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 March 26, 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 May 5, 1995 there were 65,128,625 shares outstanding of the
Company's Common Stock (without par value).
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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)
First Quarter Ended
--------------------------------
March 26, 1995 March 27,1994
-------------- -------------
<S> <C> <C>
Operating revenues....................................... $532,790 $480,718
Operating expenses
Cost of sales (exclusive of
items shown below)..................................... 270,842 240,566
Selling, general and administrative...................... 139,814 129,388
Depreciation and amortization of intangible assets....... 30,100 26,162
--------- ---------
Total operating expenses................................. 440,756 396,116
--------- ---------
Operating profit......................................... 92,034 84,602
Equity in QUNO net income (loss)......................... 4,081 (9,123)
Gain on sale of America Online stock..................... 15,272 -
Interest income.......................................... 4,321 4,622
Interest expense......................................... (4,263) (5,848)
--------- ---------
Income before income taxes............................... 111,445 74,253
Income taxes............................................. (43,482) (34,184)
Net income............................................... 67,963 40,069
Preferred dividends, net of tax.......................... (4,621) (4,644)
--------- ---------
Net income attributable to common shares................. $ 63,342 $ 35,425
========= =========
Net income per share:
Primary $ .96 $ .53
========= =========
Fully diluted $ .89 $ .49
========= =========
Dividends per common share............................... $ .28 $ .26
========= =========
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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<TABLE>
<CAPTION> TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of dollars)
March 26, 1995 December 25, 1994
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments..................... $ 67,049 $ 21,824
Accounts receivable, net............................ 283,690 313,316
Broadcast rights.................................... 185,380 155,754
Inventories, prepaid expenses and other............. 63,142 52,650
---------- ----------
Total current assets................................ 599,261 543,544
Investment in and advances to QUNO.................. 265,176 265,818
Property, plant and equipment....................... 1,335,803 1,316,715
Accumulated depreciation............................ (693,142) (675,684)
Net properties...................................... 642,661 641,031
---------- ----------
Broadcast rights.................................... 175,514 195,535
Intangible assets, net.............................. 829,556 834,596
Mortgage note receivable from affiliate............. 82,536 83,314
Other............................................... 236,505 221,987
---------- ----------
Total assets........................................ $2,831,209 $2,785,825
========== ==========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities
Contracts payable for broadcast rights.............. $ 176,516 $ 145,026
Deferred income..................................... 61,090 35,766
Income taxes........................................ 50,847 19,291
Accounts payable, accrued expenses and
other current liabilities......................... 331,150 329,603
---------- ----------
Total current liabilities........................... 619,603 529,686
Long-term debt...................................... 406,185 411,200
Deferred income taxes............................... 156,091 149,521
Contracts payable for broadcast rights.............. 203,293 218,102
Other............................................... 146,469 144,336
---------- ----------
Total liabilities................................... 1,531,641 1,452,845
Stockholders' investment
Series B convertible preferred stock................ 322,917 329,286
Common stock........................................ 1,018 1,018
Additional paid-in capital.......................... 112,203 112,624
Retained earnings................................... 1,793,001 1,743,417
Treasury stock (at cost)............................ (720,388) (636,561)
Unearned compensation related to ESOP............... (274,101) (274,101)
Cumulative translation adjustment................... (20,757) (20,675)
Unrealized gain on investments...................... 85,675 77,972
---------- ----------
Total stockholders' investment...................... 1,299,568 1,332,980
---------- ----------
Total liabilities and stockholders' investment...... $2,831,209 $2,785,825
========== ==========
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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<TABLE>
<CAPTION> TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
First Quarter Ended
-----------------------------
March 26, 1995 March 27,1994
-------------- -------------
<S> <C> <C>
Operations
Net income.................................................... $ 67,963 $ 40,069
Adjustments to reconcile net income to net cash
provided by operations:
Equity in QUNO net (income) loss...................... (4,081) 9,123
Gain on sale of America Online stock.................. (15,272) -
Depreciation and amortization of intangible
assets.............................................. 30,100 26,162
Other, net............................................ 91,295 73,425
--------- ---------
Net cash provided by operations............................... 170,005 148,779
--------- ---------
Investments
Capital expenditures.......................................... (21,417) (18,068)
Acquisitions.................................................. (8,000) (93,927)
Proceeds from sale of America Online stock.................... 16,729 -
Other, net.................................................... 2,118 (7,619)
Net cash used for investments................................. (10,570) (119,614)
--------- ---------
Financing
Repayments of long-term debt.................................. (5,303) (17,260)
Sale of common stock to employees, net........................ 4,243 4,536
Purchase of treasury stock.................................... (89,140) -
Dividends..................................................... (18,379) (17,424)
Redemption of preferred stock................................. (5,631) -
--------- ---------
Net cash used for financing................................... (114,210) (30,148)
--------- ---------
Net increase (decrease) in cash and short-term investments.... 45,225 (983)
--------- ---------
Cash and short-term investments at the beginning of year...... 21,824 18,524
--------- ---------
Cash and short-term investments at the end of quarter......... $ 67,049 $ 17,541
========= =========
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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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 March 26, 1995 and the results of their operations and their
cash flows for the quarters ended March 26, 1995 and March 27, 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:
- ------
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):
First Quarter Ended
1995 1994
------ ------
Primary 65,981 67,085
Fully diluted 72,497 74,287
Note 3:
- ------
In March 1995, Tribune sold 200,000 shares of America Online common stock. The
sale resulted in an after-tax gain of $9.1 million, or $.14 per share. This
sale reduced the Company's ownership interest in America Online from
approximately 8% to 6%.
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 in an after-tax gain of approximately $13 million, or $.19 per
share, which was recorded in the second quarter of 1994. The Company retains
7.5 million shares of QUNO's 22 million common shares outstanding and also holds
a U.S. $138.8 million (face value) subordinated debenture, convertible into 11.7
million voting common shares of QUNO.
5
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Note 4:
- ------
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. Tribune acquired The Wright Group on February 18, 1994, for
approximately $100 million in cash. The Wright Group is the leading publisher of
supplemental educational materials for the elementary school market. On April
6, 1994, Tribune acquired Boston independent television station WLVI (Ch. 56)
for approximately $25 million in cash. On June 30, 1994, the Company acquired
Farm Journal Inc., publisher of The Farm Journal, a leading farm magazine, for
approximately $17.5 million in cash. These acquisitions were accounted for as
purchases, and accordingly, the results of operations of the companies have been
included in the consolidated financial statements since their respective dates
of acquisition.
Note 5:
- ------
Financial data for each of the Company's business segments is as follows (in
thousands):
<TABLE>
<CAPTION> First Quarter Ended
-------------------------------
March 26, 1995 March 27, 1994
-------------- --------------
<S> <C> <C>
Operating revenues:
Publishing.............................................. $335,961 $314,886
Broadcasting and Entertainment.......................... 176,432 146,948
New Media/Education..................................... 20,397 18,884
-------- --------
Total operating revenues................................ $532,790 $480,718
======== ========
Operating profit:
Publishing.............................................. $ 70,805 $ 69,237
Broadcasting and Entertainment.......................... 28,724 20,375
New Media/Education..................................... (356) 1,330
Corporate expenses...................................... (7,139) (6,340)
--------- ---------
Total operating profit.................................. $ 92,034 $ 84,602
========= =========
</TABLE>
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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 first quarter of 1995 to the first
quarter 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. Eighteen games were lost from the
1995 season. Negotiations for the new players' contract are continuing. The
strike had no impact in the first quarter of 1995 as no games were scheduled to
be played. The strike and the resulting shortened season will impact the
Company's Chicago Cubs baseball operations, primarily in the second quarter.
However, due to strong advertiser support, contingency plans and cost controls
at the broadcasting group, the strike is expected to have little overall impact
on 1995 broadcasting and entertainment group results. The Company cannot
predict the ultimate outcome of the negotiations.
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 two in 1995 (March and May) will result in an approximate 40% increase
in average newsprint transaction prices in 1995 over 1994. The first quarter of
1995 saw a year-over-year increase of 30%, and the second quarter increase will
be approximately 50%. The price increases will increase newsprint expense at
the Company's newspapers by approximately $70 million in 1995. The Company
expects to offset the increase, at least in part, through cost controls and
expected revenue increases. QUNO Corporation, a Canadian newsprint manufacturer
in which the Company has a 34% equity investment, will benefit from the price
increases in 1995.
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 first quarter reflect this seasonal pattern.
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CONSOLIDATED
The Company's consolidated operating results for the first quarters of 1995
and 1994 and the percentage change from 1994 were as follows:
(Dollars in millions, First Quarter
except per share amounts) 1995 1994 Change
------ ------ ------
Operating revenues $533 $480 +11%
Operating profit 92 84 + 9%
Equity in QUNO net loss 4 (9) *
Gain on sale of AOL stock 15 - *
Net income 68 40 +70%
Primary net income per share .96 .53 +81%
*Not meaningful
In March 1995, the Company sold 200,000 shares of America Online (AOL)
common stock. With this sale, Tribune reduced its position in AOL to 6%. The
sale resulted in an after-tax gain of approximately $9.1 million, or $.14 per
share on a primary basis.
Net Income Per Share -- Primary net income per share for the 1995 first quarter
rose 81% to $.96 from $.53 in 1994. Excluding the AOL gain, primary net income
per share rose 55% to $.82. This increase was due to improved operating results
from the Company's newspapers and television and radio stations and equity
earnings from its investment in QUNO.
Operating Profit and Revenues -- The Company's consolidated operating revenues,
EBITDA (earnings before equity in QUNO net income/loss, gain on AOL stock sale,
interest, taxes, depreciation and amortization) and operating profit by business
segment for the first quarter were as follows:
First Quarter
(Dollars in millions) 1995 1994 Change
------ ------ ------
Operating revenues
Publishing $336 $315 + 7%
Broadcasting & Entertainment 177 147 + 20%
New Media/Education 20 18 + 8%
------ ------
Total operating revenues $533 $480 + 11%
EBITDA
Publishing $ 89 $ 86 + 4%
Broadcasting & Entertainment 38 28 + 33%
New Media/Education 2 3 - 27%
Corporate expenses (7) (6) - 16%
------ ------
Total EBITDA $122 $111 + 10%
Operating profit
Publishing $ 71 $ 69 + 2%
Broadcasting & Entertainment 28 20 + 41%
New Media/Education - 1 -127%
Corporate expenses (7) (6) - 13%
------ ------
Total operating profit $ 92 $ 84 + 9%
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As shown above, consolidated operating revenues for the 1995 first quarter
rose 11% to $533 million from $480 million due to continued strength in
advertising and the inclusion in 1995 of recent acquisitions -- The Wright Group
in February 1994, Boston television station WLVI in April 1994 and Farm Journal
Inc. in June 1994. Excluding the acquisitions, revenues were up 6%.
Consolidated operating profit increased 9% in the 1995 first quarter and
EBITDA increased 10%, primarily due to increased revenues. Publishing operating
profit increased 2% due primarily to higher advertising revenues, which were
mostly offset by a 30% increase in newsprint and ink expense. Broadcasting and
entertainment operating profit improved 41% in the first quarter due primarily
to increased television revenues and strong results in radio. Radio includes
Farm Journal which was acquired June 30, 1994. New media/education incurred a
first quarter 1995 loss of $.3 million compared to an operating profit of $1.3
million in 1994.
Operating Expenses -- Consolidated operating expenses increased 11% for the
quarter as follows:
First Quarter
(Dollars in millions) 1995 1994 Change
------ ------ ------
Cost of sales $271 $241 +13%
Selling, general & administrative 140 129 + 8%
Depreciation & amortization
of intangible assets 30 26 +15%
------ ------
Total operating expenses $441 $396 +11%
Cost of sales increased 13%, or $30 million, in the 1995 first quarter due
to higher newsprint and ink expense and the addition of The Wright Group,
WLVI-TV Boston and Farm Journal. Excluding expenses of the three acquisitions,
cost of sales increased 8% or $19 million, in the first quarter. Newsprint and
ink expense increased $13 million, or 30%. The increase in selling, general and
administrative expenses in 1995 was primarily attributable to the new businesses
acquired and increased sales costs. Excluding the three new businesses, SG&A
expenses increased $3 million, or 3%, as sales costs rose $3 million. The
increase in depreciation and amortization of intangible assets reflects the
addition of the three acquisitions and capital expenditures made in 1994.
PUBLISHING
Operating Profit and Revenues -- The following table shows publishing operating
revenues, EBITDA and operating profit split between 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 losses from its
investment in Picture Network International.
9
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First Quarter
(Dollars in millions) 1995 1994 Change
------ ------ ------
Operating revenues
Daily newspapers $315 $296 + 6%
Other publications/services/development 21 19 +12%
------ ------
Total operating revenues $336 $315 + 7%
EBITDA
Daily newspapers $ 90 $ 87 + 4%
Other publications/services/development (1) (1) +32%
------ ------
Total EBITDA $ 89 $ 86 + 4%
Operating profit
Daily newspapers $ 73 $ 71 + 2%
Other publications/services/development (2) (2) +21%
------ ------
Total operating profit $ 71 $ 69 + 2%
Publishing operating revenues for the quarter increased 7% to $336 million
from $315 million in 1994 due mainly to an 8% increase in newspaper advertising
revenues. Operating profit for the 1995 first quarter was $71 million, up 2%
from $69 million in 1994 as the revenue increases were mostly offset by a 30%
increase in newsprint and ink expense. Daily newspapers operating margins
decreased to 23.1% from 24.2% in 1994.
Publishing group revenues by classification for the first quarter were as
follows:
First Quarter
(Dollars in millions) 1995 1994 Change
------ ------ ------
Advertising
Retail $110 $105 + 5%
General 34 35 - 4%
Classified 109 95 +15%
------ ------
Total advertising 253 235 + 8%
Circulation 62 63 - 1%
Other 21 17 +20%
------ ------
Total revenues $336 $315 + 7%
Retail advertising revenues for the 1995 quarter increased mainly due to
improvements reported in the furniture, electronic and department store
categories in Chicago, and the electronics, health care and apparel store
categories in Fort Lauderdale. General advertising revenues for the quarter
decreased due principally to softening in the transportation, packaged goods and
financial categories in Chicago. Classified advertising revenues for the
quarter rose at all newspapers mainly due to increased help wanted, real estate
and automotive advertising.
Advertising linage for 1995 increased in most categories due to the
continued strong advertising climate. Preprint advertising linage decreased
mainly due to lower retail part run preprints. The following summary presents
advertising linage for the first quarter:
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First Quarter
(Inches in thousands) 1995 1994 Change
------ ------ ------
Full run
Retail 1,073 1,078 -
General 186 179 + 4%
Classified 1,753 1,731 + 1%
------ ------
Total full run 3,012 2,988 + 1%
Part run 2,591 2,548 + 2%
Preprint 2,251 2,299 - 2%
------ ------
Total inches 7,854 7,835 -
Circulation revenues were down 1% in the 1995 first quarter due mainly to
discount programs in Chicago and Orlando. Total average daily circulation
increased 1% to 1,428,000 copies in the first quarter, while total average
Sunday circulation was up slightly.
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 first
quarter resulted partly 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 increased 8%, or $19
million, in the first quarter of 1995. The increase was mainly due to a $13
million, or 30%, increase in newsprint and ink expense and a $3 million, or
4%, increase in compensation expense. Newsprint prices increased 30% for the
quarter and newsprint consumption increased 1%.
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 its investment
in TV Food Network.
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First Quarter
(Dollars in millions) 1995 1994 Change
------ ------ ------
Operating revenues
Television $134 $119 + 13%
Radio 25 10 +140%
Entertainment/Chicago Cubs 16 17 - 8%
Cable Programming/Development 2 1 + 89%
------ ------
Total operating revenues $177 $147 + 20%
EBITDA
Television $ 39 $ 32 + 20%
Radio 5 2 +221%
Entertainment/Chicago Cubs (4) (3) - 36%
Cable Programming/Development (2) (3) + 19%
------ ------
Total EBITDA $ 38 $ 28 + 33%
Operating profit
Television $ 32 $ 26 + 22%
Radio 4 1 +280%
Entertainment/Chicago Cubs (5) (4) - 32%
Cable Programming/Development (3) (3) + 17%
------ ------
Total operating profit $ 28 $ 20 + 41%
First quarter 1995 operating revenues for broadcasting and entertainment
increased 20% to $177 million from $147 million in 1994 due to increases of 13%
in television and 140% in radio. The improved television revenues resulted from
stronger advertising revenues, primarily at WGN-Chicago, KTLA-Los Angeles and
WGNX-Atlanta, and the acquisition of WLVI-Boston. Excluding WLVI, television
revenues were up 8%. Radio revenues include those of Farm Journal, acquired in
June 1994. Farm Journal revenues are seasonal, with the first quarter being the
strongest. Excluding Farm Journal, radio revenues increased 21% due to gains at
WQCD-New York and Tribune Radio Networks. The 89% increase in cable
programming/development revenues reflects the growth of CLTV News.
Broadcasting and entertainment operating profit for the first quarter of
1995 was up 41% to $28 million from $20 million in 1994 and EBITDA was up 33% to
$38 million. The increase was due to a 22% operating profit gain from
television and strong results in radio, which includes the Farm Journal.
Tribune Entertainment losses increased due to lower revenues from fewer shows in
syndication and development costs for the new "Charles Perez" television talk
show. These losses were partially offset by lower overhead costs and increased
cable copyright revenues. Chicago Cubs results were relatively unchanged as no
baseball games are played in the first quarter of the year.
Operating Expenses -- Operating expenses for the group increased 17%, or $21
million, in the first quarter. The increase was principally due to the
acquisitions in 1994 of WLVI-Boston and Farm Journal and the above mentioned
development costs. Excluding WLVI-Boston and Farm Journal, operating expenses
were up 4%, or $5 million. This increase was due to a $3 million, or 6%,
increase in broadcast rights expense and a $1 million, or 4%, increase in
compensation costs.
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NEW MEDIA/EDUCATION
Operating Profit and Revenues -- The following table presents operating
revenues, EBITDA and operating profit for the new media/education segment.
First Quarter
(Dollars in millions) 1995 1994 Change
------ ------ ------
Operating revenues $ 20 $ 18 + 8%
EBITDA 2 3 - 27%
Operating profit - 1 -127%
New media/education operating revenues were up 8% to $20 million in 1995
due to the acquisition of The Wright Group in February 1994. Excluding The
Wright Group, new media/education revenues were down 20% for the quarter
primarily due to lower original equipment manufacturers sales and distribution
revenues at Compton's as it continues to change its focus after its
restructuring in January. In education, traditional peaks occur in the summer
months and the last quarter of the year, while the first quarter is generally
the weakest.
As expected, first quarter operating losses for the new media/education
group were $.3 million in 1995, versus operating profit of $1.3 million in 1994.
Operating gains at Contemporary Books and The Wright Group were offset by losses
at Compton's.
Operating Expenses -- New media/education's operating expenses were up 18%, or
$3 million, in the 1995 first quarter due to The Wright Group. Excluding The
Wright Group, operating expenses were down in the quarter.
EQUITY IN QUNO NET INCOME (LOSS)
The Company's share of QUNO's 1995 first quarter net income was $4 million,
or $.06 per share on a primary basis. In the 1994 first quarter, the Company's
share of QUNO's net loss was $9 million, or $.14 per share. The 1995
improvement was due to increased newsprint prices, higher sales volume and a
large foreign currency exchange loss in 1994.
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 ownership interest in QUNO from 59% to 34%. The Company also holds a
U.S. $138.8 million (face value) subordinated debenture, convertible into 11.7
million voting common shares of QUNO.
OTHER
Interest expense decreased 27% to $4 million in the 1995 first quarter due
to lower debt levels. The Company's effective income tax rate, excluding QUNO's
equity income or loss, declined in the 1995 first quarter to 40.5% from 41.0%.
13
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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations for the first quarter of 1995 was $170
million compared to $149 million in the first quarter of 1994. The increase was
due primarily to higher net income and changes in working capital. Net cash used
for investments was $11 million for the first quarter of 1995 compared to $120
million for the corresponding 1994 period. The 1995 first quarter included the
$17 million of proceeds from the sale of 200,000 shares of America Online common
stock, the acquisition of Relocation Consultants, Inc. in January for
approximately $8 million in cash and $21 million in capital expenditures. The
1994 first quarter included the acquisition of The Wright Group in February 1994
for approximately $100 million in cash and capital expenditures of $18 million.
Capital expenditures for fiscal year 1995 are expected to total approximately
$125 million, related to a variety of modernization and normal replacement
projects as well as a press expansion project at Fort Lauderdale and the
relocation and expansion of WPIX-New York's news and production studios.
Net cash used for financing activities in the 1995 first quarter was $114
million compared to $30 million in 1994. Net cash used for financing activities
in 1995 included treasury stock repurchases of $89 million, debt repayment of $5
million and dividends of $18 million. In the first quarter of 1995 the Company
acquired approximately 1.6 million shares of its common stock, financed with
available cash. At March 26, 1995, the Company had authorization to repurchase
3.3 million additional shares and expects to continue to repurchase shares in
1995, financed with available cash or commercial paper. The first quarter 1995
dividend increased 8% to $.28 per share from $.26 per share.
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") has
issued a preliminary draft report identifying the Company's subsidiary, Sentinel
Communications Company, as a source of certain trichloroethene (TCE) groundwater
contamination in downtown Orlando, Florida. Based upon separate environmental
reviews performed by the Company's environmental consultants, management
believes that many of the findings contained in the DEP's preliminary draft
report are inaccurate and that the Sentinel is not the source of the extensive
contamination. Although the Company cannot predict the ultimate resolution of
this matter, based on information currently available, the Company does not
believe that the resolution of this matter will have a material adverse effect
on its consolidated financial position or results of operations.
14
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
(a) The Company held its annual meeting of stockholders on May 2, 1995.
(b) No answer required.
(c) Proposal 1 involved the election of one director to serve until the
1996 Annual Meeting and four directors to serve until the 1998 Annual
Meeting. Those directors and the voting results are as follows:
Votes Votes Votes
"For" "Not For" "Abstained"
----- --------- -----------
Stanton R. Cook (1996) 64,781,427 1,487,419 --
John W. Madigan 65,259,714 1,009,132 --
Nancy Hicks Maynard 65,215,815 1,053,031 --
James J. O'Connor 65,315,494 953,352 --
Arnold R. Weber 65,266,997 1,001,849 --
Proposal 2 involved the adoption of the Tribune Company 1995
Nonemployee Director Stock Option Plan.
Votes Votes Votes
"For" "Not For" "Abstained"
----- --------- -----------
54,397,574 10,978,013 893,259
Proposal 3 involved the ratification of the selection of Price
Waterhouse LLP to serve as the Company's independent certified public
accountants for 1995.
Votes Votes Votes
"For" "Not For" "Abstained"
----- --------- -----------
65,690,453 297,692 280,701
(d) Not applicable.
Item 5. Other Information.
------------------
The computation of the ratios of earnings to fixed charges, filed herewith
as Exhibit 12, is incorporated herein by reference.
15
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits.
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 first quarter of 1995.
16
<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: May 10, 1995 R. Mark Mallory
Vice President and Controller
(on behalf of the Registrant
and as chief accounting officer)
17
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
TRIBUNE COMPANY
STATEMENTS OF COMPUTATION OF PRIMARY AND FULLY DILUTED
NET INCOME PER SHARE
(In thousands, except per share amounts) First Quarter Ended
March 26, 1995 March 27, 1994
-------------- --------------
PRIMARY
- -------
<S> <C> <C>
Net income $67,963 $40,069
Preferred dividends, net of tax (4,621) (4,644)
------------- -------------
Net income attributable to common shares $63,342 $35,425
------------- -------------
Weighted average common shares outstanding 65,981 67,085
------------- -------------
Primary net income per share $ .96 $ .53
============= =============
FULLY DILUTED
- -------------
Net income $67,963 $40,069
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax (2,770) (2,980)
Assumed elimination of tax benefit on certain ESOP
preferred dividends (831) (705)
------------- -------------
Adjusted net income $64,362 $36,384
Weighted average common shares outstanding 65,981 67,085
Assumed conversion of preferred shares into common shares 5,903 6,011
Assumed exercise of stock options, net of common
shares assumed repurchased with the proceeds 613 1,191
------------- -------------
Adjusted weighted average common shares outstanding 72,497 74,287
------------- -------------
Fully diluted net income per share $ .89 $ .49
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
18
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12
TRIBUNE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
First Quarter Fiscal Year Ended December
Ended -----------------------------------------------------
3/26/95 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) before cumulative effects of
accounting changes $67,963 $242,047 $188,606 $136,625 $141,981 ($63,533)
Add:
Income tax expense (benefit) 43,482 186,668 143,821 96,266 99,894 (30,695)
(Income) losses on equity investments (865) 16,176 20,212 1,903 1,107 2,285
--------- --------- --------- --------- --------- ---------
Sub-total 110,580 444,891 352,639 234,794 242,982 (91,943)
--------- --------- --------- --------- --------- ---------
Fixed charge adjustments
Add:
Interest expense 4,263 20,585 24,660 49,254 63,083 53,576
Amortization of capitalized interest 553 2,362 2,392 5,304 5,258 4,850
Interest component of rental expense (A) 2,355 8,236 8,732 9,329 9,047 14,467
--------- --------- --------- --------- --------- ---------
Earnings (loss), as adjusted $117,751 $476,074 $388,423 $298,681 $320,370 ($19,050)
========= ========= ========= ========= ========= =========
Fixed charges:
Interest expense $ 4,263 $ 20,585 $ 24,660 $ 49,254 $ 63,083 $ 53,576
Interest capitalized 75 - 1,099 3,445 1,976 8,652
Interest component of rental expense (A) 2,355 8,236 8,732 9,329 9,047 14,467
Interest related to guaranteed ESOP debt (B) 6,162 24,017 25,742 27,019 27,500 27,757
--------- --------- --------- --------- --------- ---------
Total fixed charges $ 12,855 $ 52,838 $ 60,233 $ 89,047 $101,606 $104,452
========= ========= ========= ========= ========= =========
Ratio of Earnings to Fixed Charges 9.2 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>
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the First
Quarter 1995 consolidated 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-26-1994
<PERIOD-END> MAR-26-1995
<CASH> 23,290
<SECURITIES> 43,759
<RECEIVABLES> 317,976
<ALLOWANCES> 34,286
<INVENTORY> 39,570
<CURRENT-ASSETS> 599,261
<PP&E> 1,335,803
<DEPRECIATION> 693,142
<TOTAL-ASSETS> 2,831,209
<CURRENT-LIABILITIES> 619,603
<BONDS> 0
<COMMON> 1,018
0
322,917
<OTHER-SE> 975,633
<TOTAL-LIABILITY-AND-EQUITY> 2,831,209
<SALES> 0
<TOTAL-REVENUES> 532,790
<CGS> 0
<TOTAL-COSTS> 270,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,263
<INCOME-PRETAX> 111,445
<INCOME-TAX> 43,482
<INCOME-CONTINUING> 67,963
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,963
<EPS-PRIMARY> .96
<EPS-DILUTED> .89
</TABLE>
