- --------------------------------------------------------------------------------
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 28, 1997
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 November 3, 1997 there were 122,936,214 shares outstanding of the
Company's Common Stock (without par value).
- --------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
---------------------
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Third Quarter Ended Three Quarters Ended
-------------------------------- ---------------------------------
Sept. 28, 1997 Sept. 29, 1996 Sept. 28, 1997 Sept. 29, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating Revenues........................................ $ 695,286 $ 618,327 $2,008,947 $1,797,376
Operating Expenses
Cost of sales (exclusive of items shown below)............ 333,523 310,602 938,594 917,451
Selling, general and administrative....................... 163,685 153,632 495,426 428,149
Depreciation and amortization
of intangible assets................................... 47,190 37,780 130,598 103,515
--------- --------- ---------- ----------
Total operating expenses.................................. 544,398 502,014 1,564,618 1,449,115
--------- --------- ---------- ----------
Operating Profit.......................................... 150,888 116,313 444,329 348,261
Other..................................................... 41,496 - 70,025 -
Interest income........................................... 5,934 7,700 21,121 24,075
Interest expense.......................................... (23,360) (12,692) (63,994) (34,680)
--------- --------- ---------- ----------
Income from Continuing Operations
Before Income Taxes..................................... 174,958 111,321 471,481 337,656
Income taxes.............................................. (70,180) (45,085) (191,266) (136,751)
--------- --------- ---------- ----------
Income from Continuing Operations......................... 104,778 66,236 280,215 200,905
Discontinued Operations of QUNO, net of tax............... - - - 89,317
--------- --------- ---------- ----------
Net Income................................................ 104,778 66,236 280,215 290,222
Preferred dividends, net of tax........................... (4,700) (4,697) (14,099) (14,090)
--------- --------- ---------- ----------
Net Income Attributable to Common Shares ................ $ 100,078 $ 61,539 $ 266,116 $ 276,132
========= ========= ========== ==========
Net Income Per Share:
Primary: Continuing operations.................. $ .81 $ .50 $2.17 $1.52
Discontinued operations................ - - - .73
----- ----- ----- -----
Net income............................. $ .81 $ .50 $2.17 $2.25
===== ===== ===== =====
Fully diluted: Continuing operations.................. $ .75 $ .46 $1.99 $1.40
Discontinued operations................ - - - .65
----- ----- ----- -----
Net income............................. $ .75 $ .46 $1.99 $2.05
===== ===== ===== =====
Dividends per common share................................ $ .16 $ .15 $ .48 $ .45
===== ===== ===== =====
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<TABLE>
<CAPTION>
September 28, 1997 December 29, 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments........................................... $ 599 $ 274,170
Accounts receivable, net.................................................. 431,942 350,773
Inventories............................................................... 80,483 80,525
Broadcast rights.......................................................... 187,055 154,904
Prepaid expenses and other................................................ 28,365 26,349
----------- -----------
Total current assets...................................................... 728,444 886,721
Property, plant and equipment............................................. 1,506,643 1,456,209
Accumulated depreciation.................................................. (881,373) (813,501)
----------- -----------
Net properties............................................................ 625,270 642,708
Broadcast rights.......................................................... 204,237 173,552
Intangible assets, net.................................................... 2,473,709 1,251,470
Investments............................................................... 624,009 629,129
Other..................................................................... 132,387 117,320
----------- -----------
Total assets.............................................................. $ 4,788,056 $ 3,700,900
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Long-term debt due within one year........................................ $ 29,565 $ 31,073
Contracts payable for broadcast rights.................................... 207,884 178,589
Deferred income........................................................... 45,150 51,591
Income taxes.............................................................. 51,361 83,467
Accounts payable, accrued expenses and other current liabilities.......... 366,277 328,381
----------- -----------
Total current liabilities................................................. 700,237 673,101
Long-term debt............................................................ 1,585,919 979,754
Deferred income taxes..................................................... 361,161 189,673
Contracts payable for broadcast rights.................................... 255,884 209,754
Compensation and other obligations........................................ 119,657 109,112
----------- -----------
Total liabilities......................................................... 3,022,858 2,161,394
Shareholders' equity
Series B convertible preferred stock...................................... 303,864 312,470
Common stock and additional paid-in capital............................... 179,696 150,879
Retained earnings......................................................... 2,421,900 2,210,024
Treasury stock (at cost).................................................. (1,083,407) (1,034,012)
Unearned compensation related to ESOP..................................... (216,772) (218,668)
Unrealized gain on investments............................................ 159,917 118,813
----------- -----------
Total shareholders' equity................................................ 1,765,198 1,539,506
----------- -----------
Total liabilities and shareholders' equity................................ $ 4,788,056 $ 3,700,900
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
TRIBUNE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Quarters Ended
------------------------------------
Sept. 28, 1997 Sept. 29, 1996
-------------- --------------
<S> <C> <C>
Operations
Net income..................................................................... $ 280,215 $ 290,222
Adjustments to reconcile net income to net cash
provided by operations:
Discontinued operations of QUNO, net of tax............................ - (89,317)
Gain on sales of investments........................................... (150,891) -
Loss on write-down of investment....................................... 77,266 -
Depreciation and amortization of intangible assets..................... 130,598 103,515
Other, net............................................................. (71,867) (100,824)
---------- ---------
Net cash provided by operations................................................ 265,321 203,596
---------- ---------
Investments
Capital expenditures........................................................... (63,055) (61,338)
Acquisitions and investments................................................... (1,205,623) (565,707)
Proceeds from sales of investments, subsidiary and other assets................ 228,455 -
Proceeds from sale of QUNO..................................................... - 426,828
Other, net..................................................................... (6,663) 8,905
---------- ---------
Net cash used for investments.................................................. (1,046,886) (191,312)
---------- ---------
Financing
Proceeds from issuance of long-term debt....................................... 612,317 149,945
Repayments of long-term debt................................................... (6,976) (11,262)
Sale of common stock to employees, net......................................... 40,127 28,058
Purchase of treasury stock..................................................... (69,135) (123,353)
Dividends...................................................................... (68,339) (64,531)
---------- ---------
Net cash provided by (used for) financing...................................... 507,994 (21,143)
---------- ---------
Net decrease in cash and short-term investments................................ (273,571) (8,859)
Cash and short-term investments at the beginning of year....................... 274,170 22,899
---------- ---------
Cash and short-term investments at the end of quarter.......................... $ 599 $ 14,040
========== =========
</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 28, 1997 and the results of their
operations for the quarters and first three quarters ended September 28, 1997
and September 29, 1996 and cash flows for the first three quarters ended
September 28, 1997 and September 29, 1996. 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 1997 presentation.
The condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and the related notes included by
reference in the Company's Annual Report on Form 10-K. All share and per share
data has been restated to reflect a two-for-one common stock split effective
January 15, 1997.
Note 2:
- -------
Inventories consist of (in thousands):
Sept. 28, 1997 Dec. 29, 1996
-------------- -------------
Finished goods....................... $62,037 $60,341
Newsprint (at LIFO).................. 11,660 10,186
Supplies and other................... 6,786 9,998
------- -------
Total inventories.................... $80,483 $80,525
======= =======
Newsprint inventories are valued under the LIFO method and were less than
current cost by approximately $9.3 million at September 28, 1997 and $11.4
million at December 29, 1996. Finished goods primarily include books and
supplementary educational materials.
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 Three Quarters
---------------------- ---------------------
1997 1996 1997 1996
------- ------- ------- -------
Primary................ 123,247 122,468 122,872 122,720
Fully diluted.......... 136,157 136,162 135,962 136,510
5
<PAGE>
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share". SFAS No. 128
requires presentation on the face of the income statement of both basic and
diluted net income per share. SFAS No. 128 is effective for financial statements
issued for periods ending after December 15, 1997, and requires restatement of
all prior period net income per share data presented. The adoption of this
statement is not expected to materially affect either future or prior period net
income per share of the Company.
Note 4:
- -------
The third quarter of 1997 included two non-recurring items. In September,
the Company sold approximately 512,000 shares of America Online, Inc. ("AOL")
common stock for $38 million in cash and recorded a pretax gain of $37 million,
or $.19 per share on a primary basis. Also in September, the Company sold
300,000 shares of Gemstar International Group Limited common stock for
$7 million in cash and recorded a pretax gain of $4 million, or $.02 per share
on a primary basis.
The second quarter of 1997 included several non-recurring items. In May,
the Company sold approximately 2 million shares of AOL common stock for $96
million in cash and recorded a pretax gain of $94 million, or $.47 per share on
a primary basis. In June, the Company sold 1.3 million shares of CheckFree
Corporation common stock for $22 million in cash and recorded a pretax gain of
$16 million, or $.08 per share on a primary basis. Also in June, the Company
concluded that the decline in the value of its investment in The Learning
Company common stock was other than temporary and wrote down the investment to
fair market value in accordance with Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The
write-down resulted in a non-cash, pretax loss of $77 million, or $.39 per share
on a primary basis.
In the aggregate, non-recurring items increased primary net income per
share from continuing operations by $.21 in the 1997 third quarter and $.35 in
the first three quarters.
In May 1997, the Company reached an agreement with Emmis Broadcasting
Corporation regarding the sale of the Company's WQCD radio station in New York.
Under the agreement, the Company has the option through May 2000 to require
Emmis to purchase substantially all of the assets of WQCD for approximately $160
million. The agreement also contemplates that, in certain circumstances, Emmis
could be required to acquire another suitable media property to be exchanged for
WQCD. Effective July 1, 1997 and in connection with the agreement, Emmis assumed
responsibility for certain operations of the station for up to three years for
an annual fee of approximately $8 million, after which Emmis has the right to
purchase the station.
At the beginning of the 1997 second quarter, the Company sold its Farm
Journal subsidiary for approximately $17 million in cash. The Company had
acquired Farm Journal in 1994 for approximately $17 million. In June 1997, the
Company completed the sale of a building in Fort Lauderdale, which is
approximately 35% occupied by the Company's Sun-Sentinel newspaper subsidiary.
The Company received proceeds of approximately $43 million and deferred, under
sale-leaseback accounting, the gain of approximately $11 million which will be
amortized over the Sun-Sentinel's remaining 14.5 year lease term.
6
<PAGE>
In March 1996, the Company completed the sale of its holdings in QUNO
Corporation, a Canadian newsprint company, as part of QUNO's merger with Donohue
Inc. The sale resulted in a 1996 after-tax gain of $89.3 million, or $.73 per
share on a primary basis. The gross proceeds from the sale were approximately
$427 million in cash, Donohue stock and short-term notes. Immediately after the
sale, the Company sold the Donohue stock and notes for cash. After-tax proceeds
were approximately $331 million. QUNO has been accounted for as a discontinued
operation in the Company's consolidated financial statements.
Note 5:
- -------
In September 1997, the Company acquired Shortland Publications Limited.
Shortland is a New Zealand-based company that publishes reading, language arts,
science and social studies materials for several international elementary school
markets.
On March 25, 1997, the Company completed its acquisition of Renaissance
Communications Corp., a publicly traded company owning six television stations,
for approximately $1.1 billion in cash. The stations acquired were WB affiliates
KDAF-Dallas and WDZL-Miami and Fox affiliates KTXL-Sacramento,
WXIN-Indianapolis, WTIC-Hartford and WPMT-Harrisburg. The Federal Communications
Commission ("FCC") order granting the Company's application to acquire the
Renaissance stations contained waivers of two FCC rules. First, the FCC
temporarily waived its duopoly rule relating to the overlap of WTIC's and WPMT's
broadcast signals with those of other Tribune stations. The temporary waivers
were granted subject to the outcome of pending FCC rulemaking that is expected
to make duopoly waivers unnecessary. Second, the FCC granted a 12-month waiver
of its rule prohibiting television/newspaper cross-ownership in the same market,
which relates to the Miami television station and the Fort Lauderdale
Sun-Sentinel. The Company has appealed the FCC's ruling on the cross-ownership
issue and a petition requesting a rulemaking procedure has been filed with the
FCC since the FCC issued the order. On October 31, 1997, an appellate court
ordered the FCC to determine by December 1, 1997 its position regarding the
initiation of a rulemaking proceeding on television/newspaper cross-ownership.
The Company cannot predict the outcome of the FCC duopoly rulemaking or the FCC
cross-ownership determination.
In March 1997, the Company agreed to exercise an option for $21 million to
increase its equity ownership in The WB Television Network to 21.9%.
In January 1996, the Company acquired Houston television station KHTV for
approximately $102 million in cash. In February 1996, the Company acquired the
remaining minority interest in Philadelphia television station WPHL for
approximately $23 million in cash. In March 1996, the Company acquired
Educational Publishing Corporation for $205 million in cash and NTC Publishing
Group for $83 million in cash. In April 1996, the Company acquired San Diego
television station KSWB for approximately $72 million in cash.
The acquisitions are being accounted for by the purchase method, and
accordingly, the results of operations of the companies have been included in
the consolidated financial statements since their respective dates of
acquisition. The purchase accounting for the Renaissance acquisition reflected
in the condensed consolidated financial statements is preliminary and will
likely change as appraisals are finalized and more facts become known. No
material adjustments are expected.
7
<PAGE>
The following table presents the unaudited pro forma results of operations
of the Company for the third quarters of 1997 and 1996 and the first three
quarters of 1997 and 1996 as if the acquisitions and dispositions discussed in
Notes 4 and 5 had occurred at the beginning of each year presented. The pro
forma results may not be indicative of the results that would have been reported
if the transactions had actually occurred at the beginning of each year
presented, or of results that may be attained in the future. The unaudited pro
forma results do not reflect any synergies anticipated by the Company as a
result of the acquisitions.
<TABLE>
<CAPTION>
Third Quarter Ended Three Quarters Ended
-------------------------------- --------------------------------
(In thousands, except per share data) Sept. 28, 1997 Sept. 29, 1996 Sept. 28, 1997 Sept. 29, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating Revenues.................................. $697,029 $659,465 $2,045,800 $1,939,640
Income from Continuing Operations................... $104,634 $ 55,670 $ 270,016 $ 172,120
Primary Net Income Per Share
from Continuing Operations...................... $.81 $.42 $2.08 $1.29
</TABLE>
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. 28, 1997 Sept. 29, 1996 Sept. 28, 1997 Sept. 29, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating revenues:
Publishing.................................... $341,516 $322,784 $1,056,773 $ 980,612
Broadcasting and Entertainment................ 274,020 222,905 775,677 663,380
Education..................................... 79,750 72,638 176,497 153,384
-------- -------- ---------- ----------
Total operating revenues............................ $695,286 $618,327 $2,008,947 $1,797,376
======== ======== ========== ==========
Operating profit:
Publishing.................................... $ 69,581 $ 60,989 $ 257,182 $ 197,093
Broadcasting and Entertainment................ 65,945 41,449 176,941 136,377
Education..................................... 24,035 21,839 35,263 37,810
Corporate expenses............................ (8,673) (7,964) (25,057) (23,019)
-------- -------- ---------- ----------
Total operating profit.............................. $150,888 $116,313 $ 444,329 $ 348,261
======== ======== ========== ==========
</TABLE>
8
<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 first
three quarters of 1997 to the third quarter and first three quarters of 1996.
All share and per share data has been restated to reflect a two-for-one common
stock split effective January 15, 1997.
This discussion contains certain forward-looking statements that are based
largely on the Company's current expectations and are subject to certain risks,
trends and uncertainties that could cause actual results to differ materially
from those anticipated. Among such risks, trends and uncertainties are changes
in advertising demand, newsprint prices, circulation, interest rates and other
economic conditions and the effect of acquisitions, dispositions, investments
and regulatory rulings on the Company's results of operations and financial
condition. The words "believe," "expect," "anticipate" and similar expressions
generally identify forward-looking statements. Readers are cautioned not to
place undue reliance on such forward-looking statements, which speak only as of
the date of this filing.
SIGNIFICANT EVENTS
- ------------------
On March 25, 1997, the Company completed its acquisition of Renaissance
Communications Corp., a publicly traded company owning six television stations,
for approximately $1.1 billion in cash. The stations acquired were WB affiliates
KDAF-Dallas and WDZL-Miami and Fox affiliates KTXL-Sacramento,
WXIN-Indianapolis, WTIC-Hartford and WPMT-Harrisburg. The Federal Communications
Commission ("FCC") order granting the Company's application to acquire the
Renaissance stations contained waivers of two FCC rules. First, the FCC
temporarily waived its duopoly rule relating to the overlap of WTIC's and WPMT's
broadcast signals with those of other Tribune stations. The temporary waivers
were granted subject to the outcome of pending FCC rulemaking that is expected
to make duopoly waivers unnecessary. Second, the FCC granted a 12-month waiver
of its rule prohibiting television/newspaper cross-ownership in the same market,
which relates to the Miami television station and the Fort Lauderdale
Sun-Sentinel. The Company has appealed the FCC's ruling on the cross-ownership
issue and a petition requesting a rulemaking procedure has been filed with the
FCC since the FCC issued the order. On October 31, 1997, an appellate court
ordered the FCC to determine by December 1, 1997 its position regarding the
initiation of a rulemaking proceeding on television/newspaper cross-ownership.
The Company cannot predict the outcome of the FCC duopoly rulemaking or the FCC
cross-ownership determination.
The Company also has acquired five other businesses since the beginning of
1996. In 1997, the Company acquired Shortland Publications Limited in September.
In 1996, the Company acquired Houston television station KHTV in January,
Educational Publishing Corporation and NTC Publishing Group in March and San
Diego television station KSWB in April. The results of these businesses have
been included in the consolidated financial statements since their respective
dates of acquisition.
The third quarter of 1997 included two non-recurring items. In September,
the Company sold approximately 512,000 shares of America Online, Inc. ("AOL")
common stock for $38 million in cash and recorded a pretax gain of $37 million,
or $.19 per share on a primary basis. Also in September, the Company sold
300,000 shares of Gemstar International Group Limited common stock for $7
million in cash and recorded a pretax gain of $4 million, or $.02 per share on a
primary basis.
9
<PAGE>
The second quarter of 1997 included several non-recurring items. In May,
the Company sold approximately 2 million shares of AOL common stock for $96
million in cash and recorded a pretax gain of $94 million, or $.47 per share on
a primary basis. In June, the Company sold 1.3 million shares of CheckFree
Corporation common stock for $22 million in cash and recorded a pretax gain of
$16 million, or $.08 per share on a primary basis. Also in June, the Company
concluded that the decline in the value of its investment in The Learning
Company common stock was other than temporary and wrote down the investment to
fair market value in accordance with Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The
write-down resulted in a non-cash, pretax loss of $77 million, or $.39 per share
on a primary basis.
In the aggregate, non-recurring items increased primary net income per
share from continuing operations by $.21 in the 1997 third quarter and $.35 in
the first three quarters.
In May 1997, the Company reached an agreement with Emmis Broadcasting
Corporation regarding the sale of the Company's WQCD radio station in New York.
Under the agreement, the Company has the option through May 2000 to require
Emmis to purchase substantially all of the assets of WQCD for approximately $160
million. The agreement also contemplates that, in certain circumstances, Emmis
could be required to acquire another suitable media property to be exchanged for
WQCD. Effective July 1, 1997 and in connection with the agreement, Emmis assumed
responsibility for certain operations of the station for up to three years for
an annual fee of approximately $8 million, after which Emmis has the right to
purchase the station.
At the beginning of the 1997 second quarter, the Company sold its Farm
Journal subsidiary for approximately $17 million in cash. The Company had
acquired Farm Journal in 1994 for approximately $17 million. In June 1997, the
Company completed the sale of a building in Fort Lauderdale, which is
approximately 35% occupied by the Company's Sun-Sentinel newspaper subsidiary.
The Company received proceeds of approximately $43 million and deferred, under
sale-leaseback accounting, the gain of approximately $11 million which will be
amortized over the Sun-Sentinel's remaining 14.5 year lease term.
In March 1996, the Company completed the sale of its holdings in QUNO
Corporation, a Canadian newsprint company, as part of QUNO's merger with Donohue
Inc. The sale resulted in a 1996 after-tax gain of $89.3 million, or $.73 per
share on a primary basis. The gross proceeds from the sale were approximately
$427 million in cash, Donohue stock and short-term notes. Immediately after the
sale, the Company sold the Donohue stock and notes for cash. After-tax proceeds
were approximately $331 million. QUNO has been accounted for as a discontinued
operation in the Company's consolidated financial statements.
RESULTS OF OPERATIONS
- ---------------------
The results of operations, when examined on a quarterly basis, reflect the
seasonality of the Company's revenues. In both publishing and broadcasting and
entertainment, second and fourth quarter advertising revenues are typically
higher than first and third quarter revenues. In education, second and third
quarter revenues are typically higher than first and fourth quarter revenues.
Results for the 1997 and 1996 third quarters reflect these seasonal patterns.
10
<PAGE>
CONSOLIDATED
The Company's consolidated operating results for the third quarter and
first three quarters of 1997 and 1996 and the percentage changes from 1996 were
as follows:
<TABLE>
<CAPTION>
(Dollars in millions, Third Quarter Three Quarters
except per share amounts) ---------------------- --------------------------
1997 1996 Change 1997 1996 Change
---- ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $695 $618 + 12% $2,009 $1,797 + 12%
Operating profit 151 116 + 30% 444 348 + 28%
Non-recurring items 41 - * 70 - *
Income from continuing operations 105 66 + 58% 280 201 + 39%
Discontinued operations of QUNO, net of tax - - - - 89 *
Net income 105 66 + 58% 280 290 - 3%
Continuing operations excluding
non-recurring items 79 66 + 20% 237 201 + 18%
Primary net income per share
Continuing operations .81 .50 + 62% 2.17 1.52 + 43%
Discontinued operations - - - - .73 *
Total .81 .50 + 62% 2.17 2.25 - 4%
Continuing operations excluding
non-recurring items .60 .50 + 20% 1.82 1.52 + 20%
*Not meaningful
</TABLE>
Net Income Per Share -- Primary net income per share for the 1997 third quarter
rose to $.60, up 20% from $.50 last year, excluding non-recurring items. For the
first three quarters of 1997, primary net income per share from continuing
operations rose 20% to $1.82 from $1.52 in 1996, excluding non-recurring items.
The improvements were due primarily to higher operating profit from publishing
and broadcasting and entertainment, partially offset by higher net interest
expense. Including non-recurring items, primary net income per share from
continuing operations increased 62% to $.81 in the third quarter of 1997 and
increased 43% to $2.17 in the first three quarters.
11
<PAGE>
Operating Profit and Revenues -- The Company's consolidated operating revenues,
EBITDA (operating profit before depreciation, amortization and non-recurring
items) and operating profit by business segment for the third quarter and first
three quarters were as follows:
<TABLE>
<CAPTION>
Third Quarter Three Quarters
------------------------ ---------------------------
(Dollars in millions) 1997 1996 Change 1997 1996 Change
---- ---- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues
Publishing $341 $323 + 6% $1,057 $ 981 + 8%
Broadcasting and Entertainment 274 223 + 23% 776 663 + 17%
Education 80 72 + 10% 176 153 + 15%
---- ---- ------ ------
Total operating revenues $695 $618 + 12% $2,009 $1,797 + 12%
EBITDA*
Publishing $ 90 $ 82 + 9% $ 318 $ 255 + 25%
Broadcasting and Entertainment 87 53 + 65% 232 171 + 36%
Education 29 26 + 11% 48 47 + 2%
Corporate expenses (8) (7) - 11% (23) (21) - 10%
---- ---- ------ ------
Total EBITDA $198 $154 + 29% $ 575 $ 452 + 27%
Operating profit
Publishing $ 70 $ 61 + 14% $ 257 $ 197 + 30%
Broadcasting and Entertainment 66 41 + 59% 177 136 + 30%
Education 24 22 + 10% 35 38 - 7%
Corporate expenses (9) (8) - 9% (25) (23) - 9%
---- ---- ------ ------
Total operating profit $151 $116 + 30% $ 444 $ 348 + 28%
</TABLE>
* EBITDA is defined as earnings before interest, taxes, depreciation,
amortization and non-recurring items. The Company has presented EBITDA
because it is comparable to the data provided by other companies in the
industry and is a common alternative measure of performance. EBITDA does
not represent cash provided by operating activities as reflected in the
Company's consolidated statements of cash flows, is not a measure of
financial performance under generally accepted accounting principles
("GAAP") and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
Consolidated operating revenues for the 1997 third quarter rose 12% to
$695 million from $618 million in 1996 and for the first three quarters
increased 12% to $2,009 million from $1,797 million in 1996. This was due to
recent acquisitions and higher newspaper advertising revenues. Excluding
businesses recently acquired or sold, operating revenues were up 6% for the
third quarter and up 7% for the first three quarters.
Consolidated operating profit increased 30% in the 1997 third quarter and
28% in the first three quarters, while EBITDA increased 29% in the third quarter
and 27% in the first three quarters. Publishing operating profit increased 14%
in the 1997 third quarter and 30% in the first three quarters primarily due to
higher advertising revenues and lower newsprint expense. Broadcasting and
entertainment operating profit increased in both periods of 1997 due to
significant growth in television with the March acquisition of Renaissance
Communications and improved radio results, partially offset by higher equity
losses in The WB Television Network. Education operating profit increased 10% in
the third quarter due to gains at all of the
12
<PAGE>
education companies except Educational Publishing Corporation. Education
operating profit declined 7% in the first three quarters due to lower sales at
Educational Publishing Corporation, partially offset by gains at all of the
other education companies. Excluding businesses recently acquired or sold,
consolidated operating profit was up 18% in the third quarter and 22% in the
first three quarters, while EBITDA was up 13% in the third quarter and 18% in
the first three quarters.
Operating Expenses -- Consolidated operating expenses increased 8% in both the
third quarter and the first three quarters as follows:
<TABLE>
<CAPTION>
Third Quarter Three Quarters
------------------------- ----------------------------
(Dollars in millions) 1997 1996 Change 1997 1996 Change
---- ---- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Cost of sales $333 $310 + 7% $ 939 $ 917 + 2%
Selling, general & administrative 164 154 + 7% 495 428 + 16%
Depreciation & amortization
of intangible assets 47 38 + 25% 131 104 + 26%
---- ---- ------ ------
Total operating expenses $544 $502 + 8% $1,565 $1,449 + 8%
</TABLE>
Cost of sales increased 7%, or $23 million, in the 1997 third quarter and
increased 2%, or $22 million, in the first three quarters. Excluding businesses
recently acquired or sold, cost of sales increased 4%, or $12 million, in the
third quarter and was down 1%, or $6 million in the first three quarters. Cost
of sales was up in the 1997 third quarter due to higher compensation costs and
increased expenses for development activities, partially offset by lower
newsprint and ink expense and reduced broadcast rights amortization expense. The
decrease in the first three quarters was due to lower newsprint and ink expense
and reduced broadcast rights amortization, partially offset by higher
compensation costs, increased newspaper manufacturing and distribution costs and
increased expenses for development activities. Newsprint and ink expense
decreased 5%, or $3 million, in the third quarter of 1997 and was down 17%, or
$31 million, in the first three quarters. Broadcast rights amortization
decreased 4%, or $2 million, in the third quarter and 7%, or $13 million, in the
first three quarters. Compensation expense was up 11%, or $11 million, in the
third quarter and 7%, or $20 million, in the first three quarters.
Selling, general and administrative expenses ("SG&A") were up 7%, or $10
million, in the 1997 third quarter and increased 16%, or $67 million, in the
first three quarters. Excluding businesses recently acquired or sold, SG&A
expenses increased 4%, or $6 million, in the third quarter and increased 10%, or
$40 million, in the first three quarters primarily due to higher compensation
expense, increased losses from equity investments, expenses for development
activities and, for the first three quarters, increased promotion expenses at
the Company's newspapers. Compensation expense was up 12%, or $8 million, in the
third quarter and 13%, or $23 million, in the first three quarters. Losses from
equity investments and expenses for development activities increased $1 million
in the 1997 third quarter and rose $11 million in the first three quarters.
The increase in depreciation and amortization of intangible assets
reflects the acquisitions and capital expenditures made in 1997 and 1996.
13
<PAGE>
PUBLISHING
Operating Profit and Revenues -- The following table presents publishing
operating revenues, EBITDA and operating profit for daily newspapers and other
publications/services/development for the third quarter and first three
quarters. The latter category includes syndication of editorial products,
advertising placement services, niche publications, delivery of other
publications, direct mail operations, online/electronic products and, for EBITDA
and operating profit, equity losses from investments.
<TABLE>
<CAPTION>
Third Quarter Three Quarters
------------------------ ----------------------------
(Dollars in millions) 1997 1996 Change 1997 1996 Change
---- ---- ------ ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues
Daily newspapers $321 $305 + 5% $ 999 $929 + 8%
Other publications/
services/development 20 18 + 14% 58 52 + 10%
---- ---- ------ ----
Total operating revenues $341 $323 + 6% $1,057 $981 + 8%
EBITDA
Daily newspapers $ 95 $ 90 + 6% $ 325 $272 + 20%
Other publications/
services/development (5) (8) + 27% (7) (17) + 55%
---- ---- ------ ----
Total EBITDA $ 90 $ 82 + 9% $ 318 $255 + 25%
Operating profit
Daily newspapers $ 78 $ 70 + 12% $ 273 $217 + 26%
Other publications/
services/development (8) (9) + 6% (16) (20) + 21%
---- ---- ------ ----
Total operating profit $ 70 $ 61 + 14% $ 257 $197 + 30%
</TABLE>
Publishing operating revenues for the 1997 third quarter increased 6% to
$341 million, and for the first three quarters were up 8% to $1,057 million, due
principally to higher advertising revenues at all of the newspapers. Advertising
revenues increased 6% in the third quarter and 9% in the first three quarters
due to higher linage and rates. Operating profit for the 1997 third quarter was
up 14% to $70 million, and for the first three quarters was up 30% to $257
million, due primarily to higher advertising revenues and lower newsprint
expenses. In the third quarter of 1997, daily newspaper operating profit margins
increased to 24.2% from 22.9% in 1996 and in the first three quarters increased
to 27.3% from 23.4% in 1996.
Publishing group revenues, by classification, for the third quarter and
first three quarters were as follows:
<TABLE>
<CAPTION>
Third Quarter Three Quarters
------------------------ --------------------------
(Dollars in millions) 1997 1996 Change 1997 1996 Change
---- ---- ------ ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Advertising
Retail $101 $ 98 + 3% $ 319 $302 + 5%
General 32 32 - 107 100 + 6%
Classified 130 118 + 10% 392 350 + 12%
---- ---- ---- ----
Total advertising 263 248 + 6% 818 752 + 9%
Circulation 61 62 - 1% 188 190 - 1%
Other 17 13 + 32% 51 39 + 31%
---- ---- ------ ----
Total revenues $341 $323 + 6% $1,057 $981 + 8%
</TABLE>
14
<PAGE>
Retail advertising revenues for the 1997 third quarter and first three
quarters rose mainly due to increases in the department store, health care, food
and drug and furniture store categories in Orlando, the electronics and movie
categories in Chicago and the health care, department store and food and drug
categories in Fort Lauderdale. General advertising rose in the first three
quarters due mainly to increases in the transportation and resorts categories in
Chicago. Classified advertising revenues were up in the third quarter and first
three quarters due to increases in help wanted advertising at all of the
newspapers and advertising from Internet and other electronic products.
Total advertising linage increased 7% in both the 1997 third quarter and
first three quarters. Full run retail advertising linage increased 2% in the
first three quarters due to increases at Orlando, Newport News and Fort
Lauderdale. Full run general advertising linage decreased 4% in the third
quarter due to declines at all of the newspapers and increased 5% in the first
three quarters due to increases at Orlando, Chicago and Newport News. Full run
classified advertising linage increased 3% in the third quarter due to increases
at Orlando and Fort Lauderdale and was up 1% in the first three quarters due to
increases at Newport News and Chicago. Part run advertising linage was up 7% for
both the third quarter and the first three quarters due primarily to increases
in Chicago in classified and in Orlando in retail. Preprint advertising linage
increased 14% in the 1997 third quarter and 16% in the first three quarters due
primarily to higher preprint part run linage at all of the newspapers and
increased preprint full run linage in Orlando, Chicago, Fort Lauderdale and, for
the first three quarters, at Newport News. The following summary presents
advertising linage for the third quarter and first three quarters.
<TABLE>
<CAPTION>
Third Quarter Three Quarters
-------------------------- -----------------------------
(Inches in thousands) 1997 1996 Change 1997 1996 Change
----- ----- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Full run
Retail 835 831 - 2,630 2,572 + 2%
General 172 179 - 4% 569 541 + 5%
Classified 1,617 1,577 + 3% 4,897 4,844 + 1%
----- ----- ------ ------
Total full run 2,624 2,587 + 1% 8,096 7,957 + 2%
Part run 2,458 2,294 + 7% 7,458 7,002 + 7%
Preprint 2,201 1,931 + 14% 6,621 5,698 + 16%
----- ----- ------ ------
Total inches 7,283 6,812 + 7% 22,175 20,657 + 7%
</TABLE>
Circulation revenues decreased 1% in both the 1997 third quarter and first
three quarters. Total average daily circulation was down 1% to 1,225,000 copies
in the 1997 third quarter, and total average Sunday circulation was down 1% to
1,854,000 copies. For the first three quarters of 1997, total average daily
circulation decreased 2% to 1,267,000 copies, while total average Sunday
circulation was down 2% to 1,899,000 copies.
Other revenues are derived from advertising placement services; the
syndication of columns, features, information and comics to newspapers;
commercial printing operations; delivery of other publications; direct mail
operations; usage revenues from Internet/electronic projects; and other
publishing-related activities. The increase in other revenues in the 1997 third
quarter and first three quarters resulted primarily from higher revenues from
commercial printing, direct mail operations and usage revenues from
Internet/electronic projects.
15
<PAGE>
Operating Expenses -- Publishing operating expenses increased 4%, or $10
million, in the third quarter of 1997 and 2%, or $16 million, in the first three
quarters. In the third quarter of 1997, newsprint and ink expense decreased 5%,
or $3 million, as average newsprint prices were down 9% while consumption
increased 5% as a result of increased advertising volume. Other expenses were up
6%, or $13 million, mainly due to higher compensation costs of $8 million and
increased expenses for development activities. For the first three quarters,
newsprint and ink expense decreased 17%, or $31 million, as average newsprint
prices were down 21% while consumption increased 4%. Other expenses were up 8%,
or $47 million, in the first three quarters mainly due to higher compensation
costs of $21 million, increased expenses for development activities and higher
promotion expenses.
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 for the third
quarter and first three quarters. Cable programming/development includes CLTV
News and, for EBITDA and operating profit, the Company's equity income or loss
from its investments in The WB Television Network, TV Food Network and Qwest
Broadcasting.
<TABLE>
<CAPTION>
Third Quarter Three Quarters
-------------------------- ------------------------
(Dollars in millions) 1997 1996 Change 1997 1996 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues
Television $212 $159 + 34% $617 $503 + 23%
Radio 14 22 - 35% 58 67 - 14%
Entertainment/Chicago Cubs 45 40 + 11% 93 87 + 7%
Cable Programming/Development 3 2 + 36% 8 6 + 31%
---- ---- ---- ----
Total operating revenues $274 $223 + 23% $776 $663 + 17%
EBITDA
Television $ 78 $ 45 + 75% $231 $162 + 43%
Radio 5 3 + 59% 17 12 + 44%
Entertainment/Chicago Cubs 9 10 - 9% 3 8 - 59%
Cable Programming/Development (5) (5) - 8% (19) (11) - 76%
---- ---- ---- ----
Total EBITDA $ 87 $ 53 + 65% $232 $171 + 36%
Operating profit
Television $ 58 $ 35 + 68% $182 $134 + 36%
Radio 5 2 + 76% 15 10 + 57%
Entertainment/Chicago Cubs 8 9 - 10% - 4 *
Cable Programming/Development (5) (5) - 8% (20) (12) - 71%
---- ---- ---- ----
Total operating profit $ 66 $ 41 + 59% $177 $136 + 30%
*Not meaningful
</TABLE>
16
<PAGE>
Broadcasting and entertainment operating revenues increased 23% to $274
million in the 1997 third quarter and increased 17% to $776 million in the first
three quarters due primarily to increased television revenues. Television
revenues were up 34%, or $53 million, in the third quarter and 23%, or $114
million, in the first three quarters, due largely to the acquisition of the six
Renaissance stations in March 1997. Excluding Renaissance, television revenues
were up 6% in the third quarter and 3% in the first three quarters.
Third quarter 1997 operating profit for broadcasting and entertainment was
up 59% to $66 million from $41 million in 1996 and for the first three quarters
was up 30% to $177 million from $136 million in 1996. An increase in television
operating profit and improved radio results in both periods were partially
offset by higher equity losses in The WB. Television operating profit increased
68%, or $23 million, in the third quarter and 36%, or $48 million, in the first
three quarters due primarily to the acquisition of Renaissance and improved
profitability at KTLA-Los Angeles and WGN-Chicago. Excluding Renaissance,
television operating profit was up 31% in the third quarter and 14% in the first
three quarters. Equity losses in The WB increased $2 million in the third
quarter of 1997 and $13 million in the first three quarters, due in part to
Tribune's increased equity investment in The WB.
Operating Expenses -- Broadcasting and entertainment operating expenses
increased 15%, or $27 million, in the 1997 third quarter and 14%, or $72
million, in the first three quarters. The increase in both periods was primarily
due to the acquisition of Renaissance and higher equity losses from The WB.
Excluding Renaissance, The WB, KSWB-San Diego, Farm Journal and WQCD,
broadcasting and entertainment operating expenses were flat in the both the
third quarter and the first three quarters due to lower broadcast rights
amortization and reduced production costs at Tribune Entertainment, partially
offset by higher compensation expense. Broadcast rights amortization decreased
4%, or $2 million, in the third quarter and was down 7%, or $13 million, in the
first three quarters due primarily to lower amortization for syndicated and
feature programming and lower sports rights expense at KTLA-Los Angeles,
partially offset by higher sports rights expense at WPIX-New York. Compensation
expense increased 15%, or $9 million, in the third quarter and 10%, or $17
million, in the first three quarters due primarily to higher player compensation
at the Chicago Cubs and to expanded news coverage at several television
stations.
EDUCATION
Operating Profit and Revenues -- The following table presents education
operating revenues, EBITDA and operating profit for the third quarter and first
three quarters:
Third Quarter Three Quarters
----------------------- ------------------------
(Dollars in millions) 1997 1996 Change 1997 1996 Change
---- ---- ------ ---- ---- ------
Operating revenues $80 $72 + 10% $176 $153 + 15%
EBITDA 29 26 + 11% 48 47 + 2%
Operating profit 24 22 + 10% 35 38 - 7%
Education operating revenues increased 10% to $80 million in the 1997
third quarter and increased 15% to $176 million in the first three quarters due
to improvements at all of the education businesses except Educational Publishing
Corporation's Creative Publications division. Excluding Educational Publishing
and NTC Publishing from the first three quarters and Shortland Publications from
both periods, education revenues increased 8% for the quarter and 19% in the
first three quarters.
17
<PAGE>
Education third quarter operating profit was up 10% to $24 million in 1997
due to gains at all of the education companies except Educational Publishing
Corporation's Creative Publications division. In the first three quarters of
1997, operating profit was down 7% to $35 million due to the lower sales at
Creative Publications, which more than offset improvements at the other
education businesses.
Operating Expenses -- Education operating expenses were up 10%, or $5 million,
in the third quarter of 1997, primarily due to increased fulfillment and
compensation expenses. For the first three quarters, education operating
expenses increased 22%, or $26 million, primarily due to acquisitions after
1995.
OTHER
Interest expense for the 1997 third quarter increased 84% to $23 million
and for the first three quarters increased 85% to $64 million due to higher debt
levels resulting from acquisitions and stock repurchases. Interest income
decreased 23% to $6 million in the 1997 third quarter and decreased 12% to $21
million in the first three quarters due mainly to the prepayment of a mortgage
note receivable in the fourth quarter of 1996. The effective tax rate, excluding
non-recurring items, was 40.7% and 40.5% for the 1997 and 1996 third quarters,
respectively, and 41.0% and 40.5% for the 1997 and 1996 first three quarters,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from operations is the Company's primary source of
liquidity. Net cash provided by operations in the first three quarters was $265
million in 1997, up from $204 million in 1996 mainly due to higher income from
continuing operations and, in 1996, the payment of taxes on the sale of QUNO.
The Company normally expects to fund dividends, capital expenditures and other
operating requirements with net cash provided by operations. Funding required
for share repurchases and acquisitions is financed by available cash flow from
operations and, if necessary, by the issuance of debt.
Net cash used for investments totaled $1.0 billion in the 1997 first three
quarters and related mainly to the acquisition of Renaissance Communications
Corp. which was financed largely through the issuance of commercial paper and
long-term debt. The Company received $163 million of gross proceeds in 1997 from
the sales of America Online, CheckFree and Gemstar common stock, $43 million
from a sale-leaseback transaction on a Fort Lauderdale building and $17 million
from the sale of its Farm Journal subsidiary.
Net cash provided by financing activities in the 1997 first three quarters
was $508 million, as proceeds from the issuance of debt and the sale of stock to
employees were only partially offset by purchases of treasury stock, dividends
and repayments of debt. In the first three quarters of 1997, the Company issued
$462 million of commercial paper and $150 million of Series D medium-term notes
and repurchased 1.6 million shares of its common stock for $69 million. At
September 28, 1997, the Company had authorization to repurchase an additional
3.4 million shares and expects to continue to repurchase shares in 1997. The
1997 common dividend increased 7% to $.48 per share for the first three quarters
from $.45 per share in 1996.
18
<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.
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 1997.
19
<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 10, 1997 /s/ R. Mark Mallory
-------------------
R. Mark Mallory
Vice President and Controller
(on behalf of the Registrant
and as Chief Accounting Officer)
20
EXHIBIT 11
TRIBUNE COMPANY
STATEMENTS OF COMPUTATION OF PRIMARY AND FULLY DILUTED
NET INCOME PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Third Quarter Ended Three Quarters Ended
--------------------------------- ---------------------------------
PRIMARY Sept. 28, 1997 Sept. 29, 1996 Sept. 28, 1997 Sept. 29, 1996
- ------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income from continuing operations $ 104,778 $ 66,236 $ 280,215 $ 200,905
Discontinued operations of QUNO, net of tax - - - 89,317
---------- ---------- ---------- ----------
Net income 104,778 66,236 280,215 290,222
Preferred dividends, net of tax (4,700) (4,697) (14,099) (14,090)
---------- ---------- ---------- ----------
Net income attributable to common shares $ 100,078 $ 61,539 $ 266,116 $ 276,132
---------- ---------- ---------- ----------
Weighted average common shares outstanding 123,247 122,468 122,872 122,720
---------- ---------- ---------- ----------
Primary net income per share:
Continuing operations (A) $ .81 $ .50 $ 2.17 $ 1.52
Discontinued operations - - - .73
---------- ---------- ---------- ----------
Total $ .81 $ .50 $ 2.17 $ 2.25
========== ========== ========== ==========
FULLY DILUTED
- -------------
Income from continuing operations $ 104,778 $ 66,236 $ 280,215 $ 200,905
Additional ESOP contribution required assuming
all preferred shares were converted, net of tax (3,287) (3,374) (9,863) (10,123)
---------- ---------- ---------- ----------
Adjusted income from continuing operations 101,491 62,862 270,352 190,782
Discontinued operations of QUNO, net of tax - - - 89,317
---------- ---------- ---------- ----------
Adjusted net income $ 101,491 $ 62,862 $ 270,352 $ 280,099
---------- ---------- ---------- ----------
Weighted average common shares outstanding 123,247 122,468 122,872 122,720
Assumed conversion of preferred shares into common shares 11,093 11,406 11,093 11,406
Assumed exercise of stock options, net of common
shares assumed repurchased with the proceeds 1,817 2,288 1,997 2,384
---------- ---------- ---------- ----------
Adjusted weighted average common shares outstanding 136,157 136,162 135,962 136,510
---------- ---------- ---------- ----------
Fully diluted net income per share:
Continuing operations $ .75 $ .46 $ 1.99 $ 1.40
Discontinued operations - - - .65
---------- ---------- ---------- ----------
Total $ .75 $ .46 $ 1.99 $ 2.05
========== ========== ========== ==========
</TABLE>
(A) Primary net income per share from continuing operations is computed by
deducting preferred dividends, net of tax, from income from continuing
operations and then dividing by weighted average common shares
outstanding.
EXHIBIT 12
TRIBUNE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
Fiscal Year Ended December
Three Quarters --------------------------------------------------------------
Ended 9/28/97 1996 1995 1994 1993 1992
-------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations before
cumulative effects of accounting changes $ 280,215 $ 282,750 $ 245,458 $ 233,149 $ 204,646 $ 179,534
Add:
Income tax expense 191,266 191,663 167,076 158,698 142,212 120,089
Losses on equity investments 22,840 13,281 13,209 9,739 1,857 1,903
-------------- ---------- ---------- ---------- ---------- ----------
Subtotal 494,321 487,694 425,743 401,586 348,715 301,526
-------------- ---------- ---------- ---------- ---------- ----------
Fixed charge adjustments
Add:
Interest expense 63,994 47,779 21,814 20,585 24,660 35,301
Amortization of capitalized interest 1,559 2,108 2,253 2,362 2,392 2,434
Interest component of rental expense (A) 7,326 9,362 8,200 8,236 8,732 8,182
-------------- ---------- ---------- ---------- ---------- ----------
Earnings, as adjusted $ 567,200 $ 546,943 $ 458,010 $ 432,769 $ 384,499 $ 347,443
============== ========== ========== ========== ========== ==========
Fixed charges:
Interest expense $ 63,994 $ 47,779 $ 21,814 $ 20,585 $ 24,660 $ 35,301
Interest capitalized 224 168 610 - 1,099 1,092
Interest component of rental expense (A) 7,326 9,362 8,200 8,236 8,732 8,182
Interest related to guaranteed ESOP debt (B) 13,445 20,134 22,057 24,017 25,742 27,019
-------------- ---------- ---------- ---------- ---------- ----------
Total fixed charges $ 84,989 $ 77,443 $ 52,681 $ 52,838 $ 60,233 $ 71,594
============== ========== ========== ========== ========== ==========
Ratio of Earnings to Fixed Charges 6.7 7.1 8.7 8.2 6.4 4.9
============== ========== ========== ========== ========== ==========
</TABLE>
(A) Represents a portion of rental expense incurred by the Company, which is a
reasonable approximation of the interest cost component of such expense.
(B) Tribune Company guarantees the debt of its Employee Stock Ownership Plan
(ESOP).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
September 28, 1997 condensed consolidated statement of income and condensed
consolidated balance sheet and is qualified in its entirety by references to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> SEP-28-1997
<CASH> 0
<SECURITIES> 599
<RECEIVABLES> 470,475
<ALLOWANCES> 38,533
<INVENTORY> 80,483
<CURRENT-ASSETS> 728,444
<PP&E> 1,506,643
<DEPRECIATION> 881,373
<TOTAL-ASSETS> 4,788,056
<CURRENT-LIABILITIES> 700,237
<BONDS> 0
0
303,864
<COMMON> 1,018
<OTHER-SE> 1,460,316
<TOTAL-LIABILITY-AND-EQUITY> 4,788,056
<SALES> 0
<TOTAL-REVENUES> 2,008,947
<CGS> 0
<TOTAL-COSTS> 938,594
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,994
<INCOME-PRETAX> 471,481
<INCOME-TAX> 191,266
<INCOME-CONTINUING> 280,215
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 280,215
<EPS-PRIMARY> 2.17
<EPS-DILUTED> 1.99
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
September 29, 1996 condensed consolidated balance sheet and restated financial
information for the first three quarters of 1996 extracted from the
September 28, 1997 condensed consolidated statements of income and is qualified
in its entirety by reference to such reports. The previously filed financial
data schedule has been restated to conform to revised financial statement
presentation. The restatement had no effect on net income.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-29-1996
<CASH> 10,685
<SECURITIES> 3,355
<RECEIVABLES> 402,061
<ALLOWANCES> 36,338
<INVENTORY> 76,804
<CURRENT-ASSETS> 642,536
<PP&E> 1,433,592
<DEPRECIATION> 793,487
<TOTAL-ASSETS> 3,521,812
<CURRENT-LIABILITIES> 608,667
<BONDS> 0
0
312,470
<COMMON> 1,018
<OTHER-SE> 1,139,851
<TOTAL-LIABILITY-AND-EQUITY> 3,521,812
<SALES> 0
<TOTAL-REVENUES> 1,797,376
<CGS> 0
<TOTAL-COSTS> 917,451
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,680
<INCOME-PRETAX> 337,656
<INCOME-TAX> 136,751
<INCOME-CONTINUING> 200,905
<DISCONTINUED> 89,317
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 290,222
<EPS-PRIMARY> 2.25
<EPS-DILUTED> 2.05
</TABLE>
