated December 2, 1992 between Tribune Company
and QUNO Corporation (Exhibit 10.17 to Annual Report on Form 10-K
for 1992).
11 Statements of Computation of Primary and Fully Diluted Net Income
Per Share.
12 Computation of Ratios of Earnings to Fixed Charges.
13 The portions of the Company's 1993 Annual Report to Stockholders
which are specifically incorporated herein by reference.
21 Table of subsidiaries of Tribune Company.
23 Consent of Independent Accountants.
99 Form 11-K financial statements for Tribune Company Savings Incentive
Plan (to be filed by amendment).
</TABLE>
34
<PAGE>
Exhibit 10.1b
Tribune Company
435 North Michigan Avenue
Chicago, Illinois 60611
December 14, 1993
Mr. Stanton R. Cook
224 Raleigh Road
Kenilworth, IL 60043
Dear Stan:
We are writing on behalf of the Board of Directors to confirm the
arrangements as to continuation of the consulting services you perform relative
to the Chicago Cubs as first described in our letter dated December 14, 1992.
You have agreed to provide consulting services during 1994 which will
include your representing Tribune Company's ownership interest in the Chicago
Cubs at meetings of Major League Baseball, the National League and any of their
committees to which you may be appointed. In addition, your consulting
activities will include serving as Chairman of the Board of Directors of Chicago
National League Ball Club, Inc. During 1994, you will lead the search for a
president and chief executive officer for the Cubs. You will serve as acting
CEO of the Cubs for the portion of the year prior to appointment of the
permanent president and chief executive officer.
You will be compensated for these services as provided in the employment
agreement between you and Tribune Company dated July 31, 1990. It is
specifically agreed that for your services during 1994, you will be compensated
$31,250 per month (or part thereof) payable at the end of each month.
In addition, the Company will reimburse you for out-of-pocket travel and
business expenses you incur in rendering the consulting services. This
reimbursement will include reimbursement of dues at the Chicago Club, the 410
Club and Tavern Club.
The foregoing arrangement will terminate on December 25, 1994. Any
consulting service to be provided by you after that date will be mutually agreed
upon based on circumstances that then exist.
We will be happy to discuss any questions you may have concerning these
arrangements.
Sincerely,
Charles T. Brumback
-------------------
Chairman & Chief Executive Officer
Andrew J. McKenna
-----------------
Chairman, Governance & Compensation
Committee
<PAGE>
Exhibit 10.2a
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT, made effective as of the 27th day of July, 1993, by and
between CHARLES T. BRUMBACK, of Chicago, Illinois ("Brumback") and TRIBUNE
COMPANY, a Delaware corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Brumback are parties to an employment agreement
dated as of August 1, 1990 which agreement, as amended, is now in full force and
effect; and
WHEREAS, the Company and Brumback now desire to further amend said
agreement, and to replace it with the agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants hereinafter set forth, the parties do hereby agree as follows:
1. Employment. The Company agrees to employ Brumback, and Brumback agrees
to remain in the full-time employ of the Company, for the period (the
"Employment Period") beginning on the effective date of this Agreement and
ending on the earliest to occur of December 31, 1994, the date as of which
Brumback's employment terminates pursuant to paragraph 6 or paragraph 8 of this
Agreement, or the date of Brumback's death. During the Employment Period,
Brumback shall render such services of an executive or administrative character
to the Company and its subsidiaries as the Company's Board of Directors may from
time to time direct; provided, that such services are not of such nature as to
diminish the prestige and responsibility of his position as an executive officer
of the Company. Until the Company's Board of Directors shall determine
otherwise, Brumback shall serve as the Company's Chairman and Chief Executive
Officer. Brumback shall devote his best efforts and all of his business time
and attention (except for usual vacation periods and reasonable periods of
illness or other incapacity) to the business of the Company and its subsidiaries
and shall, if elected to such a position, also serve as a director of the
Company or of one or more of the Company's subsidiaries without additional
compensation.
2. Location. Brumback shall be based at, and shall perform his duties in,
Chicago, Illinois, or at such other location as may be mutually agreed upon by
Brumback and the Board of Directors of the Company. Brumback shall, however,
also travel to other locations at such times as may be appropriate for the
performance of his duties under this Agreement.
3. Compensation. During the Employment Period, Brumback shall be
compensated as follows:
<PAGE>
(a) Salary. Brumback shall be paid a salary at a rate which is not less
than six hundred ninety-five thousand dollars ($695,000) per year, exclusive of
bonuses, if any, which may from time to time be awarded to Brumback at the
discretion of the Board of Directors of the Company or its Governance and
Compensation Committee. Brumback's salary shall be paid in bi-weekly
installments.
(b) Expenses. Brumback shall be reimbursed for all reasonable business
expenses incurred in the performance of his duties pursuant to this Agreement,
to the extent such expenses are substantiated and are consistent with the
general policies of the Company relating to the reimbursement of expenses of its
executive officers.
(c) Fringe Benefits. Brumback shall be entitled to participate, during
the Employment Period, in any and all pension, profit sharing, and other
employee benefit plans or fringe benefit programs which are from time to time
maintained by the Company for its executive officers, in accordance with the
provisions of such plans or programs as from time to time in effect.
(d) Deductions and Withholding. All compensation and other benefits
payable to or on behalf of Brumback pursuant to this Agreement shall be subject
to such deductions and withholding as may be agreed to by Brumback or required
by applicable law.
4. Deferred Compensation.
(a) If Brumback continues in the active employ of the Company until the
end of the Employment Period, he shall be entitled to receive, as deferred
compensation, one hundred twenty-five thousand dollars ($125,000) per year for a
period of ten (10) years. Such amount shall be paid in quarterly installments
and shall commence within ninety (90) days after the last day of the Employment
Period; provided, that if the Employment Period terminates pursuant to paragraph
8 (as a result of Brumback's voluntary termination) such payments shall commence
within ninety (90) days after December 31, 1994.
(b) If the Employment Period terminates as a result of Brumback's death,
if the Employment Period terminates pursuant to paragraph 6 or paragraph 8 and
Brumback dies prior to the date on which the payments provided for in paragraph
4(a) begin, or if Brumback dies within ten (10) years after the payments
provided for in paragraph 4(a) have begun, the amounts that would otherwise have
been paid to Brumback during such ten (10) year period (or the remainder
thereof) shall be paid to the beneficiary or beneficiaries named in the last
written instrument
2
<PAGE>
signed by Brumback for such purpose and received by the Company prior to his
death; provided, that if Brumback fails to so name any beneficiary, such amounts
shall be paid to Brumback's estate. Such amounts may be paid in annual or
quarterly installments, in the Company's discretion, and shall commence within
ninety (90) days after the date of Brumback's death.
(c) If Brumback is living at the end of the ten (10) year period specified
under paragraph 4(a), he shall be entitled to receive, as deferred compensation,
payments at the rate of sixty thousand dollars ($60,000) per year for the
remainder of his life. Such amounts shall be paid in quarterly installments and
shall commence within ninety (90) days after the last day for which he received
payments provided in paragraph 4(a).
(d) If Mary H. Brumback survives Brumback, is married to him at the time
of his death and is living on the tenth (10th) anniversary of the date on which
the payments provided for in paragraph 4(a) began, she shall be entitled to
receive payments at the rate of sixty thousand dollars ($60,000) per year for
the remainder of her life. Such amounts shall be paid in quarterly
installments, and shall commence within ninety (90) days after the later of the
tenth (10th) anniversary of the date on which the payments provided for in
paragraph 4(a) began or the date of Brumback's death.
(e) Brumback agrees that he and his beneficiaries shall be unsecured,
general creditors of the Company with respect to his or their right to receive
such amounts.
5. Consulting and Advisory Services.
(a) Due to Brumback's wide and intimate knowledge of all aspects of the
operations of the Company and its subsidiaries, the Company desires to retain
the benefit of Brumback's consulting and advisory services after the termination
of the Employment Period. Accordingly, Brumback agrees that, subsequent to the
Employment Period, he will render such consulting and advisory services to the
Company as its Board of Directors may reasonably request. Brumback will inform
the Company of any plans he may from time to time make for holidays or travel
and the Company will not, except in emergencies, call for consulting or advisory
services at times which would interfere with such plans; provided, that such
plans shall not render Brumback unavailable for consultation for more than two
(2) months in any calendar year.
(b) The Company shall compensate Brumback at the rate of Two Hundred Fifty
Dollars ($250.00) per hour for the performance of consulting and advisory
services rendered to the Company. Brumback shall keep, and shall submit to the
Company upon request, adequate records of the time spent in the
3
<PAGE>
performance of such services. Brumback agrees that any amounts paid to him
pursuant to this paragraph 5 shall, for purposes of federal, state, and local
income taxes, be treated as compensation for the performance of services
rendered as an independent contractor, and neither Brumback nor his successor
shall take any position inconsistent with such treatment.
6. Disability. If, during the Employment Period, Brumback shall become
incapacitated by accident or illness and, in the opinion of the Board of
Directors of the Company, shall be unable to perform the duties of the positions
he then occupies for a period of six (6) consecutive months, the Company shall
have the right to terminate the Employment Period effective at any time after
such six (6) month period of disability by thirty (30) days advance written
notice to Brumback. Brumback's right to receive his full salary during the
period of disability prior to termination shall be in lieu of his rights, if
any, to collect his full salary for a specified period (currently twenty-six
(26) weeks) under the Company's Short-Term Disability Plan.
7. Other Benefits. Except to the extent provided in paragraph 6, the
compensation provisions of this Agreement shall be in addition to, and not in
derogation or diminution of, any benefits that Brumback or his beneficiaries may
be entitled to receive under the provisions of any pension, profit sharing,
disability, or other employee benefit plan now or hereafter maintained by the
Company or by any of its subsidiaries.
8. Termination. Brumback may voluntarily terminate his employment by
giving one hundred and eighty (180) days prior written notice to the Company,
whereupon the Employment Period shall terminate on the later of the date
specified in such notice or the last day of such one hundred and eighty (180)
day notice period.
9. Competition.
(a) During the Employment Period, Brumback will not, except with the
express written consent of the Board of Directors of the Company, become engaged
in or permit his name to be used in connection with any business other than the
businesses of the Company and its subsidiaries, whether or not such other
business is competitive with the businesses of the Company or its subsidiaries;
provided, that Brumback may participate in charitable, civic, and governmental
activities to the extent that such participation does not conflict with his
obligations to the Company under this Agreement.
(b) In consideration of his continued employment by the Company, and of
his entitlement to the amounts payable under paragraphs 4 and 5 of this
Agreement, Brumback covenants and agrees that for a period of five (5) years
after the termination
4
<PAGE>
of the Employment Period, he will not, except with the express written consent
of the Board of Directors of the Company, engage directly or indirectly in or
permit his name to be used in connection with the sale or distribution of any
product or service which was being sold, offered, or developed for sale by the
Company or any of its subsidiaries during a period of eighteen (18) months
preceding the last day of the Employment Period, in an area within a radius of
one hundred (100) miles of any city in which such product or service is then
being sold or offered for sale by the Company or any of its subsidiaries.
(c) For the purposes of this paragraph 9, the phrase, "engage directly or
indirectly in" shall encompass: (i) all of Brumback's activities whether on his
own account or as an employee, director, officer, agent, consultant, independent
contractor, or partner of or in any person, firm, or corporation (other than the
Company and its subsidiaries), and (ii) Brumback's ownership of more than
fifteen (15%) of the voting capital stock of any corporation, three percent (3%)
or more of the gross income of which is derived from any business or businesses
in which Brumback may not then engage.
10. Confidential Information. Brumback agrees that he will not, without
the prior written consent of the Board of Directors of the Company, during the
term or after termination of his employment under this Agreement, directly or
indirectly disclose to any individual, corporation, or other entity (other than
the Company or any subsidiary thereof, their officers, directors, or employees
entitled to such information, or to any other person or entity to whom such
information is regularly disclosed in the normal course of the Company's
business) or use for his own or such another's benefit, any information, whether
or not reduced to written or other tangible form, which:
(a) is not generally known to the public or in the industry;
(b) has been treated by the Company or any of its subsidiaries as
confidential or proprietary; and
(c) is of competitive advantage to the Company or any of its
subsidiaries and in the confidentiality of which the Company or
any of its subsidiaries has a legally protectible interest;
(such information being referred to in this paragraph 10 as "Confidential
Information"). Confidential Information which becomes generally known to the
public or in the industry, or in the confidentiality of which the Company and
its subsidiaries cease to have a legally protectible interest, shall cease to be
subject to the restrictions of this paragraph.
5
<PAGE>
11. Enforcement. If, at the time of enforcement of any provision of
paragraphs 9 and 10, a court of competent jurisdiction shall finally determine
that the period, scope, or geographical area restrictions stated therein are
unreasonable under circumstances then existing, the maximum period, scope, or
geographical area reasonable under the circumstances shall be substituted for
the stated period, scope, or area. In the event of a breach by Brumback of any
of the provisions of paragraphs 9 and 10, the Company may, in addition to any
other rights and remedies existing in its favor, apply to any court of law or
equity of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce or prevent any violations of the provisions
thereof.
12. Rights in the Event of a Dispute. If a claim or dispute arises
concerning the rights of Brumback or a beneficiary to benefits under the
Agreement, regardless of the party by whom such claim or dispute is initiated,
the Company shall, upon presentation of appropriate vouchers, pay all legal
expenses, including reasonable attorneys' fees, court costs, and ordinary and
necessary out-of-pocket costs of attorneys, billed to and payable by Brumback or
by anyone claiming under or through Brumback (such person being hereinafter
referred to as "claimant"), in connection with the bringing, prosecuting,
defending, litigating, negotiating, or settling such claim or dispute; provided,
that Brumback or the claimant shall repay to the Company such expenses
theretofore paid or advanced by the Company if and to the extent that the party
disputing Brumback's rights obtains a judgment in its favor from a court of
competent jurisdiction from which no appeal may be taken, whether because the
time to do so has expired or otherwise, and it is determined that such expenses
were not incurred by Brumback or the claimant while acting in good faith.
13. General Provisions.
(a) Assignments. This Agreement shall be binding upon, and shall inure to
the benefit of, any successor to all or substantially all of the business or
assets of the Company. Brumback's rights and interests under this Agreement may
not be assigned, pledged, or encumbered by him without the Company's written
consent.
(b) Effect of Headings. The headings of paragraphs and subparagraphs of
this Agreement are inserted for convenience of reference only, and shall not
affect the construction or interpretation of this Agreement.
(c) Modification, Amendment, Waiver. No modification, amendment, or
waiver of any provision of this Agreement shall be effective unless approved in
writing by both parties. The failure of either party at any time to enforce any
of the
6
<PAGE>
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of either party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
(d) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
(e) No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against either party.
(f) Choice of Law. All questions concerning the construction, validity,
and interpretation of this Agreement shall be governed by the laws of the State
of Illinois.
(g) Notices. Any notice to be served under this Agreement shall be in
writing and shall be mailed by registered mail, return receipt requested,
addressed:
If to the Company, to:
Tribune Company
435 North Michigan Avenue
Chicago, Illinois 60611
Attention: Corporate Secretary; or
If to Brumback, to:
Charles T. Brumback
1500 Lake Shore Drive
Chicago, Illinois 60610;
or to such other place as either party may specify in writing, delivered in
accordance with the provisions of this subparagraph.
(i) Survival. The rights and obligations of the parties shall survive the
term of Brumback's employment to the extent that any performance is required
under this Agreement after the expiration or termination of such term.
(j) Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter thereof, and supersedes all
previous agreements between the parties relating to the same subject matter.
7
<PAGE>
IN WITNESS WHEREOF,the parties hereto have executed this Agreement as of
the day and year first above written.
TRIBUNE COMPANY
By Andrew J. McKenna
----------------------
Charles T. Brumback
------------------------
Charles T. Brumback
8
<PAGE>
Exhibit 10.2b
AMENDMENT
AGREEMENT made February 15, 1994 between Tribune Company, a Delaware
corporation (the "Company"), and Charles T. Brumback of Chicago, Illinois
("Brumback").
The Company and Brumback are parties to an employment agreement effective
as of July 27, 1993 (the "Agreement"). The Company and Brumback now desire to
amend the Agreement in order to increase the salary rate set forth in Paragraph
3(a) of the Agreement. Therefore, effective as of February 28, 1994, the salary
rate set forth in Paragraph 3(a) shall be increased from $695,000 to $ 730,000.
IN WITNESS WHEREOF, the Company and Brumback have executed this Amendment
on the date above set forth.
TRIBUNE COMPANY
By Andrew J. McKenna
-----------------------------
Chairman of the Governance
& Compensation Committee
Charles T. Brumback
-----------------------------
Charles T. Brumback
2/14/94
<PAGE>
Exhibit 10.4b
FIRST AMENDMENT
---------------
OF
--
TRIBUNE COMPANY SUPPLEMENTAL RETIREMENT PLAN
--------------------------------------------
(As Amended and Restated Effective January 1, 1989)
WHEREAS, this Company maintains TRIBUNE COMPANY SUPPLEMENTAL
RETIREMENT PLAN (the "Plan"); and
WHEREAS, the Plan has been amended previously from time to time and it
is now deemed desirable to amend the Plan further;
NOW, THEREFORE, IT IS RESOLVED that, by virtue and in exercise of the
amending power reserved to this company under Section 4 of the Plan, the Plan be
and it hereby is amended, effective January 1, 1994, in the following
particulars:
1. By substituting the following sentence for the fourth sentence of
subsection 1.2 of the Plan:
"In addition, Sections 401(a)(17) and 404(l) of the Internal Revenue Code
limit the amount of employees' annual compensation that may be taken into
account in determining the benefits that may be paid to them from a
qualified defined benefit pension plan and the deductible Employer
contributions that may be made to that plan to provide those benefits (the
'Compensation Limitation')."
2. By substituting the following sentence for the first sentence of
subsection 1.4 of the Plan:
<PAGE>
"The Plan will be administered by the Governance and Compensation Committee
of the Board of Directors of the Company (or such successor committee of
said Board as shall from time to time have responsibility for compensation
matters) (the 'Committee')."
3. By substituting the date "January 1, 1994" for the phrase
"Restatement Effective Date" where the latter phrase occurs in subsection 1.5 of
the Plan.
4. By substituting the following for subparagraph 2.1(a) of the Plan:
"(a) such participant under the Pension Plan has been designated by the
Board of Directors of the Company (by resolutions adopted on December
13, 1988) or thereafter by the Committee as being part of a select
group of management or highly compensated employees covered by this
Plan (and such designation has not been revoked by the Committee);
provided, that no revocation of a designation under this subparagraph
(a) shall be effective if made (i) on the day of, or within 36 months
after, the occurrence of a 'Change-In-Control' (as defined in
subsection 3.1 below), (ii) prior to a Change-In-Control but at the
request of any third party participating in or causing the Change-In-
Control, or (iii) otherwise in connection with or in anticipation of a
Change-In-Control; and"
5. By adding the following two sentences to subsection 2.2 of the
Plan, immediately after the last sentence of that subsection:
"Each Participant's Supplemental Benefits hereunder shall accrue on an
annual basis on the last day of each Plan Year, unless the Participant's
employment with the Employers and Related Companies terminated during the
Plan Year, in which case the increase in a Participant's Supplemental
Benefits which is attributable to the Plan Year in which his employment
terminates shall accrue on the date of his employment
-2-
<PAGE>
termination. The Committee shall determine the amount of each Participant's
accrual for a Plan Year as of the appropriate date described in the
preceding sentence."
IT IS FURTHER RESOLVED, that the Secretary of the Company is
authorized to prepare a restatement of the Plan to incorporate the foregoing
amendments.
* * *
I, Stanley J. Gradowski, Secretary of Tribune Company, hereby certify
that the foregoing is a correct copy of a resolution duly adopted by the Board
of Directors of said corporation on December 14, 1993, and that the resolution
has not been changed or repealed.
Dated this 14th day of December, 1993.
Stanley J. Gradowski
------------------------------
As Secretary as Aforesaid
(Corporate Seal)
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<PAGE>
Exhibit 10.8
TRIBUNE COMPANY
---------------
BONUS DEFERRAL PLAN
-------------------
McDermott, Will & Emery
Chicago, Illinois
<PAGE>
TRIBUNE COMPANY BONUS DEFERRAL PLAN
-----------------------------------
SECTION 1
---------
Introduction
------------
1.1. The Plan. TRIBUNE COMPANY BONUS DEFERRAL PLAN (the "Plan") has been
established by TRIBUNE COMPANY, a Delaware corporation (the "Company"),
effective as of December 14, 1993.
1.2. Purpose. The Company and certain of its subsidiaries which have adopted,
and become "Employers" under, the Plan in accordance with subsection 1.3 below,
intend through the use of the Plan (a) to offer a select group of senior
officers and other highly compensated key employees of the Employers who are
described in Section 2, the opportunity to defer the receipt of all or a portion
of any Qualifying Bonus (as defined in Section 3.3 below) which would otherwise
be payable to them currently, and (b) to provide for involuntary deferral of
certain Participants' Qualifying Bonuses in specified circumstances (as
described in subsection 3.1(b) below), for the period provided in the Plan.
1.3. Employers; Related Companies; SIP. The Company and each subsidiary of the
Company that (a) is a "Related Company" under the Tribune Company Employees'
Savings Incentive Plan (the "SIP") and (b) employs one or more employees who
have become Participants in accordance with subsection 2.1 below, shall each be
an "Employer" under this Plan. For purposes of this Plan, a "subsidiary" of the
Company shall mean any corporation, more than 50% of the voting stock of which
is owned, directly or indirectly, by the Company.
1.4. Plan Administration. The Plan will be administered and interpreted by the
Governance and Compensation Committee of the Board of Directors of the Company
(or such successor committee of said Board as shall from time to time have
responsibility for compensation matters) (the "Committee"). The Committee has,
to the extent appropriate and in addition to the powers described in subsection
3.1 below, full discretionary authority to construe and interpret the terms and
provisions of the Plan, to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts, including the
delegation of its administrative responsibilities, as it shall, from time to
time, deem advisable, and to otherwise supervise the administration of this
Plan.
<PAGE>
The Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan, or in any election hereunder, in the manner and to
the extent it shall deem necessary to carry the Plan into effect. Any decision,
interpretation or other action made or taken in good faith by or at the
direction of the Company, the Board of Directors of the Company, or the
Committee (or any of its members) arising out of or in connection with the Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the Company, the other
Employers and all employees and Participants and their respective heirs,
executors, administrators, successors and assigns. The Committee's
determinations hereunder need not be uniform, and may be made selectively among
eligible employees, whether or not they are similarly situated. Any actions to
be taken by the Committee will require the consent of a majority of the
Committee members.
1.5. Fiscal Year. Reference in this Plan to a "Fiscal Year" means the fiscal
year of the relevant Employer, which is a 52-53 week year ending on the last
Sunday occurring within each calendar year.
SECTION 2
---------
Participation
-------------
Subject to the conditions and limitations of the Plan, each employee of an
Employer on or after the Effective Date shall become a "Participant" under this
Plan as of the first day as of which such employee:
(a) is a participant in the Tribune Company Management Incentive Plan, and
(b) has an annualized rate of Compensation (as defined in the SIP) in
excess of $150,000.
SECTION 3
---------
Deferral
--------
3.1. Election of Deferral; Automatic Deferral; Settlement Date. Subject to the
following provisions of this subsection
-2-
<PAGE>
3.1 and the provisions of subsection 3.2 below, within a period specified by the
Committee before each Fiscal Year that begins after the Effective Date, a
Participant may make an irrevocable written election (on a form prescribed by
the Committee) to defer receipt of all or a specified portion (in whole
multiples of 5%) of the Qualifying Bonus earned for that Fiscal Year, regardless
of the year in which that Qualifying Bonus is normally or actually paid.
Notwithstanding the foregoing provisions of this subsection 3.1:
(a) Minimum Deferral. The portion of a Participant's Qualifying Bonus
earned for any Fiscal Year which the Participant elects to defer
hereunder may not be less than $10,000.
(b) Automatic (Deemed) Election. In the case of any Participant who, with
respect to a particular Fiscal Year beginning after the Effective
Date, in the judgment of the Committee may be a "covered employee"
under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code") for such Fiscal Year and may have
"applicable employee remuneration" (as defined in said Section) for
that year of more than $1,000,000, the Committee may determine in its
sole discretion that the Participant will be deemed and treated as
having elected to defer all or a portion of his Qualifying Bonus for
that year.
(c) Deferral of Qualifying Bonus Earned for 1994 or for First Year of
Participation. Each Participant on the Effective Date may elect prior
to January 31, 1994, to defer all or a portion of his Qualifying Bonus
earned for the 1994 Fiscal Year and payable during calendar year 1995,
in accordance with the otherwise applicable provisions of this
subsection 3.1. An employee of an Employer who becomes a Participant
during a Fiscal Year ending after 1993 may file a deferral election
under this subsection 3.2 within 30 days after the date he receives
notice that he has become a Participant (but before the end of that
Fiscal Year), which election shall be applicable to his Qualifying
Bonus for that Fiscal Year.
Any amounts which a Participant elects to defer under this subsection 3.1 shall
be deferred until the March 1 following the end of the Fiscal Year in which the
Participant's termination of employment with the Employers and other Related
Companies occurs; provided, however, that a military or personal leave of
absence granted by an Employer or Related Company shall not constitute a
termination of employment for
-3-
<PAGE>
this purpose; and provided further, that the Committee shall have the authority
to require deferral beyond that date to a later date to the extent necessary to
avoid or reduce a limitation on the deductibility by an Employer under Section
162(m) of the Internal Revenue Code, of the amounts so deferred. Said March 1 or
later date described in the preceding sentence shall be referred to herein as
the Participant's Settlement Date.
3.2. Limitations on Deferral Elections. The Committee may set, from time to
time, limitations on the amount of Participants' Qualifying Bonuses which may be
subject to deferral hereunder, including but not limited to establishing annual
limitations relating to particular employment positions or grades of employees.
The applicable limitations for a particular Fiscal Year shall be set forth in an
attachment to the form of deferral election relating to such year.
3.3. Qualifying Bonus. A Participant's "Qualifying Bonus" earned for any
Fiscal Year means the bonus that he is awarded under the Tribune Company
Management Incentive Plan for that Fiscal Year.
SECTION 4
---------
Treatment of Deferred Amounts
-----------------------------
4.1. Accounts. Each Employer shall maintain on its books a separate account
(the "Account") for each Participant who has deferred all or a portion of any
Qualifying Bonus from that Employer under this Plan. The amount of the
Qualifying Bonus earned for a particular Fiscal Year which the Participant
elected to defer shall be credited to such Participant's Account (on the books
of the Employer that paid that Qualifying Bonus) as of the March 1 (or the first
business day thereafter) nearest the date as of which the Qualifying Bonus was
awarded.
4.2. Increments. The balance credited to each Participant's Account shall be
deemed to earn "interest" at a rate equal to the thirty-year United States
Treasury bond rate determined as of March 1 of each year (or if that March 1 is
not a business day, then the first business day following that March 1).
Interest will be credited to Participants' accounts as of the last day of each
fiscal quarter of the Company. Any interest deemed to have been earned on the
Participant's Account balance
-4-
<PAGE>
shall be referred to as an "Increment" for purposes of this Plan.
4.3. Funding. The Plan and the recording of Accounts hereunder shall not
constitute a trust and shall merely be for the purpose of recording an unsecured
contractual obligation. Amounts payable under this Plan to a Participant or his
beneficiary shall be paid (i) directly by the Employers from their general
assets and/or (ii) from Tribune Company Deferred Benefit Trust, in such
proportions (if any) as the Company shall determine. The provisions of this
Plan shall not require that the Employers segregate on their books or otherwise
any amounts to be used for payments under Section 5 of this Plan, except as to
any amounts paid or payable to Tribune Company Deferred Benefit Trust.
4.4. Reports. Until the entire net credit balance in a Participant's Account
shall have been paid in full, the Participant's Employer will furnish to the
Participant a report, at least annually, setting forth transactions in, and the
status of, his Account.
SECTION 5
---------
Payment of Deferred Amounts
---------------------------
5.1. Amount of Payment. The amount to be paid to a Participant following his
Settlement Date in a lump sum under subsection 5.3 or 5.5 below (or in the case
of installments under subsection 5.3 below, the amount from which the first
installment payment amount will be derived) shall be an amount equal to the sum
of the net credit balance in his Account as of the last day of the Fiscal Year
immediately preceding his Settlement Date, after all adjustments required to be
made to his Account as of that date have been made, plus the deferred amount (if
any) of his Qualifying Bonus for the Fiscal Year preceding the year in which his
Settlement Date occurred.
5.2. Medium of Payment. All payments of Account balances under this Plan shall
be made in cash.
5.3. Method of Payment. Subject to subsection 6.9 below, the net credit
balance in a Participant's Account shall be payable either in a single lump sum
payable as of his Settlement Date,
-5-
<PAGE>
or in a series of annual installments beginning as of his Settlement Date and
thereafter payable as of each subsequent anniversary thereof. In this regard,
each Participant will elect on his initial deferral election form the method of
payment of his Account (i.e., lump sum or installments) and, if payment is to be
made in installments, the number of annual installments over which his Account
balance shall be paid (the "Payout Period"). A Participant may elect a different
method of payment or Payout Period on any subsequent year's deferral election
form (validly filed during the Fiscal Year immediately preceding the Fiscal Year
in which his Settlement Date occurs), which will automatically revoke all
previous elections as to method of payment and Payout Period. If a Participant's
Account balance is paid in installments, it shall be credited with Increments
during the Payout Period at the rate from time to time determined under
subsection 4.2. The installment payment to a Participant in any year shall be in
an amount equal to the quotient obtained by dividing his Account balance as of
the last day of the preceding Fiscal Year by the number of payments remaining in
his Payout Period, including the current payment. A Participant's Payout Period
shall include not more than 15 annual installments; provided, however, that
notwithstanding the foregoing provisions of this subsection 5.3, the Committee,
in its discretion, may from time to time set a minimum dollar amount applicable
to individual annual installment payments permitted under the Plan, and may
adjust the duration of the Payout Period elected by a Participant to provide
that the dollar amount of any annual installment to that Participant is not
projected to be less than the minimum annual dollar amount in effect at the
beginning of his Payout Period.
5.4. Payment Following Death or Permanent Disability. Notwithstanding the
Payout Period selected by the Participant, if the employment of a Participant is
terminated as a result of the Participant's death or permanent disability, the
entire net credit balance in such Participant's Account may, in the sole
discretion of the Committee, become payable in a lump sum to such Participant
(or, in the case of death, to his beneficiary) on the March 1 immediately
following the Participant's death or termination of employment due to permanent
disability, or on a later date to the extent the Committee believes appropriate
to avoid or reduce a limitation on the deductibility by an Employer under
Section 162(m) of the Internal Revenue Code (or any successor provision). For
purposes of this Plan, a Participant's employment shall be deemed to have been
terminated as a result of permanent disability in the event the Participant
suffers a physical illness, injury or other impairment with respect to which the
Participant is entitled to receive bene-
-6-
<PAGE>
fits under the long-term disability plan maintained by the Company.
5.5. Acceleration of Payments. Notwithstanding any other provision of this
Plan to the contrary, the Committee, in its sole discretion, is empowered to
accelerate the payment of a Participant's Account or of all Participants'
Accounts (before or after any termination of employment), including conversion
to a smaller number of installment payments or to a single lump sum payment, for
any reason the Committee may determine to be appropriate without any premium or
penalty. Neither the Employers nor the Committee shall have any obligation to
make any such acceleration for any reason whatsoever.
SECTION 6
---------
General Provisions
------------------
6.1. Interests Not Transferable. Except as to withholding of any tax under the
laws of the United States or any state or municipality, the interests of
Participants and their beneficiaries to amounts deferred under the Plan are not
subject to the claims of their creditors and may not be voluntarily or
involuntarily transferred, assigned, alienated or encumbered.
6.2. Controlling Law. To the extent not superseded by the laws of the United
States, the laws of Illinois shall be controlling in all matters relating to the
Plan.
6.3. Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine and neuter genders, the plural shall include
the singular and the singular shall include the plural.
6.4. Action by the Company. Any action required of or permitted by the Company
under the Plan shall be by resolution of its Board of Directors or by a duly
authorized committee of its Board of Directors, or by any person or persons
authorized by resolution of its Board of Directors or such committee.
6.5. Successor to the Company or Any Other Employer. The term "Company" as
used in the Plan shall include any successor to the Company by reason of merger,
consolidation, the purchase or transfer of all or substantially all of the
Company's assets, or otherwise. The term "Employer" as used in the Plan with
respect to the Company or any of its subsidiaries shall include any successor to
that corporation by reason of merger, consolidation, the purchase or
-7-
<PAGE>
transfer of all or substantially all of the assets of that corporation, or
otherwise.
6.6. Facility of Payment. Any amounts payable under this Plan to any person
under a legal disability or who, in the judgment of the Committee, is unable to
properly manage his affairs may be paid to the legal representative of such
person or may be applied for the benefit of such person in any manner which the
Committee may select.
6.7. Expenses. The Employers, in such proportions as the Company determines,
shall bear all expenses incurred by them and by the Committee in administering
this Plan. If a claim or dispute arises concerning the rights of a Participant
or beneficiary amounts deferred under the Plan (including Increments thereon),
regardless of the party by whom such claim or dispute is initiated, the
Employers shall, in such proportions as the Company determines, and upon
presentation of appropriate vouchers, pay all legal expenses, including
reasonable attorneys' fees, court costs, and ordinary and necessary out-of-
pocket costs of attorneys, billed to and payable by the Participant or by anyone
claiming under or through the Participant (such person being hereinafter
referred to as the Participant's "claimant"), in connection with the bringing,
prosecuting, defending, litigating, negotiating, or settling of such claim or
dispute; provided, that:
(a) The Participant or the Participant's claimant shall repay to the
Employers any such expenses theretofore paid or advanced by the
Employers if and to the extent that the party disputing the
Participant's rights obtains a judgment in its favor from a court of
competent jurisdiction from which no appeal may be taken, whether
because the time to do so has expired or otherwise, and it is
determined that such expenses were not incurred by the Participant or
the Participant's claimant while acting in good faith; provided
further, that
(b) In the case of any claim or dispute initiated by a Participant or the
Participant's claimant, such claim shall be made, or notice of such
dispute given, with specific reference to the provisions of this Plan,
to the Committee within one year after the
-8-
<PAGE>
occurrence of the event giving rise to such claim or dispute.
6.8. Other Benefits. The benefits provided under the Plan shall, except to the
extent otherwise specifically provided herein, be in addition to, and not in
derogation or diminution of, any benefits that a Participant or his beneficiary
may be entitled to receive under any other plan or program now or hereafter
maintained by the Company or by any of its subsidiaries.
6.9. Withholding. The Employers shall have the right to deduct from any payment
to be made pursuant to this Plan any federal, state or local taxes required by
law to be withheld. The Employers shall have the further right to deduct from
any other payment to be made to a Participant any federal, state or local taxes
required to be withheld with respect to amounts deferred under this Plan.
6.10.No Obligation. Neither this Plan nor any elections hereunder shall create
any obligation on the Employers to continue any other existing award plans or
policies or to establish or continue any other programs, plans or policies of
any kind. Neither this Plan nor any election made pursuant to this Plan shall
give any Participant or other employee any right with respect to continuance of
employment by the Employers or any subsidiary or of any specific aggregate
amount of compensation, nor shall there be a limitation in any way on the right
of the Employers or any subsidiary by which an employee is employed to terminate
such employee at any time for any reason whatsoever or for no reason, nor shall
this Plan create a contract of employment.
6.11. Designation of Beneficiary. In the event of the death of a Participant,
the amount payable under Section 5.5 hereof shall, unless the Participant shall
designate to the contrary as provided below, thereafter be made (a) to such
person or persons who, as of the date payment is to be made under this Plan,
would receive distribution of the Participant's account balances, if any, under
the terms of the SIP, or (b) if the Participant is not a participant in the SIP
at the time of his death, then to his surviving spouse or (if there is no
surviving spouse) to his estate. Notwithstanding the preceding sentence, a
Participant may specifically designate the person or persons (who may be
designated successively or contingently) to receive payments under this Plan
following the Participant's death by filing a written beneficiary designation
with the
-9-
<PAGE>
Committee during the Participant's lifetime. Such beneficiary
designation shall be in such form as may be prescribed by the Committee and may
be amended from time to time or may be revoked by the Participant pursuant to
written instruments filed with the Committee during his lifetime. Beneficiaries
designated by a Participant may be any natural or legal person or persons,
including a fiduciary, such as a trustee of a trust or the legal representative
of an estate. Unless otherwise provided by the beneficiary designation filed by
a Participant, if all of the persons so designated die before a Participant on
the occurrence of a contingency not contemplated in such beneficiary
designation, then the amount payable under this Plan shall be paid to the person
or persons determined in accordance with the first sentence of this subsection
6.11.
6.12. Liability. No member of the Board of Directors of the Company or any
Employer, no employee of an Employer and no member of the Committee (nor the
Committee itself) shall be liable for any act or action hereunder whether of
omission or commission, by any other member or employee or by any agent to whom
duties in connection with the administration of the Plan have been delegated or,
except in circumstances involving his bad faith, gross negligence or fraud, for
anything done or omitted to be done by himself. The Employers will fully
indemnify and hold the members of the Committee harmless from any liability
hereunder, except in circumstances involving a Committee member's bad faith,
gross negligence or fraud. The Company or the Committee may consult with legal
counsel, who may be counsel for the Company or other counsel, with respect to
its obligations or duties hereunder, or with respect to any action or proceeding
or any question of law, and shall not be liable with respect to any action taken
or omitted by it in good faith pursuant to the advice of such counsel.
SECTION 7
---------
Amendment and Termination
-------------------------
While the Employers expect to continue the Plan, the Company must necessarily
reserve and reserves the right to amend the Plan from time to time or to
terminate the Plan at any time. However, neither an amendment of Plan nor
termination of the Plan may, without the Participant's consent adversely affect
any deferred amounts or Increments already credited to his Account as of the
date such amendment is made or the termination of the Plan occurs and which, but
for such amendment or
-10-
<PAGE>
termination, are payable under this Plan on, or would become payable under this
Plan after, the date such amendment is made or the termination of the Plan
occurs.
-11-
<PAGE>
Exhibit 10.12b
Tribune Company
Amendment to 1988 Restricted Stock Plan
for Outside Directors
Effective April 28, 1992
The following is added at the end of Section 10:
"; and provided further that the Plan shall not be amended more
than once every six months, other than to comport with changes
in the Internal Revenue Code of 1986 or the Employee Retirement
Income Security Act of 1974, or the rules thereunder."
<PAGE>
Exhibit 10.13
TRIBUNE COMPANY
EXECUTIVE FINANCIAL COUNSELING
------------------------------
This memorandum describes the Executive Financial Counseling program for
executives of Tribune Company as approved by the Company's Board of Directors on
October 19, 1988 and as amended effective January 1, 1994.
Types of Services
- -----------------
The plan permits participants to obtain the following types of services:
Financial planning:
a) Investment planning and analysis
b) Cash management and budgeting
Tax planning:
a) Income tax planning
b) Estate and gift tax planning
Tax return preparation:
a) Federal income tax
b) State and city income tax
c) Gift tax
Will and trust agreement drafting
Service Provider
- ----------------
Each participant may obtain assistance in these areas from the financial
counseling firm, law firm and/or accounting firm of the executive's choice.
Reimbursement Arrangements
- --------------------------
The service provider(s) should bill the executive for services rendered and the
executive should pay for these services directly. Once a year, the executive
may submit copies of the invoices and cancelled checks covering the preceding 12
months for reimbursement by the Company. The annual reimbursement is limited to
the lesser of:
a) 1.73 times the fees paid, or
<PAGE>
b) 1.5% of cash compensation (salary plus bonus). The limit is 3%
of compensation for the first year of participation.
The fees eligible for reimbursement do not include any charges based on the
amount of money under management, the value of the investments made or insurance
policies purchased, etc. Thus, the Company will not reimburse brokerage fees,
investment management fees, commissions and similar charges.
The amount reimbursed to the executive will be treated as additional income on
the W-2 from the Company.
Participants
- ------------
The financial counseling program will be provided to employees who serve on the
Tribune Company Board of Directors and other executives designated by the chief
executive officer of the Company.
sjg/cc
12/17/93
<PAGE>
TRIBUNE COMPANY
FINANCIAL COUNSELING
PARTICIPANTS
--------------------
John W. Madigan
Charles T. Brumback
James C. Dowdle
Thomas P. O'Donnell
Harold R. Lifvendahl
Laurence A. Himes
Dennis J. FitzSimons
Jack Fuller
sjg/cc
12/17/93
<PAGE>
Exhibit 10.15
TRIBUNE COMPANY
---------------
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
--------------------------------------
McDermott, Will & Emery
Chicago, Illinois
<PAGE>
TRIBUNE COMPANY SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
------------------------------------------------------
SECTION 1
---------
Introduction
------------
1.1. The Plan. TRIBUNE COMPANY SUPPLEMENTAL DEFINED CONTRIBUTION PLAN (the
"Plan"), as set forth herein, has been established by TRIBUNE COMPANY, a
Delaware corporation (the "Company"), effective January 1, 1994 (the "Effective
Date").
1.2. Purpose. The Company and certain of its subsidiaries maintain, and are
Employers under, the Tribune Company Employee Stock Ownership Plan (the "ESOP")
which is intended to constitute an employee stock ownership plan that meets the
requirements for qualification under Sections 401(a) and 4975(e)(7) of the
Internal Revenue Code. Sections 401(a)(17) and 404(l) of the Internal Revenue
Code limit the amount of employees' annual compensation that may be taken into
account after December 31, 1993 in determining the amount of deductible Employer
contributions that may be allocated to their accounts under a qualified employee
stock ownership plan or other qualified defined contribution plan, to $150,000
(subject to cost-of-living adjustments of that amount calculated as described in
said Section 401(a)(17)) (the "Compensation Limitation"). The purpose of this
Plan is to provide for Participants in this Plan the amount of Employer
contributions that would have been allocated to their respective accounts under
the ESOP for plan years beginning on and after the Effective Date but for the
Compensation Limitation, subject to certain limitations on recognized
compensation described in subsection 2.2 below.
1.3. Employers. The Company and each subsidiary of the Company that is an
Employer under the ESOP shall be an "Employer" under this Plan unless specified
to the contrary by the Company by written notice filed with the Committee
described in subsection 1.4.
1.4. Plan Administration. The Plan will be administered by the Governance and
Compensation Committee of the Board of Directors of the Company (or such
successor committee of said Board as shall from time to time have responsibility
for compensation matters) (the "Committee"). The Committee has, to the extent
appropriate and in addition to the powers described in subsection 2.1 below, the
same powers, rights, duties and obligations with respect to the Plan as the
Administrative
<PAGE>
Committee under the ESOP has with respect to that plan. The Committee's
determinations hereunder need not be uniform, and may be made selectively among
eligible employees, whether or not they are similarly situated. The Plan will be
administered on the basis of a "Plan Year" which is each calendar year beginning
on or after the Effective Date.
SECTION 2
---------
Participation and Supplemental Benefits
---------------------------------------
2.1. Eligibility. Subject to the conditions and limitations of the Plan, each
Employee of an Employer on or after the Effective Date who is a participant in
the ESOP shall become a "Participant" under this Plan, entitled to "Supplemental
Benefits" payable under this Plan, as of the first day of the first plan year
under the ESOP which begins on or after the Effective Date, and during which:
(a) such participant under the ESOP has been designated by the Board of
Directors of the Company (by resolutions adopted on ____________,
19__) or thereafter by the Committee (by a written instrument filed
with the Secretary of the Company) as being part of a select group of
management or highly compensated employees covered by this Plan, and
such designation has not been revoked by the Committee; provided, that
no revocation of a designation under this subparagraph (a) shall be
effective if made (i) on the day of, or within 36 months after, the
occurrence of a "Change-In-Control" (as defined in subsection 3.1
below), (ii) prior to a Change-In-Control but at the request of any
third party participating in or causing the Change-In-Control, or
(iii) otherwise in connection with or in anticipation of a Change-In-
Control; and
(b) the Compensation (as defined in the ESOP) of such participant under
the ESOP is greater than the Compensation Limitation.
In the event of the death of such a Participant, his beneficiary shall be
entitled to participate in the Plan as of the date benefit payments to such
beneficiary commence under the Plan, to the extent provided by the following
subsections of the Plan.
-2-
<PAGE>
2.2. Amount of Supplemental Benefits. The Committee shall maintain or cause to
be maintained in the records of the Plan a separate account in the name of each
Participant. As of the last day of each Plan Year that ends after the date as
of which he first became a Participant, the Committee shall:
(a) First, charge to each Participant's account all payments (if any) made
from that account since the last day of the preceding Plan Year that
have not been charged previously;
(b) Next, increase the net credit balance in each Participant's account,
as adjusted as described in subparagraph (a) above, by 7.75 percent
thereof; and
(c) Finally, credit each Participant's account with an amount, expressed
as cash, equal to the difference between (i) the value of the number
of shares of Company Stock that would have been credited to the
Participant's accounts under the ESOP for that Plan Year pursuant to
subparagraph 5.2(d) of the ESOP if the Compensation Limitation in
effect for that Plan Year had been $235,840 and (ii) the value of the
number of shares of Company Stock that were in fact credited to the
Participant's accounts under the ESOP for that Plan Year pursuant to
subparagraph 5.2(d) of the ESOP after application of the Compensation
Limitation actually in effect for that Plan Year.
provided, that the $235,840 amount in subparagraph (c) above shall be adjusted
for each Plan Year by the same percentage by which the actual Compensation
Limitation amount was adjusted for that Plan Year in accordance with Section
401(a)(17) of the Internal Revenue Code. A Participant's Supplemental Benefits
under the Plan as of any Valuation Date shall be the Nonforfeitable Percentage
(determined in accordance with the vesting schedule under the ESOP) of the net
credit balance in his account under this Plan as of that Valuation Date.
2.3. Payment of Supplemental Benefits. The Supplemental Benefits that a
Participant (or, in the event of the Participant's death, the Participant's
beneficiary) becomes entitled to receive under the Plan on account of the
retirement, other termination of employment or death of the Participant on or
after the Effective Date shall be paid at the same time and in the same manner
as benefits that are to be paid to the Participant (or his beneficiary) under
the Tribune Company Bonus Deferral Plan. Notwithstanding any other provision of
this Plan to the contrary, the Committee, in its sole discretion, is empowered
to accelerate the payment of a Par-
-3-
<PAGE>
ticipant's Supplemental Benefits or of all Participants' Supplemental Benefits,
to a smaller number of installment payments or to a single lump sum payment, for
any reason the Committee may determine to be appropriate. Neither the Employers
nor the Committee shall have any obligation to make any such acceleration for
any reason whatsoever.
2.4. Funding. Supplemental Benefits payable under this Plan to a Participant
or his beneficiary shall be paid (i) directly by the Employers from their
general assets and/or (ii) from Tribune Company Deferred Benefit Trust, in such
proportions as the Company shall determine. The provisions of this Plan shall
not require that the Employers segregate on their books or otherwise any amount
to be used for payment of Supplemental Benefits under this Plan, except as to
any amounts paid or payable to Tribune Company Deferred Benefit Trust.
SECTION 3
---------
General Provisions
------------------
3.1. Terms. References in this Plan to an individual as being a "participant"
in the ESOP and (unless expressly provided to the contrary in this Plan) terms
used in this Plan that also are used in the ESOP as to that individual shall
have the meanings for those terms set forth in the ESOP, except that a reference
in this Plan to the "beneficiary" of a Participant shall mean for purposes of
this Plan any person who becomes entitled to benefits under the ESOP because of
the Participant's death. For purposes of this Plan, a "subsidiary" of the
Company shall mean any corporation, more than 50% of the voting stock in which
is owned, directly or indirectly, by the Company, and the term "Change-In-
Control" shall mean a change in control as defined in the Tribune Company
Transitional Compensation Plan for Executive Employees as in effect on the
Effective Date of this Plan.
3.2. Employment Rights. Establishment of the Plan shall not be construed to
give any participant in the ESOP the right to be retained in the service of the
Company or any of its subsidiaries or to any benefits not specifically provided
by the Plan.
3.3. Interests Not Transferable. Except as to withholding of any tax under the
laws of the United States or any state or municipality, the interests of
Participants and any other
-4-
<PAGE>
persons who become entitled to a Supplemental Benefit under the Plan are not
subject to the claims of their creditors and may not be voluntarily or
involuntarily transferred, assigned, alienated or encumbered.
3.4. Controlling Law. To the extent not superseded by the laws of the United
States, the laws of Illinois shall be controlling in all matters relating to the
Plan.
3.5. Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine and neuter genders, the plural shall include
the singular and the singular shall include the plural.
3.6. Action by the Company. Any action required of or permitted by the Company
under the Plan shall be by resolution of its Board of Directors or by a duly
authorized committee of its Board of Directors, or by any person or persons
authorized by resolution of its Board of Directors or such committee.
3.7. Successor to the Company or Any Other Employer. The term "Company" as
used in the Plan shall include any successor to the Company by reason of merger,
consolidation, the purchase or transfer of all or substantially all of the
Company's assets, or otherwise. The term "Employer" as used in the Plan with
respect to the Company or any of its subsidiaries shall include any successor to
that corporation by reason of merger, consolidation, the purchase or transfer of
all or substantially all of the assets of that corporation, or otherwise.
3.8. Facility of Payment. Any amounts payable under this Plan to any person
under a legal disability or who, in the judgment of the Committee, is unable to
properly manage his affairs may be paid to the legal representative of such
person or may be applied for the benefit of such person in any manner which the
Committee may select.
3.9. Rights in the Event of Dispute. If a claim or dispute arises concerning
the rights of a Participant or beneficiary to benefits under the Plan,
regardless of the party by whom such claim or dispute is initiated, the Company
shall, upon presentation of appropriate vouchers, pay all legal expenses,
including reasonable attorneys' fees, court costs, and ordinary and necessary
out-of-pocket costs of attorneys, billed to and payable by the Participant or by
anyone claiming under or
-5-
<PAGE>
through the Participant (such person being hereinafter referred to as the
Participant's "claimant"), in connection with the bringing, prosecuting,
defending, litigating, negotiating, or settling of such claim or dispute;
provided, that:
(a) the Participant or the Participant's claimant shall repay to the
Company any such expenses theretofore paid or advanced by the Company
if and to the extent that the party disputing the Participant's rights
obtains a judgment in its favor from a court of competent jurisdiction
from which no appeal may be taken, whether because the time to do so
has expired or otherwise, and it is determined that such expenses were
not incurred by the Participant or the Participant's claimant while
acting in good faith; provided further, that
(b) in the case of any claim or dispute initiated by a Participant or the
Participant's claimant, such claim shall be made, or notice of such
dispute given, with specific reference to the provisions of this Plan,
to the Committee within one year after the occurrence of the event
giving rise to such claim or dispute.
3.10. Other Benefits. The benefits provided under the Plan shall, except to
the extent otherwise specifically provided herein, be in addition to, and not in
derogation or diminution of, any benefits that a Participant or his beneficiary
may be entitled to receive under any other plan or program now or hereafter
maintained by the Company or by any of its subsidiaries.
SECTION 4
---------
Amendment and Termination
-------------------------
While the Company and its subsidiaries that become Employers expect to continue
the Plan, the Company must necessarily reserve and reserves the right to amend
the Plan from time to time or to terminate the Plan at any time. However,
neither an amendment of the Plan nor termination of the Plan may:
(a) cause the reduction or cessation of any Supplemental Benefits (and of
the Employers' obligation to provide such benefits) which had accrued
as of the date such amendment is made or the termination of the Plan
occurs and which, but for such amendment or termination, are payable
under this Plan on, or would
-6-
<PAGE>
become payable under this Plan after, the date such amendment is made
or the termination of the Plan occurs; or
(b) cause the modification, rescission or revocation of (i) the provisions
of subsection 2.1 with respect to a Change-In-Control or (ii) any
written determinations by the Committee pursuant to subsection 2.3 as
to the form of payment of Supplemental Benefits to any person that are
in effect on said date.
In addition, no amendment or termination of the Plan which has the effect of
reducing or diminishing the right of any participant to receive any payment or
benefit under the Plan will become effective prior to the expiration of the 36
consecutive month period commencing on the date of a Change-In-Control, if such
amendment or termination was adopted (i) on the day of or subsequent to the
Change-In-Control, (ii) prior to the Change-In-Control, but at the request of
any third party participating in or causing the Change-In-Control, or (iii)
otherwise in connection with or in anticipation of a Change-In-Control.
-7-
<PAGE>
Exhibit 11
TRIBUNE COMPANY
STATEMENTS OF COMPUTATION OF PRIMARY AND FULLY DILUTED
NET INCOME PER SHARE
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
Fiscal Year Ended December
------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
PRIMARY
- -------
Income before cumulative effects of changes in accounting principles $188,606 $136,625 $141,981
Cumulative effects of changes in accounting principles, net of tax - (16,800) -
-------- -------- --------
Net income 188,606 119,825 141,981
Preferred dividends, net of tax (18,439) (18,168) (16,900)
-------- -------- --------
Net income attributable to common shares $170,167 $101,657 $125,081
-------- -------- --------
Weighted average common shares outstanding 66,371 65,018 64,364
-------- -------- --------
Primary net income per share:
Before cumulative effects of changes in accounting principles $2.56 $1.82 $1.94
Cumulative effects of accounting changes, net - (0.26) -
-------- -------- --------
Total $2.56 $1.56 $1.94
======== ======== ========
FULLY DILUTED
- -------------
Income before cumulative effects of changes in accounting principles $188,606 $136,625 $141,981
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax (12,442) (12,408) (11,600)
Assumed elimination of tax benefit on certain ESOP preferred dividends (2,248) (1,606) -
-------- -------- --------
Adjusted net income before cumulative effects of changes in accounting principles 173,916 122,611 130,381
Cumulative effects of changes in accounting principles, net of tax - (16,800) -
-------- -------- --------
Adjusted net income $173,916 $105,811 $130,381
-------- -------- --------
Weighted average common shares outstanding 66,371 65,018 64,364
Assumed conversion of preferred shares into common shares 6,126 6,331 6,576
Assumed exercise of stock options, net of common
shares assumed repurchased with the proceeds 1,198 971 448
-------- -------- --------
Adjusted weighted average common shares outstanding 73,695 72,320 71,388
-------- -------- --------
Fully diluted net income per share:
Before cumulative effects of changes in accounting principles $2.36 $1.70 $1.83
Cumulative effects of accounting changes, net - (0.24) -
-------- -------- --------
Total $2.36 $1.46 $1.83
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
Exhibit 12
TRIBUNE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
Fiscal Year Ended December
-----------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net income (loss) before cumulative effects of accounting changes $188,606 $136,625 $141,981 ($63,533) $242,421
Add:
Income tax expense (benefit) 143,821 96,266 99,894 (30,695) 168,463
Losses on equity investments 20,212 1,903 1,107 2,285 2,221
-------- -------- -------- -------- --------
Sub-total 352,639 234,794 242,982 (91,943) 413,105
-------- -------- -------- -------- --------
Fixed charge adjustments
Add:
Interest expense 24,660 49,254 63,083 53,576 47,866
Amortization of capitalized interest 2,392 5,304 5,258 4,850 4,098
Interest component of rental expense (A) 8,732 9,329 9,047 14,467 12,333
-------- -------- -------- -------- --------
Earnings (loss), as adjusted $388,423 $298,681 $320,370 ($19,050) $477,402
======== ======== ======== ======== ========
Fixed charges:
Interest expense $ 24,660 $ 49,254 $ 63,083 $ 53,576 $ 47,866
Interest capitalized 1,099 3,445 1,976 8,652 13,614
Interest component of rental expense (A) 8,732 9,329 9,047 14,467 12,333
Interest related to guaranteed ESOP debt (B) 25,742 27,019 27,500 27,757 20,508
-------- -------- -------- -------- --------
Total fixed charges $ 60,233 $ 89,047 $101,606 $104,452 $ 94,321
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 6.4 3.4 3.2 (C) 5.1
======== ======== ======== ======== ========
</TABLE>
(A) Represents a portion of rental expense incurred by the Company, which is a
reasonable approximation of the interest cost component of such expense.
(B) Tribune Company guarantees the debt of its Employee Stock Ownership Plan
(ESOP).
(C) The net loss for 1990 reflects an after-tax non-recurring loss of $185
million ($295 million before income taxes) relating to the sale of the New
York Daily News. Excluding this non-recurring item, the ratio for 1990 was
2.6. As a result of the loss incurred for the full-year 1990, the Company
was unable to cover the indicated fixed charges. The Company's loss, as
adjusted, plus the indicated fixed charges for 1990 totaled $124 million.
<PAGE>
EXHIBIT 13
Portions of the Company's 1993 Annual Report to Stockholders
(Annual Report Pages 28-52, 54-57)
Tribune Company and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
The following discussion presents the significant factors that have affected the
businesses of Tribune Company and its subsidiaries (the "Company") over the last
three years. This commentary should be read in conjunction with the Company's
consolidated financial statements and Eleven Year Financial Summary, which are
also presented in this annual report.
RESULTS OF OPERATIONS
- ---------------------
The Company's fiscal year ends on the last Sunday of the calendar year. Fiscal
years 1993, 1992 and 1991 all included 52 weeks.
CONSOLIDATED
The Company's consolidated financial results as reported for 1993, 1992 and
1991 were as follows:
<TABLE>
<CAPTION>
Change
(Dollars in millions, except per share amounts) 1993 1992 1991 93-92 92-91
- ------------------------------------------------- ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
Operating revenues $1,953 $2,105 $2,044 - 7% + 3%
Operating profit 356 268 288 +33% - 7%
Equity in QUNO net loss (18) - - * -
Net income 189 120 142 +57% -16%
Before accounting changes 189 137 142 +38% - 4%
Primary net income per share 2.56 1.56 1.94 +64% -20%
Before accounting changes 2.56 1.82 1.94 +41% - 6%
* Not Meaningful
</TABLE>
On February 17, 1993, the Company's previously wholly owned newsprint
subsidiary, QUNO Corporation ("QUNO"), completed an initial public offering of 9
million shares of common stock. The Company now holds 8.8 million, or 49%, of
the voting common shares and 4.2 million non-voting common shares for a combined
total of 59% of QUNO's total 22 million outstanding common shares. The Company
also holds a $138.8 million subordinated debenture, convertible into 11.7
million voting common shares of QUNO. As the Company's voting interest is now
less than 50%, the Company is using the equity method of accounting for its
investment in QUNO beginning in 1993. Accordingly, QUNO's balance sheet and
income statement are no longer consolidated in the Company's financial
statements. The Company's investment in and advances to QUNO are reported
separately in the consolidated statement of financial position and the Company's
share of QUNO's net income or loss is reported separately in the consolidated
statement of income. Prior year financial statements were not restated.
Effective as of the beginning of 1992, the Company adopted three new
Financial Accounting Standards Board ("FAS") rules, and recorded in earnings a
one-time, non-cash cumulative effect for each rule. FAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," resulted in an
after-tax charge against earnings of $37.6 million, or $.58 per share on a
primary basis. FAS 109, "Accounting for Income Taxes," resulted in a credit to
earnings of $26.3 million, or $.40 per share. FAS 112, "Employers' Accounting
for Postemployment Benefits," resulted in an after-tax charge against earnings
of $5.5 million, or $.08 per share. These cumulative effects resulted in a net
after-tax charge against 1992 earnings of $16.8 million, or $.26 per share on a
primary basis. Prior year financial statements have not been restated.
-28-
<PAGE>
Net Income Per Share--The 41% increase in 1993 primary net income per share
before accounting changes was due to higher profits at the media businesses,
lower QUNO losses and a reduction in the Company's share of those losses, and
lower net interest expense. The 6% decrease in 1992 primary net income per
share, before accounting changes, compared to 1991 resulted from significantly
larger operating losses at QUNO, partially offset by higher operating profit
from the Company's media groups and a 23% decrease in net interest expense. The
effective income tax rate increased in 1993 to 43.3% from 41.3% in 1992 and
1991, mainly due to the new 1993 tax law. Average common shares outstanding
increased 2% in 1993 and 1% in 1992.
Operating Profit and Revenues--The following table shows consolidated
operating profit (loss) by business segment:
<TABLE>
<CAPTION>
Change
(Dollars in millions) 1993 1992 1991 93-92 92-91
- ------------------------------ ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C>
Publishing $255 $225 $217 +14% + 3%
Broadcasting & Entertainment 125 121 100 + 4% +21%
Corporate expenses (24) (24) (22) - 3% - 6%
- ------------------------------ ---- ---- ---- ----- -----
356 322 295 +11% + 9%
Newsprint Operations (QUNO) - (54) (7) - -671%
- ------------------------------ ---- ---- ---- ----- -----
Total operating profit $356 $268 $288 +33% - 7%
- ------------------------------ ---- ---- ---- ----- -----
</TABLE>
Excluding QUNO, operating profit increased 11% to $356 million in 1993
and 9% to $322 million in 1992, primarily due to increased revenues.
Consolidated 1993 revenues decreased 7%, or $152 million, from 1992. A
5% increase in the publishing segment and a 6% increase in the broadcasting and
entertainment segment were more than offset by the absence of QUNO's revenues in
1993. Excluding QUNO from 1992, consolidated operating revenues grew 5%, or $97
million, in 1993. Consolidated 1992 revenues increased 3%, or $61 million, from
1991. Excluding QUNO, 1992 revenues increased 5% from 1991, resulting primarily
from increased advertising revenues and the acquisition of WPHL-Philadelphia in
June 1992.
Operating Expenses--Consolidated operating expenses, excluding QUNO from 1992
and 1991, were as follows:
<TABLE>
<CAPTION>
Change
(Dollars in millions) 1993 1992 1991 93-92 92-91
- ----------------------------------- ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
Cost of sales $ 998 $ 954 $ 938 +5% + 2%
Selling, general & administrative 495 484 440 +2% +10%
Depreciation & amortization
of intangible assets 103 96 91 +7% + 6%
- ----------------------------------- ------ ------ ------ ----- -----
Total operating expenses $1,596 $1,534 $1,469 +4% + 4%
- ----------------------------------- ------ ------ ------ ----- -----
</TABLE>
Cost of sales was 51% of revenues in 1993 and 1992, and 53% in 1991.
The 5% increase in cost of sales in 1993 was due primarily to increased
compensation costs of $12 million, or 4%, higher newsprint and ink expense of
$11 million, or 6%, and the acquisition of Contemporary Books, Inc. and
Compton's Multimedia Publishing Group in 1993. In 1992, the increase in cost of
sales resulted primarily from higher production costs for original programming
in entertainment and increased television broadcast rights expense.
SG&A expense increased 2% in 1993 from 1992, mainly due to increased
compensation costs of $10 million, or 4%. The increase in SG&A expense in 1992
from 1991 was mainly attributable to a $15.3 million charge recorded in the
fourth quarter of 1992 for the closure of the Palo Alto-based Times Tribune and
higher compensation costs. Compensation costs increased $17 million, or 8%, in
1992. The increase in depreciation and amortization of intangible assets in 1993
was principally due to capital expenditures at the Chicago Tribune and 1992 and
1993 acquisitions. Depreciation and amortization of intangible assets in 1992
increased due to the addition of WPHL-Philadelphia in 1992.
-29-
<PAGE>
PUBLISHING
Operating Profit and Revenues -- Publishing operating profit for 1993 was up 14%
from 1992 to $255 million. The 1993 increase was principally due to higher 1993
revenues and the absence of the $15.3 million charge recorded in 1992 for the
March 12, 1993 closure of the Times Tribune. Publishing operating profit in 1992
was $225 million, up 3% from the 1991 operating profit of $217 million. The 1992
increase was primarily due to higher revenues and lower newsprint prices,
partially offset by the $15.3 million charge for the closure of the Times
Tribune.
Operating revenues increased 5%, or $53 million, in 1993 due to
increased advertising revenues and the revenues from two acquisitions in 1993.
Advertising revenues increased 3% in 1993 due to increases in full run linage
and preprint volume and higher advertising rates. Operating revenues for 1992
were $1.2 billion, 2% higher than 1991, due to an increase in advertising and
other revenue. Excluding the Times Tribune from 1992 and 1991 results, 1993
publishing revenues grew 6% while operating profits rose 5%, and 1992 publishing
revenues rose 2% over 1991 while operating profits were up 9%.
Revenues in 1993 include those of Contemporary Books, Inc., acquired
in late July and Compton's Multimedia Publishing Group, acquired in mid-
September. These acquisitions are being accounted for by the purchase method,
and their results of operations have been included in the consolidated financial
statements since the dates of acquisition. Excluding revenues from these
acquisitions as well as 1992 revenues of the Times Tribune, 1993 revenues were
up 4%.
Operating margins for 1993 were 20.8% compared to 19.1% in 1992 and
18.9% in 1991. The 1993 increase was due to higher revenues, while the 1992
increase resulted primarily from lower newsprint prices.
Total publishing revenues by classification, excluding the Times
Tribune from 1992 and 1991, were as follows:
<TABLE>
<CAPTION>
Change
(Dollars in millions) 1993 1992 1991 93-92 92-91
- ----------------------- ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
Advertising
Retail $ 435 $ 420 $ 419 + 4% -
General 120 127 123 - 5% + 4%
Classified 337 305 294 +11% + 4%
- ----------------------- ------ ------ ------ ----- -----
Total advertising 892 852 836 + 5% + 2%
Circulation 246 236 233 + 4% + 2%
Other 91 69 61 +32% +13%
- ----------------------- ------ ------ ------ ----- -----
Total revenues $1,229 $1,157 $1,130 + 6% + 2%
- ----------------------- ------ ------ ------ ----- -----
</TABLE>
Retail advertising revenues were up 4% in 1993 due to increases in the
electronics and department store categories in Chicago and Fort Lauderdale.
General advertising revenues declined 5% in 1993 due principally to lower
advertising in the transportation and resorts categories at nearly all the
newspapers. Classified advertising revenues rose mainly due to increases in help
wanted and automotive advertising. All newspapers reported improved classified
advertising except the Company's newspaper in Escondido, California.
Retail advertising revenues in 1992 were relatively unchanged from
1991 as increases in Chicago and Fort Lauderdale were offset by declines in
Orlando and Escondido. General advertising revenues increased 4% in 1992 due to
stronger financial and insurance advertising at the larger newspapers.
Classified advertising revenues increased 4% due primarily to higher help wanted
and automobile advertising. Most newspapers reported improved classified
advertising.
The following table presents 1993, 1992 and 1991 advertising linage,
excluding the Times Tribune:
-30-
<PAGE>
<TABLE>
<CAPTION>
Change
(Inches in thousands) 1993 1992 1991 93-92 92-91
- ----------------------- ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
Full run
Retail 4,444 4,406 4,605 + 1% - 4%
General 641 710 742 -10% - 4%
Classified 6,502 6,023 6,016 + 8% -
- ----------------------- ------ ------ ------ ----- -----
Total full run 11,587 11,139 11,363 + 4% - 2%
Part run 10,050 10,156 10,007 - 1% + 1%
Preprint 9,822 9,101 8,322 + 8% + 9%
- ----------------------- ------ ------ ------ ----- -----
Total inches 31,459 30,396 29,692 + 3% + 2%
- ----------------------- ------ ------ ------ ----- -----
</TABLE>
The 1993 increases in retail and classified full run linage reflect
generally improved economic conditions. The decrease in general full run linage
in 1993 reflects the continued shift in advertising to preprints. The 1993
increase in preprint advertising linage is mainly attributable to the increased
number of advertising zones offered by the Company's newspapers. The declines in
full run linage in 1992 resulted from the weak economic conditions experienced
throughout most of 1992 and the shift in advertising to part run and preprint.
The increases in both part run and preprint linage were mainly attributable to
increases in the number of advertising zones offered by the Company's
newspapers. Increased zoning enables advertisers to target specific market areas
for their advertisements.
Circulation revenues, excluding the Times Tribune, increased in both
1993 and 1992 due primarily to increased newspaper prices. Total average daily
circulation, excluding the Times Tribune, decreased 2% in 1993 to 1,386,000
copies from 1,408,000 copies in 1992, while total average Sunday circulation
increased to 2,041,000 in 1993 from 2,029,000 copies in 1992. Total average
daily circulation, excluding the Times Tribune, decreased to 1,408,000 copies in
1992 from 1,421,000 copies in 1991, while total average Sunday circulation
increased to 2,029,000 in 1992 from 2,016,000 copies in 1991. The decrease in
average daily circulation for both years was primarily due to pricing action at
Chicago, Orlando and Newport News in 1992, offset partially by an increase in
circulation in Fort Lauderdale.
Other revenues are derived from publishing books and information in
print and digital formats; advertising placement services; the syndication of
columns, features, information and comics to newspapers; commercial printing
operations; direct mail operations; and other publishing-related activities. The
increase in 1993 resulted from the 1993 acquisitions of Contemporary Books in
late July and Compton's in mid-September. Excluding these acquisitions, other
revenues declined 3% due to a decrease in commercial printing revenues. The 1992
increase resulted mainly from higher revenues from advertising placement
services and direct mail operations.
Operating Expenses -- Publishing operating expenses increased 2% in both 1993
and 1992. Excluding the Times Tribune, operating expenses increased 7% from
1992. The increase was due to higher newsprint and ink expense, increased
circulation expenses and the addition of Contemporary Books and Compton's.
Excluding the two 1993 acquisitions and the Times Tribune, expenses increased
$39 million, or 4%, in 1993. Newsprint and ink expense rose 7%, or $13 million,
in 1993 due to a 5% increase in newsprint prices and a 2% increase in
consumption. Circulation costs rose 9%, or $11 million, primarily due to higher
selling, postage and delivery expenses for expanding total market coverage in
Chicago. Other expenses, including compensation, increased $15 million, or 2%,
in 1993. Full-time equivalent employees, excluding the Times Tribune, decreased
1% in 1993. Excluding the Times Tribune, operating expenses increased 1% in 1992
from 1991. Newsprint and ink expense decreased 16%, or $32 million, due to lower
newsprint prices as consumption was essentially unchanged in 1992 from 1991.
Other expenses increased $38 million, or 5%, in 1992. The largest increase was
in compensation costs which rose 6%, or $19 million, due to increased benefit
costs and pay rates.
-31-
<PAGE>
BROADCASTING AND ENTERTAINMENT
Operating Profit and Revenues--Broadcasting and entertainment operating profit
was up 4%, or $4 million, in 1993 from 1992. The Company's Chicago Cubs
subsidiary received $12.3 million of Major League Baseball expansion fees in
December 1992, which was recorded in operating revenues in 1992. Excluding the
expansion fees from 1992, operating profit in 1993 was up 15%, or $17 million.
This increase was primarily the result of improved television and radio results
due to higher revenues, partially offset by lower profit from entertainment due
principally to increased player compensation costs at the Chicago Cubs.
Broadcasting and entertainment operating profit for 1992 was up 21% from 1991
due to improved television results and the receipt of the $12.3 million of
baseball expansion fees. Broadcasting and entertainment revenues and profits,
exclusive of the baseball expansion fees, were both up 9% in 1992.
Operating revenues for the group were as follows:
<TABLE>
<CAPTION>
Change
(Dollars in millions) 1993 1992 1991 93-92 92-91
- ----------------------- ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C>
Television $537 $477 $446 +12% + 7%
Radio 59 50 49 +19% + 1%
Entertainment 131 157 122 -16% +29%
- ----------------------- ----- ----- ----- ----- -----
Total revenues $727 $684 $617 + 6% +11%
- ----------------------- ---- ----- ---- ----- -----
</TABLE>
Television revenues were up at all of the Company's stations in 1993.
The 12% increase in 1993 was largely due to higher revenues at WPIX-New York and
KTLA-Los Angeles, as well as the addition of WPHL-Philadelphia, which was
acquired June 5, 1992. Excluding WPHL, television revenues were up 9% in 1993.
Radio revenues increased 19% in 1993 principally due to the addition of two
Denver radio stations, KOSI-FM and KEZW-AM, acquired in January 1993. Excluding
revenues from these stations, radio revenues rose 5% in 1993 primarily due to
higher revenues at WQCD-New York. Entertainment revenues decreased 16% in 1993,
due to the cancellation of the syndicated programs "The Dennis Miller Show" and
"Now It Can Be Told" in the second half of 1992, and the inclusion in 1992 of
the $12.3 million of baseball expansion fees. Excluding the expansion fees from
1992, entertainment revenues declined 9% in 1993.
Television revenues increased in 1992 as a result of growth at both
WPIX-New York and WGN-Chicago and the addition of WPHL-Philadelphia. All
stations except KTLA-Los Angeles experienced revenue gains in 1992. Excluding
WPHL, television revenues increased 3% in 1992. Radio group revenues increased
modestly in 1992 as most stations reported gains. Entertainment revenues,
excluding baseball expansion fees in 1992, increased 18% mainly due to the
addition of new shows and higher revenues from existing syndicated programming.
Operating Expenses--Expenses for the group increased 7%, or $39 million, in
1993. The increase was principally due to higher compensation costs and higher
television broadcast rights expense, partially offset by a decrease in
production costs for original entertainment programming. Compensation costs
increased 15% in 1993 to $184 million, primarily due to increased player
compensation at the Chicago Cubs, the addition of the new television and radio
stations and the January 1993 start-up of ChicagoLand Television News (a
regional news cable channel.) Excluding these new operations and the Cubs,
compensation costs rose 5% in 1993. Television broadcast rights expense
increased $21 million, or 10%, to $221 million in 1993 due primarily to the
addition of Los Angeles Dodgers and Philadelphia Phillies baseball in 1993.
Production costs for original programming were down 46%, or $22 million, due to
the cancellation of "The Dennis Miller Show" and "Now It Can Be Told."
Operating expenses for the broadcasting and entertainment group
increased 9% in 1992, principally due to increased production costs for original
programming in entertainment, additional television broadcast rights expense and
higher compensation costs. Production costs increased 67%, or $19 million, in
1992 due to new shows at Tribune Entertainment, while television broadcast
rights expense increased 4%, or $8 million, mainly due to the addition of WPHL-
Philadelphia in June 1992. Excluding WPHL, television broadcast rights expense
increased 1% in 1992. Compensation costs rose $17 million, or 12%, in 1992
primarily due to
-32-
<PAGE>
increases of $8 million at the Chicago Cubs due to higher player salaries and $4
million at new operations included for the first time in 1992.
EQUITY IN QUNO NET LOSS
The Company's 1993 equity in QUNO's net loss, after interest expense and taxes,
was $18.4 million. This amount represents 100% of QUNO's net loss prior to
February 17, 1993, the date of QUNO's stock offering, and 59% of QUNO's net loss
thereafter. QUNO reported an operating loss of $31 million in 1993, $23 million
less than the $54 million operating loss incurred in 1992. This was the result
of higher average newsprint selling prices and lower operating expenses,
partially offset by a 4% decrease in newsprint shipments. Though average
newsprint selling prices began to soften in the second half of 1993, they
averaged 5% higher in 1993 than in 1992 due to the implementation of transaction
price increases in August 1992 and March 1993. QUNO's 1993 fourth quarter
results included a one-time $13 million pre-tax charge for the closure of a
pulping operation. This charge reduced the Company's 1993 net income by
approximately $5 million, or $.08 per share on a primary basis.
Total revenues were up 6% to $387 million in 1993 from $366 million in
1992 due to increased newsprint selling prices and improved sawmill revenues.
Operating expenses declined 1% from 1992 due to the decline in newsprint sales
volume and the benefit of the weaker Canadian dollar on QUNO's cash operating
expenses, partially offset by a non-cash $5 million increase in foreign currency
exchange losses. The foreign currency losses relate primarily to QUNO's U.S.
dollar-denominated debt and resulted from a 5% decline in the Canadian dollar
during 1993.
QUNO reported an operating loss of $54 million for 1992, compared to a
loss of $7 million in 1991. The 1992 loss was largely due to a 17% decrease in
average newsprint transaction prices from the 1991 average, resulting from weak
newsprint industry economic conditions. The 1991 loss also resulted primarily
from weaker newsprint pricing brought on by unfavorable industry conditions.
QUNO's revenues decreased 13% in 1992, despite a 4% increase in shipments, due
to the decline in average newsprint selling prices. Operating expenses decreased
2% in 1992 due to lower compensation costs as a result of continued cost-
reduction efforts and the 1992 decline of the Canadian dollar in relation to the
U.S. dollar, partially offset by additional costs resulting from higher
newsprint shipments. Compensation costs declined $11 million, or 8%, in 1992.
INTEREST INCOME AND EXPENSE
The components of net interest expense were as follows:
<TABLE>
<CAPTION>
Change
(Dollars in millions) 1993 1992 1991 93-92 92-91
- ----------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Interest income $ 19 $ 14 $ 17 +38% -19%
Interest expense (25) (49) (63) -50% -22%
- ----------------------- ----- ----- ----- ----- -----
Net interest expense $ (6) $ (35) $ (46) -84% -23%
- ----------------------- ----- ----- ----- ----- -----
</TABLE>
Interest income consists primarily of interest on mortgage notes
receivable from real estate affiliates, the QUNO convertible debenture and
short-term marketable securities. Interest income increased 38% to $19 million
in 1993 due to the convertible debenture. Interest expense decreased 50% in 1993
to $25 million due to lower average debt levels primarily as a result of the
QUNO initial public offering. Average debt levels declined approximately $280
million in 1993 to $585 million. Outstanding debt dropped to $537 million at
year-end 1993 from $841 million at the end of 1992. Interest expense decreased
22% in 1992 as compared to 1991 due to lower 1992 average debt levels and lower
average short-term interest rates. Average debt levels declined approximately
$140 million in 1992 to approximately $865 million. Outstanding debt dropped
from $918 million at year-end 1991 to $841 million at year-end 1992. Short-term
interest rates for 1992 averaged 2.5 percentage points lower than in 1991.
-33-
<PAGE>
FINANCIAL CONDITION
- -------------------
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations was $302 million in 1993 compared to $278
million in 1992. The 1993 increase was primarily due to higher net income.
Net cash used for investments was $55 million for 1993 compared to
$158 million in 1992. The 1993 amount includes the acquisitions of the Denver
radio stations, Contemporary Books and Compton's Multimedia Publishing Group,
the purchase of a mortgage note and capital expenditures, partially offset by
intercompany debt repayments of $180 million received from QUNO as a result of
its initial public offering and debt issuances. The Company acquired the Denver
radio stations on January 6, 1993 for approximately $20 million in cash;
Contemporary Books, Inc. on July 28, 1993 for approximately $22 million in cash
and $18.5 million in common stock; and Compton's Multimedia Publishing Group on
September 13, 1993 for approximately $57 million in cash. The Company announced
in November 1993, that it had reached an agreement to acquire independent
television station WLVI-Boston for approximately $25 million in cash plus the
amount of working capital at closing. This acquisition, which is subject to
Federal Communications Commission approval, is expected to be completed in the
second quarter of 1994. The Company also announced, on January 24, 1994, that it
will acquire The Wright Group for approximately $100 million in cash. The Wright
Group is the leading publisher of "whole language" educational materials for the
elementary school market. The acquisition is expected to be completed in
February 1994. Capital expenditures of $76 million in 1993 included a project to
provide additional color press capacity for the Chicago Tribune and a variety of
projects to increase efficiencies and lower costs throughout the Company.
Capital spending for 1994 is expected to total approximately $90 million. The
1994 spending will include a variety of modernization and normal replacement
projects throughout the Company.
Net cash used for financing activities in 1993 was $246 million
compared to $120 million in 1992. Net cash used for financing activities in 1993
included dividends of $82 million and $284 million of debt repayments primarily
funded with the proceeds received from the QUNO stock offering and debt
financing and $78 million of Medium-Term Notes, Series B, issued in September
1993. QUNO's New Zealand dollar notes of approximately $80 million, which were
unconditionally guaranteed by the Company, were repaid by QUNO in April 1993. On
July 1, 1993, the Company elected to redeem at par its $100 million 8% notes.
The redemption was financed with commercial paper and available cash. Net cash
used for financing activities in 1992 reflects dividends of $80 million, early
repayment of the $100 million, 10.5% Eurodollar notes and repayments of $14
million of medium-term notes. These uses of cash in 1992 were partially offset
by a net increase in commercial paper of $47 million and net proceeds from sale
of common stock to employees. The Company has revolving credit agreements with
banks in the aggregate amount of $445 million that are fully available to
support the issuance of commercial paper and extend to December 31, 1995. At
December 26, 1993, the Company had commercial paper outstanding of $42 million
with a weighted average interest rate of 3.3% and authorization to repurchase
900,000 shares of its common stock.
On October 25, 1993, the Company filed a Prospectus Supplement with
the Securities and Exchange Commission relating to the offer and sale from time
to time of up to $300 million principal amount of the Company's Medium-Term
Notes, Series C, originally registered with the SEC under a shelf registration
effective July 13, 1992. Funds borrowed under this issue will be used for
general corporate purposes.
The Company expects to fund 1994 dividends, capital expenditures and
other operating requirements with net cash provided by operations.
IMPACT OF INFLATION
Tribune Company's financial statements have been prepared in accordance with
generally accepted accounting principles and are expressed in historical
dollars, which measure amounts of dollars used at the dates the related
transactions occurred. Management does not believe that the effects of inflation
are significantly any more or less adverse on the Company's businesses than they
are on other companies.
-34-
<PAGE>
Tribune Company and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data) Year Ended Dec. 26, 1993 Dec. 27, 1992 Dec. 29, 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Publishing
Revenues Advertising $ 892,524 $ 868,051 $ 854,526
Circulation 246,093 238,302 234,720
Other 90,785 69,827 61,636
---------- ---------- ----------
Total 1,229,402 1,176,180 1,150,882
Broadcasting and entertainment 727,213 684,051 617,514
Newsprint operations (Canada) - 366,269 422,128
Intercompany (4,105) (121,556) (146,551)
---------- ---------- ----------
Total operating revenues 1,952,510 2,104,944 2,043,973
---------- ---------- ----------
Operating Cost of sales (exclusive of items shown below) 998,345 1,150,956 1,121,334
Expenses Selling, general and administrative 495,000 546,046 497,616
Depreciation and amortization of intangible
assets 102,762 139,579 137,048
---------- ---------- ----------
Total operating expenses 1,596,107 1,836,581 1,755,998
---------- ---------- ----------
Operating Profit 356,403 268,363 287,975
Equity in QUNO net loss (18,355) - -
Interest income 19,039 13,782 16,983
Interest expense (24,660) (49,254) (63,083)
---------- ---------- ----------
Income Before Income Taxes 332,427 232,891 241,875
Income taxes (143,821) (96,266) (99,894)
---------- ---------- ----------
Income Before Cumulative Effects
of Changes in Accounting
Principles 188,606 136,625 141,981
Cumulative effects of changes in
accounting principles, net of tax - (16,800) -
---------- ---------- ----------
Net Income 188,606 119,825 141,981
Preferred dividends, net of tax (18,439) (18,168) (16,900)
---------- ---------- ----------
Net Income Attributable to Common Shares $ 170,167 $ 101,657 $ 125,081
---------- ---------- ----------
Net Income Per Share
Primary:
Before cumulative effects of changes in
accounting principles $ 2.56 $ 1.82 $ 1.94
Cumulative effects of accounting changes, net - (.26) -
---------- ---------- ----------
Net income $ 2.56 $ 1.56 $ 1.94
---------- ---------- ----------
Fully diluted:
Before cumulative effects of changes in
accounting principles $ 2.36 $ 1.70 $ 1.83
Cumulative effects of accounting changes, net - (.24) -
---------- ---------- ----------
Net income $ 2.36 $ 1.46 $ 1.83
---------- ---------- ----------
</TABLE>
See Notes to Consolidated Financial Statements.
-35-
<PAGE>
Tribune Company and Subsidiaries
Consolidated Statements of Financial Position
<TABLE>
<CAPTION>
Assets (In thousands of dollars, except share data) Dec. 26, 1993 Dec. 27, 1992
- ---------------------------------------------- --------------------------------------------------- -------------- --------------
<S> <C> <C> <C>
Current Assets Cash and short-term investments $ 18,524 $ 16,768
Accounts receivable (less allowances
of $25,432 and $23,411) 284,110 295,742
Inventories 26,290 82,124
Broadcast rights 144,233 160,703
Prepaid expenses and other 18,102 19,001
---------- ----------
Total current assets 491,259 574,338
---------- ----------
Investment in and Advances to QUNO 250,923 -
---------- ----------
Properties Machinery, equipment and furniture 792,642 1,327,533
Buildings and leasehold improvements 307,266 459,367
Timber limits and leases, and land improvements 7,687 53,556
---------- ----------
1,107,595 1,840,456
Accumulated depreciation (599,552) (913,522)
---------- ----------
508,043 926,934
Land 54,471 51,724
Construction in progress 39,101 95,285
---------- ----------
Net properties 601,615 1,073,943
---------- ----------
Other Assets Broadcast rights 217,229 226,981
Intangible assets (less accumulated amortization of
$156,372 and $135,664) 719,965 645,385
Mortgage notes receivable from affiliates 119,437 84,486
Other 135,982 146,437
---------- ----------
Total other assets 1,192,613 1,103,289
---------- ----------
Total assets $2,536,410 $2,751,570
---------- -------------
</TABLE>
See Notes to Consolidated Financial Statements.
-36-
<PAGE>
<TABLE>
<CAPTION>
Liabilities and Stockholders' Investment Dec. 26, 1993 Dec. 27, 1992
- --------------------------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C> <C>
Current Liabilities Long-term debt due within one year $ 25,817 $ 99,992
Employee compensation 77,335 76,691
Accounts payable 85,334 106,703
Contracts payable for broadcast rights 142,686 152,605
Accrued liabilities 135,497 163,463
Income taxes 38,358 33,545
---------- ----------
Total current liabilities 505,027 632,999
---------- ----------
Long-Term Debt (less portions due within one year) 510,838 740,979
---------- ----------
Other Deferred income taxes 87,605 85,018
Non-Current Contracts payable for broadcast rights 194,846 182,190
Liabilities Compensation and other obligations 141,716 192,462
---------- ----------
Total other non-current liabilities 424,167 459,670
---------- ----------
Commitments (see Note 13) - -
Minority Interest in Subsidiaries 751 6,033
---------- ----------
Stockholders' Series B convertible preferred stock (without par value)
Investment Authorized: 1,600,000 shares
Issued and outstanding: 1,531,084 shares in 1993 and
1,554,352 shares in 1992
(liquidation value $220 per share) 335,532 340,634
Common stock (without par value)
Authorized: 400,000,000 shares; 81,771,658
shares issued 1,018 1,018
Additional paid-in capital 105,819 100,445
Retained earnings 1,589,695 1,483,016
Treasury stock (at cost)
14,791,114 shares in
1993 and 16,292,181 shares in 1992 (607,332) (667,668)
Unearned compensation related to ESOP (298,969) (321,690)
Cumulative translation adjustment (30,136) (23,866)
---------- ----------
Total stockholders' investment 1,095,627 911,889
---------- ----------
Total liabilities and stockholders' investment $2,536,410 $2,751,570
---------- ----------
</TABLE>
-37-
<PAGE>
Tribune Company and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(In thousands of dollars) Dec. 26, 1993 Dec. 27, 1992 Dec. 29, 1991
- ------------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations Net income $ 188,606 $ 119,825 $ 141,981
Adjustments to reconcile
net income to net cash provided by
operations:
Equity in QUNO net loss 18,355 - -
Cumulative effects of accounting
changes, net - 16,800 -
Depreciation and amortization of
intangible assets 102,762 139,579 137,048
Deferred income taxes 3,531 (35,527) (25,163)
(Increase) decrease in working capital
items excluding effects from acquisitions:
Accounts receivable (27,311) (658) (15,267)
Inventories, prepaid expenses and other
current assets (4,288) 19,144 (573)
Accounts payable, employee compensation
and accrued liabilities (11,166) (477) 55,344
Income taxes (2,166) (15,760) 33,815
Decrease in broadcast rights net of current
and long-term contracts payable 28,959 21,470 31,274
Other, net 4,676 13,948 3,614
--------- --------- ---------
Net cash provided by operations 301,958 278,344 362,073
--------- --------- ---------
Investments Capital expenditures (75,620) (130,232) (93,931)
Acquisitions (excluding $18.5 million of stock
issued in 1993) (98,918) (3,293) (4,192)
Repayment of note receivable from QUNO 179,846 - -
Purchase of mortgage note (35,500) - -
Sale of New York Daily News, net (14,240) (13,726) (91,591)
Other, net (10,020) (10,799) (24,227)
--------- --------- ---------
Net cash used for investments (54,452) (158,050) (213,941)
--------- --------- ----------
Financing Proceeds from issuance of long-term debt 78,050 - 18,424
Repayments of long-term debt (283,968) (67,876) (92,940)
Sale of common stock to employees, net 46,138 31,918 10,007
Dividends (81,927) (80,407) (78,415)
Redemption of preferred stock (4,043) (4,118) (1,871)
--------- -------- ---------
Net cash used for financing (245,750) (120,483) (144,795)
--------- --------- ---------
Net Increase (Decrease) in Cash and Short-Term Investments 1,756 (189) 3,337
Cash and short-term investments at the
beginning of year 16,768 16,957 13,620
--------- ---------- ---------
Cash and short-term investments at the
end of year $ 18,524 $ 16,768 $ 16,957
--------- --------- ---------
Supplemental Cash paid for:
Cash Flow Interest (net of amounts capitalized) $ 28,015 $ 53,768 $ 68,892
Information Income taxes $ 121,727 $ 128,921 $ 15,261
--------- --------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
-38-
<PAGE>
Tribune Company and Subsidiaries
Consolidated Statements of Stockholders' Investment
<TABLE>
<CAPTION>
Series B Treasury Stock Unearned
Convertible Additional ----------------- Compen- Cumulative
(In thousands, Preferred Common Paid-In Retained Amount sation Translation
except per share data) Stock Stock(1) Capital Earnings Shares --at cost (ESOP) Adjustment Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 30, 1990 $348,218 $1,018 $103,758 $1,380,032 (17,613) $(714,501) $(358,531) $ 4,518 $ 764,512
- ----------------------------------------------------------------------------------------------------------------------------
Net income 141,981 141,981
Translation adjustment (1,014) (1,014)
Redemptions of convertible
preferred stock (2,356) 36 11 449 (1,871)
Dividends declared
Common--$.96/share (61,736) (61,736)
Preferred--$17.05/share (26,909) (26,909)
Tax benefit on dividends
paid to the ESOP 10,230 10,230
Repayment of ESOP debt 16,499 16,499
Shares issued under option
and stock plans (2,518) 826 33,531 31,013
Stock tendered as payment
for options exercised (464) (21,006) (21,006)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 29, 1991 345,862 1,018 101,276 1,443,598 (17,240) (701,527) (342,032) 3,504 851,699
- ----------------------------------------------------------------------------------------------------------------------------
Net income 119,825 119,825
Translation adjustment (27,370) (27,370)
Redemptions of convertible
preferred stock (5,228) 107 25 1,003 (4,118)
Dividends declared
Common--$.96/share (62,450) (62,450)
Preferred--$17.05/share (26,502) (26,502)
Tax benefit on dividends
paid to the ESOP (2) 8,545 8,545
Repayment of ESOP debt 20,342 20,342
Shares issued under option
and stock plans (938) 1,417 57,685 56,747
Stock tendered as payment
for options exercised (494) (24,829) (24,829)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 27, 1992 340,634 1,018 100,445 1,483,016 (16,292) (667,668) (321,690) (23,866) 911,889
- ----------------------------------------------------------------------------------------------------------------------------
Net income 188,606 188,606
Translation adjustment (6,270) (6,270)
Redemptions of convertible
preferred stock (5,102) 228 20 831 (4,043)
Dividends declared
Common--$.96/share (63,799) (63,799)
Preferred--$17.05/share (26,104) (26,104)
Tax benefit on dividends
paid to the ESOP (2) 7,976 7,976
Repayment of ESOP debt 22,721 22,721
Shares issued under option
and stock plans 908 1,225 50,171 51,079
Stock tendered as payment
for options exercised (92) (4,941) (4,941)
Shares issued for Contemporary
Books acquisition 4,238 348 14,275 18,513
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 26, 1993 $335,532 $1,018 $105,819 $1,589,695 (14,791) $(607,332) $(298,969) $(30,136) $1,095,627
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Issued shares of common stock totaled 81,771,658 for all dates presented.
(2) Excludes the tax benefit on allocated preferred shares held by the ESOP,
which must be credited to income tax expense beginning in 1992.
See Notes to Consolidated Financial Statements.
-39-
<PAGE>
Tribune Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------
The significant accounting policies of Tribune Company and subsidiaries (the
"Company"), as summarized below, conform with generally accepted accounting
principles and reflect practices appropriate to the businesses in which they
operate. Certain prior year amounts have been reclassified to conform with the
1993 presentation.
Fiscal Year -- The Company's fiscal year ends on the last Sunday in December.
The fiscal years included herein comprised 52 weeks.
Principles of Consolidation -- The consolidated financial statements include the
accounts of Tribune Company and all majority-owned subsidiaries. Investments
comprising 20 to 50 percent of the voting stock of companies and joint ventures
are accounted for using the equity method. All significant intercompany
transactions are eliminated.
Short-Term Investments -- Short-term investments are stated at cost, which
approximates market value. For purposes of the consolidated statements of cash
flows, investments with maturities of three months or less at the time of
purchase are considered to be cash equivalents.
Inventories -- Inventories are stated at the lower of cost or market. Cost is
determined on the last-in, first-out ("LIFO") basis for U.S. newsprint and on
the first-in, first-out ("FIFO") or average basis for all other inventories.
Broadcast Rights -- Broadcast rights consist principally of rights to broadcast
feature films, sports and syndicated programs and are stated at the lower of
cost or estimated net realizable value. The total cost of these rights is
recorded as an asset and a liability when the program becomes available for
broadcast. Broadcast rights that have limited showings are generally amortized
using an accelerated method as programs are aired. Those with unlimited showings
are amortized on a straight-line basis over the contract period. The current
portion of broadcast rights represents those rights available for broadcast that
are expected to be amortized in the succeeding year.
Properties -- Property, plant and equipment are stated at cost. Depreciation is
computed using the straight-line method over the properties' estimated useful
lives. Depreciation expense was $81.1 million in 1993, $120.5 million in 1992
and $118.5 million in 1991.
Intangible Assets -- Intangible assets primarily represent the excess of cost
over the fair market value of tangible net assets acquired. The excess cost
related to net assets acquired since 1971 is being amortized on a straight-line
basis over various periods ranging from 3 to 40 years, with the majority over 40
years. Intangible assets of $23.5 million related to pre-1971 acquisitions are
not being amortized as the Company believes there has been no diminution of
value.
Pension Plans -- The Company contributes to pension plans that provide
retirement benefits for substantially all employees. These plans are sponsored
either by the Company or by unions. Under the Company-sponsored plans, pension
benefits are primarily a function of both the years of service and the level of
compensation for a specified number of years, depending on the plan. It is the
Company's policy to fund at least the minimum for Company-sponsored pension
plans as required by ERISA. Contributions made to union-sponsored plans are
based upon collective bargaining agreements.
New Accounting Principles -- In 1992, the Company adopted three new Financial
Accounting Standards Board ("FASB") rules and recorded the cumulative effects of
these changes in accounting principles in the 1992 consolidated statement of
income. Statement No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," resulted in an after-tax charge against earnings of $37.6
million, or $.58 per share on a primary basis. Statement No. 109, "Accounting
for Income Taxes," resulted in a credit to earnings of $26.3 million, or $.40
per share on a primary basis. Statement No. 112, "Employers' Accounting for
Postemployment Benefits," resulted in an after-tax charge against earnings of
$5.5 million, or $.08 per share on a primary basis. Additional annual expense
for 1992 due to the adoption of these principles was not material. Prior year
financial statements were not restated.
-40-
<PAGE>
In 1993, the FASB issued Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("FAS 115"), effective for fiscal
year 1994. This statement generally will require the Company to record
investments in debt securities and publicly traded equity securities at their
market value, except for debt securities which the Company intends to hold to
maturity and equity securities which are accounted for using the equity method.
The market value of the Company's long-term investments in less-than-20%-owned
publicly traded companies was approximately $40 million in excess of the
investments' $10 million carrying value at December 26, 1993. The Company also
holds a $138.8 million convertible debenture issued by QUNO Corporation (see
Note 2). The market value of this debenture, based on the $23 Canadian quoted
market price per share of the underlying QUNO Corporation common stock at
December 26, 1993, was approximately $200 million. FAS 115 requires that changes
in market value from historical cost for these investments be reported, net of
tax, in a separate component of stockholders' investment until realized. The
Company estimates that the effect of adopting this statement in 1993 would have
been to increase assets by approximately $100 million and stockholders'
investment by $60 million at December 26, 1993, with no impact on net income.
Net Income Per Share -- Primary net income per share is computed by dividing net
income attributable to common shares by the weighted average number of common
shares outstanding during the period. Fully diluted net income per share is
computed based on the assumption that all of the convertible preferred shares
are converted into common shares. For purposes of calculating fully diluted net
income per share, net income is reduced by the additional Employee Stock
Ownership Plan ("ESOP") contribution that would be required for ESOP debt
service, and the weighted average number of shares outstanding is increased by
(i) the additional common shares that would be issued upon conversion of the
preferred shares based on the stated conversion rate plus any additional common
shares that would have to be issued to meet the redemption price guarantee for
all preferred shares that have been allocated to participants, and (ii) the
effect of stock options. The numbers of common shares used in the computations
of primary and fully diluted net income per share were as follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- -------------------------------------------------------------------
<S> <C> <C> <C>
Primary 66,371 65,018 64,364
Fully diluted 73,695 72,320 71,388
</TABLE>
NOTE 2: INVESTMENT IN QUNO CORPORATION
- ---------------------------------------
On February 17, 1993, the Company's previously wholly-owned newsprint
subsidiary, QUNO Corporation ("QUNO"), completed an initial public offering of 9
million shares of common stock. The Company now holds 8.8 million, or 49%, of
the voting common shares and 4.2 million non-voting common shares for a combined
total of 59% of QUNO's total 22 million outstanding common shares. The Company
also holds a $138.8 million subordinated debenture, convertible at the option of
the Company into 11.7 million voting common shares of QUNO. The debenture is
callable by QUNO after December 27, 1997, matures in 2002 and bears interest at
an effective rate of 2.77%. As the Company's voting interest is less than 50%,
the Company is using the equity method of accounting for its investment in QUNO
beginning in 1993. Prior year financial statements have not been restated. At
closing, QUNO used the net proceeds of approximately $100 million from the stock
offering plus proceeds of approximately $80 million from QUNO's new stand-alone
bank financing agreement to repay a portion of its intercompany borrowings owed
the Company. The net price per share realized from the offering was
approximately the same as the Company's carrying value per share of its
investment in QUNO. Summarized 1993 financial information for QUNO was as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(In thousands)
- ---------------------------------------------------------------------
Revenues $386,646 Current assets $130,989
Operating loss $(31,110) Non-current assets $458,649
Net loss $(28,881) Current liabilities $ 82,213
Non-current liabilities $309,346
</TABLE>
-41-
<PAGE>
The financial statements and transactions of QUNO are maintained in its
functional currency (Canadian dollars) and translated into U.S. dollars.
Translation adjustments are accumulated in a separate component of stockholders'
investment. QUNO separately issues its financial statements in accordance with
Canadian accounting principles. The financial information included herein has
been adjusted to reflect U.S. accounting principles.
QUNO manufactures newsprint for sale to the Company's newspapers and other
North American and overseas customers. The Company is party to a contract with
QUNO expiring in 2007 to supply newsprint based on market prices. Under the
contract, the Company has agreed to purchase specified minimum amounts of
newsprint each year subject to certain limitations. The specified minimum annual
volume is 250,000 metric tons in years 1994 to 1999, 225,000, 200,000 and
175,000 metric tons in years 2000 to 2002, respectively, and 150,000 metric tons
in each of years 2003 to 2007. In 1993, 33% of QUNO's sales, or $127.2 million,
were to the Company's newspapers, which represented 74% of their consumption.
During the period that QUNO was a wholly-owned subsidiary, provision was made
for U.S. income taxes on undistributed earnings of QUNO that were expected to be
remitted to the Company. No provision for U.S. income taxes, however, was made
on undistributed earnings that were intended to be reinvested in facilities and
other assets in Canada for an indefinite period of time. The cumulative amount
of unremitted earnings and other book/tax bases differences that has been
reinvested indefinitely totaled approximately $75.0 million as of December 26,
1993. Determination of the taxes due on this amount is not practicable. No U.S.
tax benefit has been provided on the Company's 1993 equity in QUNO net loss.
NOTE 3: CHANGES IN OPERATIONS AND UNUSUAL ITEMS
- -------------------------------------------------
Acquisitions and Investments -- The Company recorded acquisitions totaling
$117.4 million in 1993, $3.3 million in 1992 and $4.2 million in 1991. These
acquisitions were all accounted for as purchases. The intangibles recorded on
these acquisitions are being amortized on a straight-line basis over periods
from 3 to 40 years. The results of these operations are included in the
consolidated statements of income from the respective dates of their
acquisitions and were not material.
The Company acquired two Denver radio stations, KOSI-FM and KEZW-AM, on
January 6, 1993 for $19.9 million in cash. On July 28, 1993, the Company
acquired Contemporary Books, Inc., a publisher of nonfiction trade titles and
educational books and materials, for $22.0 million in cash and $18.5 million in
common stock. On September 13, 1993, the Company acquired Compton's Multimedia
Publishing Group for $57.0 million in cash. Compton's develops and distributes
interactive multimedia software for the consumer and education markets.
The Company has reached an agreement to acquire independent television station
WLVI-Boston for approximately $25 million in cash plus working capital at
closing. This acquisition, which is subject to Federal Communications Commission
approval, is expected to be completed in the second quarter of 1994. The Company
has also reached an agreement to acquire The Wright Group, the leading publisher
of "whole language" educational materials for the elementary school market, for
approximately $100 million in cash. This acquisition is expected to be completed
in February 1994. Both the WLVI-TV and The Wright Group acquisitions will be
accounted for as purchases in 1994.
In June 1992, the Company exercised a warrant, acquired in 1991 for $19.0
million, to acquire a controlling common equity interest in WPHL-TV, Inc., an
independent television station in Philadelphia. Prior to June 1992, the
investment was accounted for using the cost method.
Dispositions -- The Company recorded a $15.3 million pretax charge in the
fourth quarter of 1992 as a result of its decision to close The Peninsula Times
Tribune, a Palo Alto-based newspaper, which ceased operations on March 12, 1993.
The charge, reflected in selling, general and administrative expenses in the
accompanying 1992 consolidated statement of income, reduced net income by $7.6
million and primary net income per share by $.12. Total operating revenues and
losses for the Times Tribune in 1992 and 1991 were not material.
-42-
<PAGE>
Baseball Expansion Fees -- In December 1992, the Company's Chicago Cubs
subsidiary received Major League Baseball expansion fees totaling $12.3 million,
which increased net income by $7.7 million and primary net income per share by
$.12. The fees have been included in operating revenue and profit of the
broadcasting and entertainment business segment.
NOTE 4: MORTGAGE NOTES RECEIVABLE FROM AFFILIATES
- ---------------------------------------------------
The Company holds a mortgage note resulting from the sale in 1982 of the New
York Daily News building to a limited partnership in which the Company holds a
23% interest. The note, which has a remaining principal balance of $83.9
million, is due in 1997 and bears interest at 13% plus contingent interest based
upon the building's cash flow and appreciation.
In 1993, the Company purchased a mortgage note on a building owned by a
partnership in which the Company holds a 50% interest for $35.5 million. The
note is due in 1995 and had an effective interest rate of 5.6% in 1993.
The estimated fair values of these mortgage notes receivable approximated
their book values, using the discounted cash flow method.
<TABLE>
<CAPTION>
<S> <C> <C>
NOTE 5: INVENTORIES
- ---------------------
Inventories consist of:
(In thousands) Dec. 26, 1993 Dec. 27, 1992
- -----------------------------------------------------------------------------
Supplies and materials $16,302 $ 7,353
U.S. newsprint (at LIFO) 9,988 9,212
QUNO Corporation - 65,559
- -----------------------------------------------------------------------------
Total inventories $26,290 $82,124
- -----------------------------------------------------------------------------
</TABLE>
If U.S. newsprint inventories were valued at FIFO cost, such inventories would
have been greater by $9.3 million at December 26, 1993, $8.5 million at December
27, 1992 and $10.8 million at December 29, 1991. QUNO's inventory in 1992
consisted of $30.7 million of pulpwood and other fiber, $31.1 million of
supplies and materials and $3.8 million of newsprint.
<TABLE>
<CAPTION>
<S> <C> <C>
NOTE 6: LONG-TERM DEBT
- ------------------------
Long-term debt consists of:
(In thousands) Dec. 26, 1993 Dec. 27, 1992
- ------------------------------------------------------------------------------
Promissory notes, weighted average
interest rate of 3.3% $ 41,829 $200,387
Medium-term notes, weighted average
interest rates of 7.3% and 8.7%,
due 1993-2003 163,200 107,900
New Zealand dollar notes, U.S. dollar
interest rate of 8.6%, paid 1993 - 77,427
8.0% notes, paid 1993 - 100,000
8.40% guaranteed ESOP notes,
due 1993-2003 280,999 300,913
8.19% guaranteed ESOP note,
due 1993-1998 17,970 20,777
Other notes and obligations 32,657 33,567
- ------------------------------------------------------------------------------
Total debt 536,655 840,971
Less portions due within one year (25,817) (99,992)
- ------------------------------------------------------------------------------
Long-term debt $510,838 $740,979
- ------------------------------------------------------------------------------
</TABLE>
In 1990, the Company began offering up to $200.0 million of its Series B
medium-term notes, which have maturities from two to 10 years and may not be
redeemed by the Company prior to maturity. The proceeds from the sale of the
notes have been used for general corporate purposes. The final $78 million of
these notes were issued during 1993. The Company redeemed its $100 million 8%
notes prior to their scheduled maturity. These notes, which were originally due
in 1996, were redeemed in July 1993 at par. The Company financed this redemption
with commercial paper. QUNO's New Zealand dollar notes were repaid by QUNO in
April 1993 with proceeds from its new stand-alone bank financing agreement.
-43-
<PAGE>
The notes issued by the Company's ESOP are unconditionally guaranteed by the
Company as to payment of principal and interest. Therefore, the unpaid balance
of these borrowings is reflected in the accompanying consolidated statements of
financial position as long-term debt. An amount equivalent to the unpaid balance
of these borrowings, representing unearned employee compensation, is recorded
as a reduction of stockholders' investment.
Certain debt agreements limit the amount of secured debt the Company can incur
without equally and ratably securing additional borrowings under those
agreements.
In 1994, the Company intends to refinance $41.8 million of promissory notes
and $27.4 million of Series B medium-term notes scheduled to mature in 1994, and
has the ability to do so on a long-term basis through existing revolving credit
agreements. Accordingly, these notes were classified as long-term and treated as
maturing in fiscal year 1995. The Company has revolving credit agreements with a
number of banks in the aggregate amount of $445.0 million that are fully
available to support the issuance of promissory notes. These agreements extend
to December 31, 1995, contain various interest rate options and provide for
annual fees based on a percentage of the commitment. Such fees totaled
approximately $.5 million for each of the last three years.
The estimated fair values of the Company's total debt at fiscal year end 1993
and 1992 were not significantly different from carrying values, as determined
based on quoted market prices for similar issues or on current rates offered to
the Company for debt of the same remaining maturities and similar terms.
Long-term debt at December 26, 1993 is scheduled to mature as follows: $25.8
million in 1994, $106.0 million in 1995, $40.6 million in 1996, $63.4 million in
1997, $38.2 million in 1998 and $262.6 million thereafter.
NOTE 7: INCOME TAXES
- ----------------------
The amounts of income (loss) before income taxes and cumulative effects of
accounting changes attributable to U.S. and foreign operations, and a
reconciliation of income taxes computed at the U.S. federal statutory rate
to income taxes reported in the consolidated statements of income follow:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income (loss) before income taxes and accounting changes:
U.S. $350,782 $321,989 $281,420
Foreign (18,355) (89,098) (39,545)
- -----------------------------------------------------------------------------
$332,427 $232,891 $241,875
Federal income taxes at 35% in 1993,
34% in 1992-1991 $116,349 $ 79,183 $ 82,238
Increase (decrease) resulting from:
State and local income taxes,
net of federal tax 18,502 15,781 12,811
Equity in QUNO net loss 6,424 - -
Amortization of intangible assets 4,814 5,141 5,034
Other (2,268) (3,839) (189)
- -----------------------------------------------------------------------------
Income taxes reported $143,821 $ 96,266 $ 99,894
Effective tax rate 43.3% 41.3% 41.3%
- -----------------------------------------------------------------------------
Components of income tax expense charged to income before cumulative effects
of accounting changes were as follows:
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Currently payable U.S. Federal $106,678 $101,856 $ 41,100
Foreign - 1,812 88
State 28,654 24,027 9,258
- ------------------------------------------------------------------------------
135,332 127,695 50,446
- ------------------------------------------------------------------------------
Deferred U.S. Federal 8,679 534 51,002
Foreign - (31,847) (11,706)
State (190) (116) 10,152
- ------------------------------------------------------------------------------
8,489 (31,429) 49,448
- ------------------------------------------------------------------------------
Total $143,821 $ 96,266 $ 99,894
- ------------------------------------------------------------------------------
</TABLE>
-44-
<PAGE>
Deferred income tax expense for 1993 and 1992 was calculated as the change
during the year in the Company's deferred tax liabilities and assets, adjusted
in 1993 for the deconsolidation of QUNO. The effect on deferred income taxes of
the 1% increase in the 1993 Federal tax rate was not material.
Significant components of the Company's net deferred tax liabilities were as
follows:
<TABLE>
<CAPTION>
(In thousands) Dec. 26, 1993 Dec. 27, 1992
- ----------------------------------------------------------------------------
<S> <C> <C>
Net properties $ 98,680 $ 146,028
Net intangible assets 64,006 55,195
Pensions 12,452 17,212
Other future taxable items 7,522 13,897
- ----------------------------------------------------------------------------
Total deferred tax liabilities 182,660 232,332
QUNO net operating loss carryforwards - (36,374)
Broadcast rights (27,991) (28,601)
Postretirement and postemployment
benefits other than pensions (17,457) (27,531)
Deferred compensation (27,091) (23,642)
Disposition of New York Daily News (9,218) (14,176)
Other accrued liabilities (12,144) (13,609)
Accrued employee compensation (10,988) (10,041)
Federal benefit on deferred state taxes (13,125) (10,695)
Accounts receivable (10,556) (9,611)
Disposition of Times Tribune - (7,695)
Other future deductible items (3,197) (10,428)
- ----------------------------------------------------------------------------
Total deferred tax assets (131,767) (192,403)
- ----------------------------------------------------------------------------
Net deferred tax liability $ 50,893 $ 39,929
- ----------------------------------------------------------------------------
</TABLE>
In 1991, in accordance with the accounting rules then in effect, the Company
provided deferred income taxes of $49.4 million for certain revenue and expense
items reported in different years for financial reporting and tax purposes. The
sources of the timing differences and the tax effect of each were the sale of
the New York Daily News - $74.6 million; reversal of deferred Canadian income
taxes - $(11.7) million; compensation - $(3.7) million; depreciation and
amortization - $(3.4) million; collection of mortgage note - $(5.3) million; and
other, net - $(1.1) million.
NOTE 8: EMPLOYEE PENSION PLANS
- -------------------------------
The Company amended its Company-sponsored U.S. pension plans, effective January
1989, for employees not covered by a collective bargaining agreement. The
amendments were made in connection with the establishment of the Company's ESOP
and to comply with the provisions of the Tax Reform Act of 1986. These pension
plans will continue to provide substantially the same pension benefits as under
the pre-amended plans until December 1998. After that date, the plans provide
that the pension benefit credits will be frozen in terms of pay and service.
Since the Company no longer consolidates QUNO's financial statements, the tables
below include the Canadian plans in 1992 and 1991 only.
Net pension expense (credit) for Company-sponsored plans in 1993, 1992 and
1991 included the following components:
<TABLE>
<CAPTION>
1992 1991
(In thousands) 1993 U.S. QUNO U.S. QUNO
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Benefits earned during
the period (service costs) $ 8,000 $ 7,699 $ 3,288 $ 7,698 $ 3,401
Interest cost on projected
benefit obligation 17,900 17,364 15,180 16,781 16,462
Recognized return on plan
assets (27,151) (27,036) (17,549) (25,802) (20,797)
Amortization, net (511) (443) (337) (441) 580
- -----------------------------------------------------------------------------
Net pension expense (credit) $ (1,762) $ (2,416) $ 582 $ (1,764) $ (354)
- -----------------------------------------------------------------------------
</TABLE>
-45-
<PAGE>
Actual returns on U.S. plan assets were: gains of $37.1 million in 1993, $21.1
million in 1992 and $44.0 million in 1991. Actual returns on plan assets for
Canadian plans were: gains of $7.6 million in 1992 and $29.7 million in 1991.
The following table sets forth the funded status of the Company-sponsored
pension plans as of year-end 1993 and 1992:
<TABLE>
<CAPTION>
1992
(In thousands) 1993 U.S. QUNO
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Plans' assets at fair value $297,125 $273,712 $182,241
Less: Actuarial present value of benefit
obligations
Vested benefits 224,800 199,867 155,349
Non-vested benefits 12,900 7,879 6,887
- -----------------------------------------------------------------------------
Accumulated benefit obligation 237,700 207,746 162,236
Projected future salary increases 16,188 15,540 15,450
- -----------------------------------------------------------------------------
Projected benefit obligation 253,888 223,286 177,686
- -----------------------------------------------------------------------------
Plans' assets in excess of projected
benefit obligation 43,237 50,426 4,555
Less: Unrecognized net asset at transition
being amortized through 2001 15,251 16,817 10,959
Unrecognized net gain (loss) due to actual
experience varying from actuarial assumptions (2,509) 6,176 (26,635)
Unrecognized prior service costs (1,932) (3,011) -
- -----------------------------------------------------------------------------
Pension asset recognized in the consolidated statements
of financial position $ 32,427 $ 30,444 $ 20,231
- -----------------------------------------------------------------------------
</TABLE>
The plans' assets consist primarily of listed common stocks and bonds,
including 423,725 shares of the Company's common stock having an aggregate
market value of $25.3 million at December 26, 1993. In determining the projected
benefit obligation for the U.S. plans, the weighted average assumed discount
rate used was 7.25% in 1993 and 8.25% in 1992, while the average rate of
increase in future salary levels was 4.5% for 1993 and 5.5% for 1992. The
weighted average expected long-term rate of return on assets used in determining
net pension credit was 10% in 1993 and 10.5% in 1992 and 1991. For the Canadian
plans in 1992, the weighted average assumed discount rate used was 8.0%, while
the average rate of increase in future salary levels was 6.5%. The expected
long-term rate of return on assets was 8.5% in 1992 and 11% in 1991. Total
pension expense for union-sponsored pension plans was $4.9 million in 1993, $5.1
million in 1992 and $5.4 million in 1991. The Company's portion of assets and
liabilities for multi-employer union pension plans is not determinable.
NOTE 9: CAPITAL STOCK
- -----------------------
Under the Company's Restated Certificate of Incorporation, 5.0 million shares of
preferred stock are authorized. In 1989, the Company established a series of 1.6
million shares of Series B Convertible Preferred Stock of which 1.59 million
shares were issued to the Company's ESOP. Each share of such preferred stock
pays a cumulative dividend of 7.75% annually, has a liquidation value of $220
per share, is convertible into four shares of the Company's common stock and is
voted with the common stock with an entitlement to 4.58 votes per preferred
share.
In December 1987, the Company adopted a Share Purchase Rights Plan and
declared a distribution of one right on each outstanding share of the Company's
common stock. Each right will entitle stockholders to buy one one-hundredth of a
share of Series A Junior Participating Preferred Stock at an exercise price of
$150. The rights have no voting rights and are not exercisable until 10 days
after the occurrence of certain triggering events, upon which the holders of the
rights are entitled to purchase either the common stock of an acquiror or
additional common stock of the Company at a discounted price. The rights are
redeemable at the option of the Company for $.01 per right. The Company has
established a series of 800,000 shares of Series A Junior Participating
Preferred Stock in connection with the plan, none of which have been issued.
There were approximately 4,100 holders of record of the Company's common stock
at January 28, 1994.
-46-
<PAGE>
NOTE 10: INCENTIVE COMPENSATION AND STOCK PLANS
- -------------------------------------------------
Employee Stock Ownership Plan (ESOP) -- In 1988, the Company established an ESOP
as a long-term employee benefit plan to supplement the Company's U.S. employee
pension plan. In connection therewith, the ESOP purchased, in 1988 and 1989,
approximately 800,000 common shares and 1.59 million Series B convertible
preferred shares for an aggregate of $375.0 million. The ESOP provides for the
awarding of shares of the Company's preferred and common stock on a
noncontributory basis to eligible non-union employees of the Company. At
December 26, 1993, 6.1 million shares of common stock were reserved for issuance
in connection with this plan.
Shares of stock held by the ESOP have been placed with the ESOP Trustee and
are allocated to eligible employees annually. These common and preferred shares
are allocated in the same proportion that the current year's principal and
interest payments bear to the total principal and interest paid over the lives
of the related borrowings. Each preferred share is convertible into four shares
of the Company's common stock. The ESOP Trustee must convert the preferred
shares when making distributions to participants upon their withdrawal from the
ESOP. If at the time of such conversion, the price of the Company's common stock
is below $55 per share, the Company must, at its option, either pay the
difference in cash or issue additional common stock. As of December 26, 1993,
approximately 59,800 shares of Series B Convertible Preferred Stock had been
redeemed.
The Company recognizes expense for this plan based upon cash contributions it
makes to the ESOP. The ESOP services its debt requirements with amounts received
from preferred dividends, common dividends earned on unallocated common shares
and Company contributions. The following table summarizes ESOP debt service
activity for the three years ended December 26, 1993:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt Requirements:
Principal $22,721 $20,342 $16,499
Interest 26,932 28,885 30,281
- ------------------------------------------------------------------------------
Total $49,653 $49,227 $46,780
- ------------------------------------------------------------------------------
Debt Service:
Dividends $26,548 $27,019 $27,500
Company cash contributions 23,105 22,208 19,280
- ------------------------------------------------------------------------------
Total $49,653 $49,227 $46,780
- ------------------------------------------------------------------------------
</TABLE>
Employee Stock Purchase Plan -- This plan permits eligible employees to purchase
shares of the Company's common stock at 85% of market price. A total of 4.0
million shares of stock may be sold under the plan. The Company's only expense
relating to this plan is for its administration. During 1993, 1992 and 1991,
99,809, 121,747 and 136,500 shares, respectively, were sold to employees under
this plan. As of December 26, 1993, a total of 2.4 million shares were available
for sale.
Savings Incentive Plan -- The Company maintains various qualified Savings
Incentive Plans, whereby eligible employees may make voluntary contributions to
these plans on a pre-tax salary reduction basis. The plans provide for uniform
employer contributions to eligible employees of $.25 for each $1.00 contributed
by participants up to 4% of the participants' compensation. These plans allow
participants to invest their savings in various investments including the
Company's common stock. Company contributions to these plans for each of the
last three years were not material. The Company had 400,000 shares of common
stock reserved for possible issuance under these plans at December 26, 1993.
Restricted Stock Plan for Outside Directors -- This plan provides for the
granting of restricted shares of the Company's common stock to outside
directors. The Company has reserved 50,000 shares of common stock in connection
with this plan. Upon each election or re-election, each outside director
receives an award of 300 shares of the Company's common stock for each year in
the term for which he or she is elected. The Company granted 2,700, 2,100 and
3,900 shares
-47-
<PAGE>
of its common stock under this plan in 1993, 1992 and 1991, respectively. At
December 26, 1993, 31,700 shares were available for future grant in connection
with this plan.
1992 Long-Term Incentive Plan -- In 1992, the 1984 Long-Term Performance Plan
was terminated and replaced with the 1992 Long-Term Incentive Plan. Remaining
options outstanding under the 1984 plan at December 26, 1993 totaled 2.9 million
shares. No further awards will be made under the 1984 plan. The 1992 plan
provides for the granting of stock options or various other types of awards to
eligible employees. General awards available under this plan, on an annual
basis, are equal to nine-tenths of one percent (.009) of the adjusted average
number of common shares outstanding used by the Company to calculate fully
diluted net income per share for the preceding year, plus shares of stock
available for awards in previous years which have not been awarded, and any
previously forfeited or expired options. At December 26, 1993 and December 27,
1992, .7 million and .6 million shares, respectively, were available for general
awards.
An additional number of shares is available for replacement options. The
number of shares available for replacement options is generally equal to four-
tenths of one percent (.004) of the adjusted average number of common shares
outstanding used by the Company to calculate fully diluted net income per share
for the preceding year, plus shares available under the 1984 Long-Term
Performance Plan for which no awards had been granted prior to its termination,
plus shares of stock available for awards in previous years which have not been
awarded, and any previously forfeited or expired replacement options. At
December 26, 1993 and December 27, 1992, 2.0 million and 1.9 million shares,
respectively, were available for replacement options. Shares not awarded in any
year carry over and are available for award in subsequent years.
Under the 1992 plan, only 3.0 million of the shares available for general
awards may be used for certain outright stock awards and other stock-based
awards, and only 3.0 million of the shares may be used for incentive stock
options. No such awards have been granted. The option price is the market value
of the Company's common stock at the time the option is granted. Options are
exercisable not less than six months or more than 11 years after the date the
option is granted. At December 26, 1993, 3.4 million options were exercisable. A
combined summary of stock option activity and prices is as follows:
<TABLE>
<CAPTION>
(Shares in thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Options Outstanding
Beginning of year 5,261 5,596 5,252
Granted 889 1,187 1,060
Exercised (1,131) (1,293) (686)
Cancelled (126) (229) (30)
- ------------------------------------------------------------------------------
End of year 4,893 5,261 5,596
Prices of Options
Granted $51 1/8-57 7/8 $41 1/4-50 3/8 $37 7/8-47 5/8
Exercised 16 7/8-47 3/8 16 7/8-41 16 7/8-41
Outstanding at year end 16 7/8-57 7/8 16 7/8-57 3/4 16 7/8-57 3/4
</TABLE>
NOTE 11: POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
- ------------------------------------------------------
The Company provides postretirement health care and life insurance benefits to
eligible employees under a variety of plans. Employees become eligible for these
benefits if they meet age and service requirements. The tables below include
QUNO plan information in 1992 only. For U.S. plans and effective January 1991,
the Company provides a fixed medical contribution to participants who retire
between the age of 55 to 65 and have 10 or more years of service. Medical
coverage for these participants ends when they reach age 65. Retirees are also
eligible for life insurance benefits, which are primarily a function of both the
years of service and the level of compensation at retirement.
-48-
<PAGE>
Since 1992, the cost of postretirement medical and life benefits is accrued
over the active service periods of employees to the date they attain full
eligibility for such benefits. Previously, the cost of such benefits was
generally expensed as claims were incurred. It is the Company's policy to fund
postretirement benefits as claims are incurred.
Postretirement benefit cost for 1993 and 1992 included the following
components:
<TABLE>
<CAPTION>
1992
(In thousands) 1993 U.S. Canada
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost of benefits earned during the year $ 288 $ 278 $ 492
Interest cost on accumulated postretirement
benefit obligation ("APBO") 3,159 3,175 2,249
- ----------------------------------------------------------------------------------
Postretirement benefit cost $ 3,447 $ 3,453 $ 2,741
- ----------------------------------------------------------------------------------
</TABLE>
The plans' APBO and postretirement liability were composed of the following:
<TABLE>
<CAPTION>
Dec. 27, 1992
(In thousands) Dec. 26, 1993 U.S. Canada
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Retirees $37,193 $35,736 $15,578
Active participants, fully eligible 2,271 1,980 3,284
Other participants 3,673 3,484 8,401
- -------------------------------------------------------------------------------------
APBO 43,137 41,200 27,263
Unrecognized net loss due to actual experience
varying from actuarial assumptions (1,488) - -
- -------------------------------------------------------------------------------------
Postretirement benefit liability $41,649 $41,200 $27,263
- -------------------------------------------------------------------------------------
</TABLE>
In determining the APBO for U.S. participants, the weighted average assumed
discount rate used was 7.25% in 1993 and 8.25% in 1992, while the average rate
of increase in future salary levels was 4.5% in 1993 and 5.5% in 1992. For
Canadian employees, the discount rate was 8.5% and the average rate of increase
in future salary levels was 6.5% in 1992. For U.S. plans, 13.4% and 11.0%
increases in the cost of covered health care benefits were assumed for fiscal
1994 for pre-age 65 employees and post-age 65 employees, respectively. These
rates were assumed to decrease ratably to 7.0% after 10 years and remain at that
level thereafter. The effect of a one percentage point increase in the assumed
health care cost trend rate for each future year for U.S. employees would
increase the total APBO at year-end 1993 by $2.8 million and the 1993 net
benefit cost by $.2 million.
NOTE 12: CONTRACTS PAYABLE FOR BROADCAST RIGHTS
- -------------------------------------------------
Contracts payable for broadcast rights are classified as current or long-term
liabilities in accordance with the payment terms of the contracts. The fair
value of these contracts payable was $299.4 million at December 26, 1993 and
$298.2 million at December 27, 1992, using the discounted cash flow method.
Required payments under contractual agreements for broadcast rights recorded at
December 26, 1993 are:
<TABLE>
<CAPTION>
(In thousands) Amount
----------------------------------
<S> <C>
1994 $142,686
1995 82,575
1996 54,610
1997 23,144
1998 10,893
Thereafter 23,624
</TABLE>
NOTE 13: COMMITMENTS
- ---------------------
The Company has entered into commitments for broadcast rights that are not
currently available for broadcast and are therefore not included in the
financial statements. These commitments totaled approximately $256.0 million at
December 26, 1993. Payments for broadcast rights generally commence when the
programs become available for broadcast.
The Company had commitments totaling $115.7 million at December 26, 1993
related to the purchase of property, plant and equipment and to talent
contracts.
-49-
<PAGE>
The Company leases certain equipment and office and production space under
various operating leases. Rental expense totaled $26.2 million in 1993, $28.0
million in 1992 and $27.3 million in 1991. Future minimum rental commitments
under non-cancellable operating leases are $18.0 million in 1994, $16.1 million
in 1995, $12.7 million in 1996, $11.3 million in 1997, $11.4 million in 1998 and
$81.1 million thereafter.
NOTE 14: LEGAL PROCEEDINGS
- ---------------------------
The Company and its subsidiaries are defendants from time to time in actions for
libel and other matters arising out of their business operations. In addition,
the Company and its subsidiaries are involved from time to time as parties in
various regulatory, environmental and other proceedings with governmental
authorities and administrative agencies. The Company does not believe that any
such proceedings presently pending will have a material adverse effect on its
consolidated financial position or results of operations.
NOTE 15: SEGMENT INFORMATION
- -----------------------------
Tribune Company is an information and entertainment company engaged, through its
subsidiaries, in the publishing of newspapers, books and information in print
and digital formats and the broadcasting, production and syndication of
information and entertainment. The Company's principal newspapers are the
Chicago Tribune, the Fort Lauderdale-based Sun-Sentinel and The Orlando
Sentinel. The Company's book and information publishing operations consist of
Contemporary Books and Compton's. The Company's broadcasting operations consist
of independent television stations in New York, Los Angeles, Chicago,
Philadelphia, Atlanta, Denver and New Orleans, and six radio stations. In
entertainment, the Company owns the Chicago Cubs baseball team and produces and
syndicates television programming. The Company currently holds a 59% ownership
interest in QUNO Corporation, which manufactures newsprint for sale to the
Company's newspapers and other North American and overseas customers. Prior to
February 1993, when QUNO completed an initial public offering, QUNO was a wholly
owned subsidiary and was reported as the newsprint operations business segment.
Beginning in 1993, QUNO is no longer consolidated in the Company's financial
statements. Financial data for each of the Company's business segments is
presented on page 51.
Operating revenues by business segment include sales to unaffiliated customers
and intercompany sales, which are made at prices prevailing in the industry at
the time of sale. In calculating operating profit for each segment, none of the
following items have been added or deducted: interest income and expense, non-
operating gains and losses, equity in QUNO net loss or income taxes. Assets
represent those identifiable tangible and intangible assets used in the
operations of each segment.
The Company's cost of sales by business segment is as follows:
<TABLE>
<CAPTION>
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Publishing $588,338 $ 569,232 $ 587,690
Broadcasting and Entertainment 410,007 384,860 350,839
- --------------------------------------------------------------------------
Total 998,345 954,092 938,529
Newsprint Operations (Canada) - 314,059 325,390
Intercompany (newsprint) - (117,195) (142,585)
- --------------------------------------------------------------------------
Total cost of sales $998,345 $1,150,956 $1,121,334
- --------------------------------------------------------------------------
</TABLE>
-50-
<PAGE>
Tribune Company and Subsidiaries
Business Segments
<TABLE>
<CAPTION>
(In thousands of dollars) 1993 1992 1991
- -------------------------------------------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Operating Publishing $1,229,402 $1,176,180 $1,150,882
Revenues Broadcasting and Entertainment (1) 727,213 684,051 617,514
Intercompany (4,105) (4,361) (3,966)
---------- ---------- ----------
Total 1,952,510 1,855,870 1,764,430
Newsprint Operations (Canada) - 366,269 422,128
Intercompany - (117,195) (142,585)
---------- ---------- ----------
Total operating revenues $1,952,510 $2,104,944 $2,043,973
---------- ---------- ----------
Operating Publishing (2) $ 255,121 $ 224,509 $ 217,031
Profit (Loss) Broadcasting and Entertainment (1) 125,684 121,267 100,175
Corporate expenses (24,402) (23,643) (22,256)
---------- ---------- ----------
Total 356,403 322,133 294,950
Newsprint Operations (Canada) - (53,770) (6,975)
---------- ---------- ----------
Total operating profit $ 356,403 $ 268,363 $ 287,975
---------- ---------- ----------
Capital Publishing $ 56,838 $ 67,391 $ 34,683
Expenditures Broadcasting and Entertainment 18,782 20,958 20,305
---------- ---------- ----------
Total 75,620 88,349 54,988
Newsprint Operations (Canada) - 41,883 38,943
---------- ---------- ----------
Total capital expenditures $ 75,620 $ 130,232 $ 93,931
---------- ---------- ----------
Depreciation Publishing $ 67,559 $ 64,345 $ 61,988
and Broadcasting and Entertainment 35,203 31,753 28,871
Amortization ---------- ---------- ----------
of Intangible Total 102,762 96,098 90,859
Assets Newsprint Operations (Canada) - 43,481 46,189
---------- ---------- ----------
Total depreciation and amortization
of intangible assets $ 102,762 $ 139,579 $ 137,048
---------- ---------- ----------
Assets Publishing $ 988,348 $ 856,383 $ 861,875
Broadcasting and Entertainment 1,155,331 1,149,482 1,120,066
Corporate 392,731 133,181 132,186
Intercompany receivables - (10,747) (18,733)
---------- ---------- ----------
Total 2,536,410 2,128,299 2,095,394
Newsprint Operations (Canada) - 623,271 699,904
---------- ---------- ----------
Total assets $2,536,410 $2,751,570 $2,795,298
---------- ---------- ----------
</TABLE>
(1) 1992 includes $12.3 million of Major League Baseball expansion fees.
(2) 1992 includes a $15.3 million pretax charge for the closure of The
Peninsula Times Tribune.
-51-
<PAGE>
Tribune Company and Subsidiaries
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
- --------------------
Management is responsible for the preparation, integrity and fair presentation
of the Company's consolidated financial statements and related financial
information included in this annual report to stockholders. The consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles and necessarily include certain amounts that are based on
management's best estimates and judgments.
The consolidated financial statements were examined by Price Waterhouse,
independent accountants, and their report is shown below. Price Waterhouse was
given unrestricted access to all financial records and related data, including
minutes of all meetings of stockholders, the Board of Directors and committees
of the Board. The Company believes that all representations made to the
independent accountants during their audit were valid and appropriate.
INTERNAL CONTROL SYSTEM
- -----------------------
Management is also responsible for establishing and maintaining a system of
internal control, designed to provide reasonable assurance to the Company's
management and Board of Directors regarding the preparation of reliable
published financial statements. The system of internal controls is continually
reviewed for its effectiveness and is augmented by written policies and
procedures, the careful selection and training of qualified personnel and a
program of internal audit. Each year, the Company's independent accountants
conduct a review of internal accounting controls to the extent required by
generally accepted auditing standards and perform such tests and related
procedures as they deem necessary to arrive at an opinion on the fairness of the
financial statements.
The Audit Committee of the Board of Directors is responsible for reviewing
and monitoring the Company's financial reporting and accounting practices. The
Audit Committee consists of four independent directors. The Committee meets with
representatives of management, the independent accountants and internal auditors
to discuss financial reporting, accounting and internal control matters. Price
Waterhouse and the internal auditors have direct access to the Audit Committee.
Charles T. Brumback Donald C. Grenesko
Chairman/CEO Senior Vice President and Chief Financial Officer
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF TRIBUNE COMPANY
- -------------------------------------------------------------
In our opinion, the accompanying consolidated statements of financial position
and the related consolidated statements of income, of cash flows and of
stockholders' investment present fairly, in all material respects, the financial
position of Tribune Company and its subsidiaries at December 26, 1993 and
December 27, 1992, and the results of their operations and their cash flows for
each of the three years in the period ended December 26, 1993, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, in 1992 the
Company changed its method of accounting for postretirement benefits other than
pensions, for income taxes and for postemployment benefits.
Price Waterhouse
Chicago, Illinois
January 28, 1994
-52-
<PAGE>
Tribune Company and Subsidiaries
Quarterly Results (Unaudited)
<TABLE>
<CAPTION>
Quarters
1993 (In thousands of dollars, except per share data) First Second Third Fourth Total
- ---------------------------------------------------------- -------------- ---------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Operating Publishing $ 294,583 $ 301,536 $ 292,363 $ 340,920 $1,229,402
Revenues Broadcasting and Entertainment 140,981 216,903 195,352 173,977 727,213
Intercompany (1,016) (996) (1,046) (1,047) (4,105)
-------------- ---------- ---------- -------------- ----------
Total operating revenues $ 434,548 $ 517,443 $ 486,669 $ 513,850 $1,952,510
-------------- ---------- ---------- -------------- ----------
Operating Publishing $ 55,729 $ 63,697 $ 52,546 $ 83,149 $ 255,121
Profit (Loss) Broadcasting and Entertainment 9,170 49,254 32,053 35,207 125,684
Corporate expenses (5,798) (5,860) (6,345) (6,399) (24,402)
-------------- ---------- ---------- -------------- ----------
Total operating profit 59,101 107,091 78,254 111,957 356,403
-------------- ---------- ---------- -------------- ----------
Equity in QUNO net loss (2,711) (2,757) (5,849) (7,038) (18,355)
Net interest expense (3,779) (73) (173) (1,596) (5,621)
-------------- ---------- ---------- -------------- ----------
Income Before Income Taxes 52,611 104,261 72,232 103,323 332,427
Income taxes (22,960) (41,976) (33,637) (45,248) (143,821)
-------------- ---------- ---------- -------------- ----------
Net Income 29,651 62,285 38,595 58,075 188,606
Preferred dividends, net of tax (4,628) (4,628) (4,672) (4,511) (18,439)
-------------- ---------- ---------- -------------- ----------
Net Income Attributable to Common Shares $ 25,023 $ 57,657 $ 33,923 $ 53,564 $ 170,167
-------------- ---------- ---------- -------------- ----------
Net Income Per Share (1)
Primary $ .38 $ .87 $ .51 $ .80 $ 2.56
-------------- ---------- ---------- -------------- ----------
Fully diluted $ .36 $ .80 $ .48 $ .73 $ 2.36
-------------- ---------- ---------- -------------- ----------
Common Dividends Per Share $ .24 $ .24 $ .24 $ .24 $ .96
-------------- ---------- ---------- -------------- ----------
Common Stock Price (High - Low) $56 7/8-47 5/8 $56 1/4-50 $55-48 3/8 $61 1/4-50 7/8
-------------- ---------- ---------- --------------
</TABLE>
Notes to Quarterly Results:
(1) Quarterly and full year net income per share amounts are calculated
independently based on the weighted average number of common shares
applicable for each period.
(2) Fourth quarter 1992 includes Major League Baseball expansion fees of $12.3
million, before tax, which increased fourth quarter and full year primary
net income per share by $.12.
(3) Fourth quarter 1992 includes a pretax charge for the closure of The
Peninsula Times Tribune of $15.3 million, which decreased fourth quarter
and full year primary net income per share by $.12.
(4) Relates to the adoption in 1992 of new accounting rules for retiree
benefits, income taxes and postemployment benefits.
-54-
<PAGE>
<TABLE>
<CAPTION>
1992 (In thousands of dollars, Quarters
except per share data) First Second Third Fourth Total
- ---------------------------------------------------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Operating Publishing $285,788 $297,276 $280,380 $312,736 $1,176,180
Revenues Broadcasting
and Entertainment (2) 127,295 196,424 183,293 177,039 684,051
Intercompany (1,069) (1,186) (1,020) (1,086) (4,361)
-------- -------- -------- -------- ----------
Total 412,014 492,514 462,653 488,689 1,855,870
Newsprint Operations (Canada) 90,832 90,566 89,950 94,921 366,269
Intercompany (32,408) (27,185) (26,115) (31,487) (117,195)
-------- -------- -------- -------- ----------
Total operating revenues $470,438 $555,895 $526,488 $552,123 $2,104,944
-------- -------- -------- -------- ----------
Operating Publishing (3) $ 51,396 $ 65,342 $ 49,935 $ 57,836 $ 224,509
Profit (Loss) Broadcasting 5,897 43,389 34,769 37,212 121,267
and Entertainment (2)
Corporate expenses (5,495) (5,574) (6,232) (6,342) (23,643)
-------- -------- -------- -------- ----------
Total 51,798 103,157 78,472 88,706 322,133
Newsprint Operations (Canada) (15,093) (15,765) (12,192) (10,720) (53,770)
-------- -------- -------- -------- ----------
Total operating profit 36,705 87,392 66,280 77,986 268,363
-------- -------- -------- -------- ----------
Net interest expense (10,012) (9,144) (8,761) (7,555) (35,472)
-------- -------- -------- -------- ----------
Income Before Income Taxes 26,693 78,248 57,519 70,431 232,891
Income Taxes (11,077) (33,245) (23,519) (28,425) (96,266)
-------- -------- -------- -------- ----------
Income Before Cumulative Effects of Changes
in Accounting Principles 15,616 45,003 34,000 42,006 136,625
Cumulative effects of changes in accounting
principles, net of tax (4) (16,800) - - - (16,800)
-------- -------- -------- -------- ----------
Net Income (Loss) (1,184) 45,003 34,000 42,006 119,825
Preferred dividends, net of tax (4,542) (4,542) (4,542) (4,542) (18,168)
-------- -------- -------- -------- ----------
Net Income (Loss) Attributable to
Common Shares $ (5,726) $ 40,461 $ 29,458 $ 37,464 $ 101,657
-------- -------- -------- -------- ----------
Net Income (Loss) Per Share (1)
Primary:
Before cumulative effects
of changes in accounting
principles $ .17 $ .62 $ .45 $ .57 $ 1.82
Cumulative effects of
accounting changes, net (4) $ (.26) - - - (.26)
-------- -------- -------- -------- ----------
Net income (loss) $ (.09) $ .62 $ .45 $ .57 $ 1.56
-------- -------- -------- -------- ----------
Fully diluted:
Before cumulative effects
of changes in accounting
principles $ .17 $ .58 $ .43 $ .53 $ 1.70
Cumulative effects of
accounting changes, net (4) $ (.26) - - - (.24)
-------- -------- -------- -------- ----------
Net income (loss) $ (.09) $ .58 $ .43 $ .53 $ 1.46
-------- -------- -------- -------- ----------
Common Dividends Per Share $ .24 $ .24 $ .24 $ .24 $ .96
-------- -------- -------- -------- ----------
Common Stock Price (High - Low) $46 3/4- $47 1/2- $47 1/4- $50 3/4-
39 1/2 38 3/4 40 42 3/8
-------- -------- -------- --------
</TABLE>
55
<PAGE>
Tribune Company and Subsidiaries
Eleven Year Financial Summary
<TABLE>
<CAPTION>
(Dollars in thousands,
except per share data) 1993 1992 1991 1990
- --------------------------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating Results
Operating Revenues
Publishing excluding Daily News $1,229,402 1,176,180 1,150,882 1,205,619
New York Daily News $ - - - 321,823
Broadcasting and Entertainment $ 727,213 684,051 617,514 623,981
Intercompany $ (4,105) (4,361) (3,966) (3,248)
---------- --------- --------- ---------
Total $1,952,510 1,855,870 1,764,430 2,148,175
Newsprint Operations (Canada) $ - 366,269 422,128 351,738
Intercompany $ - (117,195) (142,585) (137,986)
---------- --------- --------- ---------
Total Operating Revenues $1,952,510 2,104,944 2,043,973 2,361,927
Operating Profit (Loss)
Publishing excluding Daily News $ 255,121 224,509 217,031 278,594
New York Daily News $ - - - (114,468)
Broadcasting and Entertainment $ 125,684 121,267 100,175 107,528
Corporate expenses $ (24,402) (23,643) (22,256) (22,654)
---------- --------- --------- ---------
Total $ 356,403 322,133 294,950 249,000
Newsprint Operations (Canada) $ - (53,770) (6,975) (11,058)
---------- --------- --------- ---------
Total Operating Profit $ 356,403 268,363 287,975 237,942
Equity in QUNO net loss $ (18,355) - - -
Net interest expense $ (5,621) (35,472) (46,100) (37,170)
Other $ - - - (295,000)
---------- --------- --------- ---------
Income (loss) before income taxes $ 332,427 232,891 241,875 (94,228)
Income taxes $ (143,821) (96,266) (99,894) 30,695
---------- --------- --------- ---------
Income (Loss) Before Cumulative Effects of
Changes in Accounting Principles $ 188,606 136,625 141,981 (63,533)
Cumulative effects of changes in accounting
principles $ - (16,800) - -
---------- --------- --------- ---------
Net Income (Loss)(1) $ 188,606 119,825 141,981 (63,533)
Share Information
Primary net income (loss) per share(1) $ 2.56 1.56 1.94 (1.22)
Common dividends per share $ .96 .96 .96 .96
Stockholders' investment per share $ 15.54 13.32 12.78 11.68
Weighted average common
shares outstanding (000's) 66,371 65,018 64,364 66,032
Financial Ratios
Operating profit margin 18.3% 12.7% 14.1% 10.1%
Net income margin 9.7% 5.7% 6.9% (2.7)%
Net income as a percentage of average
stockholders' investment 18.8% 13.6% 17.6% (6.9)%
Long-term debt to total capital 30% 43% 47% 51%
Financial Position Data
Total assets $2,536,410 2,751,570 2,795,298 2,826,099
Long-term debt $ 510,838 740,979 897,835 998,962
Stockholders' investment $1,095,627 911,889 851,699 764,512
Cash Flow and Other Data
Capital expenditures $ 75,620 130,232 93,931 148,897
Repurchase (issuance) of treasury stock, net $ (46,138) (31,918) (10,007) 178,517
Dividends $ 81,927 80,407 78,415 80,110
Amortization of broadcast rights $ 236,468 233,859 207,392 228,605
Employees (full-time equivalents) 9,900 12,400 12,900 16,100
(1) Includes the cumulative effects of accounting changes of $16.8 million or $.26 per share in 1992, charges relating to New
York Daily News totaling $255.0 million or $3.86 per share in 1990, and significant non-recurring items including: a net loss
of $21.1 million or $.27 per share in 1987 and a net gain of $151.6 million or $1.88 per share in 1986.
</TABLE>
-56-
<PAGE>
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985 1984 1983
--------- --------- --------- --------- --------- --------- ---------
<C> <C> <C> <C> <C> <C> <C>
1,216,380 1,132,033 1,053,194 950,864 950,693 873,099 755,291
422,024 436,843 419,853 411,840 405,862 402,509 384,287
584,326 505,729 485,276 466,231 384,723 322,082 260,083
(3,434) (3,348) (3,322) (2,474) (2,520) (2,010) (1,648)
--------- --------- --------- --------- --------- --------- ---------
2,219,296 2,071,257 1,955,001 1,826,461 1,738,758 1,595,680 1,398,013
456,666 462,550 385,023 378,181 368,554 356,433 342,308
(213,458) (191,809) (182,879) (175,811) (170,235) (156,616) (151,598)
--------- --------- --------- --------- --------- --------- ---------
2,462,504 2,341,998 2,157,145 2,028,831 1,937,077 1,795,497 1,588,723
299,282 248,567 239,358 209,525 171,932 149,623 118,214
(2,179) 15,167 (47,357) (9,228) 3,040 (4,817) 21,840
96,803 77,754 62,858 65,537 45,693 41,182 40,471
(22,100) (22,699) (25,815) (17,650) (19,459) (15,441) (13,861)
--------- --------- --------- --------- --------- --------- ---------
371,806 318,789 229,044 248,184 201,206 170,547 166,664
61,285 99,154 73,009 33,126 40,206 17,929 (21,002)
--------- --------- --------- --------- --------- --------- ---------
433,091 417,943 302,053 281,310 241,412 188,476 145,662
- - - - - - -
(25,340) (39,515) (32,459) (35,026) (16,416) (16,283) (28,027)
3,133 - - 276,587 6,466 14,421 (4,823)
--------- --------- --------- --------- --------- --------- ---------
410,884 378,428 269,594 522,871 231,462 186,614 112,812
(168,463) (168,022) (128,057) (230,001) (107,618) (83,571) (43,545)
--------- --------- --------- --------- --------- --------- ---------
242,421 210,406 141,537 292,870 123,844 103,043 69,267
- - - - - - -
--------- --------- --------- --------- --------- --------- ---------
242,421 210,406 141,537 292,870 123,844 103,043 69,267
3.17 2.78 1.80 3.63 1.53 1.28 .95
.88 .76 .64 .52 .44 .38 .34
15.60 15.88 14.35 13.91 11.19 10.23 9.55
72,390 75,636 78,536 80,677 81,045 80,801 73,251
17.6% 17.8% 14.0% 13.9% 12.5% 10.5% 9.2%
9.8% 9.0% 6.6% 14.4% 6.4% 5.7% 4.4%
21.4% 18.4% 12.9% 29.1% 14.3% 12.9% 10.1%
40% 32% 31% 29% 41% 20% 22%
3,013,537 2,905,382 2,738,484 2,571,432 2,445,924 1,737,142 1,635,416
880,686 650,118 551,651 522,750 732,521 244,982 255,889
1,077,996 1,188,480 1,094,943 1,101,274 908,486 827,676 771,540
238,307 213,596 191,895 147,726 171,687 122,352 97,278
296,738 56,185 108,647 65,893 (5,692) (2,336) (123,325)
75,298 57,416 50,025 42,201 35,490 30,383 25,016
221,897 192,045 169,921 155,183 83,463 66,888 50,913
17,100 16,800 16,800 17,300 18,700 18,400 18,700
</TABLE>
-57-
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
APPENDIX TO EXHIBIT 13
DESCRIPTION OF GRAPHS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
<TABLE>
<CAPTION>
Annual Report
Page Number Description
------------ -----------
<C> <S>
28 Bar graph of Net Income (Excluding Accounting
Changes and Daily News) (in millions).
1989 - $244, 1990 - $191, 1991 - $142,
1992 - $137, 1993 - $189.
29 Bar graph of Operating Profit Excluding QUNO
and Daily News (in millions). 1989 - $374,
1990 - $364, 1991 - $295, 1992 - $322,
1993 - $356.
29 Pie Chart of 1993 Consolidated Expenses as a
Percent of Revenues. Compensation - 28%,
Amortization of Broadcast Rights - 12%,
Newsprint & Ink - 9%, Other - 33%,
Operating Margin - 18%.
30 Stacked bar graph of Publishing Advertising
Revenues Excluding Daily News (in millions).
Retail, 1989 - $456, 1990 - $443, 1991 - $429,
1992 - $428, 1993 - $435; General, 1989 - $129,
1990 - $129, 1991 - $124, 1992 - $129, 1993 -
$121; Classified, 1989 - $374, 1990 - $356,
1991 - $301, 1992 - $312, 1993 - $337.
31 Pie Chart of 1993 Publishing Revenues by
Market. Chicago - 53%, Fort Lauderdale - 20%,
Orlando - 16%, Virginia/CA - 5%, National - 6%.
31 Bar graph of % Recycled Newsprint (Share of
Tons Consumed Containing Recycled Fiber).
1989 - 23%, 1990 - 15%, 1991 - 29%, 1992 - 67%,
1993 - 96%.
32 Bar graph of Net Investment in Broadcast Rights
(in millions). 1989 - $162, 1990 - $136, 1991 -
$103, 1992 - $53, 1993 - $24.
33 Bar graph of Net Interest Expense (in millions).
1989 - $25, 1990 - $37, 1991 - $46, 1992 - $35,
1993 - $6.
34 Bar graph of Long-Term Debt to Total Capital.
1989 - 40%, 1990 - 51%, 1991 - 47%, 1992 - 43%,
1993 - 30%.
34 Bar graph of return on Equity (Excluding
Accounting Changes and Daily News). 1989 -
21.5%, 1990 - 18.3%, 1991 - 17.6%, 1992 - 15.3%,
1993 - 18.8%.
</TABLE>
<PAGE>
EXHIBIT 21
TRIBUNE COMPANY SUBSIDIARIES
----------------------------
<TABLE>
<CAPTION>
Jurisdiction of Other names under which
Incorporation subsidiary does business
--------------- ------------------------
PUBLISHING
- ----------
<S> <C> <C>
Tribune Publishing Company Delaware
Chicago Tribune Company Illinois Chicago Tribune; Exito!
Chicago Relay Service Association Illinois
Chicago Tribune Newspapers, Inc. Illinois Tribune Newspaper Network
Chicago Tribune Press Service, Inc. Illinois
Newspaper Readers Agency, Inc. Illinois
Tribune Direct Marketing, Inc. Delaware AmeriComm/Illinois
Precision Home Delivery, Inc. Delaware
Tribune Media Services, Inc. Delaware TV Log; TV Week
Sun-Sentinel Company Delaware Sun-Sentinel; Gold Coast
Labeling
Gold Coast Publications, Inc. Delaware Gold Coast Shopper; Porch
Plus; XS; Exito!; iCE; Vital
Signs
New River Center Maintenance Association, Florida
Inc.
Sentinel Communication Company Delaware The Orlando Sentinel; US
Express; Magic Magazine;
Sentinel Publishing; Sentinel
Direct; Tribune Interactive
Network Services
Neocomm, Inc. Delaware Porch Plus
Peninsula Newspapers, Inc. Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of Other names under which
Incorporation subsidiary does business
--------------- ------------------------
<S> <C> <C>
Peninsula Community Newspapers, Inc. Delaware
Times-Advocate Company Delaware Times-Advocate; GO Magazine;
The Californian; The
Californian Extra
Twin County Community Newspapers, Inc. Delaware The Enterprise; The Extraprize
The Daily Press, Inc. Delaware Daily Press
Hampton Roads Newspapers, Inc. Virginia
Tribune Properties, Inc. Delaware New River Center Management
Co.
Tribune New York Properties, Inc. Delaware
Tribune National Marketing Company Delaware Real Estate Information
Connection/REIC
Contemporary Books, Inc. Illinois
Congdon & Weed, Inc. New York
Wright Group Publishing, Inc. Delaware
Compton's Learning Company Delaware
Compton's NewMedia, Inc. California
Compton's Multimedia Publishing Group, Inc. Delaware
NewMedia Source, Inc. California
BROADCASTING AND ENTERTAINMENT
- ------------------------------
Tribune Broadcasting Company Delaware Tribune Plus; Tribune Plus
Corporate Sales; Tribune
Creative Services Group
Tribune Broadcasting News Network, Inc. Delaware Trib Net
ChicagoLand Television News, Inc. Delaware ChicagoLand Television/CLTV
ChicagoLand Microwave Licensee, Inc. Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of Other names under which
Incorporation subsidiary does business
--------------- ------------------------
<S> <C> <C>
Tribune Regional Programming, Inc. Delaware
Tribune New York Radio, Inc. Delaware WQCD-FM
Tribune Denver Radio, Inc. Delaware KOSI; KEZW
WGN Continental Broadcasting Company Delaware WGN-TV; WGN Radio; Tribune
Radio Networks;
Tribune Sacramento Radio, Inc. Delaware KYMX; KCTC
Tribune Entertainment Company Delaware
Magic T Music Publishing Company Delaware
Tribune Entertainment Production Company Delaware
Chicago River Production Company Delaware The Road
435 Production Company Delaware
Gossip Production Company Delaware
North Michigan Production Company Delaware
Fairfax Media, Incorporated Virginia
Tribune Productions, Inc. Delaware
Tribune (FN) Cable Ventures, Inc. Delaware
KWGN Inc. Delaware KWGN-TV
WGNO Inc. Delaware WGNO-TV
WGNX Inc. Delaware WGNX-TV
KTLA Inc. California KTLA-TV
GWB Productions Delaware
WPHL-TV, Inc. Pennsylvania WPHL
WPIX Inc. New York WPIX-TV; Tribune New York
Holdings
WLVI Inc. Delaware
Tribune California Properties, Inc. Delaware
Chicago National League Ball Club, Inc. Delaware Chicago Cubs
Diana-Quentin, Inc. Illinois
Rockford Professional Baseball Club, Inc. Florida Rockford Royals
Rock River Concessions, Inc. Florida
Orlando Baseball Club, Inc. Delaware Orlando Cubs
Orlando Baseball Concessions, Inc. Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of Other names under which
NEWSPRINT/FOREST PRODUCTS Incorporation subsidiary does business
- ------------------------- --------------- ------------------------
<S> <C> <C>
QUNO Corporation Quebec Scierie des Outardes
Marlhill Mines Limited Ontario
Manicouagan Power Company Quebec
Baie Comeau Company (1990) Ltd. Quebec
Quebec and Ontario Recycling Limited Ontario
907153 Ontario Inc. Ontario
907154 Ontario Inc. Ontario
</TABLE>
3/17/94
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (File No. 33-45793)
and on Form S-8 (File Nos. 2-90727, 33-21853, 33-26239 and 33-47547) of Tribune
Company of our report dated January 28, 1994 appearing on page 52 of the 1993
Annual Report to Stockholders which is incorporated by reference in this Annual
Report on Form 10-K. We also consent to the incorporation by reference of our
report on the Financial Statement Schedules, which appears on page 24 of this
Form 10-K.
Price Waterhouse
Chicago, Illinois
March 21, 1994
