- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 1995
Commission file 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 offices) (Zip Code)
Registrant's telephone number, including area code: (312) 222-9100
No Changes
(Former name, former address and former fiscal year, if changed since
last report)
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 / /
At October 31, 1995 there were 63,617,219 shares outstanding of the
Company's Common Stock (without par value).
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except per share data)
(Unaudited)
Third Quarter Ended Three Quarters Ended
Sept. 24, 1995 Sept. 25, 1994 Sept. 24, 1995 Sept. 25, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating revenues....................................... $567,040 $511,816 $1,691,622 $1,563,821
Operating expenses
Cost of sales (exclusive of items
shown below).......................................... 303,065 261,257 869,925 786,304
Selling, general and administrative...................... 150,172 149,730 431,981 414,741
Depreciation and amortization
of intangible assets................................... 30,680 28,900 90,048 83,460
---------- ---------- ----------- -----------
Total operating expenses................................. 483,917 439,887 1,391,954 1,284,505
---------- ---------- ----------- -----------
Operating profit......................................... 83,123 71,929 299,668 279,316
Equity in QUNO net income (loss)......................... 11,245 3,923 23,641 (5,836)
Dispositions of investments and subsidiary stock......... (7,500) - 7,772 39,381
Interest income.......................................... 5,079 5,179 13,563 14,968
Interest expense......................................... (5,651) (4,706) (14,534) (15,689)
----------- ----------- ------------- -------------
Income before income taxes............................... 86,296 76,325 330,110 312,140
Income taxes............................................. (30,396) (28,498) (124,120) (139,212)
---------- ---------- ------------ ------------
Net income............................................... 55,900 47,827 205,990 172,928
Preferred dividends, net of tax.......................... (4,622) (4,644) (13,865) (13,931)
----------- ----------- ------------- --------------
Net income attributable to common shares................. $ 51,278 $ 43,183 $ 192,125 $ 158,997
========== ========== ========== ==========
Net income per share:
Primary.................................................. $ .79 $ .64 $ 2.94 $ 2.36
========== ========== ========== ==========
Fully diluted............................................ $ .73 $ .60 $ 2.71 $ 2.18
========== ========== ========== ==========
Dividends per common share............................... $ .28 $ .26 $ .84 $ .78
========== ========== =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of dollars)
<TABLE>
<CAPTION>
September 24, 1995 December 25, 1994
------------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments................................... $ 36,910 $ 21,824
Accounts receivable, net.......................................... 315,250 313,316
Inventories....................................................... 53,162 33,488
Broadcast rights.................................................. 192,508 155,754
Prepaid expenses and other........................................ 18,798 19,162
------------ ------------
Total current assets.............................................. 616,628 543,544
Investment in and advances to QUNO................................ 330,179 265,818
Property, plant and equipment..................................... 1,344,971 1,316,715
Accumulated depreciation.......................................... (716,663) (675,684)
----------- -----------
Net properties.................................................... 628,308 641,031
Broadcast rights.................................................. 211,001 195,535
Intangible assets, net............................................ 841,684 834,596
Mortgage note receivable from affiliate........................... 82,687 83,314
Other investments................................................. 248,586 96,412
Other............................................................. 121,777 125,575
------------ ------------
Total assets...................................................... $3,080,850 $2,785,825
========== ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities
Contracts payable for broadcast rights............................ $ 170,680 $ 145,026
Deferred income .................................................. 47,236 35,766
Accounts payable, income taxes, accrued expenses and
other current liabilities....................................... 350,493 348,894
------------ ------------
Total current liabilities......................................... 568,409 529,686
Long-term debt.................................................... 494,087 411,200
Deferred income taxes............................................. 210,644 149,521
Contracts payable for broadcast rights............................ 250,668 218,102
Other............................................................. 142,188 144,336
------------ ------------
Total liabilities................................................. 1,665,996 1,452,845
Stockholders' investment
Series B convertible preferred stock.............................. 322,541 329,286
Common stock...................................................... 1,018 1,018
Additional paid-in capital........................................ 124,190 112,624
Retained earnings................................................. 1,885,327 1,743,417
Treasury stock (at cost).......................................... (799,410) (636,561)
Unearned compensation related to ESOP............................. (272,486) (274,101)
Cumulative translation adjustment................................. (18,319) (20,675)
Unrealized gain on investments.................................... 171,993 77,972
------------ -------------
Total stockholders' investment.................................... 1,414,854 1,332,980
----------- -----------
Total liabilities and stockholders' investment.................... $3,080,850 $2,785,825
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
<TABLE>
<CAPTION>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
Three Quarters Ended
September 24, 1995 September 25, 1994
------------------ ------------------
<S> <C> <C>
OPERATIONS
Net income................................................................... $205,990 $172,928
Adjustments to reconcile net income to net cash
provided by operations:
Equity in QUNO net (income) loss..................................... (23,641) 5,836
Dispositions of investments and subsidiary stock..................... (7,772) (39,381)
Depreciation and amortization of intangible assets................... 90,048 83,460
Other, net........................................................... 12,023 53,917
---------- ----------
Net cash provided by operations.............................................. 276,648 276,760
---------- ----------
INVESTMENTS
Capital expenditures......................................................... (72,355) (58,199)
Acquisitions and investments................................................. (86,673) (141,374)
Proceeds from dispositions of investments and subsidiary stock............... 32,729 94,936
Other, net................................................................... 5,953 (15,584)
---------- ---------
Net cash used for investments................................................ (120,346) (120,221)
--------- ---------
FINANCING
Proceeds from issuance of long-term debt..................................... 90,000 -
Repayments of long-term debt, net............................................ (9,102) (54,682)
Sale of common stock to employees, net....................................... 35,836 13,322
Purchase of treasury stock................................................... (187,903) (9,379)
Dividends.................................................................... (64,080) (61,693)
Redemption of preferred stock................................................ (5,967) -
--------- --------
Net cash used for financing.................................................. (141,216) (112,432)
--------- --------
Net increase in cash and short-term investments.............................. 15,086 44,107
Cash and short-term investments at the beginning of year..................... 21,824 18,524
--------- ---------
Cash and short-term investments at the end of quarter........................ $ 36,910 $ 62,631
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1:
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly the financial position of Tribune Company and its subsidiaries (the
"Company" or "Tribune") as of September 24, 1995 and the results of their
operations for the quarters and first three quarters ended September 24, 1995
and September 25, 1994 and cash flows for the first three quarters ended
September 24, 1995 and September 25, 1994. All adjustments reflected in the
accompanying unaudited condensed consolidated financial statements are of a
normal recurring nature. Results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year. Certain
prior year amounts have been reclassified to conform with the 1995 presentation.
Note 2:
Inventories consist of (in thousands):
Sept. 24, 1995 Dec. 25, 1994
-------------- -------------
Finished goods............................ $23,372 $13,893
Supplies and materials.................... 14,737 11,935
Newsprint (at LIFO)....................... 15,053 7,660
------- ------
Total inventories......................... $53,162 $33,488
======= =======
U.S. newsprint inventories are valued under the LIFO method and were less than
current cost by approximately $12.0 million at September 24, 1995 and $8.0
million at December 25, 1994.
Note 3:
Primary net income per share has been computed by dividing net income
attributable to common shares by the weighted average number of common shares
outstanding during the periods. Fully diluted net income per share has been
computed based on the assumption that all of the convertible preferred shares
have been converted into common shares. The numbers of common shares used for
computing primary and fully diluted net income per share were as follows (in
thousands):
Third Quarter Ended Three Quarters Ended
1995 1994 1995 1994
---- ---- ---- ----
Primary 64,865 67,448 65,285 67,304
Fully diluted 71,782 74,191 72,007 74,166
5
<PAGE>
Note 4:
On July 28, 1995, Tribune sold Times Advocate Company, a California
newspaper subsidiary, for approximately $16 million in cash. The sale resulted
in a pre-tax loss of $7.5 million ($4.5 million after taxes, or $.07 per share
on a primary basis) which was recorded in the third quarter. In March 1995,
Tribune sold shares of America Online common stock. The sale resulted in a
pre-tax gain of $15.3 million ($9.1 million after taxes, or $.14 per share on a
primary basis) which was recorded in the first quarter.
In May 1995, the Company reached an agreement to exchange its two
Sacramento radio stations for a Denver radio station and cash. The exchange,
which is subject to Federal Communications Commission approval, is expected to
be completed by the end of 1995.
On April 14, 1994, Tribune reduced its ownership holdings in QUNO
Corporation ("QUNO") by selling 5.5 million shares of QUNO common stock. With
this sale, Tribune reduced its ownership interest in QUNO from 59% to 34%. The
sale of the shares resulted a pre-tax gain of $39.4 million ($13 million after
taxes, or $.19 per share on a primary basis) which was recorded in the second
quarter of 1994. The Company retains 7.5 million shares of QUNO outstanding
common shares and also holds a U.S. $138.8 million (face value) subordinated
debenture, convertible into 11.7 million voting common shares of QUNO. In
September 1995, Tribune announced its intent to explore the possibility to
reduce or sell all of its holdings in QUNO.
Note 5:
In August 1995, the Company announced plans to acquire San Diego
television station KTTY, Ch. 69, for $70.5 million in cash. In September 1995,
the Company reached an agreement to acquire Houston television station KHTV, Ch.
39, for approximately $95 million in cash. Both of these acquisitions are
subject to regulatory approval and are expected to close in early 1996.
On January 1, 1995, Tribune acquired Relocation Consultants, Inc. for
approximately $8 million in cash. Relocation Consultants publishes free
apartment guides and provides apartment rental referral services to prospective
renters. On May 31, 1995, the Company acquired Jamestown Publishers, Inc., a
publisher and distributor of supplementary education materials for the
elementary and high school market, for approximately $6 million in cash. On
August 28, 1995, the Company acquired Everyday Learning Corporation, a publisher
of mathematics materials for grades kindergarten through 6 for approximately $25
million in cash. In the first three quarters of 1995, Tribune also invested
approximately $47 million for minority interests in several companies.
The Company has entered into an agreement to make a less than 50%
equity investment in Qwest Broadcasting, L.L.C., a new company formed to acquire
and operate television and radio stations. In November 1994, Qwest agreed to
acquire television stations in Atlanta (WATL) and New Orleans (WNOL) for
approximately $167 million. These acquisitions are pending approvals of the
Federal Communications Commission and other regulatory agencies and are expected
to close by the end of 1995. As part of this transaction, Qwest has agreed to
pay $150 million to WATL's current owner even if regulatory approvals have not
been received by December 14, 1995. The Company has guaranteed this payment. In
August 1995, Qwest exercised an option to acquire a Denver television station
(KDVR) for approximately $70 million. Qwest is currently negotiating the terms
of the KDVR acquisition.
6
<PAGE>
Tribune acquired The Wright Group on February 18, 1994, for
approximately $100 million in cash. The Wright Group is a publisher of
supplementary education materials for the elementary school market. On April 6,
1994, Tribune acquired Boston independent television station WLVI for
approximately $25 million in cash. On June 30, 1994, the Company acquired Farm
Journal Inc., publisher of The Farm Journal, for approximately $17.5 million in
cash.
The acquisitions are being accounted for by the purchase method, and
accordingly, the results of operations of the companies have been or will be
included in the consolidated financial statements since or from their respective
dates of acquisition.
Note 6:
Financial data for each of the Company's business segments is as
follows (in thousands):
<TABLE>
<CAPTION>
Third Quarter Ended Three Quarters Ended
Sept. 24, 1995 Sept. 25, 1994 Sept. 24, 1995 Sept. 25, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating revenues:
Publishing..................................... $321,490 $308,288 $1,000,810 $ 944,327
Broadcasting and Entertainment................. 217,031 179,986 614,373 550,019
New Media/Education............................ 28,519 23,542 76,439 69,475
-------- -------- ---------- -----------
Total operating revenues....................... $567,040 $511,816 $1,691,622 $1,563,821
======== ======== ========== ==========
Operating profit:
Publishing..................................... $ 52,186 $ 60,354 $ 197,982 $ 205,916
Broadcasting and Entertainment................. 35,058 23,699 116,806 94,321
New Media/Education............................ 3,215 (5,311) 6,721 (1,350)
Corporate expenses............................. (7,336) (6,813) (21,841) (19,571)
--------- --------- ---------- -----------
Total operating profit......................... $ 83,123 $ 71,929 $ 299,668 $ 279,316
======== ======== ========== ===========
</TABLE>
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion compares the results of operations of Tribune Company
and its subsidiaries (the "Company") for the third quarter and the first three
quarters of 1995 to the third quarter and the first three quarters of 1994.
SIGNIFICANT EVENTS AND TRENDS
The Major League Baseball players' contract expired on December 31,
1993. The Major League Baseball Players Association initiated a strike on August
12, 1994, and on August 28, 1994 the owners cancelled the remainder of the 1994
Major League Baseball season. In April 1995, the National Labor Relations Board
invalidated the owners' posted rules, and the players ended their strike. The
1995 baseball season began April 26, 1995. The strike shortened the 1995 season
by 18 games and continued to impact attendance throughout the season.
Negotiations for a new players' contract are continuing, and the Company cannot
predict the ultimate outcome of these negotiations. Third quarter 1994 results
were significantly impacted by the baseball strike as no games were played after
August 12, 1994.
The North American newsprint industry has increased newsprint prices
due to higher demand for newsprint in the U.S. and overseas. Three price
increases in 1994 and three in 1995 (March, May and September) are expected to
result in an approximate 45% increase in average newsprint transaction prices in
1995 over 1994. The price increases will increase newsprint expense at the
Company's newspapers by approximately $75 million in 1995. Several newsprint
producers have announced another price increase for the first quarter of 1996.
The Company expects to significantly offset the increases through cost controls,
a decrease in newsprint consumption and expected revenue increases. QUNO
Corporation, a Canadian newsprint manufacturer in which the Company has a 34%
equity investment at September 24, 1995, has and will continue to benefit from
the price increases.
RESULTS OF OPERATIONS
The Company's results of operations, when examined on a quarterly
basis, reflect the seasonality of advertising, which affects the results of both
publishing and broadcasting and entertainment. Second and fourth quarter
advertising revenues are typically higher than first and third quarter revenues.
Results for the 1995 and 1994 third quarters reflect this seasonal pattern.
8
<PAGE>
CONSOLIDATED
The Company's consolidated operating results for the third quarter and
first three quarters of 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
(Dollars in millions,
except per share amounts) Third Quarter Three Quarters
1995 1994 Change 1995 1994 Change
----- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $ 567 $ 512 + 11% $1,691 $1,564 + 8%
Operating profit 83 72 + 16% 300 279 + 7%
Equity in QUNO net income (loss) 11 4 + 187% 24 (6) *
Dispositions of investments and subsidiary stock (7) - * 8 39 - 80%
Net income 56 48 + 17% 206 173 + 19%
Before dispositions 60 48 + 26% 201 160 + 26%
Primary net income per share .79 .64 + 23% 2.94 2.36 + 25%
Before dispositions .86 .64 + 34% 2.87 2.17 + 32%
*Not meaningful
</TABLE>
On July 28, 1995, Tribune sold Times Advocate Company, a California
newspaper subsidiary, for approximately $16 million in cash. The sale resulted
in a pre-tax loss of $7.5 million and an after-tax loss of $4.5 million, or $.07
per share on a primary basis. In March 1995, the Company sold a portion of its
America Online ("AOL") common stock holdings and reduced its position in AOL to
approximately 5%. The sale resulted in a pre-tax gain of $15.3 million and an
after-tax gain of $9.1 million, or $.14 per share.
On April 14, 1994, the Company reduced its ownership holdings in QUNO
by selling 5.5 million shares of QUNO common stock. With this sale, the Company
reduced its equity ownership interest in QUNO from 59% to 34%. The sale of the
shares resulted in a pre-tax gain of $39.4 million and an after-tax gain of
$13.0 million, or $.19 per share on a primary basis.
Net Income Per Share -- Primary net income per share for the 1995 third quarter
was $.79, up 23% from $.64 in 1994. For the first three quarters of 1995,
primary net income per share rose 25% to $2.94 from $2.36 in 1994. Excluding the
non-recurring items discussed above, primary net income per share rose 34% to
$.86 in the third quarter of 1995 and 32% to $2.87 in the first three quarters
of 1995. The improvement was due to higher operating profits in broadcasting and
entertainment and new media/education and increased equity earnings from
Tribune's investment in QUNO. These gains were partially offset by lower
publishing profits as average newsprint prices rose substantially from 1994.
Operating Profit and Revenues -- The Company's consolidated operating revenues,
EBITDA (operating profit before depreciation and amortization) and operating
profit by business segment for the third quarter and first three quarters were
as follows:
9
<PAGE>
<TABLE>
<CAPTION>
Third Quarter Three Quarters
(Dollars in millions) 1995 1994 Change 1995 1994 Change
----- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues
Publishing $321 $308 + 4% $1,001 $ 944 + 6%
Broadcasting & Entertainment 217 180 + 21% 614 550 + 12%
New Media/Education 29 24 + 21% 76 70 + 10%
----- ------ ------- -------
Total operating revenues $567 $512 + 11% $1,691 $1,564 + 8%
EBITDA
Publishing $ 71 $ 78 - 9% $ 253 $ 257 - 2%
Broadcasting & Entertainment 44 33 + 36% 144 120 + 20%
New Media/Education 5 (4) + 252% 13 4 + 269%
Corporate expenses (7) (6) - 14% (21) (18) - 16%
------ ------ ------- -------
Total EBITDA $ 113 $ 101 + 13% $ 389 $ 363 + 7%
Operating profit
Publishing $ 52 $ 60 - 14% $ 198 $ 206 - 4%
Broadcasting & Entertainment 35 24 + 48% 117 94 + 24%
New Media/Education 3 (5) + 161% 7 (1) + 598%
Corporate expenses (7) (7) - 8% (22) (20) - 12%
------ ------ ------- -------
Total operating profit $ 83 $ 72 + 16% $ 300 $ 279 + 7%
</TABLE>
Consolidated operating revenues increased 11% in the third quarter to
$567 million from $512 million in 1994 due to strong advertising results and
because of the significant impact of the baseball strike on 1994 revenues.
Operating revenues increased 8% in the first nine months to $1.69 billion from
$1.56 billion in 1994 due to higher advertising revenues and acquisitions.
Excluding acquisitions and the sale of Times Advocate Company, operating
revenues were up 6% for the first three quarters of 1995.
Consolidated operating profit increased 16% in the 1995 third quarter
and 7% in the first three quarters, while EBITDA increased 13% in the third
quarter and 7% in the first three quarters. Publishing operating profit
decreased 14% in the 1995 third quarter and 4% for the first nine months.
Revenue increases of 4% in the 1995 third quarter and 6% in the first three
quarters were offset by increases in newsprint and ink expense of 38% in the
third quarter and 36% in the first three quarters. Broadcasting and
entertainment operating profit improved in both periods due primarily to gains
in television results and in the third quarter due to improved Chicago Cubs
results, partially offset by equity losses from Tribune's recent investment in
The WB Network. New media/education 1995 third quarter operating profit was $3
million, compared to a loss of $5 million in 1994. For the first three quarters,
new media/education operating profit was $7 million, compared to a 1994 loss of
$1 million. The improvement in both periods was due to gains at The Wright Group
and Contemporary Books and reduced losses at Compton's.
10
<PAGE>
Operating Expenses -- Consolidated operating expenses increased 10% for the
quarter and 8% for the first three quarters as follows:
<TABLE>
<CAPTION>
Third Quarter Three Quarters
(Dollars in millions) 1995 1994 Change 1995 1994 Change
----- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Cost of sales $303 $261 + 16% $ 869 $ 786 + 11%
Selling, general & administrative 150 150 - 432 415 + 4%
Depreciation & amortization
of intangible assets 31 29 + 6% 90 84 + 8%
------ ------ -------- --------
Total operating expenses $484 $440 + 10% $1,391 $1,285 + 8%
</TABLE>
Cost of sales increased 16%, or $42 million, in the 1995 third quarter
and 11%, or $83 million, in the first three quarters due primarily to increased
newsprint and compensation costs and additionally for the first three quarters,
as a result of the addition of The Wright Group, Everyday Learning, WLVI-Boston
and Farm Journal. Excluding the acquisitions from the first three quarters, cost
of sales increased 9%, or $67 million. Newsprint and ink expense increased $17
million, or 38%, in the 1995 third quarter, and $48 million, or 36% in the first
three quarters. Compensation expense included in cost of sales was up $19
million, or 21%, in the third quarter and $20 million, or 7%, in the first three
quarters due primarily to the impact of the baseball strike in 1994 on player
compensation and, for the first three quarters, the above mentioned
acquisitions. Excluding the acquisitions, compensation was up 6% in the first
three quarters. The increase in selling, general and administrative expenses in
the first three quarters of 1995 was primarily attributable to the new
businesses acquired. Excluding the new businesses from the first three quarters,
SG&A expenses increased $6 million, or 2%. The increase in depreciation and
amortization of intangible assets reflects the addition of the acquisitions and
capital expenditures made in 1994.
PUBLISHING
Operating Profit and Revenues -- The following table, which excludes Times
Advocate Company, presents publishing operating revenues, EBITDA and operating
profit for daily newspapers and other publications/services/development. The
latter category includes syndication of editorial products, advertising
placement services, alternative publications, alternate delivery services,
direct mail operations, online/electronic products and, for EBITDA and operating
profit, the Company's equity income and losses from its investments.
11
<PAGE>
<TABLE>
<CAPTION>
Third Quarter Three Quarters
(Dollars in millions) 1995 1994 Change 1995 1994 Change
----- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues
Daily newspapers $297 $284 + 5% $924 $873 + 6%
Other publications/
services/development 24 20 + 23% 68 58 + 18%
------ ------ ------ ------
Total operating revenues $321 $304 + 6% $992 $931 + 7%
EBITDA
Daily newspapers $ 71 $ 80 - 11% $255 $263 - 3%
Other publications/
services/development - (1) + 121% (1) (5) + 71%
------- ------ ------ ------
Total EBITDA $ 71 $ 79 - 9% $254 $258 - 2%
Operating profit
Daily newspapers $ 53 $ 63 - 15% $203 $215 - 5%
Other publications/
services/development (1) (2) + 35% (4) (7) + 36%
------ ------ ------ ------
Total operating profit $ 52 $ 61 - 15% $199 $208 - 4%
</TABLE>
Publishing operating revenues, excluding Times Advocate, were up 6% in
the 1995 third quarter to $321 million and were up 7% to $992 million in the
first three quarters, due principally to a 4% increase in advertising revenues
in the quarter and a 6% increase in the first three quarters. Including Times
Advocate, operating revenues were up 4% for the quarter and 6% for the year to
date.
Operating profit for the 1995 third quarter, excluding Times Advocate,
was down 15% to $52 million from $61 million in 1994 and for the first three
quarters declined 4% to $199 million from $208 million as gains in operating
revenues were more than offset by increased expenses resulting primarily from
significantly higher newsprint prices. Including Times Advocate, publishing
operating profit for the quarter was down 14% to $52 million from $60 million in
1994 and for the first three quarters declined 4% to $198 million from $206
million in 1994.
Publishing group revenues by classification, excluding Times Advocate,
were as follows:
<TABLE>
<CAPTION>
Third Quarter Three Quarters
(Dollars in millions) 1995 1994 Change 1995 1994 Change
----- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Advertising
Retail $109 $105 + 4% $334 $318 + 5%
General 26 28 - 8% 93 96 - 4%
Classified 104 96 + 8% 319 287 + 11%
---- ---- ---- ----
Total advertising 239 229 + 4% 746 701 + 6%
Circulation 59 58 + 2% 181 181 -
Other 23 17 + 37% 65 49 + 32%
---- ---- ---- ----
Total revenues $321 $304 + 6% $992 $931 + 7%
</TABLE>
12
<PAGE>
Advertising revenues for the 1995 third quarter and first nine months
increased largely due to rate increases. Retail advertising revenues increased
in both periods primarily due to improvements reported in the general
merchandise category in Chicago. Classified advertising revenues rose in both
periods, boosted by increased help wanted advertising in Chicago, Orlando and
Ft. Lauderdale and real estate advertising increases in Ft. Lauderdale.
Total advertising linage, excluding Times Advocate, decreased 2% for
the 1995 third quarter and 1% for the first three quarters. Part run advertising
linage was down 5% in the third quarter and 3% in the first three quarters due
primarily to decreases at Orlando in both retail and classified. The following
summary presents advertising linage for the third quarter and the first three
quarters, excluding Times Advocate.
<TABLE>
<CAPTION>
Third Quarter Three Quarters
(Inches in thousands) 1995 1994 Change 1995 1994 Change
----- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Full run
Retail 885 951 - 7% 2,813 2,947 - 5%
General 150 158 - 5% 500 494 + 1%
Classified 1,637 1,609 + 2% 4,925 4,900 + 1%
----- ----- ------ -------
Total full run 2,672 2,718 - 2% 8,238 8,341 - 1%
Part run 2,285 2,417 - 5% 7,219 7,417 - 3%
Preprint 1,978 1,968 + 1% 5,916 5,868 + 1%
----- ----- ------ ------
Total inches 6,935 7,103 - 2% 21,373 21,626 - 1%
</TABLE>
Circulation revenues, excluding Times Advocate, increased 2% in the
third quarter due mainly to improvements at Chicago and Ft. Lauderdale and
remained unchanged for the first nine months. Total average daily circulation,
excluding Times Advocate, was down slightly to 1,263,000 copies in the 1995
third quarter, and total average Sunday circulation was up slightly to 1,919,000
copies. For the first three quarters of 1995, total average daily circulation
increased 1% to 1,321,000 copies, while total average Sunday circulation was up
slightly to 1,975,000 copies.
Other revenues are derived from advertising placement services; the
syndication of columns, features, information and comics to newspapers;
commercial printing operations; direct mail services; and other
publishing-related activities. The increase in other revenues in the 1995 third
quarter and first three quarters resulted primarily from higher advertising
placement services and from the addition of Relocation Consultants, Inc.,
acquired in January 1995, which publishes free apartment guides and provides
apartment rental referral services to prospective renters.
Operating Expenses -- Publishing operating expenses, excluding Times Advocate,
increased 11%, or $26 million, in the third quarter of 1995. Newsprint and ink
expense rose $18 million, or 41%, as average newsprint selling prices increased
53%. Newsprint consumption declined 7% in the 1995 third quarter mainly due to
actions at the newspapers to reduce newsprint usage. Other expenses rose 4% in
the quarter. Publishing operating expenses increased 10%, or $70 million, in the
first nine months as newsprint and ink expense rose $48 million, or 37%.
Newsprint selling prices were up 44%, while consumption declined 4%. Other
expenses rose 4%. Including Times Advocate, operating expenses increased 9% for
both the quarter and the first three quarters.
13
<PAGE>
BROADCASTING AND ENTERTAINMENT
Operating Profit and Revenues -- The following table presents operating
revenues, EBITDA and operating profit for television, radio,
entertainment/Chicago Cubs and cable programming/development. Cable
programming/development includes CLTV News (a regional news cable channel) and,
for EBITDA and operating profit, the Company's equity losses from The WB Network
and TV Food Network.
<TABLE>
<CAPTION>
Third Quarter Three Quarters
(Dollars in millions) 1995 1994 Change 1995 1994 Change
----- ----- ------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues
Television $150 $135 + 12% $455 $421 + 8%
Radio 20 19 + 4% 66 46 + 42%
Entertainment/Chicago Cubs 45 25 + 81% 88 80 + 11%
Cable Programming/Development 2 1 + 50% 5 3 + 55%
------ ------ ------ ------
Total operating revenues $217 $180 + 21% $614 $550 + 12%
EBITDA
Television $ 46 $ 35 + 33% $155 $125 + 24%
Radio 2 3 - 19% 11 9 + 23%
Entertainment/Chicago Cubs 1 (3) - 148% (12) (6) - 95%
Cable Programming/Development (5) (2) - 120% (10) (8) - 21%
------ ------ ------ -----
Total EBITDA $ 44 $ 33 + 36% $144 $120 + 20%
Operating profit
Television $ 38 $ 28 + 38% $134 $106 + 26%
Radio 1 2 - 39% 9 7 + 26%
Entertainment/Chicago Cubs 1 (3) + 123% (15) (10) - 58%
Cable Programming/Development (5) (3) - 107% (11) (9) - 20%
------ ------ ------ ------
Total operating profit $ 35 $ 24 + 48% $117 $ 94 + 24%
</TABLE>
Broadcasting and entertainment third quarter 1995 operating revenues
increased 21% to $217 million from $180 million in 1994 and increased 12% in the
first three quarters to $614 million from $550 million in 1994. Television
revenues increased in both periods due to strong advertising revenues at most
stations. The first three quarters were also helped by the April 1994
acquisition of WLVI-Boston. Excluding WLVI, television revenues rose 7% in the
first three quarters. Radio revenues increased 42% in the first three quarters
due to the acquisition of Farm Journal Inc. Excluding Farm Journal, radio
revenues increased 7% in the first three quarters. Entertainment/Chicago Cubs
revenues increased 81% in the quarter, as third quarter 1994 operating revenues
were significantly impacted by the baseball strike that began August 12, 1994.
The strike also shortened the 1995 baseball season by 18 games and continued to
impact attendance throughout the season.
Broadcasting and entertainment operating profit for the third quarter was
up 48% to $35 million from $24 million in 1994. A 38% gain from television and
improved Chicago Cubs results were partially offset by equity losses from
Tribune's recent investment in The WB Network and lower radio results. For
14
<PAGE>
the first three quarters, operating profit for the broadcasting and
entertainment group increased 24% to $117 million from $94 million in 1994 due
mainly to a 26% gain in both television and radio operating profits.
Operating Expenses -- Operating expenses for the broadcasting and entertainment
group increased 16%, or $26 million, in the 1995 third quarter primarily due to
increased Chicago Cubs operating expenses, as more games were played in 1995
versus the 1994 strike-impacted season. Operating expenses for the first three
quarters increased 9%, or $42 million, due to the baseball strike impact on 1994
expenses and the acquisitions of WLVI-Boston and Farm Journal in 1994. Excluding
the acquisitions, operating expenses increased 5%, or $20 million, in the first
three quarters.
NEW MEDIA/EDUCATION
Operating Profit and Revenues -- The following table presents operating
revenues, EBITDA and operating profit for the new media/education segment.
<TABLE>
<CAPTION>
Third Quarter Three Quarters
(Dollars in millions) 1995 1994 Change 1995 1994 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $ 29 $ 24 + 21% $ 76 $ 70 + 10%
EBITDA 5 (4) + 252% 13 4 + 269%
Operating profit 3 (5) + 161% 7 (1) + 598%
</TABLE>
New media/education third quarter operating revenues were up 21% to $29
million from $24 million in 1994 due to gains at all business units. Third
quarter 1995 results include those of Everyday Learning Corporation, a publisher
of mathematics materials for grades kindergarten through 6, acquired on August
28, 1995. Excluding Everyday Learning, new media/education revenues increased
15% in the third quarter. For the first three quarters, revenues in the new
media/education group were up 10% to $76 million. Excluding The Wright Group,
acquired in February 1994, and Everyday Learning, operating revenues were down
9% in the first three quarters due to lower revenues at Compton's.
Third quarter operating profit for the new media/education group was
$3.2 million in 1995, compared with a loss of $5.3 million in 1994. For the
first three quarters, operating profit was $6.7 million, compared to a 1994 loss
of $1.4 million. The improvement in both periods was due to gains at The Wright
Group and Contemporary Books and reduced losses at Compton's.
Operating Expenses -- New media/education's operating expenses were down 12%, or
$3 million, in the third quarter of 1995, and decreased 2%, or $1 million in the
first three quarters. Excluding The Wright Group and Everyday Learning,
operating expenses for the first three quarters were down 14%, or $7 million.
The decrease in operating expenses for both periods was due to reduced expenses
at Compton's.
15
<PAGE>
EQUITY IN QUNO NET INCOME (LOSS)
The Company's share of QUNO's 1995 third quarter net income was $11
million, or $.17 per share, compared with $4 million, or $.06 per share, in
1994. For the first three quarters, the Company's share of QUNO's 1995 net
income was $24 million, or $.36 per share, while the Company's share of QUNO's
1994 net loss was $6 million, or $.09 per share. The improvement in both periods
was attributable to increased newsprint prices and higher sales volume.
OTHER
Interest expense for the 1995 third quarter increased 20% to $6 million
from $5 million last year due to higher debt levels. For the first three
quarters, interest expense declined 7% to $15 million from $16 million in 1994.
Interest income decreased 2% to $5 million in the 1995 third quarter and 9% to
$14 million in the first nine months. The Company's effective income tax rate,
excluding QUNO's equity income or loss and the 1994 gain on sale of QUNO common
stock, was 40.5% in the 1995 third quarter and first three quarters, compared to
39.4% and 40.5% in the 1994 third quarter and first three quarters,
respectively. Since QUNO's IPO in February 1993, the Company has not recorded
any U.S. taxes on its share of QUNO's cumulative net loss. At September 24,
1995, the Company's cumulative share of QUNO's net loss since the IPO was
approximately $1 million. U.S. income taxes must be recorded when the Company's
equity income from QUNO exceeds this $1 million. This is expected to occur in
the fourth quarter of 1995.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations for the first three quarters of both
1995 and 1994 was $277 million. Net cash used for investments was $120 million
for the first three quarters of 1995 and for the corresponding 1994 period. The
first nine months of 1995 included $17 million of proceeds from the sale of
shares of America Online common stock, $16 million of proceeds from the sale of
Times Advocate Company, acquisitions and investments of $87 million, including
the purchase of Everyday Learning in August 1995 for $25 million, and capital
expenditures of $72 million. Capital expenditures for fiscal year 1995 are
expected to total approximately $120 million and consist of a variety of
modernization and normal replacement projects as well as a press expansion
project at Ft. Lauderdale and the relocation and expansion of WPIX-New York's
news and production studios. The 1994 first three quarters included $95 million
of proceeds received by the Company from the sale of 5.5 million shares of QUNO
common stock, the acquisition of The Wright Group in February 1994 for
approximately $100 million in cash, the acquisition of WLVI-Boston in April 1994
for approximately $25 million in cash, the acquisition of Farm Journal Inc. in
June 1994 for approximately $17.5 million in cash and capital expenditures of
$58 million.
Net cash used for financing activities in 1995's first three quarters
was $141 million compared to $112 million in 1994. Net cash used for financing
activities in 1995 included $188 million of treasury stock repurchases, $90
million of proceeds from the issuance of Medium Term Notes, debt repayments of
$9 million and dividends of $64 million. In the first three quarters of 1995,
the Company acquired approximately 3.2 million shares of its common stock,
financed primarily with available cash. At September 24, 1995, the Company had
authorization to repurchase 1.7 million additional shares and expects to
continue to repurchase shares in 1995, financed with available cash or
commercial paper. For
16
<PAGE>
the first three quarters of 1995, dividends per common share increased 8% to
$.84 from $.78 in 1994. Net cash used for financing activities in 1994's first
three quarters included treasury stock repurchases of $9 million, debt
repayments of $55 million and dividends of $62 million.
In August 1995, the Company announced plans to acquire San Diego
television station KTTY, Ch. 69, for $70.5 million in cash. In September 1995,
the Company reached an agreement to acquire Houston television station KHTV, Ch.
39, for approximately $95 million in cash. Both of these acquisitions are
subject to regulatory approval and are expected to close in early 1996.
The Company expects to fund capital expenditures, dividends and other
operating requirements for the remainder of 1995 primarily with net cash
provided by operations.
The State of Florida Department of Environmental Protection ("DEP") and
the Company's subsidiary, Sentinel Communications Company, have entered into a
consent decree under which the Sentinel will assist the DEP in remediating
certain trichloroethene groundwater contamination in downtown Orlando, Florida.
The Company currently estimates that the Sentinel's share of the remediation
costs will not be material and has previously provided for the costs in the
Company's financial statements.
17
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information.
The computation of the ratios of earnings to fixed charges, filed
herewith as Exhibit 12, is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.19 - 1995 Nonemployee Director Stock Option Plan.
11 - Statements of computation of primary and fully diluted
net income per share.
12 - Computation of ratios of earnings to fixed charges.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed in the third quarter of 1995.
18
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIBUNE COMPANY
(Registrant)
Date: November 7, 1995 R. Mark Mallory
Vice President and Controller
(on behalf of the Registrant
and as Chief Accounting Officer)
19
EXHIBIT 10.19
TRIBUNE COMPANY
1995 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE I
GENERAL
1.1 Purpose. Tribune Company, a Delaware corporation (the "Company"), hereby
adopts this 1995 Nonemployee Director Stock Option Plan (the "Plan"). The
purpose of the Plan is to increase the stock ownership of nonemployee directors,
to further align their interests with those of the Company's other stockholders
and to foster and promote the long-term financial success of the Company by
attracting and retaining outstanding nonemployee directors by enabling them to
participate in the Company's growth through automatic, nondiscretionary grants
of Options (as defined in Article II).
1.2 Participation. Only directors of the Company who at the time a grant is made
meet the following criteria ("Directors") shall receive grants under the Plan:
(a) the director is not, and has not been for at least three years, an employee
or officer of the Company or any subsidiary of the Company and (b) the director
is a "disinterested person" as such term is defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act") or any similar
rule which may subsequently be in effect ("Rule 16b-3").
1.3 Shares Subject to The Plan. Shares of stock covered by grants under the Plan
may be in whole or in part authorized and unissued or treasury shares of the
Company's common stock or such other shares as may be substituted pursuant to
Section 3.2 ("Common Stock"). The maximum number of shares of Common Stock which
may be issued for all purposes under the Plan shall be 100,000 (subject to
adjustment pursuant to Section 3.2). Any shares of Common Stock subject to an
Option which for any reason is cancelled or terminated, without having been
exercised, shall again be available for grants under the Plan.
ARTICLE II
STOCK OPTIONS
2.1 Grant of Stock Options. Effective on the date of each annual meeting of the
stockholders of the Company at which Directors are elected ("Annual Meeting")
commencing with the Annual Meeting in 1995, each Director in office on
adjournment of said meeting will automatically be awarded a non-qualified stock
option (an "Option") under the Plan to purchase 1,000 (subject to adjustment
pursuant to Section 3.2) shares of Common Stock. The Options are not intended to
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended.
-1-
<PAGE>
2.2 Stock Option Certificates. The grant of an Option shall be evidenced by
a Notice of Grant and Terms Sheet executed by an officer of the Company.
2.3 Option Price. The purchase price of Common Stock under each Option (the
"Option Price") granted shall be the Fair Market Value of the Common Stock as of
the date of the Annual Meeting.
2.4 Exercise and Term of Options.
(a) Options may be exercised by the delivery of written notice of
exercise and the Option Price for the shares to be purchased to the Corporate
Secretary of the Company. The Option Price shall be paid in cash (including
check, bank draft or money order) or, unless in the opinion of counsel to the
Company to do so may result in a possible violation of law, by delivery of
Common Stock already owned by the Director for at least six months valued at
Fair Market Value on the date of exercise. As soon as practicable after receipt
of each notice and full payment, the Company shall deliver to the Director a
certificate or certificates representing the acquired shares of Common Stock.
(b) Each Option shall become exercisable beginning six months and one
day after the date it is granted and may be exercised at any time until (subject
to Section 3.1) the first to occur of the tenth anniversary of the date such
Option was granted or the third anniversary of the date the Director ceases to
be a Director (whether by death, disability, retirement or resignation). In the
event of the death of a former Director prior to the exercise of any Options
which were then exercisable, such Options may be exercised as provided in
Section 3.1 until the third anniversary of the date the former Director ceased
to be a Director; provided, that Options not exercisable on the day a person
ceases to be a Director for any reason shall be cancelled.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Nontransferability; Beneficiaries. No Option granted under the Plan shall be
transferable by the Director otherwise than by will or, if the Director dies
intestate, by the laws of descent and distribution. All grants shall be
exercisable during the Director's lifetime only by the Director or his personal
representative. Any transfer contrary to this Section 3.1 will make the Option
null and void. In the event of a Director's death prior to the exercise of any
Options which were then exercisable, such Options may be exercised by the
Director's beneficiary, designated as provided below, or, in the absence of any
such designation, the Director's estate for the period indicated in Section
2.4(b) above. Each Director may name, from time to time, any beneficiary or
beneficiaries (who may be named contingently or successively) who may exercise
such Options and receive such certificates. Each designation will revoke all
prior designations by such Director, and will be effective only when filed by
the Director during the Director's lifetime with the Corporate Secretary.
-2-
<PAGE>
3.2 Adjustments Upon Certain Changes. If any of the events described in Sections
4.4(a) or (b) of the Company's 1992 Long-Term Incentive Plan shall occur, the
number of shares authorized by the Plan, the number of shares covered by
Outstanding Options and the Option Prices specified therein shall be
automatically adjusted on the same basis to give the proper effect to such
change so as to prevent the dilution or enlargement of rights under Options. In
the event fractional shares would otherwise result from any such adjustment, the
number of shares so authorized and covered and the Option Prices thereof shall
be further adjusted so as to eliminate such fractions.
3.3 Amendment, Suspension and Termination of Plan.
(a) The Board of Directors may suspend or terminate the Plan or any
portion thereof at any time and may amend it from time to time in such respects
as the Board of Directors may deem advisable in order that any grants thereunder
shall conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or the Directors to enjoy the benefits of
any change in applicable laws or regulations, or in any other respect the Board
of Directors may deem to be in the best interests of the Company; provided,
however, that no such amendment shall, without stockholder approval to the
extent required by law, agreement or the rules of any exchange upon which the
Common Stock is listed (a) except as provided in Section 3.2, materially
increase the number of shares of Common Stock which may be issued under the
Plan, (b) materially modify the requirements as to eligibility for participation
in the Plan, or (c) materially increase the benefits accruing to Directors under
the Plan. No such amendment, suspension, or termination shall (x) impair the
rights of Directors under any outstanding Options without the consent of the
Directors affected thereby or (y) make any change that would disqualify the
Plan, or any other plan of the Company intended to be so qualified, from the
exemption provided by Rule 16b-3.
(b) The provisions of Sections 1.2, 2.1, 2.3 and 3.4 may not be amended
more than once every six months other than to comply with changes in the
Internal Revenue Code of 1986, the Employee Retirement Income Security Act of
1974, and the rules thereunder.
3.4 Definition of Fair Market Value. The term "Fair Market Value" unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder shall mean, as of any date, the closing price of the Common
Stock as reported on the New York Stock Exchange Composite Transactions List (or
such other consolidated transaction reporting system on which the Common Stock
is primarily trade) for such day, or if the Common Stock was not traded on such
day, then the next preceding day on which the stock was traded, all as reported
by such source as the Board of Directors may select. If the Common Stock is not
readily tradeable on a national securities exchange or other market system, its
Fair Market Value shall be set under procedures established by the Board of
Directors on the advice of an investment advisor.
3.5 Plan Not Exclusive. The adoption of the Plan shall not preclude the
adoption by appropriate means of any other stock option or other incentive plan
for Directors.
-3-
<PAGE>
3.6 Listing, Registration and Legal Compliance. Each Option shall be subject to
the requirement that if at any time counsel to the Company shall determine that
the listing, registration or qualification thereof or of any shares of Common
Stock or other property subject thereto upon any securities exchange or under
any foreign, federal or state securities or other law or regulation, or the
consent or approval of any governmental body or the taking of any other action
to comply with or otherwise with respect to any such law or regulation, is
necessary or desirable as a condition to or in connection with the grant of such
Option or the issue, delivery or purchase of shares of Common Stock or other
property thereunder, no such Option may be exercised unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained free of any conditions not acceptable to the Company and
the holder of the Option will supply the Company with such certificates,
representations and information as the Company shall request and shall otherwise
cooperate with the Company in effecting or obtaining such listing, registration,
qualification, consent, approval or other action. The Company may at any time
impose any limitations upon the exercise, of any Option which, in the opinion of
the Board of Directors, are necessary or desirable in order to cause the Plan or
any other plan of the Company to comply with Rule 16b-3 and preserve the
disinterestedness of the directors under Rule 16b-3. If the Company, as part of
an offering of securities or otherwise, finds it desirable because of foreign,
federal or state legal or regulatory requirements to reduce the period during
which Options may be exercised, the Board of Directors may, without the holders'
consent, so reduce such period on not less than 15 days' written notice to the
holders thereof.
3.7 Rights of Directors. Nothing in the Plan shall confer upon any Director any
right to serve as a Director for a period of time or to continue his present or
any other rate of compensation.
3.8 Requirements of Law; Governing Law. The granting of Options and the issuance
of shares of Common Stock shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Delaware.
3.9 Change in Control. In the event of a Change in Control of the Company (as
defined in Section 12.2 of the Company's 1992 Long-Term Incentive Plan), all
outstanding Options granted prior to the Change in Control shall be fully vested
and immediately exercisable in their entirety.
3.10 Effective Date. The Plan shall, subject to the approval of the holders of a
majority of the votes of all shares present, or represented, and entitled to be
cast on the matter at the 1995 Annual Meeting, be deemed effective as of such
Annual Meeting. No grants shall be made hereunder after May 31, 2005.
sjg/cc
3/8/95
-4-
<TABLE>
<CAPTION>
Exhibit 11
TRIBUNE COMPANY
STATEMENTS OF COMPUTATION OF PRIMARY AND FULLY DILUTED
NET INCOME PER SHARE (UNAUDITED)
(In thousands, except per share amounts)
Third Quarter Ended Three Quarters Ended
PRIMARY Sept. 24, 1995 Sept. 25, 1994 Sept. 24, 1995 Sept. 25, 1994
- --------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net income $ 55,900 $ 47,827 $ 205,990 $ 172,928
Preferred dividends, net of tax (4,622) (4,644) (13,865) (13,931)
-------- --------- --------- ---------
Net income attributable to common shares $ 51,278 $ 43,183 $ 192,125 $ 158,997
-------- --------- --------- ---------
Weighted average common shares outstanding 64,865 67,448 65,285 67,304
-------- --------- --------- ---------
Primary net income per share $ .79 $ .64 $ 2.94 $ 2.36
======== ======== ======== =========
FULLY DILUTED
- --------------
Net income $ 55,900 $ 47,827 $ 205,990 $ 172,928
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax (2,772) (2,978) (8,324) (8,936)
Assumed elimination of tax benefit on certain ESOP
preferred dividends (828) (704) (2,490) (2,113)
-------- --------- --------- ---------
Adjusted net income $ 52,300 $ 44,145 $ 195,176 $ 161,879
-------- --------- --------- ---------
Weighted average common shares outstanding 64,865 67,448 65,285 67,304
Assumed conversion of preferred shares into common shares 5,887 6,012 5,887 6,012
Assumed exercise of stock options, net of common
shares assumed repurchased with the proceeds 1,030 731 835 850
-------- --------- --------- ---------
Adjusted weighted average common shares outstanding 71,782 74,191 72,007 74,166
-------- --------- --------- ---------
Fully diluted net income per share $ .73 $ .60 $ 2.71 $ 2.18
========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
Exhibit 12
TRIBUNE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
Three
Quarters Fiscal Year Ended December
Ended -----------------------------------------------------
9/24/95 1994 1993 1992 1991 1990
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) before cumulative effects
of accounting changes $ 205,990 $ 242,047 $ 188,606 $ 136,625 $ 141,981 $ (63,533)
Add:
Income tax expense (benefit) 124,120 186,668 143,821 96,266 99,894 (30,695)
(Income) losses on equity investments (15,337) 16,176 20,212 1,903 1,107 2,285
--------- -------- -------- -------- -------- --------
Sub-total 314,773 444,891 352,639 234,794 242,982 (91,943)
--------- -------- -------- -------- -------- --------
Fixed charge adjustments
Add:
Interest expense 14,534 20,585 24,660 49,254 63,083 53,576
Amortization of capitalized interest 1,659 2,362 2,392 5,304 5,258 4,850
Interest component of rental expense (A) 7,452 8,236 8,732 9,329 9,047 14,467
--------- -------- -------- -------- -------- --------
Earnings (loss), as adjusted $ 338,418 $ 476,074 $ 388,423 $ 298,681 $ 320,370 $ (19,050)
========= ======== ======== ======== ======== ========
Fixed charges:
Interest expense $ 14,534 $ 20,585 $ 24,660 $ 49,254 $ 63,083 $ 53,576
Interest capitalized 388 - 1,099 3,445 1,976 8,652
Interest component of rental expense (A) 7,452 8,236 8,732 9,329 9,047 14,467
Interest related to guaranteed ESOP debt (B) 16,534 24,017 25,742 27,019 27,500 27,757
--------- -------- -------- -------- -------- --------
Total fixed charges $ 38,908 $ 52,838 $ 60,233 $ 89,047 $ 101,606 $ 104,452
========= ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 8.7 9.0 6.4 3.4 3.2 (C)
========= ======== ======== ======== ======== ========
(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.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the first
three quarters ended September 24, 1995 consolidated financial statements of
income and consolidated statements of financial position and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-26-1995
<PERIOD-END> SEP-24-1995
<CASH> 14,712
<SECURITIES> 22,198
<RECEIVABLES> 351,911
<ALLOWANCES> 36,661
<INVENTORY> 53,162
<CURRENT-ASSETS> 616,628
<PP&E> 1,344,971
<DEPRECIATION> 716,663
<TOTAL-ASSETS> 3,080,850
<CURRENT-LIABILITIES> 568,409
<BONDS> 0
<COMMON> 1,018
0
322,541
<OTHER-SE> 1,091,295
<TOTAL-LIABILITY-AND-EQUITY> 3,080,850
<SALES> 0
<TOTAL-REVENUES> 1,691,622
<CGS> 0
<TOTAL-COSTS> 869,925
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,534
<INCOME-PRETAX> 330,110
<INCOME-TAX> 124,120
<INCOME-CONTINUING> 205,990
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 205,990
<EPS-PRIMARY> 2.94
<EPS-DILUTED> 2.71
</TABLE>
